Annual Report
2023
Energy Transition
PLC
4
Company Overview
8
Highlights
10
The Year in Brief
14
Chair’s Statement
20
Strategy and Business Model
25
The Strategy in Practice
35
Key Performance Indicators
37
Investment Manager’s Report
50
Sustainability Report
62
The Company’s Progress to Date on
TCFD Recommendations
72
Section 172(1) Statement
74
Stakeholder Engagement
76
Risk Management
83
Going Concern and Viability
Statement
Company Overview
Strategic Report
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Governance
88
Chair’s Introduction
89
Application of AIC Code Principles
92
Board of Directors
94
Corporate Governance
98
Audit Committee Report
102
Management Engagement
Committee Report
104
Nomination Committee Report
107
Directors’ Remuneration Report
108
Directors’ Remuneration Policy
110
Annual Report on Directors’ Remuneration
113
Report of the Directors
117
Directors’ Responsibility Statement
118
Independent Auditor’s Report
Financial Statements
128
Income Statement
129
Balance Sheet
130
Statement of Changes in
Shareholders’ Equity
131
Statement of Cash Flows
132
Notes to the Financial Statements
Other Information
158
Glossary and Definitions
160
Shareholder Information
161
Forward-Looking Statements
162
Annex 1
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
1
2023 Annual Report
Company
Overview
Who
we are
Triple Point Energy
Transition plc (“TENT”) is
an investment trust listed
on the Premium Segment
of the Main Market of the
London Stock Exchange,
which supports the
transition to Net Zero by
investing holistically across
the energy sector whilst
targeting a diversified and
sustainable income for
investors.
We invest in assets
which generate, store,
or consume energy and
which contribute to our
target total net asset
value (“NAV”) return
of 7- 8% per annum to
shareholders.
Triple Point Energy Transition plc
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
4
What we do
The Group invests across the full spectrum of the energy transition, targeting niche
opportunities that have an attractive risk and return profile whilst supporting the
transition to Net Zero by 2050. Investing across the breadth of the energy transition
also drives diversification in the Group’s investments.
The Group aims to accomplish this through investing across three thematic areas:
Energy storage
and distribution
Distributed
energy generation
Onsite energy
generation and lower
carbon consumption
The backbone of the Net Zero
economy is a Net Zero power
sector, which is why the UK
Government has set this goal
as a target by 2035. Achieving
this requires a move away from
centralised fossil fuel generation
towards decentralised renewable
and lower carbon baseload power.
The Group seeks to achieve this
through investing into assets such
as: hydroelectric power, solar PV
development, energy from waste,
and biomass generation.
Both the generation of, and demand
for, energy are becoming more
unpredictable, driven by intermittent
renewable generation and the
electrification of energy consumption,
for example through heat pumps and
electric vehicles (“EVs”). Balancing
supply and demand are important to
the efficient operation of the energy
system and so the Group invests
in storage assets, such as Battery
Energy Storage Systems (“BESS”),
which also improve the resilience of
the energy system through frequency
response services.
Reducing the demands of
businesses and consumers for
energy from grid networks reduces
emissions and energy wastage.
This can be achieved through
investing in measures to reduce
demand, for example light emitting
diodes (“LEDs”) or building retrofit,
or through generating and storing
the energy required on site, for
example rooftop solar, behind-
the-meter batteries or embedded
Combined Heat and Power
(“CHP”).
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
5
2023 Annual Report
HYDRO
SOLAR
BATTERY ENERGY
STORAGE SYSTEMS
WIND
We take a holistic approach and look at investments which improve the efficiency of the whole
UK energy system as part of the energy transition:
from generation to consumption.
This illustration is indicative
of the types of technologies
TENT may look to invest in
but is not exhaustive.
1
2
A Holistic Approach
ENERGY STORAGE
AND DISTRIBUTION
Better aligning the supply and
demand for energy and providing
frequency response to deliver a more
resilient and efficient energy system.
DISTRIBUTED ENERGY
GENERATION
Lower carbon, decentralised energy
generation in place of centralised
fossil fuel generation.
1
2
Triple Point Energy Transition plc
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
6
HEAT NETWORKS
CHP
LED LIGHTING
AIR CONDITIONING
AND HEAT PUMPS
GRID
EFFICIENT BOILERS
ELECTROLYSER
EV CHARGING
EXISTING INVESTMENTS
ROOFTOP SOLAR
GREEN HYDROGEN
3
ONSITE ENERGY
GENERATION AND
EFFICIENT CONSUMPTION
Reducing demands placed on
the energy system, either through
generating energy onsite or through
demand reduction measures.
3
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
7
Highlights
DIVIDEND
PER SHARE
5.50p
(31 March 2022: 5.50p)
Dividends declared in respect of
the year ended 31 March 2023
totalled 5.50 pence per share, in
line with the Company’s target.
NET ASSET
VALUE (“NAV”)
PER SHARE
99.44p
(31 March 2022: 96.12p)
NAV as at 31 March 2023 was
£99.4 million, equal to 99.4 pence per
share, resulting in NAV growth of 3.5%
for the year ended 31 March 2023.
ONGOING CHARGES
RATIO (“OCR”)
1
1.94%
(31 March 2022: 1.38%)
The ongoing charges ratio was 1.94% as at 31 March 2023 and is
a ratio of ongoing charges expressed as a percentage of average
NAV from 1 April 2022 to 31 March 2023.
PORTFOLIO VALUATION
£90.1 MILLION
(31 March 2022: £79.0 million)
Portfolio valued at £90.1 million on an IFRS basis as at 31 March 2023.
Triple Point Energy Transition plc
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
8
DIVIDEND
COVER
¹
1.1x
(31 March 2022: 0.14x)
The Company delivered a
dividend for the year cash
covered 1.1x (2022: 0.14x).
TOTAL NAV
RETURN
1
9.2%
(31 March 2022: 4.9%)
During the financial year a total NAV return of
9.2%, exceeding the targeted return. This was
delivered through dividends paid of 5.7% and
capital growth of 3.5%.
The target total NAV return is 7%-8% per annum.
RENEWABLE ENERGY
GENERATED
1
18,965 MWh
(31 March 2022: 9,425 MWh)
In respect of the year ended 31 March 2023 the Group generated
18,965 MWh of renewable energy
2
.
TONNES OF CO
2
AVOIDED
1
27,112
(31 March 2022: 17,074 tonnes)
In respect of the year ended 31 March 2023, the Group’s activities
lowered emissions by 27,112 tonnes of CO
2
2
.
1. Alternative performance measure
2. The data presented is for the year ended 31 March 2023, and where an investment was made part way through the
year, the data for that asset is from the point of investment to 31 March 2023.
Further details and calculations for the data presented can be found within the KPIs
section on pages 34 to 35 and pages 154 to 155
2023 Annual Report
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
9
25 AUGUST 2022
The Company declared
a dividend of 1.375
pence per Ordinary
Share for the period
from 1 April 2022 to
30 June 2022.
14 JUNE 2022
The Company declared a
dividend of 1.375 pence
per Ordinary Share for the
period from 1 January 2022
to 31 March 2022.
28 OCTOBER 2022
The Company was
admitted to trading on
the Premium Segment
of the London Stock
Exchange.
30 AUGUST 2022
Following shareholder
approval at the Company’s
Annual General Meeting,
the Company changed
its name to Triple Point
Energy Transition plc.
8 MARCH 2023
The Company declared a
dividend of 1.375 pence
per Ordinary Share for the
period from
1 October 2022 to
31 December 2022.
14 MARCH 2023
The Group completed an
extension of its
£40 million revolving
credit facility with TP
Leasing Limited.
The Year
in Brief
JULY 2022 –
MARCH 2023
The Group provided
funding of £2.2 million to a
lighting solutions provider,
which has installed efficient
lighting and controls at
a large retail logistics
specialist.
Triple Point Energy Transition plc
Company Overview
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10
25 AUGUST 2022
Following approval at the Company’s
Annual General Meeting, the Company
adopted a revised investment policy,
focused on investing in the energy
transition and providing for a proportion
of European assets.
30 NOVEMBER 2022
The first project in the BESS Portfolio
commenced operations. The project
is located in Oldham, Greater
Manchester and has a capacity of
20MW / 20MWh.
2 DECEMBER 2022
The Company announced its results for
the six-months ended 30 September 2022
and declared a dividend of 1.375 pence
per Ordinary Share for the period from
1 July 2022 to 30 September 2022.
24 JUNE 2022
The Company announced
the appointment of J.P.
Morgan Cazenove as its sole
Corporate Broker.
POST BALANCE
SHEET ACTIVITY
In June 2023, the Group
deployed a further
£3.9 million to the BESS
Portfolio. The remaining
commitment now stands
at £35.5 million.
In June 2023, the Group
successfully completed
their first drawdown
of the revolving credit
facility.
20 MARCH 2023
The Company
announced its
unaudited NAV for
the quarter ended 31
December 2022 was
99.53 pence per share.
31 MARCH 2023
The Group committed a
£5 million debt investment to Innova
Renewables to help fund its development
pipeline of solar, battery and energy
storage systems across the UK. The facility
was fully drawn on 3 April 2023.
2023 Annual Report
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
11
Strategic
Report
Chair’s
Statement
JOHN ROBERTS, Chair
The energy system is undergoing a
fundamental transformation to achieve
Net Zero emissions by 2050. This
opens up enormous opportunities
and exciting challenges for energy
investors who can adapt to the changing
markets and policies. The Company
has a holistic mandate that enables
it to invest in a wide range of assets
that support the low-carbon transition
and offer significant opportunities
for value creation. The Company has
fully committed its capital and is well
placed to reap the benefits of its
diversified portfolio The Company has
also delivered a dividend that is cash
covered 1.1x, demonstrating its strong
financial performance.
14
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Triple Point Energy Transition plc
Dear Shareholder,
I am pleased to present the results for Triple Point
Energy Transition plc (“TENT” or the “Company”) for the
year ended 31 March 2023. This is our first set of annual
results reported under our new mandate and name,
announced in August 2022, which consolidated the
Company’s focus on investing across the energy sector
to support the transition to Net Zero.
Our investment mandate covers three thematic areas:
•
distributed energy generation
•
energy storage and distribution
•
onsite energy generation and lower carbon
consumption
This strategy reflects our conviction that a holistic,
system-wide approach to reducing emissions across
every part of the energy sector is vital to supporting the
transition to Net Zero and to delivering attractive returns
for our investors. We also believe that this approach
gives us a highly differentiated position in our sector,
offering shareholders exposure to a diversified portfolio
of attractive investments in sectors and investment
classes which are not typically targeted by many other
investment trusts.
The past year has been marked by unprecedented
challenges and opportunities in the global energy sector.
The devastating war in Ukraine, which has now entered
its second year, and the resulting energy crisis have
exposed the vulnerabilities and risks of relying on fossil
fuels, especially imported gas, for meeting our energy
needs. This has also led to a cost-of-living crisis and
inflation increases, putting pressure on consumers and
businesses. At the same time, the events have triggered
a wave of policy and market developments which are
designed to accelerate the energy transition. The EU’s
REPowerEU plan, the US Inflation Reduction Act, China’s
14th Five-Year Plan, and other initiatives by major
economies have created a huge investment potential
for clean energy technologies globally, through a strong
regulatory framework and incentives for deployment.
Moreover, global investment in clean energy
technologies matched that of fossil fuels for the first time
in 2022, signalling a shift in investor preferences and
expectations.
These global developments have a direct impact on the
UK and EU markets, which are the focus of our mandate.
The UK and the EU are both committed to achieving Net
Zero emissions by 2050 and have set ambitious targets
and policies to accelerate the decarbonisation of their
energy systems. The UK’s Powering Up Britain, the EU’s
Green Deal, and the Glasgow Climate Pact are some of
the key initiatives that demonstrate this commitment and
provide a clear direction for our investment strategy. The
UK and the EU are also facing increasing energy security
concerns and rising energy costs, which create an urgent
need for more domestic, diversified, and reliable sources
of energy. This is where our investment portfolio can
provide solutions and value for our shareholders and
society.
By investing holistically across the energy sector, in
assets that generate, distribute or conserve electricity
or heat, we are able to capture the opportunities and
mitigate the risks arising from these developments. Our
three thematic areas of focus are complementary and
synergistic, as they enable a lower-carbon, more resilient,
and more flexible energy system. They also generate
stable and predictable income for our investors, from
long-term contracts with high-quality counterparties or
from wholesale or merchant markets.
/
INVESTMENT ACTIVITY
I am delighted to report that the Company’s remaining
capital has been fully committed to a portfolio of broadly
diversified opportunities across the energy transition
sector. This achievement reflects our ability to discern
and execute attractive deals in a competitive market. We
have strategically utilised the funds to invest in multiple
asset classes and capital structures, providing a solid
defence against risks and challenges. Importantly we
balance both debt and equity investments to ensure
a consistent income stream, capital preservation, and
capital growth.
The Group has continued to advance funds under the
£45.6 million debt facility to a subsidiary of Virmati
Energy Ltd to fund a 110MW portfolio of four BESS
assets (the “BESS Portfolio”). During the period, £6.2
million of the facility was utilised, with commitment fees
being received in respect of the undrawn balance. Post
the balance sheet date, a further £3.9 million was drawn.
The Group has also invested in new asset classes – LED
lighting and solar project development – through debt
financing. This further enhances our diversification,
resilience to negative trends, and participation in
innovative technologies.
15
2023 Annual Report
Company Overview
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Governance
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Other Information
The Group’s £2 million investment in the installation
of new Light Emitting Diodes (“LEDs”) in several
warehouses of an investment-grade global logistics
company, has led to a c.58% reduction in the
warehouses’ energy consumption.
These investments not only showcase our commitment
to advancing this important energy transition industry
but also enable us to leverage the stability of debt
financing to support projects which reduce energy waste
and drive sustainability.
/
PORTFOLIO PERFORMANCE
The portfolio continued to deliver a strong performance
with all asset classes contributing positively to the financial
performance of the Company.
The Hydroelectric Portfolio performed marginally below
expectation. The annual generation performance was c.
5% lower than forecast, due to a local grid curtailment
of some of the schemes in March 2023. One scheme
has commenced development of water storage capacity
and is progressing to the next stage. This provides the
opportunity to increase the annual generation capacity by
1,250 MWh and allows the scheme to target periods of
peak load generation through a controlled release of the
flow.
The deployment of the BESS Portfolio has progressed
during the year, with the asset located in Oldham now
operational and the asset located in Gerrards Cross under
construction and expected to reach commercial operations
in late 2023. The third and fourth projects are expected
to be operational during 2024. Once fully deployed, the
BESS assets will contribute to reduce grid constraints and
allow the inclusion of more renewable energy generators
to the energy mix.
The CHP Portfolio continues to benefit from the volatile
gas and electricity wholesale market which illustrates the
resilience of the economic model of these assets, as they
benefit from dual revenue sources (wholesale market and
private offtake of heat and power).
/ FINANCING
The Group, via its wholly owned subsidiary, TENT
Holdings Limited (“TENT Holdings”), has a £40 million
Revolving Credit Facility (“RCF”) with TP Leasing Limited,
and in March 2023, we completed a 12-month extension
of the RCF to 28 March 2025. The interest rate charged is
a fixed rate coupon of 6% pa on drawn amounts.
TP Leasing Limited is an established private credit
and asset leasing business which is managed by the
Investment Manager and, as a result, is deemed to
be a related party as defined in the Listing Rules. The
extension to the RCF was deemed to be a “smaller
related party transaction” for the purposes of LR11.1.10R
and, therefore, was undertaken in accordance with the
relevant requirements of the Listing Rules.
The Group will make use of the RCF to fund its
committed portfolio. The Group will follow a prudent
approach to gearing with a target medium-term gearing
of up to 40% of Gross Asset Value (“GAV”) and a
maximum gearing that will not exceed 45% of GAV
at the time of drawdown, in line with the Company’s
borrowing policy.
As at 31 March 2023, the RCF had not been drawn,
however it is expected that the RCF will be fully utilised
during 2024.
/
FINANCIAL RESULTS
During the year, TENT achieved a total profit and
comprehensive income of £8.8 million (31 March
2022: £4.8 million), which is reflective of the growing
investment portfolio that has increased in value by 14%
in the financial year. Further information on profitability
and financial performance can be found on pages 128 to
153.
The Company generated a total NAV return for
shareholders of 9.2%, in excess of the Company’s
target. The NAV per share is 99.44 pence per share as at
31 March 2023 (31 March 2022: 96.12 pence per share),
an annual growth rate of 3.5%, which was made possible
through a combination of robust contractual revenues
and the revaluation of the investment portfolio.
TENT has delivered a dividend of 5.5 pence per share
for the year, which was cash covered 1.1x (31 March
2022: 0.14x). The enhancement in coverage reflects
the full deployment of the IPO proceeds in the financial
year. As a result, cash income generation has increased
approximately 300% to £9.0 million (31 March 2022:
£2.2 million).
16
Triple Point Energy Transition plc
Company Overview
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Governance
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Other Information
/
SHARE PRICE
During the year, as part of a number of actions to
improve the share price liquidity and attract new
investors, the Board decided to migrate to the Premium
Segment of the Main Market of the London Stock
Exchange, having been listed on the Specialist Fund
Segment since the IPO in October 2020. The Company
commenced trading on the Premium Segment on 28
October 2022.
The Board continues to monitor the Company’s share
price, which has suffered following the mini budget
in September 2022 and in the higher interest rate
environment. At the financial year end, the Company’s
share price was 62.5 pence, representing a 37% discount
to NAV (31 March 2022: 84.5 pence, representing a
12% discount to NAV). The Board believes that the
discount to NAV is unwarranted, is driven in large part by
illiquidity of the shares and does not reflect the quality
of the Group’s portfolio, the robust nature of contractual
earnings, and the future potential of its strategy.
The Board is concerned by the continuing level of share
price discount to NAV, and continues to consider ways to
address the discount.
The Investment Manager has been actively engaging
with stock market analysts, existing and potential
new shareholders and has an active investor relations
programme planned for the remainder of 2023.
In accordance with the Investment Management
Agreement, the Investment Manager has used 20% of
the annual investment management fee (net of relevant
taxes) to acquire Ordinary Shares in the Company. The
Investment Manager purchased the following Ordinary
Shares during the financial year:
•
28 September 2022 – 41,550 Ordinary Shares at an
average price of 80.86 pence per share
•
22 December 2022 – 57,616 Ordinary Shares at an
average price of 80.00 pence per share
As at 31 March 2023, including other shares purchased
in the year, the Investment Manager held a total of
1,042,157 Ordinary Shares in the Company, representing
approximately 1.0% of the total issued share capital.
/ DIVIDENDS
The Board is pleased to confirm the dividend in respect
of the quarter to 31 March 2023 of 1.375 pence per
share, payable on or around 14 July 2023 to holders
of Ordinary Shares on the register on 30 June 2023,
bringing the total annual dividend to the target of 5.50
pence per share. Cash received in the Company’s wholly
owned subsidiary TENT Holdings, from the investee
companies by way of distributions, which includes
interest and dividends, was £9.0 million. After operating
and finance costs, the cash flow within the Company
and TENT Holdings was £5.9 million, cash covering the
dividends paid during the year of 5.50 pence per share
by 1.1x.
The Company has set a dividend target of 5.50 pence
per share for the year ending 31 March 2024
3
.The
Company notes that the deployment of the loans to the
BESS Portfolio and Innova is expected to provide further
income with which to cover dividends over the course of
FY24.
/
ENVIRONMENTAL, SOCIAL AND
GOVERNANCE (“ESG”)
The Company has adopted an approach to ESG
which reflects the importance of sustainability to the
investment policy and to maximise the potential for our
ESG considerations to add value to the portfolio.
Throughout the year there has been a focus on
developing relationships with asset owners (where we
have debt investments) and O&M contractors (where we
own the asset) to improve data collection and identify
where discussion may lead to improved action and
ESG management of our portfolio. Climate and Net
Zero analysis are also a key priority with significant time
allocated to the evolution of these activities, which have
been captured in our voluntary reporting against the
TCFD framework. The Board continues to engage fully
to support and seek progress on these fast evolving
and important areas. The Sustainability Report contains
full details on the approach including reporting aligned
with a range of relevant industry frameworks and best
practice.
3.
The dividend and return targets stated are Pounds Sterling denominated returns targets only and not a profit forecast. There can be no assurance
that these targets will be met, and they should not be taken as an indication of the Company’s expected future results.
17
2023 Annual Report
Company Overview
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Financial Statements
Other Information
/
SUMMARY & OUTLOOK
The energy market is undergoing a seismic
transformation, driven by the urgent need for
decarbonisation and a growing emphasis on energy
security and independence. The Company’s broader
investment mandate positions it for success in this
rapidly evolving landscape by diversifying its portfolio
across three thematic areas: distributed energy
generation, onsite energy generation and lower carbon
consumption, and energy storage and distribution. This
approach not only mitigates risk and enhances resilience
but also supports the Net Zero pathway, presenting
a favourable outlook for the Company’s investment
prospects.
The Company is well-positioned to capitalise on
the immense potential arising from the ambitious
renewable energy targets and various legislative
initiatives in the UK and EU markets, such as Powering
Up Britain and REPowerEU. These programmes aim
to unlock a vast amount of investments and create a
favourable environment for the growth of clean energy
technologies, opening up a market worth $5.3 trillion
across Europe
4
. By investing in innovative solutions
for the decarbonisation of buildings and transport and
leveraging its expertise in cutting-edge sectors such
as battery storage, green hydrogen, and LED lighting,
the Company aims to drive transformative change and
contribute to the global shift towards a low-carbon
economy. The Company also intends to pursue market-
driven unsubsidised projects that can offer higher returns
with lower risks, as they are less exposed to policy
changes and provide increased flexibility. These projects
further diversify the Group’s portfolio compared to other
peers in the space and differentiate the risk profile.
On behalf of the Board, I remain confident in the
Company’s ability to continue generating sustainable
income and capital growth for our shareholders. We
would like to extend the Board’s thanks to shareholders
for their ongoing support and belief in our differentiated
investment case.
John Roberts
Chair
16 June 2023
4. Europe’s Path to Clean Energy: A $5.3 Trillion Investment Opportunity | BloombergNEF (bnef.com)
18
Triple Point Energy Transition plc
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19
2023 Annual Report
Strategy and Business Model
The Company’s purpose is to invest into infrastructure assets that contribute to the energy
transition and generate a stable and growing long-term income stream for investors.
ORIGINATE
INVEST
OVERVIEW
TENT originates across the
spectrum of the energy
transition.
TENT invests across the capital
structure of an energy transition
investment.
COMPETITIVE
ADVANTAGE
This enables the Company to
identify the most attractive
risk and return characteristics
of opportunities across the
energy transition space.
This typically means that
TENT invests in more niche
areas of the transition
and avoids areas with
elevated valuations, such as
subsidised large scale UK
solar and wind generation.
TENT seeks to build long-
term partnerships with
developers and partners to
secure repeat deal flow.
In certain technologies such as
CHP or BESS, investing in debt
may enable TENT to achieve
better risk adjusted returns than
equity.
In others, inflation protected
contracts in more established
technologies, such as hydro-
electric power, may offer more
attractive equity opportunities.
RISK MANAGEMENT
Read more about our rigorous approach to risk management on page 76
GOVERNANCE
Read about our approach to governance on page 88
1
2
20
Company Overview
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Triple Point Energy Transition plc
OPERATE AND OPTIMISE
HOLD
RESULTS
TENT operate and optimise
assets based on a two pronged
approach.
TENT’s strategy is
to hold investments
to maturity.
Our business
activities result in:
Firstly, TENT seeks to have exposure
to strong management teams in an
energy sub sector. For example,
it has backed one of the leading
renewables developers in the UK,
Innova Renewables.
Working with a diverse range of
specialist management. teams
across a range of energy sub sectors
provides further diversification to
investors.
Secondly, the Investment Manager’s
inhouse portfolio management team
actively manages the investments,
identifying opportunities to enhance
performance and mitigate risks.
This long-term
stewardship
approach enables
TENT to more
successfully originate
opportunities, with
a view to aligning
interests with project
counterparties over
the investment
period.
3
4
5
Income
for
shareholders
5.50p
Dividends
declared for the
year ended
31 March 2023
Tonnes of CO
2
avoided
27,112
in the year ended
31 March 2023
21
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/
CHANGES TO THE COMPANY’S
INVESTMENT POLICY
Following approval at the Company’s AGM on
25 August 2022, the Company revised its Investment
Policy, shifting focus from solely Energy Efficiency
investments in the United Kingdom towards a broader
spectrum of Energy Transition Assets in both the UK and
Europe. This revision to the Investment Policy reflects a
strategic adaptation to the evolving energy market and
global trends. By focusing on Energy Transition Assets
and expanding its geographical scope, the Company is
positioning itself to capitalise on the growing demand
for sustainable and renewable energy solutions. This
is in line with global efforts to combat climate change
and transition towards a low-carbon economy. It allows
the Group to invest in innovative businesses that are
contributing to the energy transition, thereby potentially
enhancing the Company’s portfolio and returns.
/
INVESTMENT OBJECTIVE
The Company’s Investment Objective is to generate a
total return for investors comprising sustainable and
growing income and capital growth.
/
INVESTMENT POLICY
The Company intends to achieve its investment objective
by investing in a diversified portfolio of Energy Transition
Assets typically via the acquisition of equity in, or the
provision of debt financing to, the relevant Investee
Company. The Company may invest in opportunities in
the United Kingdom (and the Crown Dependencies) and
Europe.
The Group will invest in a range of Energy Transition
Assets which meet the following criteria:
•
contribute towards the energy transition to lower, or
zero, carbon emissions
•
are established technologies
•
contribute to the generation of stable and
predictable income across the Company’s portfolio,
as a whole, arising from:
•
long-term revenues based on availability, usage,
consumption or energy savings-based contracts
with good quality industrial, governmental,
and corporate Counterparties or off-takers (as
assessed by the Investment Manager’s due
diligence processes), including Counterparties
which represent multiple end-users; or
•
assets with income from wholesale or merchant
sources (including, but not limited to, battery
energy storage, pumped storage or other power
storage and discharge systems and renewable
power assets), typically where the Investee
Company benefits from an option to put in place
a long-term fixed contractual price if it deems
it necessary to do so and where operated by a
reputable operator; and
•
entitle the Company to receive cash flows over
the medium to long-term in Developed Country
Currencies. The Company may, but does not intend
to, enter into any currency hedging arrangements.
The Group’s portfolio of Energy Transition Assets will
predominantly comprise operational Energy Transition
Assets. It will invest in either single assets or portfolios of
multiple assets.
Subject to the investment restrictions set out below,
the Group may also invest in assets that are in the
Development Phase or the Construction Phase, either
directly or through funding of a third-party developer,
where such investments will deliver an attractive risk
adjusted return.
In addition, the Company may invest in or acquire
minority interests in companies with a strategy that
aligns with the Company’s overarching investment
objective, such as developers, operators or managers of
Energy Transition Assets (“
Other Related Companies
”).
The Group will seek to diversify its commercial exposure
through contractual relationships, directly or indirectly
(through the Investee Company), with a range of
different Counterparties and off-takers, as appropriate to
the relevant investment.
Investments may be acquired from a single or a range of
vendors and the Group may also enter into joint venture
arrangements alongside one or more co-investors,
where the Group retains control or has strong minority
protections. Recognising the different risk profiles and
business models of the various technologies, the Group
can invest across both debt and equity investments.
Debt investments will include market standard downside
protections including, but not limited to, cash reserve
accounts, security and have robust contractual and
covenant protections.
22
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INVESTMENT RESTRICTIONS
The Company will invest and manage its assets with the
objective of spreading risk and, in doing so, will maintain
the following investment restrictions:
•
no single debt commitment or debt investment to
fund, via an Investee Company, one or more Energy
Transition Asset(s) will represent more than 20%
of Adjusted Gross Asset Value. No single equity
investment into an Energy Transition Asset directly or
via an Investee Company, will represent more than
20% of Adjusted Gross Asset Value except, where
the Group has control over an Investee Company
which holds multiple Energy Transition Assets and
such assets are standalone economic operations,
between which risk can be apportioned separately,
this restriction shall apply to each individual Energy
Transition Asset;
•
the aggregate maximum exposure to any
Counterparty will not exceed 20% of Adjusted Gross
Asset Value (and where an Energy Transition Asset
derives revenues from more than one source, the
relevant Counterparty exposure in each case shall
be calculated by reference to the proportion of
revenues derived from payments received from the
Counterparty, rather than any other source). This
restriction does not apply to circumstances where
all, or substantially all, of the revenue generated
by an Energy Transition Asset is derived through
connection to the wholesale electricity market, for
example, transmission or distribution networks,
where there are multiple potential off-takers;
•
the aggregate maximum exposure to assets in the
Development Phase and the Construction Phase
will not exceed, 25% of Adjusted Gross Asset
Value, provided that, within this limit, the aggregate
maximum exposure to assets in the Development
Phase will not exceed 5% of Adjusted Gross
Asset Value, and the aggregate exposure to any
one Developer will not exceed 10% of Adjusted
Gross Asset Value. The restriction on Construction
Phase assets will not apply to assets where on-site
commissioning is expected to be completed within a
period of three months and any equipment on order
is sufficiently insurance wrapped;
•
at least 70% of the value of the Group’s portfolio
of Energy Transition Assets will comprise United
Kingdom based investment;
•
the Group will not invest more than 5% of Adjusted
Gross Asset Value, in aggregate, in the acquisition
of minority stakes in Other Related Companies, and
at all times such investments will only be made with
appropriate minority protections in place;
•
neither the Group nor any of the Investee
Companies will invest in any UK listed closed-ended
investment companies; and
•
the Company will not conduct any trading activities
which are significant in the context of the Group as a
whole.
Compliance with the above investment limits will be
measured at the time of investment or in the case
of commitment at the time of commitment, and
noncompliance resulting from changes in the price
or value of assets following investment will not be
considered as a breach of the investment limits.
For the purposes of the foregoing, the term “Adjusted
Gross Asset Value” shall mean the aggregate value of
the total assets of the Company as determined using the
accounting principles adopted by the Company from
time to time as adjusted to include any third-party debt
funding drawn by, or available to, any unconsolidated
Holding Entity.
BORROWING POLICY
The Directors intend to use gearing to enhance the
potential for income returns and long-term capital
growth, and to provide capital flexibility. However, the
Company will always follow a prudent approach for the
asset class with regards to gearing, and the Group will
maintain a conservative level of aggregate borrowings.
Gearing will be employed either at the level of the
Company, at the level of any Holding Entity or at the
level of the relevant Investee Company and any limits
set out in this document shall apply on a look-through
basis. The Company’s target medium term gearing for
the Wider Group will be up to 40% of Gross Asset Value,
calculated at the time of drawdown.
The Group may enter into borrowing facilities at a higher
level of gearing at the Investee Company or Holding
Entity, provided that the aggregate borrowing of the
Wider Group shall not exceed a maximum of 45% of
Gross Asset Value, calculated at the time of drawdown.
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Debt may be secured with or without a charge over some
or all of the Wider Group’s assets, depending on the
optimal structure for the Group and having consideration
to key metrics including lender diversity, cost of debt,
debt type and maturity profiles. Intra-group debt
between the Company and (i) Holding Entities and/or (ii)
Investee Companies subsidiaries will not be included in
the definition of borrowings for these purposes.
HEDGING AND DERIVATIVES
The Company will not employ derivatives for investment
purposes. Derivatives may however be used for efficient
portfolio management.
The Wider Group will only enter into hedging contracts
(in particular, in respect of inflation, interest rate,
currency, electricity price and commodity price hedging)
and other derivative contracts when they are available in
a timely manner and on acceptable terms. The Company
reserves the right to terminate any hedging arrangement
in its absolute discretion. Any such hedging transactions
will not be undertaken for speculative purposes. The
Company can, but does not intend to, enter into any
currency hedging.
CASH MANAGEMENT
The Company may hold cash on deposit for working
capital purposes and awaiting investment and, as well as
cash deposits, may invest in cash equivalent investments,
which may include government issued treasury bills,
money market collective investment schemes, other
money market instruments and 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.
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/
BESS PORTFOLIO CASE STUDY
Borrower
Field
Type
Fixed rate senior debt
Stage
Construction and operation
Technology
Battery Energy Storage System
Term
18.25 years
Amount
£45.6 million
INVESTMENT THESIS:
BESS are part of the second of TENT’s three thematic investment areas – Energy Storage and Distribution. The growing
penetration of intermittent renewable generation has transformed the way the power system functions.
As a result, the demand and supply within a given settlement period are increasingly not balanced and the grid requires
more corrective actions to maintain its frequency and power factor. These two components – balancing and stabilising – can
be supported by BESS shifting power between settlement periods and providing ancillary services to stabilise the grid.
Battery assets can be a more cost-effective means to address the current needs of the grid as the capital required can be
lower than traditional solutions, such as new transmission lines, and faster to deploy. BESS projects can be deployed in
small increments and in strategic locations. They will not supersede the need for major grid infrastructure upgrades as the
production of renewable energy in the generation mix is scaling up, but they address an immediate need to avoid delaying
the transition due to the current grid limitations leading to curtailment of renewable generators (Curtailment of wind
generation due to grid constraints cost £299 million and £507 million to the electricity customers respectively in 2020 and
2021
5
.)
The business model of BESS projects is based on a diverse range of revenue sources. These include ancillary services, the
balancing mechanism, power trading and capacity market.
INVESTMENT OVERVIEW:
In March 2022, TENT committed £45.6 million to fund a portfolio of four geographically diverse BESS assets in the UK.
The debt facility is provided to a subsidiary of Virmati Energy Ltd (trading as “Field”). Field was established in 2020 with a
vision to finance, build, operate and monetise the renewable infrastructure needed to reach Net Zero, starting with battery
storage, and has aspirations to be a market leader in sustainable practices in energy storage.
The portfolio, once built, will have a total capacity of 110MW. The first BESS asset, located in Oldham in the North of
England, a 20MW capacity one-hour duration battery project, became operational in Q3 of the financial year ended
31 March 2023.
The second asset, at Gerrards Cross, located at the border of Greater London, is a 20MW – one hour storage project and is
under construction. The other two BESS assets will be located in Scotland (two-hour duration battery; total capacity 50MW),
and Wales (two-hour duration battery; total capacity 20MW) and are expected to commence construction in the summer
2023 and to be operational in 2024.
The Strategy
in Practice:
5.
Source: LCP, Renewable curtailment and the role of long duration storage, Report for DRAX, May 2022
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CASE STUDY
BESS Portfolio
ORIGINATE
INVEST
OVERVIEW
In 2021, TENT identified
BESS as a crucial asset
class for the energy
transition and one
with an increasingly
proven technology
and performance track
record.
Field was looking for
a long-term financing
partner to provide a
bespoke debt financing
solution to invest in
the construction of
their portfolio of BESS
assets.
TENT succeeded in a tender process to secure the right to invest
into Field through tailoring a financing offering enabling Field
to construct and operate the assets in a way that allowed for
the maximisation of net revenues. The structure includes some
unique elements such as a revenue share, providing upside to
TENT’s return case, and further income sharing in the event of
higher-than-forecast inflation.
The investment case was also based on a conservative
expectation for the long-term trading conditions for BESS.
As part of its desire to create a positive ESG impact through
its investments, TENT introduced strong incentives for the
developer to improve the KPIs of the projects at all stages of
the lifecycle:
•
Procurement: Robust provisions around responsible sourcing.
•
Operation: The borrower is incentivised to maximise the
positive impact on the grid carbon intensity through a
mechanism providing a reduction of interest rate when
demonstrating a maximum arbitrage between the grid
carbon intensity during the charging and discharging period
of the battery cycles. The “Interest Ratchet Clause for
Carbon Saving” clause has been shared with The Chancery
Lane Project and is an open source available for other
borrowers/lenders to replicate.
•
End of life: Consent rights over recycling strategy at end of
cell life to ensure it meets its environmental standards.
COMPETITIVE
ADVANTAGE
TENT leveraged its
flexible investment
strategy to focus on
originating credit
opportunities into BESS
assets. At the point
of signing heads of
terms there had only
been three other debt
financing parties to
BESS assets in the UK,
providing TENT with
early mover advantage in
this sector.
The early mover advantage in the debt market for BESS enabled TENT
to secure attractive rates of return at the upper end of TENT’s target
return range. Meanwhile, equity returns were impacted by higher
capital costs and developer premiums, which rose as a function of a
significant increase in the equity capital targeting these assets.
Investing through debt provides the advantage of strong downside
protection, with TENT able to achieve its target returns even in the event
that forecast revenues were lower than projected at financial close.
Market revenues to date in 2023 of £k55,000/MW have been
considerably lower than 2022 revenues of £153,000/MW as a
function of the saturation of ancillary revenues
6
. TENT’s returns
are not impacted at these lower revenue levels. Further down-side
protection comes through the cross-collateralisation of the four assets
and reserve accounts, enabling TENT to receive its target return in
the event that one of the BESS assets underperforms for example.
1
2
6.
Revenue assumptions based on Modo Energy - Modo Revenue Benchmark and Modo Energy
Annual GB battery fleet revenues by revenue stream.
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Triple Point Energy Transition plc
OPERATE AND OPTIMISE
HOLD
The assets are managed on
a day-to-day basis by Field’s
technical team. The Investment
Manager also monitors the assets
from construction to operation,
in conjunction with third-party
technical experts, providing
a robust level of scrutiny and
performance management.
The tenor of the investment reflects
the long-term commitment of TENT
to Field and the BESS asset class. In
addition to the scope of the original
transaction – £45.6 million debt
secured against four projects – TENT
has a right of first refusal on the
pipeline of future projects developed
by Field up to a pipeline of 500MW
or 650MWh of further assets to be
commissioned by Field.
Stable contractual
income for TENT
over 18 years
The breadth of expertise across
both the specialist management
team at Field and the Investment
Manager provides additional
value beyond what an in-house
team alone could provide to
shareholders.
The secured pipeline
provides a contractually
underpinned pathway
to scaling TENT at an
attractive rate of return.
3
4
5
RESULTS
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PROJECT DEVELOPMENT
(SOLAR AND BESS) CASE STUDY
Borrower
Innova Renewables Limited
Stage
Development
Technology
Co-located solar and storage
Term
12 months; fixed rate
Value
£5 million
INVESTMENT THESIS
Investing in renewable energy generation is the first of TENT’s three target segments, with renewables being
the backbone of a Net Zero power system.
The UK Government has set a target of a Net Zero power system by 2035, and solar energy has a critical role
to play in providing the required power to the system.
In the last 2-3 years, the duration of the development cycle for renewable generation assets has increased
due to grid connection delays, increases in the time taken to determine planning applications and supply
chain constraints. Recycling capital after exiting previous projects is no longer always sufficient to support the
funding requirements for developers scaling up their pipeline.
INVESTMENT OVERVIEW:
•
Innova Renewables Limited (“Innova”), part of the wider Innova group, is responsible for development
and construction of large-scale subsidy-free renewable energy projects within the UK. To date, Innova has
created a large portfolio of fully consented and development stage projects.
•
The security against the £5 million debt provided by TENT is a portfolio of solar and BESS assets across
the UK in various stages of development ranging from early development stage up to submission of
planning and grid connection applications to Ready to Build stage when the project is fully consented, and
the construction and off-take contracts have been negotiated.
The Strategy
in Practice:
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CASE STUDY
Innova
ORIGINATE
INVEST
OVERVIEW
Debt finance secured against project
rights is an attractive solution
for experienced developers with
growing pipelines of large assets
given the increased time and cost of
development. The Company has been
seeing growing demand for this sort of
facility from renewable developers over
the last 6-12 months.
The facility was sized with a
conservative loan to value, providing
significant project rights coverage of
the outstanding loan balance.
COMPETITIVE
ADVANTAGE
The opportunity originated from an
ongoing relationship between Innova and
the Investment Manager which started
in 2017, which the Company leveraged
to identify the opportunity. Many asset
owners invest in development to provide a
pipeline of assets which they subsequently
own. TENT‘s more flexible strategy
enabled it to target development as a
standalone opportunity in its own right,
offering a more compelling proposition
to developers who do not wish to restrict
themselves to partnering with a single
investor partner.
Development debt finance attracts
higher returns than construction
and operation stage investments
to compensate for the potential
abandonment of a project in case of
unsuccessful applications (planning
and grid connection) as well as the
uncertainty around the timing of consent
being granted. This is mitigated by
lending against a large portfolio of
projects developed by an experienced
team.
Furthermore, this is an area to which
banks typically have not lent given the
more complex nature of the security
used for the loan.
1
2
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OPERATE AND OPTIMISE
HOLD
Whilst the investment is into
development, rather than
operating assets, the TENT
and Innova’s teams oversee the
project development process on
an ongoing basis.
While the development debt
facility agreed between TENT
and Innova has a 12-month
term, Innova has a large
portfolio in development which
TENT could support with a
follow-up loan or refinance in a
larger facility.
Diversification of the
Group’s portfolio
and strong fixed-rate
returns.
As new projects are developed,
the value of the security
increases, further de-risking the
investment for TENT.
By being an
early mover into
development
debt financing for
renewables projects,
TENT has established
a growing pipeline
of additional
development
opportunities.
3
4
5
RESULTS
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PORTFOLIO LOCATION
BESS
Number of Assets
4
Valuation (£'000)
45,647
Percentage of Portfolio
35%
Number of Assets
9
Valuation (£'000)
54,252
Percentage of Portfolio
41%
Number of Assets
3
Valuation (£'000)
25,101
Percentage of Portfolio
19%
Number of Assets
3
Valuation (£'000)
2,079
Percentage of Portfolio
2%
Number of Assets
0*
Valuation (£'000)
5,000
Percentage of Portfolio
4%
HYDRO-ELECTRIC
CHP
LED
DEVELOPMENT
2
1
4
5
6
7
8
9
10
11
12
17
14
15
16
13
3
19
18
20
* 63 development projects in the pipeline.
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NAME
SECTOR
CAPACITY (MW)
INVESTMENT/
FIRST DRAWDOWN DATE
LOCATION
1
ALT DUBH
0.75
10-DEC-21
GREATER MANCHESTER
2
CHEANNA
0.5
10-DEC-21
HIGHLANDS
3
LOCH BLAIR
0.319
10-DEC-21
HIGHLANDS
4
BHALACHAIN
0.8
26-NOV-21
HIGHLANDS
5
SHALACHAIN
0.47
26-NOV-21
HIGHLANDS
6
LADAIDH
1.35
26-NOV-21
HIGHLANDS
7
LUAIDHE
0.5
26-NOV-21
HIGHLANDS
8
PHOCACHAIN
0.5
26-NOV-21
HIGHLANDS
9
LARAIRIDH
0.5
26-NOV-21
HIGHLANDS
10
OLDHAM
20/20***
01-DEC-22
GREATER MANCHESTER
11
GERRARDS CROSS
20/20***
08-JUN-23
BUCKINGHAMSHIRE
12
NEWPORT
20/40***
COMMITTED UNDRAWN
SOUTH WALES
13
AUCHTERAW
50/100***
COMMITTED UNDRAWN
FORT AUGUSTUS
14
HARVEST
11
18-MAR-21
ISLE OF WIGHT
15
GLASSHOUSE
11
18-MAR-21
ISLE OF WIGHT
16
SPARK STEAM
6.6
28-MAY-21
MIDDLESBROUGH
17
SHERBURN
5,460*
31-JUL-22
WEST YORKSHIRE
18
OLLERTON
4,730*
31-DEC-22
SOUTH YORKSHIRE
19
ROTHERHAM
695*
30-NOV-22
SOUTH YORKSHIRE
20
INNOVA
641**
03-APR-23
VARIOUS UK
*Number of LED replacement bulbs.
** Based on a pipelne of 63 development projects.
*** export MW/storage MWh
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Key Performance
Indicators (“KPIs”)
The Company sets out below its KPIs which it uses to track the performance of the Company over time against the
objectives as described in the Strategic Report on pages 14 to 85.
The Board believes that the KPIs detailed below provide shareholders with sufficient information to assess how
effectively the Company is meeting its objectives. The Board monitors these KPIs on an ongoing basis.
KPI AND DEFINITION
RELEVANCE TO STRATEGY
PERFORMANCE
COMMENT
DIVIDENDS PER SHARE
7
Dividends paid to
shareholders and declared in
relation to the year.
The dividend reflects the
Company’s ability to deliver a
low-risk income stream from
the portfolio.
The Company is paying
a 5.50 pence per share
dividend in respect of the
year ended 31 March 2023
(5.50 pence per share for the
period to 31 March 2022).
The Company’s target was to pay a dividend of
5.50 pence per share in respect of the year to
31 March 2023, which it achieved.
TOTAL NAV RETURN (%)
8
NAV growth and dividends
paid per share in the year.
The total NAV return measure
highlights the gross return to
investors including dividends
paid.
9.2% (4.9% for the year to
31 March 2022).
Total NAV return for the year ended 31 March
2023 is 1.2% above the target of 7% - 8%. NAV
return was generated through dividends paid of
5.7% and capital growth of 3.5%.
NAV PER SHARE (PENCE)
NAV divided by number of
shares outstanding as at the
period end.
The NAV per share shows
our ability to grow the
portfolio and to add value to
it throughout the lifecycle of
our assets.
99.44 pence per share.
(96.12 pence per share for
the year to 31 March 2022).
NAV of £99.5 million or 99.44 pence per share
as at 31 March 2023.
CASH DIVIDEND COVER
7,8
Operational cash flow
divided by dividends paid to
shareholders during the year.
Reflects the Company’s ability
to cover its dividends from the
income received in its wholly
owned subsidiary, TENT
Holdings, from the portfolio
companies.
1.1x.
The Company delivered a
dividend for the year cash
covered 1.1x (0.14x for the
year to 31 March 2022).
The Company has successfully paid a cash
covered dividend and has experienced the
advantages of a full year of income since
the IPO proceeds were fully deployed and
committed.
7.
Investors should note that references to “dividends” and “distributions” are intended to cover both dividend income and income which is designated as an interest distribution for UK
tax purposes and therefore subject to the interest streaming regime applicable to investment trusts.
8.
Alternative Performance Measure.
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Triple Point Energy Transition plc
KPI AND DEFINITION
RELEVANCE TO STRATEGY
PERFORMANCE
COMMENT
CONTRACTUAL REVENUE
Average percentage of
underlying forecast income
contractually underpinned
over the next 10 years.
The forecasted revenue
contractually underpinned
and due to the Group
encompassing two key
components: interest
payments on debt facilities
and government subsidies
received by the equity
investee companies.
92% of forecasted income is
contractually underpinned
and due to the Group over
the next 10 years.
The Group has stable and predictable income
stream from interest payments and government
subsidies, ensuring the financial stability and
growth of the organisation.
ONGOING CHARGES RATIO (“OCR”)
8
Annualised ongoing charges
(i.e., excluding acquisition
costs and other non-recurring
items, such as the premium
listing application costs)
divided by the average
published undiluted NAV
in the period, calculated in
accordance with Association
of Investment Companies
guidelines.
Ongoing charges shows
the effect of the operational
expenses incurred by the
Company.
1.94% annualised (1.38% for
the year to 31 March 2022).
Company level budgets are approved
annually by the Board and actual spend is
reviewed quarterly. This is a key measure of
our operational performance. Keeping costs
low supports our ability to pay dividends. The
increase in OCR has mainly been driven by
the increase in management fees. In the prior
financial year, the management fee calculation
was 0.9% of deployed IPO proceeds until
10 December 2021. At this date 75% of net
IPO proceeds had been deployed and the
investment management fee calculation
changed to 0.9% of NAV.
AVOIDED EMISSIONS
8
The carbon emissions
avoided by the Company’s
investments.
A measure of our success
in investing in projects that
have a positive environmental
impact through a decrease in
CO
2
emissions compared to
an equivalent asset.
27,112 tonnes CO
2
avoided
in the year ended 31 March
2023 (17,074 tonnes CO
2
avoided for the year to
31 March 2022).
The tCO
2
avoided has increased compared
to end of year 2022 as expected, due to
continued deployment and the inclusion of full-
year data for the Hydroelectric Portfolio.
GROSS LOAN TO VALUE (“LTV”)
8
The proportion of our GAV
that is funded by borrowings.
The LTV measures the
prudence of our financing
strategy, balancing the
potential amplification
of returns and portfolio
diversification that come with
using debt against the need
to successfully manage risk.
0% (0% for the year to
31 March 2022).
The Group will follow a prudent approach
to gearing with a target medium-term target
gearing of up to 40% of GAV and a maximum
gearing that will not exceed 45% of GAV, at the
time of drawdown.
On full drawdown of the RCF, the gross
LTV is expected to be around 30%, based
on prevailing NAV and all the existing
commitments.
DIVIDEND
COVER
0.14x
1.1x
CO
2
AVOIDED
27,112
2022
2023
TOTAL NAV
PER SHARE
96.12p
99.44p
2022
2023
NAV
RETURN
9.2%
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Company Overview
Strategic Report
Governance
Financial Statements
Other Information
2023 Annual Report
The Investment
Manager
/
JONATHAN HICK
Jonathan Hick has a 14-year track record in investment in the energy transition sector, from
origination through to execution and asset management. His previous experience was as
an investment director at Armstrong Capital (and investment management in the clean
energy sector) and prior to that companies including KPMG, Social and Sustainable Capital
and PwC. He holds a degree in Management with Chinese from Nottingham University, a
master’s in finance from London Business School and is a chartered accountant.
/
CHRISTOPHE ARNOULT
Christophe Arnoult joined the Investment Manager in June 2022 as portfolio director. He is an
experienced portfolio director in the renewable energy sector covering all major technologies
and has a strong background in the waste and bioenergy industry, ranging from operation to
development, design and construction. He was previously head of projects at enfinium, senior
asset manager at Equitix Energy Efficiency Fund and Energy Saving Investment and delivery
coordination manager at the Cornwall Energy Recovery Centre for Vinci.
/
ARIANE BRUNEL
Ariane Brunel joined the Investment Manager as an investment director in October 2022.
Prior to that, she was an associate director in the energy team of the European Bank for
Reconstruction and Development (EBRD) in London. Ariane has over 12 years of experience
investing in or financing sustainable infrastructure assets internationally. She is a graduate of
ESSEC Business School (Paris & Singapore).
/
JAN LIBICEK
Jan Libicek joined the Investment Manager as an investment director in November 2022. He
has 14 years’ experience in the energy sector. Jan previously worked at Bluefield Partners,
overseeing European investments, and spent five years working on strategy and investments
in Asia at TerraForm Power and at Canadian Solar.
/
CHLOE SMITH
Chloe Smith is the Fund Finance Director at the Investment manager and has over 10
years of experience in the financial services sector. She spent 8 years at Close Brothers
responsible for the Asset Finance division Financial Control and later Financial Planning &
Analysis and Investments, before moving to Kvika Banki, where she led the UK finance team
and held a board position for a bridging lender. Chloe is fellow of ACCA and qualified in
audit.
TPIM possesses a wealth of specialised knowledge and a proven history of successfully initiating, organising, and
overseeing investments in the energy transition sector.
36
Triple Point Energy Transition plc
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Investment
Manager’s
Report
JONATHAN HICK,
Fund Manager
The Company, having fully allocated all its
capital to diversified investments in innovative
areas such as LED lighting, battery storage,
and project development, is firmly positioned
in today’s dynamic market, with shares now
trading on the Premium Segment of the London
Stock Exchange. ESG remains a key strategic
pillar, with ongoing efforts towards reducing
emissions intensity and aligning assets with
broader sustainability goals. The Company
boasts a robust pipeline which, subject to capital
availability, could yield an average return of
8.8%. As the energy landscape continues to
evolve, the Company is well-placed to leverage
opportunities in renewable energy, storage, and
onsite generation, underscoring its dedication
to shareholder value and contributing to the
global shift towards a low-carbon economy.
37
2023 Annual Report
Investment
Manager’s Report
/
REVIEW OF THE PERIOD
The past year has been significant for the Company,
marked by fully committing all of the Group’s remaining
capital, broadening of the Company’s investment
mandate with the change in Company name to reflect
this, as well as the migration of the Company’s shares
to trading on the Premium Segment of the Main Market
of the London Stock Exchange. These events reflect our
strategic vision and ambition to drive sustainable growth
and positive impacts in today’s challenging energy
market.
A diversified mandate provides numerous advantages,
such as greater flexibility to invest in a wide array of
opportunities and the ability to adapt to market changes.
This diversification mitigates risk and allows us to stay
competitive in the face of emerging technologies and
regulatory shifts.
The Group’s strategic investments are unaffected by the
Electricity Generator Levy. Our successful transactions
to date have demonstrated the Investment Manager’s
expertise, showcasing our experience in managing
a range of asset classes and capital structures, whilst
building a compelling pipeline. In the deals closed to
date, 92% of the Group’s revenues are contracted for the
next ten years, with 47% of the Group’s revenues being
linked to inflation, providing a high level of visibility and
security over the Group’s income stream.
As we continue to expand our portfolio, during the
financial year we have ventured into new asset classes
and capital structures, for example receivables financing
of LED lighting and solar and BESS project development
through a debt structure. These investments not only
underscore our commitment to advancing innovative
technologies but also allow us to leverage the stability
of debt financing to support projects that drive energy
transition and sustainability, whilst generating ongoing
contractual returns for the Group at an attractive risk
adjusted rate.
The investment trust market as a whole has had a
challenging year, and this compounded with the scale
and illiquidity of the Company’s shares has driven its
discount to NAV. We do not believe that the Company’s
discount to NAV is reflective of the quality of the Group’s
portfolio.
/ INVESTMENTS
LED
During the period, the Group’s lighting service partner
completed multiple projects installing LED lighting at
logistics warehouses, totalling c.£2.2 million. Starting
in September 2022, the Group has received monthly
repayments for its fixed rate receivables financing, with
“hell or high water”
9
income contracted over the next
five years.
SOLAR DEVELOPMENT FINANCING
In March 2023 the Group committed to providing a
£5 million development debt facility to Innova
Renewables Limited, (“Innova”), part of the Innova
group, one of the UK’s leading solar and BESS
developers and operators. The facility will be used
to develop ground-mounted solar and BESS assets
across the UK. The facility has a 12-month term and
delivers fixed rate contractual returns to investors that
are materially higher than the Group’s target return
of 7-8%pa, reflecting the flexibility of the Group’s
investment strategy. The facility was fully drawn on 3
April 2023.
BESS PORTFOLIO
In March 2022, the Group committed £45.6 million
fixed rate debt facility to fund a portfolio of four
geographically diverse BESS assets in the UK. The debt
facility is provided to a subsidiary of Virmati Energy Ltd
and £6.3 million was drawn at 31 March 2023, with a
further drawdown subsequent to the balance sheet date
of £3.9 million, resulting in 78% of the facility remaining
undrawn. It is expected that the facility will be fully drawn
in 2024.
9.
With an absolute payment obligation.
38
Triple Point Energy Transition plc
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
9
+
+
D
;
)
D
B
4
4
:
D
3
"
2
4
D
Portfolio Overview
Harvest
Spark Steam
Achnacarry
Elementary Energy
Luaidhe
LED
Development
Bhalachain
Ladaidh
BESS Drawn
BESS Commitment
Phocachain
Glasshouse
Non-Investment Grade -
Unrated
Investment Grade -
Rated
Debt
Equity
42.6%
41.1%
3.7%
3.8%
57.4%
58.9%
66.4%
19.0%
41.1%
1.6%
3.8%
26.1%
34.6%
As at 31 March 2023
7.0%
6.9%
5.1%
18.5%
3.4%
6.1%
2.6%
3.6%
6.9%
4.7%
29.8%
1.6%
3.8%
UNDERLYING COUNTERPARTY EXPOSURE
10
INVESTMENT TYPE
10
ASSET EXPOSURE
10
LIFECYCLE STAGE
10
TECHNOLOGY EXPOSURE
10
10. Weighted on the sum of underlying portfolio held at fair value and commitments waiting deployment held at cost.
As at 31 March 2023
As at 31 March 2023
As at 31 March 2023
As at 31 March 2023
Operating
Construction
Development
Commitments awaiting
deployment
CHP
Hydro
BESS
LED
Development
39
2023 Annual Report
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Portfolio performance
/
CHP PORTFOLIO
In 2021 the Group made fixed rate debt investments
into a portfolio of three Combined Heat and Power
(“CHP”) Energy Service Centre Companies (“ESCos)
which deliver heat and power to glasshouses leased
by a large-scale tomato grower. These ESCos have
continued to perform above the budget in the
financial year. This demonstrates the benefits of the
economic model underlying these projects, which
generate revenues from both the wholesale electricity
market and/or direct offtake of heat and power by the
glasshouse occupiers.
The benefit of the CHP assets’ business model is that
it has two countercyclical sources of revenue, thereby
providing a stable income which, in turn, underpins the
loan repayments to the Group, as highlighted this year.
Under ordinary conditions, where energy prices are
lower than they are currently, the revenues generated by
the CHP projects are predominantly from the demand
from the tomato producers which purchase the heat
and power produced by the CHP assets to operate their
glasshouses. However, during times of higher energy
prices, the electricity produced by the CHP assets
during peak load periods is able to be exported and
provides the projects with significant revenues from the
wholesale electricity market instead.
In December 2022, following a difficult trading period,
the company leasing the glasshouses underwent a
change of ownership resulting in a stronger counterparty
for the Group. The recapitalised tomato grower
has boosted the management team to support and
reposition the business. This provided an opportunity
for the Group to renegotiate some of the terms of
the facility agreement and introduce more reporting
requirements.
The duality of the model also underpins the dual
purpose of the assets in supporting the grid by
providing electricity during the peak demand periods
and supporting the UK local food supply at a time
when both sectors were challenged by their respective
constraints.
This year, the CHP Portfolio avoided 18,098 tCO
2
equivalent emissions
11
.
11. details of calculation can be found in Annex 1 – Reporting Principles and Methodologies
40
Company Overview
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Triple Point Energy Transition plc
/
HYDROELECTRIC PORTFOLIO
The financial year ended 31 March 2023 marked the
first full year of ownership of the Hydroelectric Portfolio.
During the period, the nine hydroelectric schemes
performed marginally below expectation. The annual
generation performance of the portfolio was closely
aligned to the long-term energy yield forecast, with a
variance of less than 5%. The marginal variance was due
to a temporary period of curtailment imposed on certain
schemes by the local grid operator in March 2023.
Portfolio performance since the commissioning of the
nine assets has been reliable and closely corroborates
with the power generation forecasts based on historical
rainfall data. Accordingly, the average annual generation
performance over the last six years is within 1% of the
P50 estimate.
With the current high level of technical availability
and reliable forecasting at our disposal, it has become
imperative for us to focus on pursuing optimisation to
maximise the scheme’s potential. Loch Blair is the largest
generator of the Hydroelectric Portfolio in MWh per
year and we have focused on optimising this scheme.
The optimisation will involve construction of a small
dam upstream of the intake. The reservoir created will
attenuate peak rainfall which combined with a control
of the release of the flow feeding the existing plant will
increase the annual generation. This will enable the
scheme to target the peak load period of the tariff in the
PPA, increasing revenues from the power wholesale.
All Feed-in Tariff revenues enjoy annual indexation to
UK RPI. This has resulted in Feed-in Tariff rates being
adjusted upwards by RPI of 13.40% in 2023. 3.00%
is forecast from 2024 to 2031 and 2.40% is forecast
thereafter, which has given an uplift to revenues and
underpins the highly defensive and attractive nature of
this portfolio.
Considering the robustness of our projected revenues,
which are safeguarded by a dependable generation
forecast and the Feed-in Tariff, our management team
is actively evaluating prospects to enhance profitability
related to the sale of electricity in the wholesale market,
with various options available.
The portfolio generated 18,965 MWh of renewable
energy and avoided 8,866 tCO
2
equivalent emissions.
Please see page 51 of the Sustainability Report for
further detail.
The total generation of the portfolio remains under the
threshold of the Electricity Generation Levy and therefore
the Group will not be subject to the increased tax rate in
the coming years.
41
Company Overview
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2023 Annual Report
/
BESS PORTFOLIO
The BESS Portfolio has a total capacity of 110MW. The
first BESS asset, located in Oldham, a one-hour duration
battery project, reached its Commercial Operation
Debut (“COD”) on 1 December 2022. It is located in the
North of England and has a total capacity of 20MW.
The second asset, located in Gerrards Cross, located
at the border of Greater London, is also a one hour
duration 20MW project and is under construction
with the COD expected in late 2023. The remaining
two BESS assets are located in Scotland (two-hour
duration battery; total capacity 50MW) and Wales (two-
hour duration battery; total capacity 20MW) and are
expected to commence construction in summer 2023
and to be operational in 2024.
While these projects are greenfield projects, the
construction risk is mitigated through the modular
nature of the design where high value components
(the batteries) are manufactured off-site and delivered
ready to install. This reduces the risk of interface issues
and construction delay. The bespoke elements of
the projects, mainly the power step-up and export to
the grid, are similar to other renewable energy and
conventional generation projects. Given the relatively
conservative loan to cost ratio the construction risks are
substantially borne by the equity investors.
42
Company Overview
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Triple Point Energy Transition plc
/
PORTFOLIO VALUATION
The Investment Manager is responsible for conducting the fair market valuation of the Group’s investments. The
Company engages Mazars LLP as an external, independent, and qualified valuer to assess the validity of the discount
rates used by the Investment Manager in the determination of fair value. During the financial year the Company
transitioned to reporting quarterly financial updates and portfolio valuations, reporting for the periods 30 September,
31 December and 31 March in 2022/23.
For non-market traded investments (being all the investments in the current portfolio), the valuation is based on a
discounted cash flow (“DCF”) methodology and adjusted in accordance with the International Private Equity Valuation
Guidelines where appropriate to comply with IFRS 13, given the special nature of portfolio investments.
The valuation of each investment within the portfolio is determined through the application of a suitable discount
rate, which accounts for the perceived risk to the investment’s future cash flows and by applying this discount rate, the
present value of the investment’s expected cash flows is derived. The Investment Manager exercises its judgement in
assessing the expected future cash flows from each investment based on the project’s expected life and the financial
model produced by each project entity. In determining the appropriate discount rate, the Investment Manager
considers the relative risks associated with the revenues. For the year ending 31 March 2023, the discount rates range
from 5.6% to 8.3% pa (31 March 2022: range from 5% to 8%).
The valuation of the portfolio by the Investment Manager and reviewed and supported by the Directors as at 31 March
2023 was £90.1 million (31 March 2022: £78.8 million).
/
VALUATION MOVEMENTS
Although UK gilt rates have increased over the past 12 months, the CHP Portfolio has been held at par during
the financial year. This is supported by the underlying trading performance of the portfolio, exceeding budget for
the second year in a row at a revenue and profit level, which flowed through to higher debt servicing cover ratios.
Furthermore, during the financial year, the borrowers’ on-site customer was acquired and benefited from a cash
injection and balance sheet restructure. This reduction in counterparty risk broadly offset increased movements in the
risk-free rate and the Company believes the discount rate applied is consistent with market pricing for investments of
this nature.
During the financial year, the Group deployed 13.7% of the committed debt proceeds into the BESS portfolio and it is
expected that during 2023 and 2024 the remaining commitment will be drawn.
The valuation of the debt financing for the receivables from the energy-efficient lighting portfolio has largely stayed
consistent throughout the financial year, with only a negligible change. This stability reflects the high quality of the
counterparties involved and the associated risk-return ratio.
Due to the debt investments being valued at or close to par, the fair value movements observed during the financial
year primarily stem from the equity investment into the Hydroelectric Portfolio. A breakdown of the movement in the
Directors’ portfolio valuation is detailed and explained below.
43
2023 Annual Report
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The opening valuation as at 31 March 2022 was £79.0 million. When considering the in year cash investments through
the Company’s wholly owned subsidiary, the rebased valuation was £86.45 million. Each movement between the
valuation at the start of the financial year and the rebased valuation is considered in turn below:
/ INFLATION
The war in Ukraine, in addition to the multiple primary impacts felt in Ukraine itself, has driven an increase in energy
and commodity prices. This, along with supply chain bottlenecks has continued to place significant upward pressure on
inflation.
During the financial period, inflation forecasts for 2022 and 2023 have increased significantly and as a result have
caused a valuation uplift of £4.6 million. The methodology adopted in relation to inflation, for both RPI and CPI, follows
the latest available (March 2023) Office for Budget Responsibility forecast for the 12 months from the 31 March 2023
valuation date. Thereafter, a long-term 3.00% assumption is made in relation to RPI, dropping to 2.40% in 2031 to
reflect the 0.60% reduction as RPI is phased out and replaced with CPI.
The Company’s long-term assumption for CPI remains at 2.25%. We also model a power curve indexation assumption,
as wholesale power prices are not intrinsically linked to consumer prices, of 3.00%.
/
POWER PRICES
The valuation as at 31 March 2023 applies long-term, forward looking power prices from a leading third-party consultant.
A blend of the two most recent quarters’ central case forecasts are taken and applied, consistent with the approach
applied in previous periods. The Company adopts this approach due to the unpredictability and fluctuations in power
price forecasts. Where fixed price arrangements are in place, the valuation model reflects this price for the relevant time
period and subsequently reverts to the power price forecast using the methodology described. The updated power price
forecast has been accretive to the valuation of the Hydroelectric Portfolio by £2.0 million in the year ended 31 March
2023. The Company notes that the outlook for power prices is expected to decline over the course of FY24, however the
power price forecast for the Hydroelectric Portfolio are underpinned by the Feed-in Tariff export rate.
/
DISCOUNT RATES
A range of discount rates are used when calculating the fair value of the portfolio valuations and are representative
of the view of the Investment Manager and Board, who benefit from Company’s independent valuer’s guidance.
The discount rates are indicative of the rate of return in the market for assets with similar characteristics and risk profiles.
The weighted average discount rate of the investments made as at 31 March 2023 is 6.6%, an increase of
46 basis points since 31 March 2022. The weighted average discount rate of the deployed and committed portfolio as
at 31 March 2023 is 7.2%.
VALUATION MOVEMENT IN THE YEAR TO 31 MARCH 2023 (£MILLIONS)
79.0
1.4
9.4
(3.3)
86.5
2.0
4.6
(3.0)
90.1
31-Mar-22
TENT Holdings
Portfolio
Deployment
Principal
Repayments
Rebased
Valuation
Power
Prices
Inflation
Discount
Rate
31-Mar-23
70.0
75.0
80.0
85.0
90.0
95.0
100.0
Increase
Decrease
Total
44
Triple Point Energy Transition plc
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During the financial year, the discount rate increase has caused a reduction in the valuation in the Hydroelectric Portfolio
of £3.0 million. The discount rate movement is reflective of the significant increase in gilt yields since the prior financial
year, and although the yields fell between the peak in September 2022 and the year end, they remain higher than they
were at the start of the financial year.
/
INVESTMENT OBLIGATIONS
At 31 March 2023, the Group had two outstanding investment commitments totalling £44.4 million, one in relation to
the BESS Portfolio which has a total capacity of 110MW and a second with a leading solar, battery and energy storage
systems developer, for a 12-month development finance facility.
The committed investment into the BESS Portfolio totals £45.6 million, via a fixed rate debt facility, of which
£6.2 million has been drawn and £39.4 million remains committed at the financial year end, with a further £3.9 million
being deployed in June 2023.
The solar PV development fixed rate finance facility with Innova is for £5.0 million and was fully drawn on 3 April 2023.
/
FULLY INVESTED PORTFOLIO VALUATION
The valuation of the portfolio on a fully invested basis can be derived by adding the valuation at 31 March 2023 and the
expected outstanding commitments are as follows:
£ million
Underlying Portfolio valuation as at 31 March 2023
£87.7
Valuation of TENT Holdings Limited as at 31 March 2023
£2.4
Future investments committed at cost
£44.4
Portfolio valuation once fully invested
£134.5
/
KEY SENSITIVITIES
The following chart illustrates the sensitivity of the Company’s NAV per share to changes in key input assumptions
(with labels indicating the impact on the NAV in pence per share of the sensitivities). The total portfolio is affected by
changes in the discount rate, whereas the other sensitivities pertain only to the Hydroelectric Portfolio.
3.1p
(2.6p)
2.8p
2.5p
(3.2p)
2.8p
(2.4p)
(2.3p)
(4.0p)
(3.0p)
(2.0p)
(1.0p)
-
1.0p
2.0p
3.0p
4.0p
Energy yields
(-5% / +5%)
Discount rate
(+0.5% / -0.5%)
Power prices
(-10% / +10%)
Inflation
(-0.5% / +0.5%)
Negative change in assumption
Positive change in assumption
45
2023 Annual Report
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For each of the sensitivities, it is assumed that potential changes occur independently of each other with no effect on
any other base case assumption, and that the number of investments in the portfolio remains static throughout the
modelled life.
/
FINANCIAL REVIEW
The Company applies IFRS 10 and qualifies as an investment entity. IFRS 10 requires that investment entities measure
investments, including subsidiaries that are themselves investment entities, at fair value except for subsidiaries that
provide investment services which are required to be consolidated.
The Company’s single, wholly owned subsidiary, TENT Holdings, is the ultimate holding company for all the Company’s
investments.
It is, itself, an investment entity and is therefore measured at fair value.
/ NAV
The Company’s NAV and investment portfolio valuations are now calculated on a quarterly basis on 30 June,
30 September, 31 December and 31 March each year. Valuations are prepared by the Investment Manager and
reviewed by Mazars LLP. The other assets and liabilities of the Company are calculated by the Administrator. The NAV
is reviewed and approved by the Board. All variables relating to the performance of the underlying assets are reviewed
and incorporated in the process of identifying relevant drivers of the DCF valuation.
NAV BRIDGE FOR THE YEAR ENDED 31 MARCH 2023 (£MILLIONS)
96.1
7.3
(2.5)
4.0
(5.5)
99.4
NAV
Mar 2022
Investment
Income
Fund
Expenditure
Investment
Fair Value
Dividends
paid
NAV
Mar 2023
70.00
75.00
80.00
85.00
90.00
95.00
100.00
105.00
110.00
Increase
Decrease
Total
The movement in NAV was driven by investment income of £7.3 million representing the interest and dividend income
to TENT, via TENT Holdings, the Company’s sole wholly owned subsidiary through which investments are purchased
and measured at fair value. Income was offset by investment management fees and other expenses, as well as
dividends paid to investors. The Investment portfolio benefited from an increase in valuation, resulting in an unrealised
fair value gain of £4.0 million. The NAV at 31 March 2023 has increased by £3.3 million.
46
Triple Point Energy Transition plc
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/
OPERATING RESULTS
The profit before tax of the Company has increased by
85% during the financial year to £8.8 million (31 March
2022: £4.8 million), with earnings per share of 8.81 pence
(31 March 2022: 4.76 pence).
/
OPERATING EXPENSES AND
ONGOING CHARGES
The operating expenses for the year ended 31 March
2023 amounted to £2.5 million (31 March 2022: £1.3
million). During the financial year the Company incurred
one-off expenditure of £0.6 million in relation to the
application to trading on the Premium Segment of the
Main Market of the London Stock Exchange.
During the financial year the management fee was
calculated based on NAV and in the prior financial year
the management fee was partly calculated in reference
to deployed funds. In accordance with the terms of the
Investment Management Agreement once 75% of the
net IPO proceeds were deployed (achieved in December
2021), the annual fee is calculated based on the Net Asset
Value of the Company.
The Company’s OCR is 1.94% (31 March 2022: 1.38%).
The primary factor contributing to the increase is
the management fee charge, as described above.
The ongoing charge ratio has been calculated as an
annualised ongoing charge (excluding non-recurring
items), divided by the average Net Asset Value in the
period. With the exception of the management fee, the
operating expenses of the Company are predominantly
fixed and predetermined. As a result, as the scale of
the fund increases, the Operating Cost Ratio (OCR) is
expected to decline.
/
CASH DIVIDEND COVER
The Company measures dividend cover on a look
through basis, by consolidating the income and
operating expenses of its sole wholly owned subsidiary,
TENT Holdings. The below table summarises the cash
income, cash expenses and finance costs incurred by
the Company and TENT Holdings in the financial year
ended 31 March 2023. The cash flow statement for the
Company alone does not capture the total income and
expenses of the Group as the interest income, financing
costs and further expenses are received and paid for by
TENT Holdings.
In the year, the Company has delivered a cash dividend
cover of 1.1x (2022: 0.14x). However, it is important to
note that this calculation includes one-off expenditure
associated with the migration to trading to the Premium
Segment of the Main Market of the London Stock
Exchange and excluding the impact of this exceptional
one-off expenditure, the dividend cover increases to
1.2x.
The below table outlines the cash income and
expenditure of the Company and its wholly owned
subsidiary TENT Holdings:
31 March
2023
£millions
Consolidated cash income
9.0
Consolidated operating Cash Ex-
penses and Finance Costs
(3.0)
Dividends paid per Statement of
Changes in Equity
5.5
Cash dividend cover
1.1x
/
GEARING AND LIQUIDITY
At the year ending 31 March 2023, the Group had cash
balances of £11.2 million (31 March 2022: £17.4 million).
The Group has a committed £40 million RCF in place and
intends utilise the facility to fund the commitments to the
BESS Portfolio.
47
2023 Annual Report
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/
ENVIRONMENTAL, SOCIAL AND
GOVERNANCE
The Investment Manager is committed to promoting
ESG when assessing investment opportunities and has
been a signatory to the United Nations’ Principles for
Responsible Investing (“PRI”) since 2019.
In addition, the Investment Manager is a certified B
Corp which formalises its consideration of social and
environmental impact.
We have continued to focus on our ESG impact through
the TENT portfolio and during the year we enhanced the
portfolio from an ESG perspective through, for example,
health and safety audits conducted across the assets.
The overall TENT portfolio generated 18,965 MWh of
renewable energy and avoided 27,122 tonnes of CO
2
in
the year ended 31 March 2023.
The Group targets a wide range of assets that contribute
to energy transition and the Investment Manager and
Board believe that TENT’s investments are well-aligned
to the energy transition through the resulting avoided
carbon. The Company also recognises the importance
of continuing to reduce the emissions intensity of assets
and will continue to track a pathway to Net Zero and will
report on reduction in emissions intensity of the assets
each year, along with continued reporting of avoided
emissions. The Investment Manager, with the oversight
of the Board, has also conducted extensive analysis to
determine its ability to set an overarching Net Zero target,
to reduce its emissions intensity in line with the accepted
scientific consensus on reducing global temperature rises
to 1.5°c. At this time there is currently no established
methodology, or combination of methodologies, available
to show the Net Zero alignment of the diversified asset
base that the Company holds. The Investment Manager
will continue to actively monitor this position for future
reporting.
/ PIPELINE
Sector
Pipeline
£millions
% of
Total
Pipeline
Weighted
Average
Return
Distributed
55
10%
6.4%
Efficient
Storage
254
47%
7.6%
Onsite Generation/
Demand Reduction
236
43%
10.6%
Total
545
100%
8.8%
The current pipeline comprises opportunities that
would deliver an average yield of 8.8%, indicating
a high potential to further support the dividend
cover and deliver a progressive dividend return to
shareholders. The pipeline includes both debt and equity
opportunities, covering a range of technologies and
sectors in the Company’s three thematic areas. Potential
investments include BESS, onsite generation, low-carbon
energy consumption, and green hydrogen.
The pipeline also includes early-stage development,
mid-stage development, pre-construction projects, and
operational assets. This means that the Company can
use the pipeline to select a balanced set of investments
to deliver attractive risk-adjusted returns to investors
while also considering risk-return profiles and time
horizons. By investing a small part of the portfolio in
early-stage development, the Company can create value
by taking projects from concept to consent, capturing a
larger proportion of the project margin.
The pipeline includes several joint venture opportunities,
outright project purchases, and alternative debt
funding structures, including senior and mezzanine.
This enhances the benefit of diversifying capital
deployment, allowing the Company to strike the
right balance of risk and return. The pipeline offers
multiple types of investment opportunities, which
have different implications on capital allocation and
portfolio composition. By engaging in JV opportunities,
the Company can share risks and rewards with other
partners, while leveraging their expertise and resources.
By pursuing outright project purchases, the Company
can gain full ownership and control over the assets, as
well as optimise their design and operation. By providing
alternative debt funding structures, the Company can
generate attractive returns with lower risks than equity
investments.
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/ OUTLOOK
ENERGY SYSTEM TRANSFORMATION
The transition towards Net Zero emissions by 2050,
propelled by the ambitious targets and robust policies of
the UK and EU, is precipitating a profound transformation
in the energy system. This shift, from centralised fossil fuel-
based sources to decentralised, renewable, and flexible
energy systems, creates substantial opportunities for
investors well-positioned to navigate these changes.
The intermittency of renewable energy sources and
increased electrification of assets presents a complex
dynamic of challenges and opportunities. Balancing grid
stability against the unpredictability of energy supply and
demand necessitates innovative solutions. The Company’s
diversified mandate provides a robust framework to
navigate these uncertainties, mitigate risk, and tap into
alternative sources of income, enhancing resilience.
Decarbonisation of buildings and transport, sectors with
significant contributions to greenhouse gas emissions and
energy consumption, represents a key component of this
transition. Strategic investment decisions today in these
sectors will shape the emissions trajectory for the coming
decades.
COMPANY STRATEGY
In addition to optimising the existing portfolio and
maximising its value for shareholders, the long-term
strategy of the Company is designed to capitalise on the
opportunities presented by the energy transition as soon
as additional capital is available. The unique mandate
allows for investments across three thematic areas aligned
with the key drivers of energy system transformation,
offering potential for significant value creation.
The Company will strengthen its focus on distributed
energy generation, specifically on renewable and lower-
carbon assets. Emerging technologies such as green
hydrogen and carbon capture are recognised for their
potential, and the Company will actively assess the viability
of investing in these areas.
Energy storage and its distribution form critical parts of
the Company’s strategy. By investing in assets like battery
storage systems, the Company aims to support the
increased integration of renewable energy sources into
the grid, which is becoming increasingly important in the
context of volatility in energy supply and demand.
The Company’s commitment to onsite energy generation
and lower carbon consumption underscores its dedication
to driving energy transition and reducing emissions. By
investing in solutions such as rooftop solar and demand
reduction measures, the aim is to decrease dependence
on grid connections, mitigating risks associated with grid
availability and volatile power prices.
In a market environment characterised by falling power
prices, the Company’s diversified mandate offers a
significant advantage. This approach provides insulation
from single-technology risks and enables income
generation from a wide range of sources. The Company
is confident that its strategic focus will continue to drive
shareholder value and contribute positively to the global
transition to a low-carbon economy.
Jonathan Hick
TENT Fund Manager
16 June 2023
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Sustainability Report
/ INTRODUCTION
TENT’s approach to sustainability is predicated on the belief that a low carbon economy and a Net Zero
future can only be achieved through the adoption of transition technologies: technologies which offer
decarbonised energy, support decarbonisation, or enable existing economic activity to continue whilst
reducing carbon footprint, until more radical carbon-free solutions become available. As a result, ensuring
carbon avoided against an appropriate counterfactual is essential to the selection of every investment.
To implement a meaningful energy transition strategy it is also essential that assets are considered for
possible unintended negative social and environmental impacts, which may undermine their energy
transition benefits. Or where possible, that the opportunity to improve the ESG performance of an asset is
implemented. ESG analysis is used throughout the investment process to manage this consideration, and to
improve outcomes where possible.
This report provides a summary of the Group’s sustainability
outcomes, approach and ambition (as implemented by the
Investment Manager). The report includes Environmental, Social and
Governance performance, with a particular focus on how the Group’s
investments align with its energy transition theme. It also provides
detail on the Investment Manager’s credentials and resources to
implement this process.
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/
SELECTING ASSETS FOR AVOIDED CARBON AND ENERGY
TRANSITION ALIGNMENT
For an asset to qualify as a TENT investment, it must be possible to demonstrate that its operation results in avoided
carbon, relative to the expected status quo or other sensible or relevant counterfactual. There is no current industry
methodology for quantifying avoided carbon. TENT approaches this challenge by ensuring transparency in our
assessment and a willingness to continue to critically reflect on how these calculations are made, can be justified, and
can be improved. Details of the counterfactual approach are provided in the Methodology and Principles section,
Annex 1.
Data is collected during the due diligence stage of a deal to determine an estimate of avoided carbon over the
lifetime of the asset, accounting where necessary for shifting counterfactuals such as a decarbonising grid. This
estimate is refined throughout the deal process, and then tracked and refined further as necessary during exposure
to the asset. Agreement is sought early on from the O&M or other asset manager to ensure the relevant carbon data
is provided. The alignment of the asset to a recognised energy transition pathway is also assessed. In the UK, the
alignment of assets to the Balanced Pathway from the Climate Change Committee’s 6th Budget is assessed.
The table details how each of the operational assets contributes to the theme of energy transition, through avoided
carbon or renewable energy generation.
LIFETIME AVOIDED
CARBON ESTIMATION
(tCO
2
)
12
AVOIDED CARBON FOR
REPORTING PERIOD
(tCO
2
)
RENEWABLE ENERGY
GENERATION (MWh)
CHP
Harvest
53,000
5,396
N/A
Glasshouse
49,000
7,900
N/A
Spark Steam
23,000
4,802
N/A
Hydroelectric
186,000
8,865
18,965
BESS
Oldham
3,000
-10
N/A
Lighting
LED project
620
158
N/A
Data is for the year ended 31 March 2023, or from the point of acquisition, if the investment was made during the
course of the year.
12. Avoided carbon for the reporting period is based on estimated energy savings from the point of investment.
/
MANAGING WIDER ESG RISK AND OPPORTUNITY
The Company recognises it is important to balance supporting assets which will result in avoided carbon with the
potential wider impacts on environment and society. Failure to take due care could result in unintended negative
impacts as a result of the investment decisions taken by the Company. ESG integration helps to manage this risk and
also identify where improved practice can be implemented to drive positive outcomes for people and planet.
The Investment Manager’s approach to ESG integration is to ensure it is embedded at each stage of the investment
process. Each step of the investment process represents an opportunity to consider how ESG factors may influence
the short and long-term success of a project.
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/
TOPICS OF ASSESSMENT
While the approach to ESG must take into account the
individual nature of the target asset, for example, its size
and type, region, operational environment and stage of
project cycle, there are common measures that can be
systematically applied to calculate the longevity of an
infrastructure asset’s value. For responsible infrastructure
investments, the following areas are considered relevant:
ENVIRONMENTAL
We consider use, generation type, and carbon intensity
of energy, along with water use and its pollution. We also
look at levels of waste generated, avoided and disposed
of approach to raw material sourcing and supply chain
sustainability, and build in impacts on biodiversity and
habitat by understanding management and protection
measures. Carbon analysis is also carried out to
ensure the asset will avoid emissions compared to an
appropriate counterfactual.
SOCIAL
We consider the asset quality and fit with a
more sustainable economy, including relevance/
appropriateness to the locality. We seek reassurance
of good customer and stakeholder relations, including
management of land rights, accessibility, and social
inclusion of access to the asset. We expect strong
management and reporting of health and safety (during
and after build) as well as good labour management.
This includes staff wellbeing, good diversity and inclusion
practices, appropriate training, and presence of fair pay,
including reassurance of the absence of modern slavery.
GOVERNANCE
We scrutinise management, at the level where it is
most material to the success of the asset, to promote
accountability and responsiveness to stakeholders
by addressing issues such as Boards and senior
management, pay structure, ownership and accounting
practices. We also look for evidence of best practice in
approaches to tax policy, management of bribery and
corruption and conflicts of interest.
CLIMATE ANALYSIS
Within initial deal scanning and on-going pre acquisition
due diligence, the Investment Manager considers the
implications of climate change on the long-term value
of the Company. Details on the approach to date in
the management of climate change are captured in our
voluntary reporting under the Task Force on Climate
related Financial Disclosure (TCFD) framework.
OPERATIONAL ESG OUTCOMES:
The following information provides high-level outcomes of the ESG credentials within TENT’s investments.
ENVIRONMENTAL
SOCIAL
GOVERNANCE
ENVIRONMENTAL
INCIDENTS
HEALTH &
SAFETY
INCIDENTS
(RIDDOR/NON-
RIDDOR)
WORKERS
RECEIVE
LIVING WAGE
MODERN
SLAVERY
POLICY IN
PLACE
LOCAL
EMPLOYMENT
APPRENTICE-
SHIPS
H&S POLICY
REVIEW/
AUDIT
6
GENDER
DIVERSITY
OF SPV
DIRECTORS
(% FEMALE)
O&M
CONTRACTORS
REVIEW/AUDIT
CHP Portfolio
Harvest
Non reported
Non
reported
Y
Y
2
0
Y
0
n/a
7
Glasshouse
Non reported
Non
reported
Y
Y
2
1
Y
0
n/a
7
Spark Steam
Non reported
Non
reported
Y
Y
1
0
Y
0
n/a
7
Hydroelectric
Portfolio
0
0/0
Y
N
5
5
0.25
5
Y
(external)
0
Y
BESS Portfolio
Oldham
0
40/4
2
Y
4
Y
0
0
Y
0
Y
Gerrards Cross
0
0/0
Y
4
Y
0
0
Y
0
Y
Lighting
LED Project
1
1
0/2
3
Y
Y
0
0
Y
0
n/a
8
Operational ESG outcomes for each of the Group’s investments. Reporting at the asset level unless stated otherwise.
1.
Broken fluorescent tube
2.
Non Riddor incidents: Incorrect site discharging; fire alarm reset without incident, site lost communication briefly; attempted site break in
3.
Non Riddor incidents: Broken tube fragments falling to floor; computer monitor accidentally damaged
4.
Refers to pay levels within the O&M
5.
Number reported in full time equivalent positions – the TENT O&M contracts represent circa 20% time equivalent of a 25 person workforce and 2 apprentices at the O&M level
6.
Audit reviews conducted internally unless stated otherwise
7.
On-going long-term contract
8.
No maintenance in contract
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The portfolio is regularly reviewed for opportunities
to improve these ESG credentials and look for other
opportunities to create additional social or environmental
opportunities or risk management. The details below
provide further insight on some specific outcomes
linked to particular environmental and social themes, or
particular assets.
TENT is committed to the health and safety of
employees, contractors and the public. Over the period,
the Investment Manager has conducted a two-tiered
audit process to assess the Hydroelectric Portfolio. The
first step consisted of a site visit by the technical adviser
whereby some observations and recommendations were
highlighted. The second step involved a desktop review
by a specialised health and safety consultancy who
confirmed that the observations had been recognised
by the O&M service and were already progressing with
improvements. The consultancy concluded from the audit
that there were no major concerns regarding the current
O&M service and that significant assurance can be taken
that there is no significant or ongoing health and safety
risks. TENT will continue to arrange periodic health and
safety audits and continue to monitor the progress of
corrective actions. The BESS, CHP and LED portfolios
continue to report on health and safety requirements as
per the reporting agreements. The owners carried out
internal H&S audits in the period.
RECOGNISING THE NEED FOR A
RESPONSIBLE SUPPLY CHAIN IN BESS
BESS assets have an important role to providing much-
needed resiliency to an ever more renewable grid. Despite
this positive impact, there are potential ESG risks, in
particular, within the supply chain of BESS assets, that the
Investment Manager has aimed to mitigate: human rights
issues may exist within mineral supply chains, embodied
emissions are significant, and circular end-of-life options
for the assets are not well established. To minimise the risk
of human rights issues in the supply chain, agreements
are in place at the Gerrards Cross site to ensure that
the EPC contractor conducts appropriate supply chain
due diligence to establish supply chain transparency
compliance with the OECD Due Diligence Guidance for
Responsible Supply Chains of Minerals. Additionally, all
battery cells in use avoid the use of the riskiest mineral,
cobalt. This transparency, combined with waste and
emissions data collection for the construction phase of the
assets, will be used to refine a lifecycle carbon assessment
of the assets, to identify emissions hotspots and reduce
embodied emissions for future projects. The Facility
Agreement with the borrower further includes an interest
rate reduction in the period where cells are disposed of, to
fund responsible recycling.
WIDENING THE VALUE OF THE
HYDROELECTRIC PORTFOLIO TO BENEFIT
LOCAL COMMUNITIES
The Hydroelectric Portfolio contributes to local
communities with payments averaging around £42,000
per year. These funds are used to support community
projects including teaching Gaelic in primary schools,
community woodlands preservation, heritage societies,
village upkeep such as updating fire alarms systems
and roof repairs. One particular community has used
the contribution to provide grants to students attending
tertiary education who would otherwise struggle with
considerable travel costs from living in a remote location.
SPV BREAKDOWN OF COMMUNITY
PAYMENTS - FY23
Achnacarry
Phocachain
Luaidhe
CAB
Ladaidh
Elementary
&
/
8
,
4
7
D
38%
15%
8%
12%
20%
7%
/
INVESTMENT MANAGER’S
CREDENTIALS AND APPROACH
The Investment Manager is a purpose-led investor,
committed to responsible investment and aligning the
funds it manages to sustainability themes.
TPIM became signatories to the PRI in 2019 and will
receive their first public star rating in November 2023.
The Investment Manager is also B Corp certified since
December 2022 with a score of 97.6.
Responsibility for the ESG integration strategy sits
with the Head of Sustainability. There are a number
of oversight functions in place to ensure the effective
implementation of ESG by investment teams with the
support of the Sustainability Team.
The Investment Manager operates a Sustainability
Group which consists of senior partners and managers
from across the Investment Manager. This group
meets monthly to discuss sustainability initiatives. The
Sustainability Group is chaired by TPIM’s Co-Managing
Partner; and both Managing Partners sit on the group.
The Sustainable Investment Subgroup (SISG) reports
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to the Sustainability Group. The SISG consists of senior
investment team members from across the Investment
Manager. This SISG meets every eight weeks to share
best practice, latest industry activity and ESG ideas
from across the business. It can also be called to review
an investment opportunity for critical debate should it
present a complex sustainability profile.
During the reporting period, one investment opportunity
was presented to the SISG to discuss more complex
sustainability and responsible investment themes
associated with the opportunity. Based on this review
process, the deal was supported and ultimately
progressed to funding.
The Sustainability Team conducts an annual ESG
monitoring programme to assess the effectiveness of
ESG integration for TENT. The ESG integration policy is
reviewed, including opportunities for development and
evolution. The findings of this audit are presented to the
Sustainability Group for discussion and further action if
appropriate and is also reported to the TENT Board.
The Sustainability Team are also subject to quarterly risk
reviews by the risk team, and any identified sustainability
risks are recorded on the TPIM risk register and on TENT’s
risk register where relevant, which are both reviewed
quarterly by the Investment Manager’s Risk Committee.
The Head of Sustainability also sits on the Risk Committee
to ensure that the Investment Manager’s outlook for risk
appropriately considers sustainability issues.
The Board is actively engaged in discussion in relation
to sustainability risks and opportunities facing portfolio
companies and assets, through information provided by
the investment team and sustainability team, including
deep dives into sustainability integration, engagement,
target setting and performance.
For further details on Investment Manager Governance
processes please refer to page 63.
The transparency of TENT’s sustainability activities
is an important aspect of the Investment Manager’s
commitment. The data provided reflects avoided carbon
and alignment to the energy transition theme and
disclosures in line with a number of external frameworks
and regulations. TENT is not currently required to report
against any of these frameworks, however the Investment
Manager and Board recognise the importance of
structured and comparable sustainability information
for the Group and as such follows a range of reporting
frameworks. These frameworks have their limitations and
challenges in interpretation and the Investment Manager
looks to implement a value-adding approach to TENT
which is not driven solely by frameworks.
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/
REPORTING ALIGNED WITH INDUSTRY FRAMEWORKS
AND BEST PRACTICE
Transparency and enabling fair comparison of sustainability approach and outcome contribute to accountability
and drive improved behaviours. The following section presents TENT’s sustainability activities in relation to a
range of relevant industry frameworks.
INTENDED
APPROACH TO
SUSTAINABLE
DISCLOSURE
REGULATION
(SDR)
1
SUSTAINABLE
FINANCIAL
DISCLOSURE
REGULATION
(SFDR)
4
PRINCIPLES
FOR
RESPONSIBLE
INVESTMENTS
(PRI)
2
TASK FORCE
ON CLIMATE-
RELATED
FINANCIAL
DISCLOSURE
(TCFD)
5
UN
SUSTAINABLE
DEVELOPMENT
GOALS (SDGs)
3
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INTENDED
APPROACH TO THE UK
FCA’S SUSTAINABLE
DISCLOSURE
REGULATION (SDR)
PREDICTED RELEASE
Q3 2023
1
The Investment Manager is monitoring information and guidance emerging
around the FCA’s consultation on Sustainable Disclosure Regulation and
has begun to consider options applicable to TENT. Once the consultation is
finalised the Investment Manager, in consultation with the Board, expects to
apply one of the proposed sustainability labels to the Company. We intend
to apply best practice, wherever possible, ahead of required disclosure
timelines.
The table below demonstrates how the six principles of responsible
investment are implemented by the Investment Manager for TENT
PRINCIPLES
FOR
RESPONSIBLE
INVESTMENTS
(PRI)
2
SIGNATORY OF PRI: PRINCIPLES
FOR RESPONSIBLE INVESTMENT
PRI PRINCIPLE
PRINCIPLE ADOPTION FOR TENT
PRI is recognised as the leading
global network for investors who
are committed to integrating ESG
considerations into their investment
practices and ownership policies. The
principles demonstrate best practice
in ESG integration, guide signatories
in improvements and promote closer
alignment between the objectives of
institutional investors and those of
society at large.
TPIM became a member of PRI
in 2019. The first Assessment
Report period of 2020-2021 was
a fallow reporting year for PRI to
accommodate the launch of a
new reporting and scoring system.
TPIM’s first assessment report will be
published in 2023.
1
We will incorporate ESG issues into investment
analysis and decision-making processes.
ESG analysis is considered by the investment
team and shared in Investment Committee
papers to inform the final investment decision.
2
We will be active owners and incorporate
ESG issues into our ownership policies and
practices.
TPIM is responsible for asset management
of the portfolio and uses initial ESG analysis
to understand how operational control of
the asset can be improved to enhance ESG
behaviours and/or outcomes.
3
We will seek appropriate disclosure on ESG
issues by the entities in which we invest.
ESG topics are investigated in all due diligence
of acquisitions/investments.
ESG topics are monitored through Board
meetings and the ESG engagement
programme and reported on annually.
4
We will promote acceptance and
implementation of the principles within the
investment community.
The value of the principles and importance
of the role of ESG factors in good decision
making are proactively promoted.
5
We will work together to enhance the
effectiveness in implementing the principles.
TENT uses the best practice promoted by
the principles to inform asset optimisation
recommendations.
6
We will each report on our activities towards
implementing the principles.
The Company has committed to reporting
annually on ESG activities.
The Investment Manager reports on
responsible investments activities annually
through the PRI assessment process. The next
and first published assessment report for TPIM
will be in 2023.
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The UN Sustainable Development Goals (SDGs) provide a useful framework
for the energy transition alignment of TENT’s strategy and also provides
a framework through which other environmental and social outcomes
associated with the Company can be considered. The ESG due diligence
analysis carried out for TENT provides the main assessment of potential
negative impacts against SDGs. As the Company matures, we will look to
address an increased number of the potential positive alignments to a wider
set of goals, and how we can maximise our related outcomes. The seventeen
goals adopted in 2015 by 193 nations present a roadmap to end poverty,
promote prosperity and well-being for all and protect the planet.
The following two tables provide detail on how TENT firstly aligns with
the UN SDGs, and secondly how TENT may create negative outcomes if
sustainability risks are not managed.
UN
SUSTAINABLE
DEVELOPMENT
GOALS (SDGs)
3
TENT Alignment with UN SDGs
UN SDG
UN SDG TARGET
HOW TENT CONTRIBUTES TO THIS
GOAL AND TARGET
TENT ASSETS THAT CAN
ALIGN
Affordable &
Clean Energy:
Ensure access to
affordable, reliable,
sustainable and
modern energy
for all
7.2
By 2030, increase
substantially the share of
renewable energy in the
global energy mix
Investing in renewable energy assets
which feed into the electricity grid
contributes to the renewable energy
mix.
Investing in energy storage
technology provides greater supply
consistency, acts as an enabler
to grid decarbonisation and can
contribute to reduced wasted
renewable electricity in the event of
overproduction
Hydroelectric Portfolio
BESS Portfolio
7.3
By 2030, double the global
rate of improvement in
energy efficiency
The CHP Portfolio provide a route
for the efficient use of the fuel burnt,
to provide usable heating solutions
alongside the electricity production.
CHP Portfolio
7.a
By 2030, enhance
international cooperation
to facilitate access to
clean energy research
and technology, including
renewable energy, energy
efficiency and advanced
and cleaner fossil-fuel
technology, and promote
investment in energy
infrastructure and clean
energy technology
The investment strategy of TENT
has been conceived with the express
purpose of contributing to low
carbon, cleaner and energy transition
solutions
All assets
Build resilient
infrastructure,
promote inclusive
and sustainable
industrialisation
and foster
innovation
9.4
By 2030, upgrade
infrastructure and retrofit
industries to make them
sustainable, with increased
resource-use efficiency and
greater adoption of clean
and environmentally sound
technologies and industrial
processes, with all countries
taking action in accordance
with their respective
capabilities
The investment strategy of TENT
has been conceived with the express
purpose of contributing to energy
transition solutions, which can be
applied to existing industry and
infrastructure to reduce their reliance
and use of carbon-based fuels
All assets
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UN SDG
UN SDG TARGET
HOW TENT CONTRIBUTES TO THIS
GOAL AND TARGET
TENT ASSETS THAT CAN
ALIGN
Sustainable Cities
& Communities:
Make cities and
human settlements
inclusive, safe,
resilient and
sustainable
11.6
By 2030, reduce the
adverse per capita
environmental impact of
cities, including by paying
special attention to air
quality and municipal and
other waste management
Clean energy solutions such as the
Hydroelectric Portfolio, reduce the
need for more polluting energy
sources
Lower-carbon solutions such as the
CHP Portfolio, reduce the amount of
energy used for industrial processes
reducing pollution created. Energy
storage contributes to the efficiency
of a decarbonised grid and improves
resilience in the energy system.
Lower energy lighting solutions such
as LED instalment reduces energy
demand and waste.
All assets
Responsible
Consumption
& Production:
Ensure sustainable
consumption
and production
patterns
12.2
By 2030, achieve the
sustainable management
and efficient use of natural
resources
Investing in responsibly managed
and sustainable assets that enable
other manufacturers to improve their
production efficiency contributes to a
reduction in natural resource use.
Seeking best practice in circular
economy production and end of life
in our assets, such as the end of life
and supply chain provisions agreed
within the BESS assets
All assets
Take urgent action
to combat climate
change and its
impacts
13.2
Integrate climate change
measures into national
policies, strategies and
planning
Investing in assets which support
national ambitions to reduce GHGs
in economic activity contributes to
action on climate change.
All assets
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Alongside the thematic alignment of the Company to a number of SDGs (as shown above) there is always the
potential to negatively impact the goals being achieved through unintended consequences. The ESG analysis carried
out on each investment opportunity is intended to minimise negative outcomes and the risks they may bring to the
assets. The table below indicates the most likely areas of negative outcome which the Company and Investment
Manager continually work to minimise.
UN SDG
UN SDG TARGET
WHERE TENT MUST MITIGATE
RISK OF NEGATIVE IMPACT
WHERE THE RISK MAY
APPLY
Gender Equality
5.1
End all forms of
discrimination against
all women and girls
everywhere
The sector has not traditionally had
a high proportion of female workers.
Tent should encourage wherever
possible the potential for female
employment.
All
Decent work and
economic growth
8.7
Take immediate and
effective measures to
eradicate forced labour, end
modern slavery and human
trafficking and secure the
prohibition and elimination
of the worst forms of child
labour
Investing in the assets whose
construction relies on complex supply
chains in jurisdictions where modern
slavery is a higher risk. The manager
recognises the need for greater
understanding of supply chains
and to influence for best practice
wherever possible.
BESS Portfolio
Ensure sustainable
consumption
and production
patterns
12.2
By 2030, achieve the
sustainable management
and efficient use of natural
resources
Infrastructure assets, even those
designed to reduce carbon emissions
can result in natural resource
depletion through their construction
supply chain. Seeking to improve the
quality of supply chain practices can
reduce this impact
All
12.5
By 2030, substantially
reduce waste generation
through prevention,
reduction, recycling and
reuse
At end of life energy infrastructure
should be disposed of with regards
to the environment and with max
levels of recycling and reuse and no
inappropriate disposal
All
Life below water
14.1
By 2025, prevent and
significantly reduce marine
pollution of all kinds, in
particular from land-based
activities, including marine
debris and nutrient pollution
Ensuring our hydro assets have
no unintended impact on the river
aquatic life. Ensuring appropriate
management of water use by CHPs
Hydroelectric Portfolio, CHP
Portfolio
Life on land
15.5
Take urgent and significant
action to reduce the
degradation of natural
habitats, halt the loss of
biodiversity and, by 2020,
protect and prevent the
extinction of threatened
species
Constructing and running energy
infrastructure can degrade the natural
habitat of a site, which must be
considered and mitigated.
Hydroelectric Portfolio, CHP
Portfolio and BESS Portfolio
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SUSTAINABLE
FINANCIAL
DISCLOSURE
REGULATION (SFDR)
4
As an EU framework, disclosure relative to this regulation is voluntary for
TENT. The Investment Manager, as AIFM, has determined, with the Board’s
support, that TENT is subject to Article 8 of the EU Sustainable Finance
Disclosure Regulation (SFDR). Article 8 applies where a financial product
promotes, among other characteristics, environmental or social characteristics,
or a combination of those characteristics, provided that the companies in
which the investments are made follow good governance practices. The full
disclosure is on the website: https://www.tpenergytransition.com/. The table
below presents the indicators and results in line with those sought by SFDR,
including current Level 2 Regulatory Technical Standard requirements. The
Investment Manager, with the Board, will continue to review the implications
of voluntarily reporting against this standard which remain in flux, and new
requirements may be deemed inappropriate for TENT. Data is presented for
the year ended 31 March 2023, or from the point of investment for assets
held for less than 12 months in the portfolio. All energy use and emissions
occur within the UK.
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ADVERSE
SUSTAINABILITY
INDICATOR
METRIC
IMPACT
2021
IMPACT
2022
CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS
Greenhouse gas emissions
GHG emissions
Scope 1 GHG emissions
37,855
37,364
Scope 2 GHG emissions (location-based)
79
270
Scope 2 GHG emissions (market-based)
117
542
Total GHG emissions (Scope 1 & 2)
37,933
37,634
Carbon footprint
Carbon footprint
395
379
Exposure to companies active in the
fossil fuel sector
Share of investments in companies active in
the fossil fuel sector
0%
0%
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
96%
96%
Biodiversity
Activities negatively affecting
biodiversity-sensitive areas
Share of investments in Investee Companies
with sites/operations location in or near to
biodiversity-sensitive areas where activities of
those Investee Companies negatively affect
those areas
0%
0%
Water
Emissions to water
Tonnes of emissions to water generated
by Investee Companies per million GBP
invested, expressed as a weighted average
0
0
Waste
Hazardous waste ratio
Tonnes of hazardous waste generated
by Investee Companies per million GBP
invested, expressed as a weighted average
0
0
SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION AND ANTI-BRIBERY MATTERS
Social and employee
matters
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
n/a
0%
Lack of processes and compliance
mechanisms to monitor compliance
with UN Global Compact principles
and Organisation for Economic
Cooperation and Development
(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
n/a
0%
Board gender diversity
Average ratio of female to male board
members in Investee Companies
n/a
0
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
n/a
0
Investments in companies without
workplace accident prevention
policies
Share of investments in investee companies
without a workplace accident prevention
policy
n/a
0%
Table Note: GHG intensity of Investee Companies and Energy consumption intensity per high impact climate sector
excluded (TENT invests at an asset level, rather than in operational companies where these metrics are relevant), and
unadjusted pay gap excluded (no female employees).
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THE COMPANY’S
PROGRESS TO
DATE ON TCFD
RECOMMENDATIONS
5
INTRODUCTION
This is TENT’s second year of disclosure using the framework of the Task
Force on Climate Related Financial Disclosure (TCFD). This report outlines an
assessment of the Group’s operational climate-related risks and opportunities,
against the four key areas of governance, strategy, risk management, and
metrics and targets. It highlights how these risks and opportunities are being
managed and their short, medium or long-term impact on the Group.
The report has been prepared with reference to TCFD All Sector Guidance and Supplemental Guidance for the
Financial sector. In addition to upcoming UK government requirements, the FCA made it a requirement for listed
businesses to publish disclosures against the TCFD framework on a comply or explain basis from January 2022 and
also many regulated investment management firms are now also required to publish TCFD-aligned climate disclosures
on their website, with effect from January 2023. While not in scope of any of these requirements yet, the Company
has decided to voluntarily produce its second report showing its progress towards TCFD reporting to demonstrate its
support for the disclosures.
RECOMMENDATION
RECOMMENDED DISCLOSURES
PAGES
GOVERNANCE
Disclose the organisation’s governance around
climate-related risks and opportunities.
a. Describe the board’s oversight of climate-related risks and opportunities.
63
b. Describe management’s role in assessing and managing climate-related risks
and opportunities.
64
STRATEGY
Disclose the actual and potential impacts of
climate-related risks and opportunities on
the organisation’s businesses, strategy, and
financial planning where such information is
material.
a. Describe the climate-related risks and opportunities the organisation has
identified over the short, medium, and long term.
66-68
b. Describe the impact of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning.
66-68
c. Describe the resilience of the organisation’s strategy, taking into consideration
different climate-related scenarios, including a 2°C or lower scenario.
68-70
RISK MANAGEMENT
Disclose how the organisation identifies,
assesses, and manages climate-related risks.
a. Describe the organisation’s processes for identifying and assessing climate-
related risks.
64-65
b. Describe the organisation’s processes for managing climate-related risks.
64-65
c. Describe how processes for identifying, assessing, and managing climate-
related risks are integrated into the organisation’s overall risk management.
64-65
METRICS AND TARGETS
Disclose the metrics and targets used to assess
and manage relevant climate-related risks
and opportunities where such information is
material.
a. Disclose the metrics used by the organisation to assess climate-related risks
and opportunities in line with its strategy and risk management process.
71
b. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG)
emissions and the related risks.
71
c. Describe the targets used by the organisation to manage climate-related risks
and opportunities and performance against targets.
71
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GOVERNANCE
•
Describe the board’s oversight of climate-related
risks and opportunities.
•
Describe management’s role in assessing and
managing climate-related risks and opportunities.
The Board holds ultimate responsibility for setting the risk
appetite and for overseeing the management of the risks
including the climate-related risks faced by the Group.
Updates on material climate risks, as defined by the
Board’s risk appetite framework, are provided to the Board
for consideration by the Investment Manager’s risk team,
Head of Sustainability, and investment team. Climate-
related risks are formally captured in the TENT Risk
Register, which is reviewed and updated by the Investment
Manager on a quarterly basis and owned by the Board.
The Board holds the Investment Manager to account
on continued progress in the maturity of the climate
management for the assets and the associated disclosure,
through the course of normal quarterly board reporting.
TENT BOARD
RISK COMMITTEE
RISK TEAM
SUSTAINABILITY
TEAM
INVESTMENT
TEAM
TRIPLE POINT
ENERGY
TRANSITION PLC
TRIPLE POINT
INVESTMENT
MANAGEMENT
COUNTERPARTIES
SUSTAINABLE
INVESTMENT
SUBGROUP
SUSTAINABILITY
GROUP
FINANCIAL
COUNTERPARTIES
OPERATIONS AND
MAINTENANCE
CONTRACTORS
At the Investment Manager level, assessment and
management of climate-related risks and opportunities is
shared across the investment team and the wider TPIM
business through the Risk Committee and dedicated
investment meetings. TPIM’s sustainability and risk teams
co-ordinate these processes.
Pre-investment
During pre-acquisition due diligence, TPIM’s central
sustainability team collaborates with the investment
team to examine potential investments and identify any
significant climate-related risks. Key climate-related risks
and opportunities are assessed using a standardised
process, including scenario analysis, and the results of this
are included in the materials presented to the Investment
Committee. The committee also assesses the timeframe
over which the risks are significant, potential mitigations,
and any opportunities that a specific risk may offer for
other parts of the portfolio. The TENT Board receives
investment committee papers and feeds in its views,
including on climate risks, to the Investment Committee.
The broader structure of Triple Point’s sustainability
governance is detailed in the sustainability report
including the role of the Sustainability Group and
Sustainable Investment Subgroup.
Post-investment
Due to the nature of the investments made by the Group
through its subsidiary, ongoing risk monitoring and
mitigation activities are a collaboration between TPIM’s
investment management team, equity investors, and
Operations & Maintenance providers.
Where equity investments are made and a majority
shareholding exists, TPIM’s investment management
team have direct oversight of the assets and oversee any
necessary mitigation activities. Portfolio managers within
the investment team receive data and updates from the
contractors responsible for the construction or operation
of its assets and engage with them to plan and deliver
mitigation activities, overseen by the Investment Director.
Where debt investments are made, TENT does not
have direct control of the assets and instead focuses on
ensuring that strong data and reporting requirements are
in place so that risks can be monitored on an ongoing
basis. TPIM actively engages with the equity investors on
any issues.
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RISK MANAGEMENT
•
Describe the organisation’s processes for identifying
and assessing climate-related risks.
•
Describe the organisation’s processes for managing
climate-related risks.
•
Describe how processes for identifying, assessing,
and managing climate-related risks are integrated
into the organisation’s overall risk management.
Risk Identification
As an energy transition business, much of the climate-
related transition risk facing the Group is considered
part of its core business risk and forms a major part of
its assumptions around power prices, business models
and future opportunities. A standardised process for
identifying potential climate risks to assets is followed as
part of the Company’s overall ESG framework.
Climate-related risks and opportunities affecting the
Group are formally identified in an annual workshop
between the investment team and sustainability team
within TPIM. This allows for risks and opportunities to
be considered holistically at the portfolio-level, outside
of the ongoing identification and mitigation actions.
During this workshop, risks across physical and transition
categories are considered for all of the asset types
that the Group has exposure to, using forward-looking
analysis to identify risks under future markets, weather
and legislation to determine the likelihood and impact
of each identified. The ability to assess the financial
impact of these risks is also assessed. Given the reliance
of the assets on supply chains, supporting infrastructure
and markets, the value chain for each asset is mapped
out during this session, to allow for risks to be identified
across its entire length. Climate risks identified are
captured in the risk register where the Board also has the
opportunity to review and input.
The process for assessing the significance of each climate
risk facing the Group is aligned to the Group’s overall risk
management framework, on a matrix with a 3-point scale
for both likelihood and impact:
•
Likelihood:
low, moderate, high.
•
Impact:
low, moderate, high.
This alignment allows for integration of the risks into
wider risk management and mitigation processes.
Climate-related risks are reported into TENT’s risk
register which is reviewed during a quarterly portfolio
risk review meeting. This meeting involves members of
the TENT, sustainability and risk teams and the resulting
risk register is reviewed by TPIM’s Risk Team. It is then
reviewed and discussed with the Board and subsequently
approved by the Board.
The period over which each risk first becomes material is
defined as:
•
Short-term:
0-5 years
•
Medium-term:
5-10 years
•
Long-term:
over 10 years
These time scales are aligned to the Group’s overall risk
management framework, considering the nature of the
Group’s assets and liabilities (see page 76). The average
remaining asset lifetime in the portfolio is 25 years,
necessitating a long-term view of the climate risks to the
Group.
The Company further utilises an external provider,
Climate X, to analyse and quantify the risk of physical
damage to its assets resulting from climate change.
Climate X uses high resolution climate models,
combined with a physical model of the Earth’s geology
and hydrology, to determine the risk of physical damage
to assets resulting from acute and chronic changes
in climate. Expected physical damage due to surface
flooding, for example, depend on changing precipitation
patterns, as well as the underlying geology and
hydrology of the asset and its ability to absorb water.
Risks are modelled under different climate scenarios
(aligned to the Net Zero and Current Policies scenarios
described on page 68):
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HAZARDS ASSESSED BY THE
CLIMATE X MODEL:
River Flooding
Subsidence
Heat Stress
Coastal Flooding
Landslides
Storm
Surface Flooding
Coastal Erosion
Droughts & Wildfires
Climate X estimate future value-at-risk, expressed as
expected losses per annum, as a percentage of the total
building reinstatement cost for each asset.
RISK MANAGEMENT
The due diligence processes outlined above effectively
manage the climate-related risk of assets entering the
Group’s portfolio. Where potential risks are identified
pre- or post-acquisition, the Group works with the
counterparties responsible for maintaining its assets
to ensure these are sufficiently monitored and hedged
against.
The strategic diversification of the portfolio across
different technology types, encompassing both
generation and consumption of electricity limits exposure
to any individual risk. Climate-related data collection and
horizon scanning of emerging regulatory requirements
is in place to monitor the exposure to risks such as
carbon pricing and inform a management response if the
likelihood or impact of these risks materially changes.
Strategy
•
Describe the climate-related risks and opportunities
the organisation has identified over the short,
medium and long term.
•
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy and financial planning.
•
Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
Overall, as a UK focused Energy Transition company, the
Company’s business model is fundamentally well aligned
to the energy transition. Nonetheless, different risk and
opportunities are present under different future scenarios
with differing levels of decarbonisation. Scenario analysis
is undertaken to identify the most prominent risks under
different futures – some were sweeping policy changes
that ensure limited warming but entail high transition
risk, and others in which failure to act accelerates
warming and heightens physical risks. The main risks
faced by the Group and the resilience of its strategy to
three different scenarios are assessed below.
Financial impact if risk happens
1
2
3
4
5
Likelihood of risk happening
5
3
4
4
2
3
3
5
6
4
2
1
2
5
TRANSITION
1
Carbon pricing
2
Price cannibalisation
3
Faster than expected deployment of energy storage
4
Introduction of nodal pricing
5
Grid constraints
6
Shortage of raw material for BESS
PHYSICAL
1
Physical damage to assets due to extreme weather
2
Reduce BESS operation under extreme temperatures
3
Increased seasonality of rainfall
4
Increasingly volatile weather patterns
5
Reduced demand for heat
1
1
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TRANSITION RISKS
RISK
1. CARBON PRICING
2. PRICE
CANNIBALISATION
3. RAPID
DEPLOYMENT OF
ENERGY STORAGE
4. INTRODUCTION
OF NODAL PRICING
5. GRID
CONSTRAINTS
6. SHORTAGE OF
RAW MATERIAL FOR
BESS
ASSET TYPE
CHP, BESS
Hydro, BESS
BESS
Portfolio
Portfolio
BESS
TYPE
Policy and Legal
Market
Market
Market
Market
Market
DESCRIPTION
• The CHP Portfolio
emit carbon dioxide
and may be in
scope for future
carbon taxes.
• Carbon pricing
may also affect
the prices of
components used
in the assets,
such as steel and
concrete or BESS
components.
• Carbon pricing
or passed
through costs of
decarbonising
shipping could
increase freight
rates.
• Increasing
renewable
penetration in
the grid is likely
to reduce the
price of electricity,
leading to“price
cannibalisation”.
• The BESS Portfolio
trade on energy
market volatility that
would be reduced
by increased
competition from
additional BESS
capacity.
• Alternative sources
of grid flexibility,
such as demand-
side-response or
smart grids, may
cause market
saturation.
• Currently, Britain
has a single energy
market, but this
could be split into
“Nodes” in the
future, to make
system balancing
more efficient in a
more renewable
grid.
• Nodal pricing
would mean that
TENT's investments
would trade in
different markets,
with different
dynamics.
• Britain’s grid is
designed for
large, centralised
generation.
• As the energy
transition gathers
pace, there are
bottlenecks in the
speed at which grid
connections can be
made and assets
can be developed.
• The BESS
Portfolio require
repowering and cell
replacement during
their lifetime.
• Battery demand is
rapidly increasing
due to the
electrification of
transportation and
BESS rollout.
• This increase in
demand could push
up prices for raw
materials such as
lithium.
• Upstream carbon
pricing could further
increase costs.
FINANCIAL
IMPACT
• As the Group holds
debt in the emitting
assets, it would not
be directly liable for
any future carbon
pricing.
• Carbon pricing at
a sufficient level
could mean that the
counterparty cannot
repay the debt.
• Carbon pricing in
the supply chain
would result in
increased future
capital expenditure
for projects.
• Reduced electricity
prices reduce
revenues for the
Group’s generation
assets.
• This is particularly
the case for the
CHP assets, which
have flat costs
of gas and could
experience a
negative spark
spread, where
the cost of
gas outweighs
the revenue
from electricity
generation.
• Increase in
competition
and decrease in
revenues for BESS
assets as demand
for flexibility is met
by other assets.
• Potential reduction
in revenues for
assets within nodes
with less demand.
• Difficult to forecast
cash flows.
• The lack of grid
connection
availability could
reduce the
supply of eligible
projects, increasing
competition and
increasing prices.
• This could limit the
Company’s ability
to grow and deploy
capital.
• If increased
demand is not met
by an increase in
supply, prices could
rise.
• Repowering costs
could increase, as
cells increase in
cost.
• Potential upside
exists in the
recycling value of
depleted cells.
LIKELIHOOD
Moderate
Moderate
Moderate
High
Moderate
Moderate
IMPACT
Moderate
Low
Low
Low
Low
Low
TIME HORIZON
Short
Medium
Medium
Medium
Short
Long
MITIGATION
AND RESILIENCE
• Short loan length
means exposure is
reduced as Carbon
prices increase.
• The assets currently
hold a small emitter
exemption from the
UK ETS.
• Carbon taxation is
paid by the equity
holder and shared
with the offtaker of
heat.
• For BESS assets,
supply chain carbon
assessments are
conducted.
• Increased
electrification drives
electricity demand
and puts upwards
pressure on prices.
• CHP assets
generate heat as
well as electricity,
diversifying revenue
streams.
• Practically, an
increase in BESS
rollout would likely
be accompanied
by a rollout of
renewables.
• Modelling shows
limited effects of
aggressive BESS
rollout scenarios
and new revenue
streams.
• Geographic
distribution of
assets, spread
across Britain,
diversifying against
the risk.
• May introduce
additional trading
strategies for
flexibility assets.
• The wide mandate
of the Company
allows for
diversification of
this risk, which only
affects generation
assets.
• Global lithium
reserves are high
and an increase
in demand would
likely be met by an
increase in supply.
Current shortages
are attributable to
lack of extraction
and refining
capacity.
• Cell costs only
represent a minority
of total costs for a
BESS project.
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PHYSICAL RISKS
RISK
1. PHYSICAL
DAMAGE TO ASSETS
DUE TO EXTREME
WEATHER
2. REDUCED BESS
OPERATION
UNDER EXTREME
TEMPERATURES
3. INCREASED
SEASONALITY OF
RAINFALL
4. INCREASINGLY
VOLATILE WEATHER
PATTERNS
5. REDUCED
DEMAND FOR HEAT
6. REDUCED
AGRICULTURAL
OUTPUT
SUBSECTOR
Portfolio
BESS
Hydro
Hydro
CHP
CHP
DESCRIPTION
• Increasing
frequency and
severity of
extreme weather
events under
climate change
may damage
TENT’s assets or
their supporting
infrastructure, such
as grid connections
and road access.
• Increased
temperatures have
a number of effects
across the portfolio.
• BESS operation
requires an internal
temperature to
be maintained –
higher external
temperatures
increase the energy
required for cooling
and decrease round
trip efficiency.
• Under an extreme
scenario, increased
temperatures
increase cell
degradation rates
and can increase
fire risk.
• An increase in
the seasonality of
rainflows may lead
to more inconsistent
generation of the
hydro assets across
the year.
• As the hydroelectric
schemes have a
limited capacity,
increases in
seasonality
may lead to a
reduction in overall
generation, as
increases in winter
river flows cannot
compensate for
a reduction in
summer river flows.
• Increasingly volatile
weather patterns
cause fluctuations in
renewable energy
supply and market
volatility.
• An increase in
average ambient
temperatures
could reduce the
amount of heat
required by the
CHP’s agricultural
offtakers.
• Agricultural output
is highly dependent
on weather
conditions. Under
drought, extreme
heat or flooding,
the agricultural
output of the CHP’s
heat offtake could
be significantly
affected.
FINANCIAL
IMPACT
• Increased Capex
costs to repair
damage to the
assets.
• Increased insurance
costs.
• Severed grid
connections may
prevent operation
of assets and
decrease revenue.
• Increased energy
expenditure
to maintain
temperatures.
• Increased Capex to
replace degraded
cells more
frequently.
• Less consistent and
reliable generation
leading to more
unpredictable cash
flows.
• A potential
decrease in overall
generation,
reducing cashf lows.
• This volatility may
affect cash flows for
the Hydroelectric
Portfolio
• Reduced demand
for heat reduces
revenue.
• Decreased output
reduces the
revenues of the
counterparty and
could potentially
lead to a stranded
asset if the
location was no
longer viable
for agricultural
production.
LIKELIHOOD
Low
Low
High
Moderate
Low
Low
IMPACT
Low
Low
Low
Moderate
Low
Low
TIME HORIZON
Medium
Medium
Medium
Long
Long
Long
MITIGATION
AND RESILIENCE
• The Company
utilises third-party
risk modelling
software to assess
the vulnerability
of all of its assets
and predict any
increases in Capex
due to this risk.
• Fire protection
systems in all
BESS units, tested
regularly.
• Insurance against
fire risk.
• Cooling systems
capable of
maintaining a
consistent internal
temperature up
to 40 degrees,
extreme
temperatures
are unlikely to
cause battery
degradation.
• The financial
impacts of this
risk have been
modelled in detail,
and shown to be
marginal.
• The Manager
is introducing
optimisation
projects to manage
flows.
• Electricity is sold
via long-term
Power-purchase
agreements,
reducing exposure
to market volatility.
• Heat production
is one of three
revenue streams
for the CHPs, along
with electricity and
CO2.
• Modelling shows a
limited relationship
between increasing
temperatures and
heat demand.
• Agricultural activity
takes place within
a greenhouse, that
limits exposure
to most types of
extreme weather.
• Options exist for
alternative crops
with different
tolerances to be
grown.
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OPPORTUNITIES
OPPORTUNITY
1. ELECTRIFICATION
2. INCREASED GRID
VOLATILITY
3. INCREASE IN SHARE
PRICE AND LOWER COST
OF CAPITAL
4. INCREASED DEMAND
FOR RENEWABLE
ENERGY
5. INTRODUCTION
OF ADDITIONAL
GOVERNMENT
SUBSIDIES
SUBSECTOR
Portfolio
BESS
Portfolio
Hydros
Portfolio
TYPE
Markets
Markets
Markets
Markets
Markets
DESCRIPTION
• As the energy transition
progresses sectors
such as transportation
and residential heating
will increasingly be
electrified.
• This will significantly
increase demand for
electricity.
• An increasing
proportion of non-
dispatchable renewable
generation on the grid
will cause volatility and
greater fluctuations in
electricity prices.
• Under net zero scenarios
investor demand for
exposure to the energy
transition may increase.
• Corporate demand for
renewable energy is
increasing as companies
set Net Zero targets.
• This has increased prices
for renewable energy
certificates such as
REGOs.
• During the transition
to Net Zero the
government may
introduce new subsidies
as has previously
occurred for renewable
generation.
• Technologies such as
heat pumps or green
hydrogen may be
subsidised.
FINANCIAL
IMPACT
• Increase electrification
increases demand for
electricity and acts to
increase costs.
• This increases revenues
for the assets and
hedges against the risk
of cannibalisation.
• BESS assets trade
energy and benefit from
greater spreads.
• Revenues increase when
volatility is higher.
• The Company may
benefit from an increase
in its share price and
be able to raise growth
capital.
• The Group may be
eligible for green loans
that reduce its cost of
capital.
• Increased revenue from
REGOs.
• Given the wide
investment mandate
of the Company,
investments could be
made in these newly
subsidised sectors.
• An increase in
opportunities with
attractive returns.
LIKELIHOOD
High
High
Moderate
Low
Low
IMPACT
High
Moderate
Low
Low
Moderate
TIME HORIZON
Medium
Medium
Short
Short
Medium
/
SCENARIO ANALYSIS
Scenario analysis was utilised to understand the impact of each of the most significant risks and opportunities
identified under different potential climate outcomes, where relevant quantitative data was available. Climate
scenarios represent possible futures with varying level of responses to, and impacts from, climate change. As part of
the annual climate risk workshop, a range of possible scenarios was discussed and three were ultimately selected,
each with a different balance of physical and transitional risk, all based on the scenarios outlined by the Network for
Greening the Financial System (NGFS):
•
Current Policies:
(3-degrees+): a business-as-usual case, in
which no further climate policies are introduced and emissions
rise until 2080 before falling slowly, leading to significant
warming and high level of physical risk.
•
Net Zero:
(1.4-degrees, orderly): an immediate and ambitious
introduction of climate-related policies, in a globally
coordinated manner across sectors, leading to a rapid decrease
in emissions.
•
Divergent Net Zero:
(1.4-degrees, disorderly): net zero
is achieved by 2050, with higher costs due to divergent
policies across sectors and geographies, and a quicker phase
out of fossil fuels. Decarbonisation is more stringent in the
transportation and building sectors than in the energy and
industrial sectors, due to failure to coordinate action across
sectors, with a higher cost on consumers.
Physical Risks
Transition Risks
Disorderly
Divergent
Net Zero
Too little, too late
Net Zero
Orderly
Current
Policies
Hot house world
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A trade-off between the comparability of scenarios and
the availability of quantitative, sector- or geography-
specific data for modelling financial impacts was noted
during the selection process. For this reason, the
scenarios used draw on a number of additional different
sources:
•
Current Policies:
NGFS Current Policies, IPCC RPC
8.5, UK Met Office 4°C.
•
Net Zero:
NGFS Net Zero, IPCC RPC 2.6, UK Met
Office 1.5°C.
•
Divergent Net Zero:
NGFS Divergent Net Zero,
IPCC RPC 4.5, UK Met Office 1.5°C.
The table below shows the change in the climate metrics utilised under all three scenarios by 2050, as well as the
potential impacts of each risk on selected financial variables. These risks are explored in turn below and the impacts
of each scenario on the Company’s performance is considered.
CLIMATE RISK
FINANCIAL IMPACT
RISK
CURRENT
POLICIES
2050
NET ZERO
2050
DIVERGENT
NET ZERO
2050
CURRENT
POLICIES
2050
NET ZERO
2050
DIVERGENT
NET ZERO
2050
TRANSITION
Carbon Pricing
Carbon Price (OECD +
EU) ($ 2010)
Change in
EBITDA (CHP)
Slightly
Higher
Lower
Much Lower
Price Cannibalisation
Average baseload
power price (%
difference from base-
case)
Change in
revenue (Hydro +
CHP)
Slightly
Lower
Higher
Negligible
Faster than
expected
deployment of
energy storage
Increase in BESS
rollout compared to
base case
Change in gross
margins (BESS)
Higher
Lower
Slightly
Higher
PHYSICAL
Physical damage
to assets due to
climate change
14 modelled physical
hazards
Losses per annum
(% of replacement
value)
Low
Low
Low
Reduced demand
for heat
Change in daily
maximum air
temperature (°C)
Change in
revenue (CHP)
Negligible
Negligible
Negligible
Increased
seasonality of
rainfall
Increase in rainfall
seasonality (%)
Change in
valuation
Higher
Higher
1. CARBON PRICING
The CHP Portfolio generates carbon dioxide emissions
as part of their operation. Carbon pricing is seen as a key
policy lever for limiting emissions and achieving net zero
and, indeed, is already in place in the UK under the UK
Emissions Trading Scheme (UK ETS).
In this scenario analysis, the small emitter exemptions
that the Group’s investments benefit from was removed
and the effect of future carbon prices on the asset’s
profitability was assessed. Carbon prices were modelled
under the NGFS scenarios, which are considered by the
Investment Manager to be unlikely worst-case scenarios,
with real carbon prices reaching c.£600/tCO
2
in real
terms over the investment lifetime in the Divergent Net
Zero scenario.
Carbon pricing at these levels has a significant financial
impact on the CHP Portfolio. The Company believes that
it has sufficient protections in place to mitigate this risk –
most notably the small emitter exemptions for the assets
which are in place for the majority of the asset lifetime,
and the sharing of risk between the different parties
involved.
2. PRICE CANNIBALISATION
Electricity prices are set at any time by the marginal, most
expensive, generator in the market. As more renewables
are rolled out, this is increasingly less likely to be a fossil
fuel powered asset, decreasing electricity prices and
potentially reducing revenue across the market.
To assess this risk, price forecasts for each scenario were
obtained from third party modelling of energy system
dynamics. For the CHPs, correlated changes in the price
of gas under each scenario were also considered, and the
change in revenue under each scenario was assessed.
Impacts differ under all three scenarios but are limited
in each case. In the Current Policies scenario low gas
and carbon prices combine with weaker demand caused
by lower levels of electrification to marginally decrease
prices, while prices increase in the Net Zero scenario
due to strong power demand combined with higher
fuel and carbon costs. Prices remain similar to the base
case in Divergent Net Zero due to the speed of rollout
of renewables, pushing higher marginal cost fossil fuel
generators out of the stack. In all scenarios, changes in
revenues occur at acceptable levels.
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3. RAPID DEPLOYMENT OF ENERGY
STORAGE
The BESS Portfolio trades on energy market volatility
that could be reduced by increased competition from
additional BESS capacity.
To assess this risk, the Company commissioned third
party energy systems modelling to determine the effect
of different BESS rollout scenarios in the UK, assessing
the effect on gross margins. A base case was considered
as a “most likely” view. The Net Zero scenario involved
BESS capacity doubling, while it halves under the Current
Policies scenario. The Divergent Net Zero scenario
maintained a similar level of BESS capacity to the base
case, while increasing renewable capacity.
Impacts to BESS margins under all three scenarios
were limited, having a slight positive effect where BESS
capacity is limited, and a slight negative effect where
BESS capacity is increased. Renewable energy rollout
serves to counter the effect of increased competition,
due to the greater volatility and imbalance pricing.
4. PHYSICAL DAMAGE TO ASSETS DUE TO
EXTREME WEATHER
The Group’s investments are widely distributed
throughout Britain, sometimes in exposed locations, and
are vulnerable to damage from an increasing frequency
of extreme weather events, as well as chronic changes in
weather patterns under future climate scenarios.
Climate X, a third-party climate modelling tool was used
to simulate the effects of future climate change on the
Group’s physical assets, modelling the impacts of hazards
such as storm damage, subsidence, and flooding.
Portfolio-level risks were shown to be low and similar
under all scenarios considered. Most of the risk is derived
from an increase in the likelihood of river flooding and an
increased risk of subsidence and landslides in the more
remote assets within the Hydroelectric Portfolio. The
results of this analysis will be used to assess the assets in
detail and ensure that any necessary mitigation works are
undertaken.
5. INCREASED SEASONALITY OF RAINFALL
Under climate scenarios, rainfall in Scotland is predicted
to become more seasonal, with an increase in winter
rainfall and a corresponding decrease in summer rainfall,
affecting river levels. A potential risk for the portfolio
lies in the potentially non-compensatory nature of this
increase in seasonality, with the limited generation
capacity of the Hydroelectric Portfolio not being able to
capture the additional winter flows to make up for a loss
of summer generation.
To assess this risk, the generation of the assets was
modelled under different seasonality scenarios, with
the impact on revenues subsequently derived. While
no clear data is available under the NGFS scenarios,
Net Zero 2050 was assumed to involve no change in
seasonality, due to the global scale of response limiting
the effects of climate change. Divergent Net Zero was
assumed to result in a slight increase and Current Policies
a significant increase.
Overall, an increase in seasonality of rainfall was shown
to increase generation and revenues, contrary to the
expected pattern. This occurs as there is sufficient
“headroom” in the generation capacity of the assets to
capitalise on greater winter flows, which are responsible
for the majority of the total generation
RESILIENCE OF THE COMPANY’S STRATEGY
Overall, the Company’s strategy is considered to be
resilient to a number of different climate scenarios. In all
cases, the financial impacts of the major risks identified
are considered to be manageable, with sufficient risk
diversification and mitigations in place. The Company
was shown to be most resilient to the Current Policies
“worst case” scenario due to the lack of carbon pricing
and competition from additional energy storage in the
grid, with increased physical impacts of climate change
having little effect on the Group’s investments or, as
is the case for the Hydroelectric Portfolio, potentially
improving performance. Whilst financial impacts
were greater in the Net Zero scenarios due to high
carbon prices and additional energy storage, this was
substantially offset by increased power prices compared
to the Current Policies scenario, as well as the potential
benefits from the climate opportunities identified.
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METRICS AND TARGETS
•
Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its
strategy and risk management process.
•
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
•
Describe the targets used by the organisation to manage climate-related risks and opportunities and
performance against targets.
GHG emissions and non-renewable energy production are currently tracked to understand climate risk and
opportunity exposure. Avoided emissions, energy saved, and renewable energy production are expected to increase
as the Company further capitalises on the available opportunity. The Company also looks to extend the metrics
linked to risk management, taking a forward-looking approach to physical and transition risks and this remains a work
in progress for the strategy.
RISK INDICATORS
Scope 1 emissions
37,634
tCO
2
e
Scope 2 emissions (location-based)
270
tCO
2
e
Scope 2 emissions (market-based)
542
tCO
2
e
Total emissions
37,634
tCO
2
e
Non-renewable energy production
174,530
MWh
OPPORTUNITY INDICATORS
Avoided emissions
27,112
tCO
2
e
Energy saved
8,861
MWh
Renewable energy production
18,965
MWh
The Group targets a wide range of assets that contribute to energy transition and the Investment Manager and Board
believe that TENT’s investments are well-aligned to the energy transition through the resulting avoided carbon. The
Company also recognises the importance of continuing to reduce the emissions intensity of assets and will continue
to track a pathway to Net Zero and will report on reduction in emissions intensity of the assets each year, along
with continued reporting of avoided emissions. The Investment Manager, with the oversight of the Board, has also
conducted extensive analysis to determine its ability to set an overarching Net Zero target, to reduce its emissions
intensity in line with the accepted scientific consensus on reducing global temperature rises to 1.5°c. At this time
there is currently no established methodology, or combination of methodologies, available to show the Net Zero
alignment of the diversified asset base that the Company holds. The Investment Manager will continue to actively
monitor this position for future reporting.
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The Board is committed to promoting the long-term success of the Company whilst conducting business in a fair,
ethical, and transparent manner.
The Board makes every effort to understand the views of the Company’s key stakeholders and to take into
consideration these views as part of its decision-making process. Our key stakeholders are our shareholders, the
Investment Manager, our service providers, the asset-level service counterparties, the investee companies/borrowers
and our lenders. Information on our stakeholder engagement, including how the Board keeps itself informed about
stakeholder’s views and how we take their views into account in decision-making, can be found on pages 74 to 75.
The majority of the key stakeholder groups interface with the Company primarily through the Investment Manager. The
Investment Manager is responsible for communicating stakeholder concerns to the Board, such that they can input on
actions as required.
As an investment company, the Company does not have any employees and conducts its core activities through
third-party service providers. The Board seeks to ensure each service provider has an established track record and
is required to have in place suitable policies and procedures to ensure they maintain high standards of business
conduct, treat shareholders fairly, and employ corporate governance best practice.
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 and forms the Directors’ statement required under section 414CZA of the Act.
The likely consequence of any decision in the long term
The nature of our business means that the Board have to consider the long-term impact of their
decisions, given that the Company’s investments are generally held for the long term.
The Board hold a strategy day annually, which allows for the effectiveness of past decisions to be
assessed and to consider the actions of the Company going forward.
Please refer to the
Investment Objectives
and business model on
pages 20 to 24
The interests of the Company’s employees
As a closed-ended investment company, the Company does not have any employees but maintains
close working relationships with the Investment Manager and Administrator.
Please refer to
stakeholder
engagement section on
pages 74 to 75
The need to foster the Company’s business relationships with suppliers, customers and others
The Company’s primary suppliers are our service providers, principally the Investment Manager and
Administrator. The Board engages regularly with both, as well as at its Board meetings.
Please refer to
stakeholder
engagement section on
pages 74 to 75
The impact of the Company’s operations on the community and the environment
Having a positive environmental impact is central to the Company’s operations, given that its strategy is
to invest in assets, support the transition to a lower carbon economy, and help the UK achieve Net Zero.
Please refer to the
sustainability report on
pages 50 to 54
The desirability of the Company maintaining a reputation for high standards of business conduct
The Directors have a duty to promote the success of the Company for the benefit of shareholders.
As such they are dedicated to ensuring the maintenance of high standards of business conduct and
corporate governance.
Please refer to page
88 of the Corporate
Governance Statement
The need to act fairly as between members of the Company
The Board actively engages with shareholders and considers their interests when setting the Company’s
strategy.
Please refer to
stakeholder
engagement section on
pages 74 to 75
Section 172(1)
Statement
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/
PRINCIPAL DECISIONS
Principal decisions have been defined as those that have a material impact to the Group and its key stakeholders. In
taking these decisions, the Directors considered their duties under section 172 of the Act. Below we describe some of
the principal decisions made by the Board in the year and demonstrate how the Board took account of stakeholders’
interest in making those decisions.
MIGRATION TO THE PREMIUM SEGMENT OF THE MAIN MARKET OF THE LONDON STOCK
EXCHANGE
With effect from 28 October 2022, the Company migrated the trading of its shares to the Premium Segment of the
Main Market of the London Stock Exchange and listed on the FCA’s Official List. In its decision making process, the
Board considered the associated costs of the migration and the expected benefits. The Company’s shareholders,
were the key stakeholder impacted by this decision and the Board gave due consideration to their interests,
concluding that it was in the best interests of the Company and its shareholders, as it would provide the opportunity
to increase the diversity of the shareholder base and improve liquidity of the Company’s shares.
NET ZERO PLANNING
During the year the Board had multiple discussions regarding sustainability and has held workshops with the
Investment Manager and the Carbon Trust to discuss the approach to Net Zero planning and setting targets. In
considering Net Zero planning, the Board considered the interests of shareholders and also the Investee Companies
and Borrowers in which the Group has invested. The decisions made by the Board in respect to Net Zero planning
will directly impact the Investee Companies and Borrowers. The Investment Manager has been continuously engaged
with those key stakeholders to support them in providing data and reporting required by the Company. Further the
Board recognises the ever growing importance of sustainability to its shareholders and therefore considers tracking
progress towards Net Zero to be aligned with shareholder interests.
RISK APPETITE
The Board has an established risk appetite, which was updated during the year, to reflect the updated Investment
Policy and to better align the categories with those in the risk register. In updating the risk appetite, the Board
considered the interests of the shareholders, the Investment Manager and the lenders. The intention of the risk
appetite is to provide guidance to the Investment Manager on what level of risk the Board are comfortable taking
in the pursuit of achieving the Company’s Investment Objective. The risk appetite provides an effective way for the
Board to monitor the Investment Manger’s activity and ensures that the interests of the shareholders are appropriately
protected.
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STAKEHOLDER
SHAREHOLDERS
Why is it important to engage?
Shareholders and their continued support are critical to the continuing existence of the business and delivery
of our long-term strategy.
How have the Investment
Manager/Directors engaged?
The way in which we engage with our shareholders is set out on page 97 of the Corporate Governance Report.
During the year, the Investment Manager met with the majority of existing shareholders as well as prospective
investors. The Chair and the Senior Independent Director met with a number of shareholders following
publication of the Company’s interim results for the period ended 30 September 2022.
What were the key topics of
engagement?
The key topics of discussion included: deployment of capital, frequency of communications with shareholders,
the Company’s share price discount to NAV, the change of the Company’s name and Investment Policy.
What was the feedback
obtained and/or the outcome
of the engagement?
A key piece of feedback received, was that the Company did not communicate regularly enough, about the
progress of the underlying assets in the portfolio, with the market through RNS announcements and other
channels. Following due consideration, the Board approved the publication of the Company’s unaudited NAV
and portfolio update on a quarterly basis.
STAKEHOLDER
INVESTMENT MANAGER
Why is it important to engage?
The Investment Manager is responsible for executing the Investment Objective within the Investment Policy of
the Company.
How have the Investment
Manager/Directors engaged?
The Board maintains regular and open dialogue with the Investment Manager at Board meetings and has
regular contact on operational and investment matters outside of meetings.
The Management Engagement Committee is responsible for conducting periodic reviews of the Investment
Manager.
What were the key topics of
engagement?
A key topic of conversation during the year revolved around the Company’s share price discount to NAV and
the development of a strategy to reduce the discount.
What was the feedback
obtained/and/or the outcome
of the engagement?
In developing a strategy to manage the Company’s share price discount to NAV, it was decided to change the
Company’s name and investment policy to better reflect the nature of the current portfolio of investments and
offer a greater number of opportunities for investment in the future.
Following this change, the Investment Manager has been heavily engaged with shareholders and prospective
investors to promote the Company.
STAKEHOLDER
SERVICE PROVIDERS
Why is it important to engage?
As an externally managed Company, we are reliant on our service providers to conduct our core activities. We
believe that fostering constructive and collaborative relationships with our service providers will assist in the
promotion of the success of the Company.
How have the Investment
Manager/Directors engaged?
The Board maintains regular contact with its service providers, both through Board and Committee meetings,
as well as outside the regular meeting cycle.
The Management Engagement Committee is responsible for conducting periodic reviews of service providers.
What were the key topics of
engagement?
In discussion with the Investment Manager, the Board considered the appointment of a new broker.
What was the feedback
obtained and/or the outcome
of the engagement?
On 24 June 2022, the Company announced the appointment of J.P. Morgan Cazenove as its sole broker. Since
their appointment, J.P. Morgan Cazenove have been highly engaged with shareholders and the Company
have undertaken several activities in an attempt to reduce the Company’s share price discount to NAV.
Stakeholder
Engagement
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STAKEHOLDER
ASSET-LEVEL COUNTERPARTIES
Why is it important to engage?
Asset-level counterparties are an essential stakeholder group and engagement with them is important to
ensure assets are operating safely and effectively.
How have the Investment
Manager/Directors engaged?
The Investment Manager has developed strong working relationships with the asset-level counterparties and
has regular communication with them to ensure the assets are being managed appropriately.
What were the key topics of
engagement?
During the year, the O&M contracts for the Hydroelectric Portfolio were renegotiated.
What was the feedback
obtained and/or the outcome
of the engagement?
The renegotiated contracts ensure that fair working mechanisms between the operator and the owner are
embedded in the contract, as well as providing visibility and business continuity to the operator who has since
hired more personnel.
STAKEHOLDER
INVESTEE COMPANIES/BORROWERS
Why is it important to engage?
Investee companies and borrowers are companies in which TENT Holdings has invested either by debt or
equity. They are an essential stakeholder and engagement with them, particularly the individuals responsible
for their operations, is important to ensure the maintenance and performance of each investee company.
How have the Investment
Manager/Directors engaged?
The Investment Manager holds Board positions on the Hydroelectric Portfolio.
Each investee company and borrower have certain reporting obligations to the Group.
What were the key topics of
engagement?
The Investment Manager engaged with the boards and senior management of the investee companies to
discuss the relationship going forward, including frequency of reporting.
What was the feedback
obtained and/or the outcome
of the engagement?
During the year the Investment Manager has renegotiated the reporting requirements and information
disclosure with the Hydroelectric Portfolio O&M contractors and the borrowers, specifically requiring reporting
on ESG KPIs.
STAKEHOLDER
LENDERS
Why is it important to engage?
The lenders provide an essential source of finance for the Group, allowing it to pursue investment
opportunities.
How have the Investment
Manager/Directors engaged?
The Investment Manager provides reporting to the Lender on covenant compliance and communicates with
them as required.
What were the key topics of
engagement?
During the year the Group, via the Investment Manager, negotiated an extension of its existing £40 million
RCF with TP Leasing Limited.
What was the feedback
obtained and/or the outcome
of the engagement?
The £40 million RCF was successfully extended to 28 March 2025 on advantageous terms including a very
competitive annual coupon despite a rising interest rate environment.
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The Board and the Investment Manager recognise that
risk is inherent in the operation of the Company and are
committed to effective risk management to ensure that
shareholder value is protected and maximised.
As an externally managed investment company, the
Company outsources key services to the Investment
Manager and other service providers and relies on
their systems and controls. The Board has ultimate
responsibility for oversight of risk management and
internal controls within the Company. The Board sets the
risk appetite for the Company, and reviewed and updated
it in the year. The Investment Manager presents the
Company’s top risks, changes since the previous quarter,
risks outside of appetite and emerging risks to the Board
on a quarterly basis for their review. The Board assesses
and challenges the effectiveness of the Investment
Manager’s risk management against the risk appetite and
controls to manage risks within that appetite, particularly
those which would threaten its business model, future
performance, solvency, valuation, liquidity or reputation.
Further details of the Board’s activities relating to risk can
be found on pages 76 to 82.
The Investment Manager has responsibility for
identifying potential risks at an early stage, escalating
risks or changes to risk, and relevant considerations and
implementing appropriate mitigations which are recorded
in the Group’s risk register. Where relevant the financial
model is stress tested to assess the potential impact
of certain risks against the likelihood of occurrence.
In assessing risks, both internal controls and external
factors that could mitigate the risk are considered. A post
mitigation risk score is then determined for each principal
risk. The Group’s detailed risk register identifying risks
and controls to mitigate their potential impact and/or
likelihood is maintained by the Investment Manager, and
subject to an annual review by the Board.
/
RISK APPETITE
Managing risk is fundamental to the delivery of the
Company’s strategy, and this is achieved by defining risk
appetite and managing risks within that appetite. Risk
appetite is the level of risk the Company is willing to
take to achieve its strategic objectives. The Board has
defined its risk appetite using a category of risks inherent
to the environment in which the Company operates.
This enables the actual risks which are identified by the
Investment Manager to be compared to the defined
appetite, to identify where any additional mitigation
activity is required. The Company manages its risks
within the tolerance set. Any risks outside of appetite are
subject to additional oversight and action planning.
The Board has reviewed the Company’s appetite for
each of the principal risks set out below. The Company
seeks to take risk in executing its strategy and in line with
its Investment Policy. The Company’s risk management
framework is designed to manage rather than eliminate
the risk of failure to achieve objectives and breaches of
risk appetite.
The Board reviews and monitors the Company’s risk
appetite on, at least, an annual basis to ensure that it
remains appropriate and consistent with the Investment
Policy.
Risk
Management
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PRINCIPAL RISKS AND UNCERTAINTIES
The table below sets out what we believe to be the principal risks and uncertainties facing the Group. The table
does not cover all of the risks that the Group may face. The Board defines the Group’s risk appetite, enabling the
Group, in both quantitative and qualitative terms, to judge the level of risk it is prepared to take in achieving its
overall objectives. Additional risks and uncertainties not presently known to management or deemed to be less
material at the date of this report may also have an adverse effect on the Group.
Risk Impact
High
Moderate
to High
Moderate
3, 4, 5, 6,
7, 8, 9
1, 2
Low to
Moderate
10, 11
Low
Low
Low to
Moderate
Moderate
Moderate
to High
High
Likelihood
Risk
1
Introduction of/ amendment to laws, regulations/ technology
2
Ability to raise additional equity
3
Weather changes
4
Investments are concentrated in a particular technology
5
Exposure to power prices and risk to hedging power prices
6
The valuation of investments is subject to uncertainties
7
Counterparties ability to make contractual payments
8
Target returns are not met
9
Supply chain
10
Ability to raise debt on acceptable terms
11
Reliance on the Investment Manager
1. INTRODUCTION OF, OR AMENDMENT TO LAWS, REGULATIONS, OR TECHNOLOGY (ESPECIALLY IN RELATION TO CLIMATE CHANGE)
RISK DESCRIPTION
RISK IMPACT
MITIGATION
POST MITIGATION
IMPACT
A technological or regulatory change
could occur which could have the
effect of rendering an investment
in which the Group has invested
obsolete or materially change the
way in which a service or product is
delivered or alter the return profile of
an investment.
In addition, environmental regulators
may seek to impose injunctions or
other sanctions on an investment’s
operation due to changes in laws
or regulations that may have a
material adverse effect on its financial
condition. Carbon pricing is a
particular risk.
The future legislative prohibition or
tax of particular fuels (such as natural
gas) or as a result of technological
innovation or otherwise by changes
to law and regulation that renders an
investment obsolete could threaten
the profitability of such an investment,
in particular due to the financing
projections that are dependent on an
extended project life. If such a change
were to occur, these assets would
have very few alternative uses should
they become obsolete.
As part of the Group’s acquisition
process, the Investment Manager
conducts a thorough due diligence
process on all projects that
takes account of the technology,
regulatory environment, potential
future regulatory changes and the
robustness of any Government
subsidy.
In particular, the Group considers how
to manage the risk of carbon pricing
through using carbon price forecasts
and offsetting carbon cost risk to
off-takers where possible. The Group
monitors government guidance and
is looking to build the portfolio in line
with this guidance. See the Company’s
reporting toward TCFD on pages 62
to 71 for further detail.
The Group’s Investment Strategy
focuses on a diverse range of assets
across various energy transition sub-
sectors, which reduces the impact on
the Group should any such changes
impact any one sector. As a result, the
Group is not impacted by the recent
Electricity Generation Levy.
Moderate
POST MITIGATION
LIKELIHOOD
Moderate to High
CHANGE IN
YEAR
Stable
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2. ABILITY TO RAISE ADDITIONAL EQUITY
RISK DESCRIPTION
RISK IMPACT
MITIGATION
POST MITIGATION
IMPACT
Ability to raise additional equity, may
limit the Group’s ability to achieve its
Investment Objective.
It may be difficult to raise further
equity given that the share price has
been trading below NAV for some
time, as part of a broader market
background where most other
investment trusts in energy are also
trading at a discount.
Without sufficient funding, the Group
will be unable to pursue suitable
investments in line with its Investment
Policy.
The Board has been closely
monitoring the Company’s share price
discount to NAV and liquidity and is
keeping options for managing the
discount and liquidity under review.
The Company has increased the
frequency of its communications with
investors, for example by publishing
unaudited quarterly NAV and portfolio
updates.
The Company has delivered a fully
covered dividend for the year ended
31 March 2023, demonstrating the
quality of the portfolio to potential
equity investors.
Moderate
POST MITIGATION
LIKELIHOOD
Moderate to High
CHANGE IN
YEAR
Stable
3. WEATHER CHANGES
RISK DESCRIPTION
RISK IMPACT
MITIGATION
POST MITIGATION
IMPACT
Hydro, solar, wind or other renewable
production levels may be lower than
forecast or more drastic as a result of
climate change
This would affect their ability to
perform as well as expected, causing
detriment to the revenues and Net
Asset Value of the Group.
The Investment Manager is
introducing optimisation projects in
the Hydroelectric Portfolio; installing
log barriers to expand the pooling
storage of the water, so that there is a
greater amount in reserve to cater for
lower rain levels or to capture excess
rainfall.
Energy forecasts take into account
predicted changes in energy resource.
The Company utilises an external
provider, Climate X, to analyse and
quantify the risk of physical damage
to its assets resulting from climate
change.
Moderate
POST MITIGATION
LIKELIHOOD
Moderate
CHANGE IN
YEAR
New
4. INVESTMENTS ARE CONCENTRATED IN A PARTICULAR TECHNOLOGY
RISK DESCRIPTION
RISK IMPACT
MITIGATION
POST MITIGATION
IMPACT
The Group’s performance may be
negatively impacted if its portfolio
is overly concentrated in any one
technology type.
Different technologies are at
risk of poor operational and
financial performance in the event
of mechanical breakdown, or
obsolescence caused by disruptive
technologies. This would affect their
ability to perform as well as expected,
causing detriment to the revenues and
Net Asset Value of the Group.
The Group’s portfolio is being built up
in phases with technology exposure
being monitored and a variety
of technologies in its investment
pipeline.
The technologies that TENT invests
in are proven technologies, with
established operating track records.
Further diversification has been
achieved during the year ended 31
March 2023, with the addition of
two technologies into the portfolio
bringing the total to five technology
types.
Moderate
POST MITIGATION
LIKELIHOOD
Moderate
CHANGE IN
YEAR
Stable
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5. EXPOSURE TO POWER PRICES AND RISK TO HEDGING POWER PRICES
RISK DESCRIPTION
RISK IMPACT
MITIGATION
POST MITIGATION
IMPACT
The Group makes investments
in projects and concessions with
revenue exposure to power prices.
The market price of electricity is
volatile and is affected by a variety
of factors, including market demand
for electricity, the generation mix of
power plants, government support for
various forms of power generation,
as well as fluctuations in the market
prices of commodities and foreign
exchange.
Changes in market demand for
electricity, including changes in
consumer demand patterns, could
have a material adverse effect on the
Company’s profitability, the Net Asset
Value, the Company’s earnings and
returns to shareholders.
To the extent that the Group enters
into contracts to fix the price that it
receives on the electricity generated
or enters into derivatives with a view
to hedging against fluctuations in
power prices, the Group will be
exposed to risk related to delivering
an amount of electricity over a specific
period. If there are periods of non-
production the Group may need
to pay the difference between the
price it has sold the power at and the
market price at that time.
The Company targets Energy
Transition projects where a significant
portion of revenues are set by long-
term contracts with an end user and/
or off-taker, to mitigate the volatility
of commodity prices. Alternatively,
the company may invest through debt
structures, with the equity sponsor
taking the primary exposure to
commodity prices.
In addition, the Group believe that the
transition to a lower carbon economy,
increased usage of smart grids and
residential participation in renewable
energy generation should all positively
impact demand levels and patterns for
electricity.
The Group aims to spread credit risk
by putting in place PPAs with a range
of different counterparties.
Moderate
POST MITIGATION
LIKELIHOOD
Moderate
CHANGE IN
YEAR
Stable
6. THE VALUATION OF INVESTMENTS IS SUBJECT TO UNCERTAINTIES
RISK DESCRIPTION
RISK IMPACT
MITIGATION
POST MITIGATION
IMPACT
The valuation of assets is inherently
subjective leading to uncertainty
about how projects are valued from
period to period. These uncertainties
arise from project valuation
assumptions and as well as macro-
economic factors, such as inflation
and interest rates, which feed into
operating assumptions and discount
rates, with higher discount rates
leading to lower Net Asset Values.
Changes in values attributed to
investments during each quarter may
result in volatility in the Net Asset
Values that the Group reports from
period to period.
The Investment Manager is
responsible for carrying out the fair
market valuation of the Group’s
investments, but the Group engages
external independent valuers to assess
the validity of these valuations, with
quarterly reviews and annual audits.
Valuations are prepared using external
market benchmarks and externally-
sourced power market curves from
reputable providers or a blend from
more than one. The fair valuation
of investments is calculated in
accordance with IPEV (International
Private Equity and Venture Capital)
valuation guidelines.
Moderate
POST MITIGATION
LIKELIHOOD
Moderate
CHANGE IN
YEAR
Stable
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7. COUNTERPARTIES’ ABILITY TO MAKE CONTRACTUAL PAYMENTS
RISK DESCRIPTION
RISK IMPACT
MITIGATION
POST MITIGATION
IMPACT
The Group’s revenue derives from
the investments in the portfolio, and
the Group is exposed to the financial
strength of the counterparties to such
projects and their ability to meet their
contractual payment obligations.
The failure by a counterparty to pay
the contractual payments due, or the
early termination of an investment due
to insolvency, may materially affect
the value of the portfolio and could
have a material adverse effect on the
performance of the Group, the Net
Asset Value, the Group’s earnings and
returns to shareholders.
As part of the Group’s acquisition
process, the Investment Manager
conducts a thorough due diligence
process on all projects that includes a
credit check on counterparties.
The Investment Manager will look
to build in suitable mechanisms to
protect the Group’s income stream
from the relevant investment, which
may include parent guarantees and
liquidated damages payments on
termination.
Following asset acquisitions, the
Investment Manager puts in place,
and follows, an ongoing management
plan tailored to the specific asset.
The Group’s exposure to defaults may
be further mitigated by contracting
with counterparties who are public
sector or quasi-public sector bodies
or who are able to draw upon
government subsidies to partly fund
contractual payments.
Moderate
POST MITIGATION
LIKELIHOOD
Moderate
CHANGE IN
YEAR
Stable
8. TARGET RETURNS ARE NOT MET
RISK DESCRIPTION
RISK IMPACT
MITIGATION
POST MITIGATION
IMPACT
The Group’s targeted returns are
targets only, based on estimates and
assumptions which are subject to
significant uncertainties, including
competitive market pricing being
lower than targeted returns, and
actual returns may be materially lower
than targeted returns.
Generating returns which are lower
than the targeted returns would
probably affect the share price of
the Company, which would affect its
ability to raise further finance.
There are regular reviews of the
investment environment, competition,
the pipeline, the portfolio, and future
cash flow focused on monitoring the
Group’s returns. The Group has the
flexibility to structure investments to
be as competitive as possible through
the overall terms of a funding solution
rather than just on price.
In addition, the Group’s Revolving
Credit Facility has given the Group
access to funding with a cheaper cost
of capital which should help towards
achieving its target returns.
The Group’s average pipeline
return is 9%, with a broad range
of opportunities across a range of
sectors, asset classes and return
profiles. The ability to reinvest capital
into higher returning opportunities
should help towards achieving its
target returns.
Moderate
POST MITIGATION
LIKELIHOOD
Moderate
CHANGE IN
YEAR
Stable
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9. SUPPLY CHAIN
RISK DESCRIPTION
RISK IMPACT
MITIGATION
POST MITIGATION
IMPACT
Increases in the costs of
raw materials and shipping
increase the overall supply
chain costs.
High demand for energy
transition assets increases
the length of time taken to
receive key items.
Delays to delivery of key items required for
the construction of energy transition assets
can result in delays to projects being funded
by the Group, therefore impacting returns.
Long lead time items, such as with BESS
assets, are typically secured through
deposit payments, with penalties
for delays passed onto contractual
counterparties, therefore limiting the
impact on the Group.
Alternative methods for sourcing raw
materials are being developed, which will
ease supply chain pressures over time.
With the exception of the BESS Portfolio,
this risk has a limited impact on the
remainder of the portfolio given the
operational nature of assets.
Spare parts strategies have been
established to limit the impact of supply
chain issues for each of the respective
investments.
Moderate
POST MITIGATION
LIKELIHOOD
Moderate
CHANGE IN
YEAR
New
1O. ABILITY TO RAISE DEBT ON ACCEPTABLE TERMS
RISK DESCRIPTION
RISK IMPACT
MITIGATION
POST MITIGATION
IMPACT
Ability to raise debt on
acceptable terms, may
limit the Group’s ability to
deliver the target returns
and dividend coverage.
Should debt not be available at the terms
assumed in the financial model, TENT may
be unable to meet the total NAV return
target and/or may reduce dividend cover.
The Company, through its wholly owned
subsidiary, TENT Holdings, successfully
extended its existing £40 million RCF
to 28 March 2025 on acceptable terms.
This provides funding for the Group to
invest into the BESS Portfolio and allow
it to reinvest the capital recycled into
an attractive pipeline of opportunities
above the current blended return of the
portfolio.
Moderate to High
POST MITIGATION
LIKELIHOOD
Low to Moderate
CHANGE IN
YEAR
Decrease
11. RELIANCE ON THE INVESTMENT MANAGER
RISK DESCRIPTION
RISK IMPACT
MITIGATION
POST MITIGATION
IMPACT
The Group relies on the
Investment Manager’s
services and its reputation
in the energy and
infrastructure market.
As a result, the Group’s
performance will, to a
large extent, depend on
the Investment Manager’s
abilities in the energy
transition market.
The performance of the Group depends, in part,
on the ability of the Investment Manager to
provide competent and efficient services to the
Group.
The departure of any of the key personnel of
the Investment Manager without adequate
replacement may also have a material adverse
effect on the Group’s performance. In addition, if
any such personnel were to do anything or were
alleged to have done something that may be
the subject of public criticism or other negative
publicity or may lead to investigation, litigation
or sanction, this may have an adverse impact on
the Group and its reputation by association.
Termination of the Investment Management
Agreement would severely affect the Group’s
ability to effectively manage its operations and
may have a negative impact on the share price
of the Company.
Unless there is a default, either
party may terminate the Investment
Management Agreement by giving not
less than 12 months’ written notice,
such notice not being served before
the fourth anniversary of the date of
Admission (which was October 2020).
The Board regularly reviews and
monitors the Investment Manager’s
performance. In addition, the Board
meets regularly with the Investment
Manager to ensure that we maintain a
positive working relationship.
The key personnel of the Investment
Manager are subject to a six-month
notice period which would provide
sufficient time for the Investment
Manager to find a suitable replacement
with relevant industry experience.
Moderate to High
POST MITIGATION
LIKELIHOOD
Low to Moderate
CHANGE IN
YEAR
Decrease
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Since the last Annual Report, the following risks have been removed from the Principal Risks table:
•
Significant abortive costs in terms of financial cost and time
•
Geopolitical
Each of these risks are still being actively managed through our risk management process.
The risk of ability to raise additional finance has been broken out into ability to raise debt on acceptable terms and
ability to raise additional equity.
/
EMERGING RISKS
Emerging risks are characterised by a degree of
uncertainty and the Investment Manager and the Board
consider new and emerging risks every six months,
the risk register is then updated to include these
considerations.
The Board have recognised climate change as a risk
since fund inception and where known risks have been
identified, and considered material, they enter the risk
register, and in some cases the principal risk register, as
is the case, for example, with carbon pricing and weather
effects. Our inclusion of climate change in emerging risks
is recognition of the continued uncertainty which exists
on the severity of physical climate change and the scale
and nature of political action to counter it.
CLIMATE CHANGE
Scientific knowledge continues to develop and the
latest Intergovernmental Panel on Climate Change’s
(IPCC) sixth assessment report, published in March 2023,
confirmed that latest data indicates remaining within a
1.5 degree world is unlikely to be achievable, and that
staying within a 4 degree world is the more realistic
target still requiring urgent and significant action to
be achieved. In the face of this latest insight, we see
increasing risk of laws and/or regulation being introduced
with the purpose of driving a transition to lower carbon
emissions which may impact a given asset’s activities.
Assets are also at increased risk from physical climate
risks resulting from the more turbulent and unpredictable
weather and environmental conditions, caused by a
warming climate.
TRANSITION RISKS
The risk that results from changing policies, practices and
technologies that arise as countries and societies work
to decrease their reliance on carbon. In the near and
medium term, transition risks to portfolio investments
may arise from any unexpected changes to existing
government policies. This could have a negative impact
on the valuation of the Group’s portfolio. For the top-
rated transition risks please refer back to the progress
report under the Task Force on Climate-related Financial
Disclosures framework.
PHYSICAL EFFECTS OF CLIMATE CHANGE
While efforts to mitigate climate change continue to
progress, the physical impacts are already emerging in the
form of changing weather patterns. For example, 2022
saw both heatwaves and flash flooding throughout the
UK and Europe. We assess for ten major extreme weather
events: flooding (river, coastal, surface), subsidence,
landslides, coastal erosion, heat stress, storm, droughts
and wildfires, which may potentially impair the operations
of existing and future portfolio companies at certain
locations or impacting locations of companies within
their supply chain. The Investment Manager now uses
a specialist external data platform to identify predicted
physical risk exposure (ten major physical risks) for
TENT’s investments, or future prospective assets, in a
<1.5- and 3-degree warming environment. For the top-
rated physical risks please refer back to the progress
report under the Task Force on Climate-related Financial
Disclosures framework.
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/
GOING CONCERN
The Directors have adopted the going concern
basis in preparing the Annual Report for the year
ended 31 March 2023. In reaching this conclusion,
the Directors have considered the liquidity of the
Company’s portfolio of investments as well as its cash
position, income and expenditure commitments, until
September 2024.
The Group’s business activities, together with
the factors likely to affect its future development,
performance and position, are set out in the Investment
Manager’s Report. The Group faces a number of risks
and uncertainties, as set out in the Strategic Report. The
financial risk management objectives and policies of
the Group, including exposure to credit risk, price risk
and market risk are disclosed in Note 17 to the financial
statements.
The Group continues to meet day to day liquidity needs
through its cash resources.
As at 31 March 2023, the Company had net assets of
£99.4 million including cash balances of £9.3 million.
The Company’s sole wholly owned subsidiary, TENT
Holdings, has a £40 million RCF which is undrawn and
a £2 million cash balance which, on a Group basis, offer
sufficient cash flow to meet the Company’s obligations,
including investment commitments of £44.4 million, as
they fall due. The covenants on the RCF are limited to
gearing and interest cover and the Group is expecting
to comply with these covenants on drawdown and in
future periods. The Company acknowledges the current
trend of rising interest rates, and while the Group’s
Revolving Credit Facility (RCF) interest rate is fixed until
March 2025, there is a possibility of future increases. As
part of the assessment of its ongoing operations and
viability, the Group has analysed the potential impact of
such a scenario. The findings indicate that the Company
would continue to operate as a going concern and
maintain ample liquidity.
The Group’s investment portfolio consists of fixed-
rate debt investments, with most of these investments
having contractual maturities between 2031 and 2035.
Additionally, the Group has the Hydroelectric Portfolio,
which is fully operational and has an economic lifespan
of over 30 years. As a result, the Group benefits from
long-term contractual cash flows and a set of risks that
can be identified and assessed. The loan investments
contribute a fixed return, and the Hydroelectric Portfolio
benefits from upward only RPI linked revenue flow
under a UK government scheme. The Hydroelectric
Portfolio also benefits from fixed price PPAs, with
institutional counterparties, for the next financial year.
Forecast revenues thereafter are subject to wholesale
power prices, the levels of which are based upon
qualified independent forecasts.
The Group’s cash outflows encompass operational
expenses, debt servicing, dividend payments, and costs
associated with acquiring new assets. These outflows
are anticipated to be covered by the Group’s current
cash reserves and cash generated from its operations.
The Company actively monitors its cash obligations on
a regular basis to ensure it maintains adequate liquidity.
The war in Ukraine continues into 2023 and the impact
of sanctions placed on Russia aimed to weaken the
Russian economy have had considerable impact on its
affiliated countries during the year. Although sanctions
are a foreign policy tool deployed in several contexts,
the coordinated sanctions on Russia are significant
to the global economy due to the size of the Russian
economy. The Company does not have any direct
exposure to Russia and no assets located in nearby
jurisdictions, however we, the Company, continues
to monitor the macroeconomic consequences on
the investment portfolio closely, including energy
price volatility, increase risk of political intervention to
regulate prices, change in inflation, taxes and further
sanctions. The Directors do not consider that the effects
of the conflict have created a material uncertainty over
the assessment of the Company as a going concern.
Going Concern and
Viability Statement
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On the basis of this review, and after making due
enquiries, the Directors have a reasonable expectation
that the Company has adequate resources to continue in
operational existence for at least 12 months from the date
of approval of this report. Accordingly, they continue to
adopt the going concern basis in preparing the financial
statements.
VIABILITY STATEMENT
The Directors have assessed the viability of the Group
over a five-year period to March 2028.
In making this statement the Directors have considered
the resilience of the Group, taking account of its current
position, the principal risks facing the business (especially
the level of future energy prices and our counterparties’
ability to make contractual payments), in severe but
plausible downside scenarios and the effectiveness of any
mitigating actions.
The Directors have determined that the five-year period
to March 2028 is an appropriate period over which to
provide this viability statement as this period accords
with the Group’s business planning exercises and is
appropriate for the investments owned by the Group. The
Group’s risk management processes, described in the Risk
Management section, consider the key risks during this
five-year period and beyond. These include sustainability-
related risks that take into account ESG considerations,
including the physical and transition risks of climate
change (in line with the recommendations of the Task
Force on Climate-related Financial Disclosures (“TCFD”)).
The viability analysis has been prepared on the
assumption that the Group’s investments comprise fixed
rate debt investments and a portfolio of hydroelectric
assets which are fully operational with economic lives well
in excess of the period being considered. As a result, the
Group benefits from long-term cash flows and a set of
risks that can be identified and assessed. Over the next
five years, the loan investments contribute a fixed return,
and the Hydroelectric Portfolio contributes returns based
on its upward only RPI linked revenue flow under a UK
government-backed arrangement. The Hydroelectric
Portfolio also benefits from fixed price PPAs, with
institutional counterparties, for the next year. Forecast
revenues thereafter are subject to wholesale power prices
whose levels are based upon qualified independent
forecasts. The projects are each supported by detailed
financial models.
The Directors believe that portfolio diversification of asset
classes across the energy transition landscape with fixed
rate debt in multiple technologies and equity investments
in hydroelectric assets helps to withstand and mitigate
risks it is most likely to meet.
The Investment Manager prepares and considers, and the
Board reviews, summary cash flow projections bi-annually
as part of management reporting, business planning and
dividend approval processes. The projections consider
cash balances, key covenants and limits, dividend cover,
investment policy compliance and other key financial
indicators over the five-year period.
These projections are based on the Investment Manager’s
expectations of future asset performance, income and
costs, and are consistent with the methodology applied
to produce the valuation of the investments.
In the viability assessment, the Company has thoroughly
evaluated its capacity to sustain operations in various
challenging scenarios. These scenarios include a
potential decrease in income and an increase in Group
expenditure, higher interest rates and even an extreme
scenario involving a substantial valuation write-down. The
assessment has confirmed that both the Company and
the Group would remain viable, fulfilling all obligations,
while also maintaining adequate liquidity and (except in
the extreme scenario where a waiver would be necessary)
meeting the covenant conditions associated with the RCF.
The Directors continue to encourage the Investment
Manager to ensure that the portfolio of investments is
able to operate as effectively as possible. The Investment
Manager has performed downside risk scenario planning
encompassing a range of potential outcomes including a
breakeven scenario where the model is stressed to failure,
illustrating a highly unlikely outcome. The other downside
scenarios demonstrate that whilst profitability may be
adversely affected, the Company and its investments are
expected to remain viable.
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Based on this review, the Directors confirm that they have
a reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they fall
due over the five-year period to March 2028.
/
BOARD APPROVAL OF THE
STRATEGIC REPORT
The Strategic Report has been approved by the Board of
Directors and signed on its behalf by the Chair.
John Roberts
Chair
16 June 2023
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2023 Annual Report
Governance
Triple Point Energy Transition plc
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Chair’s Introduction
conflicts of interest and bribery and corruption. I am
pleased with the good governance to date. I will continue
to provide leadership and will build upon the standards
that have already been implemented. In this section of
the annual report, we report on our compliance with the
principles of corporate governance and highlight the key
governance events which have taken place in the year.
/
STATEMENT OF COMPLIANCE
The Board has considered the Principles and Provisions
of the AIC Code of Corporate Governance (“AIC Code”).
The AIC Code addresses the Principles and Provisions
set out in the UK Corporate Governance Code (the “UK
Code”), as well as setting out additional Provisions on
issues that are of specific relevance to Triple Point Energy
Transition plc.
The Board considers that, as an investment company,
reporting against the Principles and Provisions of the
AIC Code, which has been endorsed by the Financial
Reporting Council, provides more relevant information to
shareholders, than the UK Code. The Company has fully
complied with the Principles and Provisions of the AIC
Code or otherwise explained non-compliance below. The
AIC Code is available on the AIC website (www.theaic.
co.uk). It includes an explanation of how the AIC Code
adapts the Principles and Provisions set out in the UK
Code to make them relevant for investment companies.
On behalf of the Board:
John Roberts
Chair
16 June 2023
I am pleased to introduce the corporate governance report
for the year ended 31 March 2023.
The Board is dedicated to ensuring robust governance
processes are in place and that suitable and thorough
information is received from the Investment Manager
and other third-party service providers. We believe that
good governance provides the foundation for an open,
informed and transparent environment which supports
good decision making and encourages constructive
communications with our shareholders.
The Board is proud to demonstrate gender diversity, with
50% of non-executive Directors being female, and believes
that the composition of the Board provides benefit, in
accessing different perspectives and better decision
making.
The Board and its Committees have in place detailed
agendas of items to review and monitor internal control
systems. The Board has implemented key policies and
has developed its risk appetite to help mitigate potential
risks, to the extent possible, and established best practice
procedures for areas such as the Market Abuse Regulation,
JOHN ROBERTS,
CHAIR
2023 Annual Report
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Application of
AIC Code Principles
The table below explains how we have applied the main principles of the AIC Code.
/
AIC CODE PRINCIPLE
/
COMPLIANCE STATEMENT
/
INSTANCES OF
NON-COMPLIANCE
A
A successful company is led by
an effective board, whose role
is to promote the long-term
sustainable success of the company,
generating value for shareholders
and contributing to wider society.
The Directors are considered to have the appropriate balance of
skills, experience, length of service and knowledge of the Company,
the energy sector and the investment trust sector to act effectively.
The Directors act in the way he/she considers, in good
faith, would be most likely to promote the success of
the Company for the benefit of its members as a whole
and in doing so have regards to other stakeholders.
None
B
The board should establish the
company’s purpose, values and
strategy, and satisfy itself that these
and its culture are aligned.
All directors
must act with integrity, lead by example
and promote the desired culture.
The Board believes that a strong corporate governance
culture is essential for the Company to achieve its Investment
Objective. This culture promotes openness and transparency
with all its key stakeholders, particularly its shareholders.
The Board is responsible for the Group’s Investment Objective
and Investment Policy and has overall responsibility for ensuring
the Group’s activities are in line with the overall strategy.
None
C
The board should ensure that the
necessary resources are in place for
the company to meet its objectives
and measure performance against
them.
The board should also
establish a framework of prudent
and effective controls, which enable
risk to be assessed and managed.
The Audit Committee reviews the Group’s internal
financial controls and the Group’s internal control and
risk management systems, as explained on page
99
.
The Group has in place the following key internal controls:
È
Board risk appetite, reviewed and updated annually, as
required;
È
a quarterly report to the Board, identifying the top risks,
movements since the prior quarter, emerging risks and any
risks outside of the Board’s appetite;
È
a risk register identifying risks and controls to mitigate their
potential impact and/or likelihood is maintained by the
Investment Manager, subject to the supervision and oversight
of the Board;
È
reporting on compliance with the investment trust conditions;
È
internal control reports of the Investment Manager,
Administrator and other key service providers are reviewed by
the Audit Committee;
È
Annual review of the Company’s financial position and
prospects procedures memorandum;
È
the Investment Manager and Administrator prepare forecasts
and management accounts which allow the Board to assess
performance; and
È
there is an agreed and defined Investment Policy, specified
levels of authority and exposure limits in relation to
investments.
None
D
In order for the company to
meet its responsibilities to
shareholders and stakeholders,
the board should ensure effective
engagement with, and encourage
participation from, these parties.
The Board encourages participation from its shareholders
at its AGM. The Company’s Broker offered calls
with the Chair to key shareholders each year.
The Investment Manager are in regular contact with the Company’s
key stakeholders and report to the Board at least quarterly.
The s.172 statement on page 72 provides a further explanation
on the Board’s approach to stakeholder engagement.
None
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/
AIC CODE PRINCIPLE
/
COMPLIANCE STATEMENT
/
INSTANCES OF
NON-COMPLIANCE
E
The chair leads the board and is
responsible for its overall effectiveness
in directing the company.
They
should demonstrate objective
judgement throughout their tenure
and promote a culture of openness
and debate. In addition, the chair
facilitates constructive board relations
and the effective contribution of all
non-executive directors, and ensures
that directors receive accurate,
timely and clear information.
The Chair promotes constructive debate and facilitates
a supportive, co-operative and open environment
between the Investment Manager and the Directors.
The Chair sets the agenda for the Board and, in conjunction with
the Company Secretary, ensures that accurate, timely and clear
information is circulated to the Directors, and sufficient time
is given in meetings to review all agenda items thoroughly.
None
F
The board should consist of an
appropriate combination of directors
(and, in particular, independent non-
executive directors) such that no one
individual or small group of individuals
dominates the board’s decision making.
All Board members are independent non-executive Directors,
who continue to be independent of the Investment Manager.
None
G
Non-executive directors should
have sufficient time to meet their
board responsibilities. They should
provide constructive challenge,
strategic guidance, offer specialist
advice and hold third party
service providers to account.
As part of the process for the appointment of the
Directors, the Directors are made aware of the
expected time commitment of their role.
The Directors assess their time commitment to the
role as part of the annual Board evaluation.
The Directors hold or have held senior positions in industry
and commerce and contribute a wide range of skills,
experience and objective perspective to the Board.
The Management Engagement Committee undertakes an annual
review of the Investment Manager and other key service providers.
None
H
The board, supported by the company
secretary, should ensure that it has
the policies, processes, information,
time and resources it needs in order
to function effectively and efficiently.
The Chair sets the agenda for the Board and, in
conjunction with the Company Secretary, ensures that
accurate, timely and clear information is circulated to the
Directors five working days prior to the meeting.
The Board has implemented various policies and procedures
to ensure the Company runs effectively and efficiently.
None
I
Appointments to the board should
be subject to a formal, rigorous and
transparent procedure, and an effective
succession plan should be maintained.
Both appointments and succession
plans should be based on merit and
objective criteria and, within this
context, should promote diversity of
gender, social and ethnic backgrounds,
cognitive and personal strengths.
The Board has yet to consider any new Board
appointments. All Board appointments will be made
on merit and have regard to diversity regarding factors
such as gender, skills, background and experience.
During the year, the Nomination Committee
discussed succession planning.
The Board is currently comprised of two
male and two female Directors.
None
J
The board and its committees should
have a combination of skills, experience
and knowledge.
Consideration
should be given to the length of
service of the board as a whole and
membership regularly refreshed.
The Directors hold or have held senior positions in industry
and commerce and contribute a wide range of skills,
experience and objective perspective to the Board.
The Board considers that the length of time each Director,
including the Chair, serves on the Board should not be
limited and has not set a finite tenure policy. Length of
service of current Directors and future succession planning
is reviewed each year by the Nomination Committee.
None
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/
AIC CODE PRINCIPLE
/
COMPLIANCE STATEMENT
/
INSTANCES OF
NON-COMPLIANCE
K
Annual evaluation of the board should
consider its composition, diversity
and how effectively members work
together to achieve objectives.
Individual evaluation should
demonstrate whether each director
continues to contribute effectively.
During the year the Board conducted a performance evaluation of
its own performance, its committees and individual Directors, as
explained on page
96
.
None
L
The board should establish formal and
transparent policies and procedures
to ensure the independence and
effectiveness of external audit functions
and satisfy itself on the integrity of
financial and narrative statements.
The Audit Committee monitors the performance, objectivity
and independence of the external auditors and this
is assessed by the committee each year. In evaluating
BDO’s performance, the Audit Committee examines
the robustness of the audit process, independence and
objectivity of the auditor and the quality of delivery.
None
M
The board should present a fair,
balanced and understandable
assessment of the company’s
position and prospects.
The Audit Committee satisfies itself that the annual report taken
as a whole is fair, balanced and understandable. The assessment
of the performance during the year and the judgements,
estimates and assumptions made throughout the annual report
are considered formally as a committee agenda item.
None
N
The board should establish
procedures to manage risk, oversee
the internal control framework, and
determine the nature and extent of
the principal risks the company is
willing to take in order to achieve
its long-term strategic objectives.
The Company relies on third party service providers to
conduct its day-to-day operations. The Audit Committee
receive internal control reports from the Investment
Manager, Administrator, and other key service providers,
which provide assurance as to the effectiveness of each of
their internal control and risk management systems.
The Board has set its risk appetite and updated it during
the year. The Board receive a quarterly report from the
Investment Manager which details the top risks, movements
since the prior quarter, emerging risks and any risks outside
of the Board’s appetite. The Board conducts a detailed review
of the entire risk register on at least an annual basis.
The Board receives a quarterly depositary report prepared by
INDOS Financial Limited who are responsible for cash monitoring,
asset verification and oversight of the Group. Additionally,
the Board receives quarterly reporting from the Investment
Manager in performing its functions under the AIFMD.
None
O
Remuneration policies and
practices should be designed to
support strategy and promote
long-term sustainable success.
The Group does not have any executive Directors or employees,
and, as a result, operates a simple and transparent remuneration
policy with no variable element, that reflects the non-executive
Directors’ duties, responsibilities and time spent. Full details of
the remuneration policy can be seen on page pages 108 to 109.
None
P
A formal and transparent procedure
for developing policy remuneration
should be established. No director
should be involved in deciding their
own remuneration outcome.
The Company does not have any executive Directors or
employees, and, as a result, operates a simple and transparent
remuneration policy with no variable element, that reflects the
non-executive Directors’ duties, responsibilities and time spent.
None
Q
Directors should exercise independent
judgement and discretion when
authorising remuneration outcomes,
taking account of company
and individual performance,
and wider circumstances.
During the year there have been no major decisions or
changes related to the Directors’ remuneration.
Directors do not consider their own remuneration
and in any case the Group’s Remuneration Policy
has no variable element to be applied.
None
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Board of Directors
DR JOHN ROBERTS CBE, NON-EXECUTIVE CHAIR (77)
Appointed:
21 August 2020
Skills and experience:
Dr John Roberts has significant experience in the energy and utilities
sectors with a 40-year executive career including senior roles at Manweb
plc, Hyder plc and culminating with his role as Chief Executive of United
Utilities plc (a long-term constituent of the FTSE 100) from which he retired
in 2006. John is a keen advocate for the environment and, amongst other
roles, was a member of the Royal Commission on Environmental Pollution,
Ofgem’s Environmental Advisory Panel and the Renewables Advisory Board,
he was also previously Chairman of the North-West Energy Council.
A qualified engineer and Chartered Certified Accountant, John
was made a Doctor of Engineering by the University of Liverpool
and an Honorary Fellow of Liverpool John Moores University.
He was awarded a CBE in 2004 for his services to the utilities industry.
Committee memberships:
Management Engagement Committee
Nomination Committee
Principal external
appointments:
None
ROSEMARY BOOT, NON-EXECUTIVE SENIOR INDEPENDENT
DIRECTOR (60)
Appointed:
21 August 2020
Skills and experience:
Rosemary Boot has an investment banking background with 16 years at UBS
Warburg, following which she was appointed Group Finance Director of
The Carbon Trust, a position she held for over 10 years. Rosemary then held
senior executive positions including at Circle Housing and, finally, was Chief
Financial Officer of Future Cities Catapult, stepping down in 2016. Rosemary’s
knowledge of the wider low carbon technology sector has been built up over
20 years with other current roles including trustee of the Green Alliance Trust,
co-founder, director and steering group member of Chapter Zero Limited. She
is also a Non-Executive Director of a number of listed and unlisted companies.
Committee memberships:
Audit Committee (Chair)
Management Engagement Committee
Nomination Committee
Principal external
appointments:
Chapter Zero Limited (Co-Founder and Non-Executive Director)
Impact Healthcare REIT plc (Non-Executive Director)
The Green Alliance Trust (Trustee)
Urban&Civic plc (Non-Executive Director)
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SONIA MCCORQUODALE, NON-EXECUTIVE DIRECTOR (48)
Appointed:
21 August 2020
Skills and experience:
Sonia McCorquodale has a background in the renewable energy sector
with an executive career with a range of companies spanning start up,
operational, PFI managed and an A-rated utility group. In her current
role as Trading and Optimisation Director for Drax she manages teams
optimising hydro, run of river, biomass and trading global commodities.
Prior to this, she was Managing Director for the Commercial division
of Welsh Water Limited and prior to that she was Head of Commercial
Projects for AIM listed renewable energy company, Good Energy
Limited. Over the past 20 years, Sonia has sat on numerous steering
committees and trade bodies including, more recently, the CBI Heat Policy
Group and Entrepreneurial Women in Renewable Energy (EWIRE).
Committee memberships:
Audit Committee
Management Engagement Committee
Nomination Committee (Chair)
Principal external
appointments:
Cairnbe Limited (Director)
Drax Power Limited (Trading and Optimisation Director)
DR ANTHONY WHITE MBE, NON-EXECUTIVE DIRECTOR (70)
Appointed:
21 August 2020
Skills and experience:
Dr Anthony White has over 35 years’ experience in international power markets
and the low carbon economy from capital markets, analytical and industry
strategy roles. His key executive responsibilities included establishing the Uplift
Management Incentive Scheme at National Grid, where he became Group
Head of Strategy in the 1990s, and being lead analyst for Citigroup’s top
ranked pan-European power team. More recently, Anthony was a Managing
Director of Climate Change Capital, a specialist low carbon advisory and
asset management business, and still consults on developments in the low
carbon economy through his company, BW Energy Limited. Anthony has
participated in numerous government advisory bodies on UK energy and
power including the Energy Advisory Panel, Commission on Environmental
Markets and Economic Reform, Energy Networks Strategy Group and the
House of Commons Select Committee on Energy & Climate Change.
Anthony was appointed an MBE in 2004 for services to UK energy policy.
Committee memberships:
Audit Committee
Management Engagement Committee (Chair)
Nomination Committee
Principal external
appointments:
Green Energy Options Ltd (Director)
B W Energy Limited (Director)
Pickfords Wharf RTM Company Limited (Director)
Bialik-Langworth Limited (Director)
Longspur Capital (Senior Advisory Board)
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Corporate
Governance
/ RESPONSIBILITIES
The Board aligns its purpose, values and strategy
through a strong corporate governance culture.
The Board is responsible for leading and controlling
the Company and has oversight of the management
and conduct of the Company’s business, strategy and
development. The Board determines the Investment
Objectives and Investment Policy and risk appetite
and has overall responsibility for the Group’s activities,
including review of investment activity and performance.
The Board is also responsible for the control and
supervision of the Investment Manager (who is also the
Company’s AIFM) and compliance with the principles
and recommendations of the AIC Code. The Board
ensures the maintenance of a sound system of internal
controls and risk management (including financial,
operational and compliance controls) and reviews the
overall effectiveness of systems in place. The Board is
responsible for approval of any changes to the capital,
corporate and/or management structure of the Company.
The Board’s main focus is to promote the sustainable
long-term success of the Company, to deliver value for
shareholders and contribute to wider society. The Board
does not routinely involve itself in day-to-day business
decisions, but there is a formal schedule of matters that
requires the Board’s specific approval. In all interactions
with the Investment Manager, its service providers,
and particularly with its shareholders, the Board values
openness and transparency.
The Investment Manager is responsible for making
investments in line with the Investment Objectives,
Investment Policy and Board approved risk appetite,
portfolio management and risk management of the
Company pursuant to AIFMD.
The key matters reserved to the Board, include but are
not limited to:
È
approval of Board appointments and removals and
agreement of continue in office of Directors;
È
review of the structure, size and composition of the
Board, taking account of recommendations from the
Nomination Committee;
È
conducting an annual review of its own performance,
including assessment of independence of Directors
and tenure;
È
the appointment, termination, and regular
assessment of the performance of the principal
advisers, including the Investment Manager,
Tax Advisers, Legal Advisers, Financial Advisers,
Administrator and Company Secretary, Brokers,
Registrar, Depositary and Auditor;
È
managing conflicts of interest of Directors;
È
overall leadership of the Company and setting of its
purpose, culture, values and standards;
È
setting the business strategy, including the ongoing
review of the Company’s Investment Objectives,
Policy and restrictions;
È
the approval of annual and half yearly financial
reports, to 31 March and 30 September respectively,
dividends, quarterly unaudited NAV announcements,
accounting policies and significant changes in
accounting practices;
È
Stock Exchange related matters, including the
approval of communications to the Stock Exchange,
and communications with shareholders, other than
announcements of a routine nature;
È
ensuring the maintenance of a system of internal
controls and risk management;
È
establishing a risk appetite and providing supervision
and oversight of the risk register;
È
the review of the adequacy of corporate governance
procedures;
È
approval of changes to the capital structure,
dividend policy, borrowing facilities and any banking
relationships, hedging strategy, cash management
strategy and policies;
È
approval of any related party transactions subject to
further regulatory requirements; and
È
oversight of the Company’s operations ensuring
compliance with statutory and regulatory obligations.
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/
BOARD MEMBERSHIP AND
ATTENDANCE
During the year to 31 March 2023, the number of
meetings attended by each Director was as follows:
Director
Scheduled
Quarterly
Board
meetings*
Ad-hoc
Board
meetings
Dr John Roberts
4/4
8/8
Rosemary Boot
4/4
8/8
Dr Anthony White
4/4
8/8
Sonia McCorquodale
4/4
8/8
*
Number of scheduled meetings attended/maximum number of meetings that
the Director could have attended.
The ad-hoc Board meetings were convened at shorter
notice to discuss various matters including, but not
limited to, the migration to the premium segment of the
London Stock Exchange, risk appetite, and shareholder
feedback. The Board also held a strategy day in the year.
/ COMPOSITION
The Company has a non-executive Chair and three other
non-executive Directors, including a Senior Independent
Director, all of whom were considered independent
on and since their appointment. All the Directors are
independent of the Investment Manager.
John Roberts is the Chair of the Board and is responsible
for the Board’s overall effectiveness in directing the
Company. The Chair, in conjunction with the Company
Secretary, ensures that accurate, timely and clear
information is circulated to the Directors, and that
sufficient time is given in meetings to consider and
discuss all agenda items thoroughly. He promotes a
culture of openness and constructive debate to ensure
the effective contribution of all Directors, facilitating a co-
operative environment between the Investment Manager
and the Directors, and encourages Directors to critically
examine information and reports to constructively
challenge the Investment Manager and hold third party
service providers to account where appropriate.
The Chair has put mechanisms in place to ensure
effective communication between shareholders and the
Board, to ensure that their views, issues and concerns
are considered as part of the decision-making process.
Rosemary Boot is the Senior Independent Director and,
if required, will act as a sounding board and intermediary
for the other Directors and shareholders.
The Directors hold or have held senior positions in
industry and commerce and contribute a wide range of
skills, experience and objective perspective to the Board.
The Board committees allow the Directors to focus in
greater detail and depth on key matters such as strategy,
governance, internal controls and risk management.
The Directors’ other principal commitments are listed
on pages 92 to 93. During the year, the Board satisfied
itself that all Directors were and remain able to commit
sufficient time to discharge their responsibilities
effectively having given due consideration to their other
significant commitments. Changes in any Director’s
commitments outside the Group are required to be,
and have been, disclosed and approved prior to the
acceptance of any such appointment. No external
appointments accepted during the year were considered
to be significant for the relevant directors, taking into
account the expected time commitment and nature of
these roles.
/
BOARD COMMITTEES
The Board has established a Management Engagement
Committee, an Audit Committee and a Nomination
Committee. Given that the Company has no executive
Directors or other employees; the Board does not consider
it necessary to establish a separate remuneration committee
and those functions are undertaken by the whole Board.
The functions and activities of each of the committees are
described in their respective reports.
/
BOARD MEETINGS
The Board meets formally on, at least, a quarterly basis
with additional meetings as required from time to time. The
Chair, in conjunction with the Company Secretary, sets the
agenda for meetings and ensures that Directors receive
accurate, clear and timely information to help them to
discharge their duties.
The meetings focus on a review of portfolio performance
and associated matters such as pipeline and future
investment considerations, ESG matters, investment
restrictions and regulatory matters.
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DISCUSSIONS OF THE BOARD
During the period the Board considered the following
matters:
È
approval for the Group to extend the £40 million RCF
with TP Leasing Limited, pursuant to the requirements
of Chapter 11 of the FCA’s Listing Rules (“Related
Party Transactions”);
È
approval of the Company migrating to the premium
segment of the Main Market of the London Stock
Exchange and listing on the FCA’s Official List;
È
approval of quarterly unaudited NAV announcements;
È
the Company’s share price discount to NAV and
strategies to attempt to rectify it;
È
discussion of feedback from shareholders meetings
with the Investment Manager and also the Chair/
Senior Independent Director;
È
approval of J.P. Morgan Cazenove as the Company’s
sole broker;
È
discussion of ESG related matters including Net Zero
planning and approval of the Company classifying
itself as an SFDR Article 8 Fund;
È
review and update of the Board’s risk appetite;
È
annual detailed review of the Company’s risk register;
È
quarterly reporting on the Company’s top risks,
changes since the prior quarter, emerging risks and
risks outside of appetite;
È
the Director’s remuneration benchmarked against its
peer group;
È
considering the application of the Company’s
investment policy and restrictions to potential new
investments;
È
the Company’s compliance with the investment trust
conditions;
È
the annual expense budget and monitoring;
È
pipeline review and monitoring; input to investment
opportunities being reviewed by the Investment
Manager in its role as the AIFM;
È
approval of various Company policies;
È
the key performance indicators by which the Company
measures success;
È
approval of quarterly dividends and qualifying interest
payments; and
È
approval of the interim results.
/
PERFORMANCE EVALUATION
The Directors recognise that an evaluation process is
a significant opportunity to review the practices and
performance of the Board, its committees and its
individual Directors and to implement actions to improve
the Board’s focus and effectiveness which contribute to
the Company’s success. During the year, the Nomination
Committee conducted a formal internal process to
evaluate Board performance. The Directors were asked to
complete a questionnaire that considered amongst other
areas, the Board and Committees, Board composition and
diversity, leadership, efficiency of Board processes and
stakeholder engagement. The Directors were also asked
to provide feedback on the performance of themselves
and their fellow Directors, which was then reported back
to them individually by the Chair (with the SID providing
feedback to the Chair).
The results of the performance evaluation demonstrated
that there is consensus that the performance and
functioning of the Board remains effective. However, there
were areas of improvement identified. The key challenges
and recommendations of next steps are outlined below.
The recommendations will be monitored at the quarterly
Board meetings to ensure progress is made.
/
CHALLENGES
/
RECOMMENDATION OF NEXT
STEPS
Efficiency of process
To re-examine information flows and
timing to allow for greater Board scrutiny.
Diversity
To keep diversity of the Board under
regular review, particularly when a
recruitment exercise is undertaken.
It is intended that an externally facilitated evaluation will
be conducted once every three years.
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/
CONFLICTS OF INTEREST
The Group operates a Conflict of Interest Policy that has
been approved by the Board and sets out the approach
to be adopted and procedures to be followed where a
Director, or such other persons to whom the Board has
determined the policy applies, has an interest which
conflicts, or potentially may conflict, with the interests
of the Group. Under the policy and the Company’s
Articles of Association, the Board may authorise potential
matters of conflict that may arise, subject to imposing
limits or conditions when giving authorisation, if this is
appropriate.
It is the responsibility of each individual Director to avoid
an unauthorised conflict of interest situation arising. All
Directors must inform the Board as soon as they become
aware of the possibility of an interest that conflicts or
might possibly conflict, with the interests of the Group.
A register of interests is maintained by the Company
Secretary and is reviewed at Board meetings to ensure
that any authorised conflicts remain appropriate. The
Directors are required to confirm at these meetings
whether there has been any change to their position.
From its admission to trading on the Specialist Fund
Segment of the Main Market of the LSE, the Company
voluntarily complied with the provisions of Chapter 11
of the Listing Rules regarding related party transactions.
Subsequent to the migration of the Company’s Ordinary
Shares to trading on the Premium Segment of the Main
Market of the LSE and listing the FCA’s Official List, the
Company is now subject to the relevant requirements of
the Listing Rules, including the provisions of Chapter 11.
/
PROFESSIONAL DEVELOPMENT
The Directors received a comprehensive induction
programme on joining the Board that covered the
Group’s investment activities, the role and responsibilities
of a Director and guidance on corporate governance
and applicable regulatory and legislative landscape. The
Directors’ training and development will ordinarily be
considered as part of the annual effectiveness evaluation
and, in any event, the Chair reviews and discusses any
development needs with each Director. Each Director is
aware that they should take responsibility for their own
individual development needs and take the necessary
steps to ensure they are fully informed of regulatory and
business developments.
During the period, the Directors received periodic
guidance on regulatory and compliance changes at
quarterly Board meetings.
/
SHAREHOLDER ENGAGEMENT
The Board seeks to attract long-term investors in the
Company and acknowledges the importance of building
and maintaining strong relationships to achieve this.
During the year the Investment Manager and the brokers
held a series of investor events which facilitated more
informal, but regular, dialogue with shareholders. The
Chair and the Senior Independent Director met with
some
shareholders following publication of the 2022
annual results.
Shareholders are encouraged to attend and vote at the
Company’s shareholder meetings, so they can discuss
governance and strategy and the Board can enhance its
understanding of shareholder views. The Board attends
the Company’s shareholder meetings to answer any
shareholder questions and the Chair will make himself
available, as necessary, outside of these meetings to
speak to shareholders.
The Board is committed to providing investors with
regular announcements of significant events affecting the
Group.
In addition, the Board seeks to communicate with
shareholders regularly through the following: annual and
interim accounts; unaudited quarterly NAV, quarterly
factsheets and investor presentations.
All investor documentation is available to download from
the Company’s website https://www.tpenergytransition.
com/
/ WHISTLEBLOWING
The Board has considered the arrangements by which
staff of the Investment Manager or Administrator
may, in confidence, raise concerns within their
organisations about possible improprieties in matters
of financial reporting or other matters. It has concluded
that adequate arrangements are in place for the
proportionate and independent investigation of such
matters and, where necessary, for appropriate follow-
up action to be taken within their organisations.
proportionate and independent investigation of such
matters and, where necessary, for appropriate follow-up
action to be taken within their organisations.
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Other Information
The following pages set out the Audit Committee’s
report on how it has discharged its duties in accordance
with the AIC Code and its activities in respect of the year
ended 31 March 2023.
The Audit Committee has been in operation throughout the
year and operates within clearly defined terms of reference.
/ RESPONSIBILITIES
The Audit Committee has the primary responsibility for
reviewing the financial statements and the accounting
principles and practices underlying them, liaising with
the external auditors and reviewing the effectiveness of
internal controls.
The main role of the Audit Committee is to:
È
monitor the integrity of the financial statements of
the Company and any formal announcements relating
to the financial performance and reviewing significant
financial reporting judgements contained in them;
È
provide formal and transparent arrangements for
considering how to apply the financial reporting and
internal control principles set out in the AIC Code
and to maintain an appropriate relationship with the
external auditors;
È
review the investment valuations and underlying
assumptions and provide advice to the Board;
È
provide advice to the Board on whether 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;
È
monitor the integrity of the financial statements of
the Company and any formal announcements relating
to the financial performance and reviewing significant
financial reporting judgements contained in them;
È
review the internal financial controls and the internal
control and risk management systems of the
Company;
È
consider the appropriateness of the Company
establishing an internal audit function;
È
review the adequacy of the Company’s arrangements
as they relate to compliance, whistleblowing and
fraud;
È
review the contents of external non-financial
reporting (including sustainability and progress
towards TCFD) and KPIs to ensure they are fair and
reasonable;
È
make recommendations to the Board to put to the
shareholders for their approval in general meeting
in relation to the appointment, re-appointment and
removal of the external auditor and to approve
the remuneration and terms of engagement of the
external auditor;
È
review and monitor the external auditor’s
independence and objectivity and the effectiveness
of the audit process, taking into consideration
relevant UK professional and regulatory requirements;
È
develop and implement policy on the engagement
of the external auditor to supply non-audit services,
taking into account relevant ethical guidance
regarding the provision of non-audit services by the
external audit firm;
È
report to the Board on significant issues relating
to the financial statements and how they were
addressed; its assessment of the effectiveness of the
audit process; any key matters raised by the external
auditor and any other issues on which the Board has
requested the Committee’s opinion; and
È
report to the Board on how it has discharged its
responsibilities.
/
COMMITTEE MEMBERSHIP
The Audit Committee comprises all the Directors with the
exception of John Roberts and is chaired by Rosemary
Boot.
The Board is satisfied that at least one member of the
Audit Committee has recent and relevant financial
experience. Rosemary Boot was the chief financial officer
of Future Cities Catapult, and from 2001 to 2011 she
was group finance director of the Carbon Trust and she
is a member of a number of other listed and unlisted
company Audit Committees. The Board is also satisfied
that the committee as a whole has competence relevant
to the sector in which the Group operates.
Audit Committee
Report
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Other Information
/
MEETING ATTENDANCE
The Committee met three times in the year ended
31 March 2023, the meetings were attended by each
member as follows:
Director
Attendance
Rosemary Boot
3/3
Sonia McCorquodale
3/3
Anthony White
3/3
/ ACTIVITIES
The Audit Committee meets three times a year to
consider the annual report, interim report, review year
end audit planning and to consider any other formal
financial performance announcements and any other
matters as specified under the Committee’s terms
of reference and reported to the Board on how it
discharged its responsibilities.
During the year the Audit Committee discussed and
considered the following key matters:
È
the external auditor’s performance, objectivity and
independence;
È
the external auditor’s re-appointment;
È
accounting policies and significant accounting
judgements and estimates;
È
the risk register and specifically the effectiveness of
the mitigating controls;
È
various ESG related matters including reporting on
SFDR and towards TCFD;
È
tax matters for the Company and the decision to
make a qualifying interest payment;
È
robust challenge of the Company’s valuation of
investments;
È
review of the Company’s policies including; non-audit
services, valuations, liquidity and anti-bribery and the
prevention of tax evasion;
È
review of internal control reports from key service
providers;
È
long-term viability and going concern;
È
possible areas for future internal audit assurance; and
È
annual review and update of the Company’s financial
position and prospects procedures memorandum.
/
PERFORMANCE EVALUATION
The Committee was evaluated as part of the internal
review process undertaken in the year and was felt to be
functioning satisfactorily.
/
INTERNAL CONTROL AND RISK
MANAGEMENT
The Company has put a process in place for identifying,
evaluating and managing the principal and emerging
risks it faces.
During the year, the Board satisfied itself that the
procedures for identifying the information needed to
monitor the business and manage risk so as to make
proper judgements on the financial position and
prospects were robust. The Group has in place the
following key internal controls:
È
An initial risk appetite was agreed in May 2021,
and was updated in the year to reflect the updated
Investment Policy and to better align the categories
with that in the risk register. The risks outside of
appetite are reported to the Board on a quarterly
basis for consideration.
È
The Investment Manager presents the Company’s
top 10 risks, changes since the previous quarter and
emerging risks to the Board on a quarterly basis.
È
A detailed risk register identifying risks and controls
to mitigate their potential impact and/or likelihood is
maintained by the Investment Manager, and subject
to an annual review by the Board.
È
Internal control reports of the Investment Manager,
Administrator and Depositary are reviewed by the
Audit Committee bi-annually.
È
The Company’s Financial Position and Prospects
Procedures Memorandum is updated annually by the
Investment Manager.
È
The Investment Manager and administrator prepare
budgets and then forecasts and management
accounts which allow the Board to assess
performance.
È
There is an agreed and defined Investment
Policy and specified exposure limits in relation to
investments and leverage.
È
Compliance reporting is reviewed at each quarterly
Board meeting.
È
Company policies have been established and/or
updated for a variety of matters including, but not
limited to; treasury, anti-bribery and prevention of tax
evasion and liquidity.
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Other Information
The Board also receives a quarterly depositary
report prepared by INDOS Financial Limited, which
is responsible for cash monitoring, asset verification
and oversight of the Company and the Investment
Manager in performing its functions under the AIFMD.
The Depositary reports its findings on a quarterly basis
during which it monitors and verifies all new acquisitions,
share issues, loan facilities, shareholder distributions and
other key events. In addition, on an ongoing basis, the
Depositary tests the quarterly management accounts,
bank reconciliations and performs a quarterly review of
the Company when discharging its duties.
Taking into account the review of the reports provided
and its knowledge of the business, the Audit Committee
has reviewed and approved any statements included in
the annual report concerning internal controls and risk
management and has determined that the effectiveness
of the internal controls were satisfactory. The principal
risks and uncertainties identified from the risk register can
be found on pages 77 to 79.
/
INTERNAL AUDIT
The Board has considered the appropriateness of
establishing an internal audit function and, having regard
to the structure and nature of the Company’s activities,
has concluded that the function is not necessary.
The Audit Committee receive and review internal control
reports from the Investment Manager and other third-
party service providers to ensure that a sound system of
internal control is maintained.
The Audit Committee will review on an annual basis
the need for this function and make appropriate
recommendations to the Board.
/
SIGNIFICANT AREAS OF FOCUS
The following details the key areas of focus by the Audit Committee in relation to the financial statements for the year,
which were discussed and debated with the Investment Manager and BDO. The Audit Committee determined that
the key risk of material misstatement of the Company’s financial statements related to the valuation of its underlying
investments, regarding in particular forecast assumptions used and discount rates applied.
/
SIGNIFICANT ISSUES CONSIDERED BY THE AUDIT COMMITTEE
VALUATION OF INVESTMENTS
As outlined in Note 12 to the financial statements, the total carrying value of the underlying investments held by TENT Holdings at
fair value at 31 March 2023 was £90.1 million (31 March 2022: £78.8 million). Market quotations are not available for these financial
assets, and as such, their valuation is determined using a DCF methodology. This requires a series of material judgements to be
made as further explained in Note 3 to the financial statements.
The valuation process and methodology is unchanged from the previous financial year. It was discussed by the Audit Committee
with the Investment Manager at the time of the interim review, in November 2022, for the interim reporting period
ended 30
September
2022, prior to the year end valuation process and again in June 2023 as part of the year-end valuation process. The
Committee met with the auditor when it reviewed and agreed the auditor’s audit plan and at the conclusion of the audit of the
financial statements, discussing the valuation process. With effect from 31 December 2022, the Investment Manager carries out a
valuation quarterly. The Company also engaged Mazars as an external, independent, and qualified valuer to assess the validity of
the discount rates used for the valuations in the year. Mazars provided a report to the Audit Committee in June 2023 confirming
the discount rates adopted at 31 March 2023 were appropriate.
/
SIGNIFICANT ISSUES CONSIDERED BY THE AUDIT COMMITTEE
GOING CONCERN AND VIABILITY STATEMENTS
The Board is required to consider and report on the longer-term viability of the business as well as assess the appropriateness of
applying the going concern assumption, as well as the assumptions and scenarios reviewed in the long-term viability assessment.
The Audit Committee reviewed the solvency and liquidity position of the Company from the financial statements and the information
provided by the Investment Manager on the forecasted cash flow for the Company.
As a result, the Audit Committee recommended
that the Board adopt the going concern basis of preparation of the financial statements.
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/
EXTERNAL AUDITORS, AUDIT
FEES AND NON-AUDIT SERVICES
BDO were appointed as the external auditors of the
Company on 21 August 2020 with Peter Smith as the audit
partner. It is the Committee’s responsibility to monitor the
performance, objectivity, and independence of the external
auditors and this will be assessed by the Committee
each year. In evaluating BDO’s performance, the
Committee examines the robustness of the audit process,
independence and objectivity and the quality of delivery.
BDO were appointed as the external auditors following
a tender process undertaken prior to IPO. On an annual
basis the Audit Committee reviews the external auditor’s
performance, objectivity, and independence. During the
year the Audit Committee conducted such a review, taking
into account the views of the Investment Manager and
concluded that the external auditor’s performance was
adequate and they remained objective and independent.
The Audit Committee has approved a non-audit services
policy, that is aligned with the FRC Ethical Standard, and
which determines the services that BDO can provide and
the maximum fee that may be raised for non-audit services
in comparison to the statutory audit fee.
BDO are prohibited from providing services to the
Group that would be considered to jeopardise their
independence such as tax services, bookkeeping and
preparation of accounting records, financial systems design
and implementation, valuation services, internal audit
outsourcing and services linked to the financing, capital
structure and allocation. All of which are prohibited under
the FRC Ethical Standard.
The policy is reviewed annually, by the Audit Committee, to
ensure it continues to be in line with best practice.
The total fees for non-audit services provided by the
external auditor to the Group shall be limited to no more
than 70% of the average of the statutory audit fee for the
Group paid to the auditor in the last three consecutive
financial years.
Total fees paid to BDO during the year totalled £153,000,
of which £44,000 was paid for non-audit services relating
to the interim review for the half-year ended 30 September
2022. The Audit Committee considered it appropriate to
engage BDO for the interim review as: it is not prohibited
under the non-audit services policy; BDO have knowledge
of the Company; and it would not be efficient or practical
to have another auditor conduct this service.
Rosemary Boot
Audit Committee Chair
16 June 2023
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Management Engagement
Committee Report
/ RESPONSIBILITIES
The main function of the Management Engagement
Committee is to review and make recommendations
on any proposed amendment to the Investment
Management Agreement and keep under review the
performance of the Investment Manager (which is the
Company’s AIFM).
The Management Engagement Committee regularly
reviews the composition of the key executives performing
the services on behalf of the Investment Manager and
monitors and evaluates the performance of other key
service providers to the Company.
The Management Engagement Committee has been in
operation throughout the year and operates within clearly
defined terms of reference.
/
COMMITTEE MEMBERSHIP
The Management Engagement Committee comprises all
the Directors and is chaired by Dr Anthony White.
/
MEETING ATTENDANCE
The Committee met once in the year ended 31 March
2023, the meetings were attended by each member as
follows:
Director
Attendance
Anthony White
1/1
Rosemary Boot
1/1
Sonia McCorquodale
1/1
John Roberts
1/1
/ ACTIVITIES
During the period, the Management Engagement
Committee conducted a review of the key agreements
with its service providers, and a detailed review of
the performance, composition and personnel of
the Investment Manager. The discussion included
an assessment of performance and suitability of the
services provided in the contract, the fees paid to each
provider, and a review of the termination period of each
agreement.
The Management Engagement Committee considered
the terms of the Investment Management Agreement,
to ensure it continues to properly reflect the commercial
arrangements agreed between the Company and the
Investment Manager and were satisfied that this was the
case.
/
PERFORMANCE EVALUATION
The Committee was evaluated as part of the internal
review process undertaken in the year and was felt to be
functioning satisfactorily.
/
MANAGEMENT ARRANGEMENTS
The Company operates as an externally managed
alternative investment fund for the purposes of the
AIFMD. In its role as AIFM, the Investment Manager
is responsible for making investments in line with the
Company’s Investment Objectives, Investment Policy
and risk appetite, portfolio management and risk
management of the Group pursuant to the AIFMD,
subject to the overall control and supervision of the
Directors.
The Company has given certain market standard
indemnities in favour of the Investment Manager in
respect of the Investment Manager’s potential losses
in carrying out its responsibilities under the Investment
Management Agreement.
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Under the Investment Management Agreement, the
Investment Manager is entitled to receive an annual
management fee on the following basis:
Net asset value
Annual Management Fee
(percentage of Net Asset Value)
On such part of the Net
Asset Value that is up to and
including £650 million
0.9%
On such part of the Net
Asset Value that is above
£650 million
0.8%
The annual fee to the Investment Manager under the
Investment Management Agreement for the year ended
31 March 2023 was £883,000, exclusive of VAT (31 March
2022: £436,000).
Under the terms of the agreement, the Investment
Manager must use 20% of the management fee received
to acquire shares in the Company. On a semi-annual
basis, following the announcement of the Net Asset
Value for the semi-annual periods ending 31 March and
30 September in each year, the Investment Manager shall
procure that the Wider Triple Point Group shall apply
an amount, in aggregate, equal to 20% of the Annual
Management Fee for the relevant six-month period as
follows:
(a)
where the Ordinary Shares are trading at, or at a
premium to, the latest published Net Asset Value
per Ordinary Share; the Investment Manager shall
procure that the Wider Triple Point Group shall use
the relevant amount to subscribe for new Ordinary
Shares issued at the latest published Net Asset Value
per Ordinary Share applicable at the date of issuance;
or
(b) where the Ordinary Shares are trading at a discount
to the latest published Net Asset Value per Ordinary
Share; the Investment Manager shall procure that the
Wider Triple Point Group shall, as soon as reasonably
practicable use the relevant amount to make market
purchases of Ordinary Shares within four months of
the relevant Net Asset Value publication date.
Even though the Annual Management Fee is payable on
a quarterly basis, Ordinary Shares will only be acquired
by the Wider Triple Point Group on a half-yearly basis.
In addition, any such Ordinary Shares acquired by the
Wider Triple Point Group are subject to a minimum lock-
in period of 12 months.
There are no performance fees payable to the Investment
Manager.
The Investment Management Agreement may be
terminated by the Investment Manager or the Company
by not less than 12 months’ written notice, with such
notice not being served before the fourth anniversary of
the date of Initial Admission.
/
CONTINUING APPOINTMENT OF
KEY SERVICE PROVIDERS
The Management Engagement Committee met in the
period and reviewed the continuing appointment of the
Investment Manager and other key service providers.
A thorough process was undertaken, reviewing the
performance of the Investment Manager and key service
providers, following which feedback was provided,
including any areas of improvement. It was concluded
that the continuing appointment of the Investment
Manager and key service providers, on the terms agreed,
remained in the best interests of shareholders as a whole.
During the year, the Board approved the appointment
of J.P. Morgan Securities plc (trading as J.P Morgan
Cazenove) as sole corporate broker effective from
24 June 2022.
Dr Anthony White
Management Engagement Committee Chair
16 June 2023
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/ RESPONSIBILITIES
The Nomination Committee’s main function is to lead
the process for appointments, ensuring plans are in
place for orderly succession to the Board, overseeing the
development of a diverse pipeline for succession and any
other matters as specified under the Committee’s terms of
reference. This includes ensuring that any appointments
and succession plans are based on merit and objective
criteria, and, within this context, promotes diversity of
gender, social and ethnic backgrounds, cognitive and
personal strengths.
The Nomination Committee has been in operation
throughout the year and operates within clearly defined
terms of reference.
/
COMMITTEE MEMBERSHIP
The Nomination Committee comprises all of the Directors
and is chaired by Sonia McCorquodale.
/
MEETING ATTENDANCE
The Committee met twice in the year ended 31 March
2023, the meetings were attended by each member as
follows:
Director
Attendance
Sonia McCorquodale
1/1
Rosemary Boot
1/1
John Roberts
1/1
Anthony White
1/1
/ ACTIVITIES
During the year, the Nomination Committee discussed
matters including, but not limited to, tenure policy,
diversity policy, Board composition, time commitments,
Director independence, succession planning and Board
performance.
/
APPOINTMENT AND
REPLACEMENT OF DIRECTORS
There were no changes to the composition of the Board in
the year.
/
PERFORMANCE EVALUATION
The Committee was evaluated as part of the internal
review process undertaken in the year and was felt to be
functioning satisfactorily.
/
RE-ELECTION OF DIRECTORS
The Board considers that the performance of each
Director continues to be effective and demonstrates
the commitment required to continue in their present
roles, and that each Director’s contribution continues to
be important to the Company’s long-term sustainable
success. This consideration is based on, amongst other
things, the business skills and industry experience of each
of the Directors (refer to the biographical details of each
Director as set out below), as well as their knowledge and
understanding of the Company’s business model.
The Board has also considered the other contributions
which individual Directors may make to the work of the
Board, with a view to ensuring that:
È
the Board maintains a diverse balance of skills,
knowledge, backgrounds and capabilities leading to
effective decision-making;
È
each Director is able to commit the appropriate time
necessary to fulfilling their roles; and
È
each Director provides constructive challenge,
strategic guidance, offers specialist advice and holds
third party service providers to account.
All Directors will submit themselves for re-election on an
annual basis. Therefore, all Directors in office as at the
date of this report are to be proposed for re-election at
the 2023 AGM.
Nomination
Committee Report
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/
DIVERSITY AND INCLUSION
During the year the Nomination Committee reviewed
and updated the Company’s diversity policy to take into
account the FCA’s diversity targets and the corresponding
reporting requirements under Listing Rule 14.3.33R and
9.8.6R(10).
DIVERSITY POLICY
The Board recognises the benefits of all types of diversity
and supports the recommendations of the Hampton-
Alexander Review and the Parker Review. All Board and
Committee appointments will be made on merit, and
promote diversity of all kinds including gender, ethnicity,
sexual orientation, disability or educational, professional
and socioeconomic backgrounds and neurodiversity.
This
will ensure that any such appointment will develop and
enhance the operation of the Board to best serve the
Company’s strategy.
The Board recognises the importance of diversity in the
boardroom, which introduces different perspectives to
Board debate and considers it to be in the interests of
the Group and its shareholders to take into consideration
diversity criteria when appointing a new individual to
the Board. When undertaking the appointment of a new
Director, the Nomination Committee will generally instruct
an external search consultancy to undertake an open and
transparent process that includes potential candidates
from a variety of backgrounds.
The Board is committed to maintaining that the Board,
as a whole, will have at least 40% representation of either
gender.
The Board will continue to monitor diversity, taking such
steps as it considers appropriate to maintain its position as
a meritocratic and diverse business.
FCA LISTING RULE REQUIREMENTS
The following table sets out the gender and ethnic
diversity of the Board as at 31 March 2023 in accordance
with the FCA’s Listing Rules, the disclosure of which in this
report having been approved by each of the Directors:
Gender Diversity
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board*
Men
2
50%
1
Women
2
50%
1
Not specified / prefer not
to say
–
–
–
Ethnic Diversity
White British or other White
(including minority white
groups)
4
100%
2
Mixed/Multiple Ethnic
Groups
–
–
–
Asian/Asian British
–
–
–
Black/African/Caribbean/
Black British
–
–
–
Other ethnic group,
including Arab
–
–
–
Not specified / prefer not
to say
–
–
–
*
In accordance with the Listing Rules, as an externally managed investment
Company, we consider these rules inapplicable as we do not have any
executive management, including the roles of CEO or CFO, who are Directors
of the Company. The Company considers the SID and Chair to be the only
applicable senior roles within the business and have reported against these in
the table above.
At the period end, the Board comprised of the Chair and
three Non-Executive Directors; two male and two female,
therefore fulfilling the requirement for at least 40% of
the Board to be women.
Rosemary Boot is the Senior
Independent Director therefore fulfilling the requirement
for at least one senior Board position to be held by a
woman.
The Company has reported against the Listing Rules on
diversity and has complied with the targets or otherwise
explained non-compliance below.
/
REQUIREMENT
/
EXPLANATION
A minimum of one
board member is
from a minority ethnic
background
The size of the Company, and also of
the Board, make meeting this target
challenging. The Nomination Committee
considered the appointment of a fifth
Director, but concluded that it would not
be in the best interests of the Company
to incur the additional expense, as
the Board has an appropriate mix of
skills, knowledge and experience. The
Company is committed to progressing
towards meeting the recommended
targets as soon as practicable and at such
time as recruitment activity is undertaken,
the Board will ensure that appropriate
action is taken to help attract diverse
candidates.
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/
TENURE POLICY
The Board’s policy for Directors, including the Chair, is
that they serve for no more than nine years, other than
in exceptional circumstances. This ensures the regular
refreshment of the Board and its Committees and forms an
integral part of the Board’s succession planning.
/
EXTERNAL SEARCH
CONSULTANCY
In identifying suitable candidates for an appointment to
the Board, the Nomination Committee may use open
advertising or the services of external advisers to facilitate
the search. There were no appointments during the period
and therefore an external search consultancy was not
required during the period.
/
COMPANY’S SUCCESSION PLANS
The Nomination Committee gave due consideration to
the succession planning of the Board during the year and
will reassess on an annual basis to ensure progressive
refreshing of the Board, taking into account the challenges
and opportunities facing the Board and the balance of
skills and expertise that are required in the future.
Sonia McCorquodale
Nomination Committee Chair
16 June 2023
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Directors’
Remuneration Report
/
ANNUAL STATEMENT
Dear shareholder,
I am pleased to present the Directors’ Remuneration
Report on behalf of the Board for the year ended
31 March 2023. It is set out in two sections in line with
legislative reporting regulations
È
Directors’ Remuneration Policy (on pages 108 to 109)
– This sets out our Remuneration Policy for Directors
of the Company that has been in place since 26
August 2021 following approvals by shareholders.
È
Annual Report on Directors’ Remuneration (on pages
110 to 112) – This sets out how our Directors were
paid for the year ended 31 March 2023 and how we
intend to apply our Policy for the year ending 31
March 2024. There will be an advisory shareholder
vote on this section of the report at our 2023 AGM.
Prior to our IPO in October 2020, the Company
introduced a remuneration framework to ensure that
remuneration was aligned with best market practice
whilst attracting and securing the right non-executive
directors to deliver our investment objectives.
The scale and structure of the Directors’ remuneration
was determined by the Company, prior to the IPO in
2020, in consultation with the sponsor and other advisers
having been benchmarked against companies of a
similar size in the sector and having regard to the time
commitment and expected contribution to the role. The
Board conducted a remuneration benchmarking exercise
during the year which confirmed that the Directors’
remuneration remained at an appropriate level.
The Group does not have any executive directors or
employees, and, as a result, operates a simple and
transparent remuneration policy with no variable
element, that reflects the non-executive Directors’ duties,
responsibilities and time spent.
/
DISCRETION EXERCISED
UNDER THE DIRECTORS’
REMUNERATION POLICY
At the date of this report, no discretion is intended to be
exercised under the Directors’ Remuneration Policy.
We value engagement with our shareholders and for the
constructive feedback we receive and look forward to
your support at the forthcoming AGM.
Dr John Roberts
Chair
16 June 2023
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Directors’
Remuneration Policy
/
APPROVAL OF REMUNERATION
POLICY
Our Directors’ Remuneration Policy was last approved by
shareholders at the Annual General Meeting of the Group
held on 26 August 2021 and became effective from the
conclusion of that meeting. In accordance with section 439A
of the Act, the provisions of the policy will apply until they
are next put to shareholders for renewal of that approval,
which must be at intervals of not more than three years, or if
the Remuneration Policy is varied, in which event shareholder
approval for the new Remuneration Policy will be sought.
The policy applies to the non-executive Directors; the
Company has no executive Directors or employees. There
are no planned changes to the policy in the upcoming
financial year.
/
REMUNERATION POLICY
OVERVIEW
The Company’s objective is to have a simple and transparent
remuneration structure, aligned with the strategy. The
Company aims to provide remuneration packages with no
variable element which will retain non-executive directors
with the skills and experience necessary to maximise
shareholder value on a long-term basis. The remuneration
packages for non-executive Directors will be set with
reference to the remuneration packages of comparable
businesses.
The Board will assess the appropriateness of the
Remuneration Policy on an annual basis and shareholder
approval will be sought in the event of any changes being
proposed.
/
SERVICE CONTRACTS
The Directors are engaged under letters of appointment
and do not have service contracts with the Company.
/
DIRECTORS’ TERM OF OFFICE
Under the terms of the Directors’ letters of appointment,
each directorship is for an initial period of 12 months and
thereafter terminable on three months’ written notice by
either the Director or the Company. Each Director will
be subject to annual re-election by shareholders at the
Company’s Annual General Meeting in each financial year.
/
POLICY ON PAYMENT
FOR LOSS OF OFFICE
Upon termination, a Director shall only be entitled to
accrued fees as at the date of termination together with
reimbursement of any expenses properly incurred to that
date.
/
CONSIDERATION OF
SHAREHOLDER VIEWS
The Company is committed to establishing ongoing
shareholder dialogue and takes an active interest in
voting outcomes. Where there are substantial votes
against resolutions in relation to Directors’ remuneration,
the Company will seek the reasons for any such vote
and will detail any resulting actions in the Directors’
Remuneration Report.
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/
POLICY TABLE
The Directors are entitled only to the fees as set out in the table below from the date of their appointment. No
element of Directors’ remuneration is subject to performance factors.
/
COMPONENT
/
HOW IT OPERATES
/
MAXIMUM FEE
/
LINK TO STRATEGY
Annual fee
Each Director receives a basic fee which
is paid on a quarterly basis.
The Audit Committee Chair is entitled
to an additional fee over and above
their normal Director fee, reflecting their
additional duties and responsibilities in
those roles.
The total aggregate fees that
can be paid to the Directors is
calculated in accordance with the
articles of association and will not
exceed in aggregate £300,000
per annum.
The level of the annual fee has been
set to attract and retain high calibre
Directors with the skills and experience
necessary for the role. The fee has been
benchmarked against companies of a
similar size.
Additional fees
Where a Director performs services,
which in the opinion of the Board, are
outside the ordinary duties of a Director,
they will be entitled to an additional fee.
The quantum of any additional
remuneration paid to Directors
shall be determined by the Board.
The additional fee for services outside
of the scope of ordinary duties offers
flexibilities for a Director to be awarded
additional remuneration to adequately
compensate a Director where this is
considered appropriate for the effective
functioning of, or in furtherance of, the
Company’s aims.
Other benefits
The Directors shall be entitled to be
repaid expenses.
All reasonable travelling, hotel
and other expenses properly
incurred in the performance of
their duties as Director.
In line with market practice, the Company
will reimburse the Directors for expenses
to ensure that they are able to carry out
their duties effectively.
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/ CONSIDERATION OF REMUNERATION MATTERS
The Board does not consider it necessary to establish a separate remuneration committee as it has no executive
Directors. The Board as a whole considers the remuneration of the Directors.
/ DIRECTORS’ FEES
The Directors are each paid an annual fee of £40,000 other than the Chair of the Audit Committee who is entitled to
an additional £5,000, with an annual fee of £45,000, and the Chair who is entitled to receive an annual fee of £75,000.
Directors are also entitled to recover all reasonable expenses properly incurred in connection with performing their
duties as a Director. No other remuneration was paid or payable during the year to any Director.
/ SINGLE TOTAL FIGURE (AUDITED INFORMATION)
The fees paid to Directors in respect of the year ended 31 March 2023 and the prior year are shown below.
For the year ended 31 March 2023
For the year ended 31 March 2022
Fixed
Remuneration
Discretionary
remuneration
Total
Fixed
Remuneration
Discretionary
remuneration
Total
Dr John Roberts
(Chair)
£75,000
£Nil
£75,000
£75,000
£Nil
£75,000
Rosemary Boot
(Audit Committee Chair)
£45,000
£Nil
£45,000
£45,000
£Nil
£45,000
Sonia McCorquodale
£40,000
£Nil
£40,000
£40,000
£Nil
£40,000
Dr Anthony White
£40,000
£Nil
£40,000
£40,000
£Nil
£40,000
Total
£200,000
£Nil
£200,000
£200,000
£Nil
£200,000
The Company does not provide bonuses, pension benefits, share options, long-term incentive schemes or other
benefits in respect of their services as
n
on-executive Directors of the Company.
Information required on executive Directors and employees has been omitted because the Company has neither and
therefore it is not relevant.
The Directors only receive fees and reasonable expenses for services as non-executive directors. The Directors’ fees
are show in the table above. The Directors’ expenses for the year ended 31 March 2023 totalled £485 (31 March 2022:
£643). No other remuneration or taxable benefits were paid or payable during the period to any Director.
Annual Report on
Directors’ Remuneration
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Other Information
/
ANNUAL PERCENTAGE CHANGE IN THE DIRECTORS’ REMUNERATION
The annual percentage change in remuneration in respect of the financial years prior to the current year in respect of
each Director role is detailed in the table below. The annual percentage change is calculated based on the aggregate
annual base Directors’ remuneration plus an additional fee for acting in the role as either Chair of the Company or
Chair of the Audit Committee.
Date Appointed
Financial year to
31 March 2021
Financial year to
31 March 2022
Financial year to
31 March 2023
Dr John Roberts
(Chair)
21 August 2020
N/A
Nil
Nil
Rosemary Boot
(Audit Committee Chair)
21 August 2020
N/A
Nil
Nil
Sonia McCorquodale
21 August 2020
N/A
Nil
Nil
Dr Anthony White
21 August 2020
N/A
Nil
Nil
/
STATEMENT OF DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS
(AUDITED TABLE)
Detailed in the table below are details of the Directors’ shareholdings as at 31 March 2023. There has been no change in
shareholding in the period between 31 March 2023 and the date of this report.
The Directors are not required to hold any shares of the Company by way of qualification. A Director who is not a shareholder
of the Company shall nevertheless be entitled to attend and speak at shareholders’ meetings.
Ordinary Shares
of 1p each held at
31 March 2023
% of issued
Ordinary Share
capita
l
Dr John Roberts
40,000
0.04
Rosemary Boot (through her self-invested personal pension)
40,000
0.04
Sonia McCorquodale
10,000
0.01
Dr Anthony White
40,000
0.04
/
RELATIVE IMPORTANCE OF SPEND ON PAY
The table below shows the total spend on remuneration compared to the distributions to shareholders by way of dividends,
share buybacks and the management fees incurred by the Company. As the Group has no employees the total spend on
remuneration comprises only the Directors’ fees.
31 March
2023
£’000
31 March
2022
£’000
Dividends paid
5,501
6,125
Share buybacks
Nil
Nil
Management fee
883
436
Directors’ emoluments
200
200
Triple Point Energy Transition plc
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/
TOTAL SHAREHOLDER RETURN
As required under regulation, the graph below illustrates the total shareholder return of the Company for the year ended
31 March 2023. This is mapped against the total shareholder return on a hypothetical holding over the same period in the
FTSE Fledgling Index. This index has been chosen as it is considered to be the most appropriate benchmark against which to
assess the relative performance of the Company as the FTSE Fledgling represents companies of a similar capital size and is in
line with our peer group.
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
3/31/2022
4/30/2022
5/31/2022
6/30/2022
7/31/2022
8/31/2022
9/30/2022
10/31/2022
11/30/2022
12/31/2022
1/31/2023
2/28/2023
3/31/2023
TENT Total Return
FTSE Fledgling Total Return
/
CONSIDERATION OF SHAREHOLDER VIEWS
The Company is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Where there
are substantial votes against resolutions in relation to Directors’ remuneration, the Company will seek the reasons for any
such vote and will detail any resulting actions in the Directors’ Remuneration Report.
During the period the Group did not receive any communications from shareholders specifically regarding Directors’ pay.
The resolutions to approve the Directors’ Remuneration Report (excluding the Directors’ Remuneration Policy) and the
Directors’ Remuneration Policy were passed on a poll at the Annual General Meeting on 25 August 2022 and 26 August
2021 respectively.
Votes for
Votes against
Votes withheld
Remuneration Report
99.98%
0.02%
12,566
Remuneration Policy
100%
0%
0
On behalf of the Board:
Dr John Roberts
Chair
16 June 2023
2023 Annual Report
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Financial Statements
Other Information
Report of
the Directors
The Directors are pleased to present the annual report,
including the Company’s audited financial statements
as at, and for the period ended 31 March 2023. The
information that fulfils the requirements of the Corporate
Governance statement in accordance with rule 7.2 of the
Disclosure and Transparency Rules (“DTR”) can be found
in this Directors’ report and in the Governance section
on pages 88 to 112 all of which is incorporated into this
Directors’ report by reference.
Details of significant events since the balance sheet date
are contained in Note 21 to the financial statements.
An indication of likely future developments of the
Company and details of the outlook and pipeline are
included in the Strategic Report. Information about the
use of financial instruments by the Company and its
subsidiaries is given in Note 2 to the financial statements.
/
PRINCIPAL ACTIVITY
trade on the Premium Segment of the Main Market of the
London Stock Exchange.
/ DIRECTORS
The names of the Directors who served from 1 April
2022 to 31 March 2023 are set out in the Board of
Directors section on pages 92 to 93, together with their
biographical details and principal external appointments.
/
INVESTMENT MANAGER AND
AIFM
A summary of the principal contents of the Investment
Management Agreement are set out in the Management
Engagement Committee report on pages 102 to 103.
/
INVESTMENT TRUST STATUS
The Company has been approved as an Investment Trust
Company (“ITC”) under sections 1158 and 1159 of the
Corporation Taxes Act 2010. The Company had to meet
relevant eligibility conditions to obtain approval as an ITC
and must adhere to ongoing requirements to maintain
its ITC status, including, but not limited to, retaining no
more than 15% of its annual income.
During the period, the Company has continued to
conduct its affairs to ensure it complies with these
requirements. The Board continues to monitor
compliance with the ITC conditions.
/
FINANCIAL RESULTS AND
DIVIDENDS
The financial results for the year can be found in the
Company Income Statement on page 128. The Company
declared the following interim dividends in respect of
the year to 31 March 2023, amounting to 5.5 pence per
share.
Relevant period
Dividend
per share
(p)
Ex-dividend
date
Record
date
Payment
date
1 April to 30
June 2022
1.375
8 September
2022
9 September
2022
30 September
2022
1 July to 30
September 2022
1.375
15 December
2022
16 December
2022
6 January
2023
1 October to 31
December 2022
1.375
16 March
2023
17 March
2023
31 March
2023
1 January to 31
March 2023
1.375
29 June
2023
30 June
2023
14 July
2023
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/
POWERS OF THE DIRECTORS
The powers given to the Directors are contained within
the current articles of association of the Company (the
“Articles”), are subject to relevant legislation and, in
certain circumstances (including in relation to the issuing
or buying back by the Company of its shares), are
subject to the authority being given to the Directors by
shareholders in general meetings.
The Articles govern the appointment and replacements
of Directors.
/
DIRECTORS’ INDEMNITY
Subject to the provisions of the Act, the Company has
agreed to indemnify each Director against all liabilities
which any Director may suffer or incur arising out of or in
connection with any claim made, or proceedings taken
against him/her, or any application made by him/her, on
the grounds of his/her negligence, default, breach of
duty or breach of trust in relation to the Company or any
associated Company.
This policy remained in force during the financial
period and also at the date of approval of the financial
statements.
The Company maintains appropriate Directors’ and
Officers’ liability insurance in respect of legal action
against its Directors on an ongoing basis.
/
FINANCIAL RISK MANAGEMENT
The information relating to the Company’s financial risk
management and policies can be found in Note 17 of the
financial statements.
/
POST-BALANCE SHEET EVENTS
Important events that have occurred since the end of the
financial year can be found in Note 21 of the notes to the
financial statements.
/
AMENDMENT TO THE ARTICLES
The Articles may only be amended with shareholders’
approval in accordance with the relevant legislation.
/
SHARE CAPITAL
As at 31 March 2023, the Company had 100,014,079
Ordinary Shares in issue. All of the Ordinary Shares are
fully paid and carry one vote per share.
There are no restrictions on the transfer of securities
in the Company other than certain restrictions which
may be impaired by law, for example, Market Abuse
Regulations, and the Company’s Share Dealing Code.
The Company is not aware of any agreements between
shareholders that restrict the transfer of Ordinary Shares.
The Directors are generally and unconditionally
authorised, in accordance with s.551 of the Act, to
exercise all powers of the Company to allot Ordinary
Shares up to an aggregate nominal value of £10,000,000,
with the authority expiring on 22 July 2025.
/
PURCHASE OF OWN ORDINARY
SHARES
At the Company’s Annual General Meeting on 25
August 2022, the Company was granted authority to
make market purchases up to a maximum of 10,000,000
Ordinary Shares.
The Company made no purchases of its own shares
during the period.
/
MAJOR SHAREHOLDINGS
In accordance with DTR 5, the Company was advised of
the following significant direct and indirect interests in
the issued Ordinary Share capital of the Company as at
31 March 2023.
Number of
Ordinary
Shares held
% of
voting rights
East Riding of Yorkshire Council
15,000,000
15.000%
Aviva plc
9,700,000
9.700%
Stichting Juridisch Eigendom
Privium Sustainable Impact Fund
5,875,000
5.875%
Liontrust Investment Partners LLP
5,000,000
5.000%
South Yorkshire Pensions Authority
5,000,000
5.000%
Brewin Dolphin Limited
4,499,929
4.499%
The Company has not been informed of any changes to
notifiable interests between 31 March 2023 and the date
of this report.
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/
DISCLOSURE OF INFORMATION
TO THE AUDITORS
So far as the Directors are aware, there is no relevant
audit information of which the auditor is unaware.
The Directors have taken all the steps that they ought
to have taken as Directors to make themselves aware of
any relevant audit information and to establish that the
auditor is aware of that information.
/
RELATED PARTY TRANSACTIONS
Related Party transactions for the year to 31 March 2023
can be found in Note
19
of the financial statements.
/
RESEARCH AND DEVELOPMENT
No expenditure on research and development was made
during the period.
/
DONATIONS AND
CONTRIBUTIONS
No political or charitable donations were made during
the period.
/
BRANCHES OUTSIDE THE UK
There were no branches of the business located outside
the United Kingdom.
/
STREAMLINED ENERGY CARBON
REPORTING
In relation to the Streamlined Energy and Carbon
Reporting (“SECR”), implemented by The Companies
(Directors’ Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations 2018, for the
year ended 31 March 2023 the Group is considered to
be a low energy user (<40,000KWh) and therefore falls
below the threshold to produce an energy and carbon
report.
Nevertheless, the Board has disclosed in the
Sustainability Report on page 61 GHG emissions metrics
for the Group’s investments for the year ended 31 March
2023.
/
ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be
held on 31 August 2023.
/
BUSINESS RELATIONSHIPS
The Company has a set of third party corporate service
providers that ensure the smooth running of the Group’s
activities. The Group’s key service providers are listed on
page 160 and the Management Engagement Committee
annually reviews the effectiveness and performance
of these service providers, taking into account any
feedback received. Each of these relationships is critical
to the long-term success of the business. Therefore,
the Company and the Investment Manager maintain
high standards of business conduct by acting in a
collaborative and responsible manner with all its service
providers that protects the reputation of the Group as a
whole.
The s.172 statement on page 72 provides more detail
on how the Board considers the interests of such
stakeholders in its decision making.
/
SIGNIFICANT AGREEMENTS
There are no significant agreements that take effect,
alter or terminate on change of control of the Company
following a takeover. Additionally, there are no agreements
with the Company or a subsidiary in which a Director
is or was materially interested or to which a controlling
shareholder was a party.
/ EMPLOYEES
The Company has no employees and accordingly there is
no requirement to separately report on this area.
The Investment Manager is an equal opportunities
employer that respects and seeks to empower each
individual and the diverse cultures, perspectives, skills and
experiences within its workforce. The Investment Manager
places great importance on company culture and the
wellbeing of its employees and considers various initiatives
and events to ensure a positive working environment.
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/
ANTI-BRIBERY POLICY
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 Directors and to those who
represent the Company.
/
HUMAN RIGHTS
The Company is not within the scope of the Modern
Slavery Act 2015 because it has not exceeded the turnover
threshold and is therefore not obliged to make a slavery
and human trafficking statement.
The
Board considers the Company to be a low risk given
the services supplied to or on behalf of the Company and
believes the Company’s current procedures and ability
to rely on regulatory oversight in relation to professional
services are sufficient in this regard.
/
INFORMATION INCLUDED IN
THE STRATEGIC REPORT
The information that fulfils the reporting requirements
relating to the following matters can be found on the
pages identified.
Subject matter
Page reference
Likely future developments
14 to 85
On behalf of the Board:
Dr John Roberts
Chair
16 June 2023
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Other Information
The Directors are responsible for preparing the annual
report and the financial statements in accordance with UK
adopted international accounting standards and applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors are required to prepare the Company financial
statements in accordance with UK adopted international
accounting standards. Under company law the Directors
must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state
of affairs of the Company and of the profit or loss for the
Company for that period.
In preparing these financial statements, the Directors are
required to:
È
select suitable accounting policies and then apply
them consistently;
È
make judgements and accounting estimates that are
reasonable and prudent;
È
state whether they have been prepared in
accordance with UK adopted international
accounting standards, subject to any material
departures disclosed and explained in the financial
statements;
È
prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business;
È
prepare a Directors’ report, a strategic report and
Directors’ remuneration report which comply with the
requirements of the Act.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements
comply with the Act .
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for ensuring that the annual
report and accounts, taken as a whole, are fair, balanced,
and understandable and provides the information
necessary for shareholders to assess the Company’s
performance, business model and strategy.
The Directors are responsible for ensuring the annual
report and the financial statements are made available
on a website.
Financial statements are published on
the Company’s website in accordance with legislation
in the United Kingdom governing the preparation and
dissemination of financial statements, which may vary from
legislation in other jurisdictions.
The maintenance and
integrity of the Company’s website is the responsibility of
the Directors.
The Directors’ responsibility also extends to
the ongoing integrity of the financial statements contained
therein.
The Directors have delegated the hosting and
maintenance of the Company’s website content to TPIM
and its materials are published on the TPIM website
www.triplepoint.co.uk. Legislation in the United Kingdom
governing the preparation and dissemination of Financial
Statements may differ from legislation in other jurisdictions.
/
DIRECTORS’ RESPONSIBILITIES
PURSUANT TO DTR4
The Directors confirm to the best of their knowledge:
The financial statements have been prepared in
accordance with the applicable set of accounting
standards, give a true and fair view of the assets, liabilities,
financial position and profit and loss of the Company.
The annual report includes a fair review of the
development and performance of the business and
the financial position of the Company, together with a
description of the principal risks and uncertainties that they
face.
We 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
Company’s position and performance, business model and
strategy.
/ APPROVAL
This Directors’ responsibilities statement was approved by
the Board of Directors and signed on its behalf by:
Dr John Roberts
Chair
16 June 2023
Directors’
Responsibility Statement
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/
TO THE MEMBERS OF TRIPLE POINT ENERGY TRANSITION PLC
OPINION ON THE FINANCIAL STATEMENTS
In our opinion:
È
the financial statements give a true and fair view of the state of the Company’s affairs as at 31 March 2023 and
profit for the year then ended;
È
the Company financial statements have been properly prepared in accordance with UK adopted international
accounting standards; and
È
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Triple Point Energy Transition Plc
March 2023 which comprise the Income Statement, the Balance Sheet, the Statement of Changes in Shareholder’s
Equity, the Statement of Cash Flows and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and
UK adopted international accounting standards.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit
committee.
Independence
Following the recommendation of the audit committee, we were appointed by the Directors on 21 August 2020 to
audit the financial statements for the year ended 31 March 2021 and subsequent financial periods. The period of total
uninterrupted engagement including retenders and reappointments is three years, covering the years ended 31 March
2021 to 31 March 2023. We remain independent of the Company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed
public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by that standard were not provided to the Company.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of
the Company’s
ability to continue to adopt the going concern basis of accounting included:
È
Reviewing the forecasted cash flows that support the Directors’ assessment of going concern, challenging
assumptions and judgements made in the forecasts, and assessing them for reasonableness. In particular,
we considered the available cash resources relative to the contractual investment commitments and forecast
expenditure.
Independent Auditor’s
Report
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Other Information
È
Assessing assumptions used within the valuation models to supporting documentation per the Key audit matter
noted below and considering how these impact on the ability of the portfolio companies to make distributions to
the Company and therefore on the Company’s ability to meet its commitments as they fall due;
È
Calculating financial ratios to ascertain the financial health of the Company; and
È
Performing stress testing of extreme downside scenarios and cash flow forecasts, as well as conducting a robust
review of the Company’s liquidity position.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether
the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
OVERVIEW
Key audit matter
2023
2022
Valuation of Unquoted Investments
Yes
Yes
Materiality
Company financial statements
£1.50m (2022:£1.44m) based on 1.5% (2022: 1.5%) of net assets
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s
system of internal control, and assessing the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, 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. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
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Key audit matter
How the scope of our audit addressed
the key audit matter
Valuation of
unquoted
investments
See Note
12 and
accounting
policy on
page 134 to-
135.
The Company holds an
investment its subsidiary TENT
Holdings Limited. As the
Company meets the definition
of an investment entity it
measures this investment at
fair value through profit and
loss rather than consolidating
it.
The fair value of the
Company’s investment is
determined in reference
to the fair values of the
underlying investments held
by TENT Holdings Limited,
which comprise both loan
investments and the Hydro
asset investment (which is a
combination of equity and
loan investments). These
investments have been
classified within level 3 as they
are not traded and contain
certain unobservable inputs
and there is a high level
of estimation uncertainty
involved in determining the
investment valuations.
The Investment Manager’s fee
is based on the value of the
net assets of the company.
The Investment Manager is
responsible for preparing the
valuation of investments which
are reviewed and approved by
the Board. Notwithstanding
this review, there is a potential
risk of misstatement in the
investment valuations.
We, therefore, have
determined the valuation of
investments to be a key audit
matter.
We performed the following procedures around the valuation of the
loan investments held by TENT Holdings Limited as at 31 March
2023:
È
Agreed the terms of the loan from agreement such as interest
rates and contractual cash flows, to the relevant valuation
models;
È
Agreed the cash outflow associated with making the loan
investments to the bank statement;
È
Assessed the determination of the market discount rate applied
to the valuation of the loans through, inter alia, consideration of
the expected Internal Rate of Return over its life, movements in
base rates, and changes in the credit quality of counterparties
È
Consulted with our internal valuations expert on the
appropriateness of the market discount rate applied to the
valuation of the loans
È
Considered the independence and credentials of management
experts engaged to perform valuations of the renewable assets
in the portfolio and held discussions with management’s experts
regarding their key assumptions applied;
In respect of the unquoted investments in the Hydro assets held
by TENT Holdings Limited as at 31 March 2023 (combined equity
and loan investments), which are valued using discounted cash flow
models (“DCF”), we performed the following procedures:
È
Reviewed and challenged the key assumptions including, inter
alia, discount factors, inflation, asset life, energy yield and power
price applied by benchmarking these to available industry data
and verifying these to supporting evidence
È
Consulted with our internal valuations experts on the
appropriateness of the assumptions, including the discount rate,
inflation, power price, and asset life.
È
Considered the independence and credentials of management
experts engaged to perform valuations of the renewable assets
in the portfolio and held discussions with management’s experts
regarding their key assumptions applied;
È
Used spreadsheet analysis tools to assess the integrity of the
models;
È
Performed sensitivity analysis by adjusting certain key inputs
in order to calculate a reasonable range of possible valuations
where appropriate; and
È
Considered the accuracy of forecasting by comparing previous
forecasts to actual results.
Key Observations:
Based on the procedures performed, consider the estimates
and judgements made in the valuation of investments to be
appropriate.
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OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a
lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements
below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
2023
2022
Materiality
£1.50m
£1.44m
Basis for determining materiality
1.5 % of Net assets
1.5 % of Net assets
Rationale for the benchmark applied
Net Asset Value is a key indicator
of performance and as such was
considered to be the most relevant
benchmark on which to base
materiality for the users of the
financial statements.
Net Asset Value is a key indicator
of performance and as such was
considered to be the most relevant
benchmark on which to base
materiality for the users of the
financial statements.
Performance materiality
£1.12m
£1.08m
Basis for determining
performance materiality
75% of materiality
75% of materiality
Rationale for the percentage applied
for performance materiality
The level of performance materiality
applied was set after having
considered a number of factors
including the expected total value of
known and likely misstatements and
the level of transactions in the year.
The level of performance materiality
applied was set after having
considered a number of factors
including the expected total value of
known and likely misstatements and
the level of transactions in the year.
Specific materiality
We also determined that for Revenue return before tax, a misstatement of less than materiality for the financial
statements as a whole, specific materiality, could influence the economic decisions of users. As a result, we
determined materiality for these items impacting revenue return of £251k based on 5% of revenue return before tax
(2022: £125k lower testing threshold which is 10% of revenue return before tax). We further applied a performance
materiality level of 75% (2022: NIL since we used lower testing threshold) of specific materiality to ensure that the risk
of errors exceeding specific materiality was appropriately mitigated.
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Reporting Threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £29k
(2022:£27k).
We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in
the Annual Report other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that
part of the Corporate Governance Statement relating to the company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during
the audit.
Going concern
and longer-term
viability
È
The Directors’ statement with regards to the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified set out on page 100; and
È
The Directors’ explanation as to their assessment of the entity’s prospects, the period this
assessment covers and why the period is appropriate 100.
Other Code
provisions
È
Directors’ statement on fair, balanced and understandable set out on page 117;
È
Board’s confirmation that it has carried out a robust assessment of the emerging and principal
risks set out on page 76;
È
The section of the annual report that describes the review of effectiveness of risk management
and internal control systems set out on page 99; and
È
The section describing the work of the audit committee set out on page 98.
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OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our work performed during the course of the audit, we are required
by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report
and Directors’
report
In our opinion, based on the work undertaken in the course of the audit:
È
the information given in the Strategic report and the Directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
È
the Strategic report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or
the Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
Matters on
which we
are required
to report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:
È
adequate accounting records have not been kept by the Company, or returns adequate for
our audit have not been received from branches not visited by us; or
È
the 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
È
certain disclosures of Directors’ remuneration specified by law are not made; or
È
we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control
as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the 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 the Directors either intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a 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 the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
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Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations:
Based on:
È
Our understanding of the legal and regulatory framework applicable to the Company and the industry in which it
operates;
È
Discussion with management and those charged with governance;
È
Obtaining an understanding of the control environment in monitoring compliance with laws and regulations;
we considered the significant laws and regulations to include (but not limited to) compliance with the Companies
Act 2006, the FCA listing and DTR rules, the principles of the UK Corporate Governance Code, industry practice
represented by the Association of Investments Companies’ Statement of Recommended practice: Financial
Statements of Investment Trust Companies and Venture Capital Trusts (“the SORP”), requirements of s.1158 of the
Corporation Tax Act, and the applicable financial reporting framework.
Our procedures in respect of the above included
È
Agreement of the financial statement disclosures to underlying supporting documentation;
È
Enquiries of directors and those charged with governance of their knowledge of non-compliance with laws and
regulations;
È
Review of minutes of board meetings throughout the period to identify any instances of non-compliance with laws
and regulations and corroborate our above inquiries; and
È
Reviewing the calculation in relation to Investment Trust compliance to check that the Company was meeting its
requirements to retain their Investment Trust Status.
Fraud:
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk
assessment procedures included:
È
Enquiry with management and those charged with governance (including Audit Committee) regarding any known
or suspected instances of fraud;
È
Obtaining an understanding of the Company’s policies and procedures relating to:
a)
Detecting and responding to the risks of fraud; and
b)
Internal controls established to mitigate risks related to fraud.
È
Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;
È
Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; and
È
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud;
Based on our risk assessment, we considered the areas most susceptible to fraud to be the valuation of unquoted
investments and management override of controls.
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Our tests included, but were not limited to:
È
The procedures set out in the Key Audit Matters section above;
È
Obtaining independent evidence to support the ownership of investments;
È
Recalculating investment management fees in total;
È
Obtaining independent confirmation of bank balances; and
È
Testing journals posted in the process of preparation of financial statements and a sample of expense entries to
introduce and element of unpredictability by agreeing to supporting documentation and evaluating whether there
was evidence of bias by the Investment Manager and Directors that represented a risk of material misstatement
due to fraud.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members who were all deemed to have appropriate competence and capabilities and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or
through collusion. There are inherent limitations in the audit procedures performed and the further removed non-
compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.
uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
USE OF OUR REPORT
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 the Company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Peter Smith (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
16 June 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Financial
Statements
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Income Statement
For the year ended 31 March 2023
Year Ended 31 March 2023
Year Ended 31 March 2022
Note
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Investment income
5
Profit arising on the revaluation of investments
at the year end
Investment return
Investment management fees
4
Other expenses
6
Profit before taxation
Taxation
8
Profit/(Loss) after taxation
Other comprehensive income
Total comprehensive income
Basic & diluted earnings per share (pence)
Ordinary Shares
9
The total column of this statement is the Income Statement of the Company prepared in accordance with
the
requirements of the Act and in accordance with the UK adopted international accounting standards. The
supplementary revenue return and capital columns have been prepared in accordance with the Association of
Investment Companies Statement of Recommended Practice (AIC SORP).
All revenue and capital items in the above statement derive from continuing operations.
This Income Statement includes all recognised gains and losses.
The accompanying Notes on pages 132 to 153 are an integral part of this statement.
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Balance Sheet
at 31 March 2023
Company Number: 12693305
Note
31 March 2023
£’000
31 March 2022
£’000
Non-current assets
Investments at fair value through profit or loss
12
Current assets
Trade and other receivables
13
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
14
(242 )
(412 )
(242 )
(412 )
Net assets
Equity attributable to equity holders
Share capital
15
Share premium
Special distributable reserve
Capital reserve
Revenue reserve
Total equity
Shareholders’ funds
Net asset value per Ordinary Share (pence)
11
The statements were approved by the Directors and authorised for issue on 16 June 2023 and are signed on behalf of
the Board by
:
Dr John Roberts
Chair
16 June 2023
The accompanying Notes on pages 132 to 153 are an integral part of this statement.
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Statement of Changes in
Shareholders’ Equity
For the year ended 31 March 2023
For the year ended 31 March 2023
Note
Issued
Capital
£’000
Share
Premium
£’000
Special
Distributable
Reserve
£’000
Capital
Reserve
£’000
Revenue
Reserve
£’000
Total
£’000
Opening balance
Issue of share capital
15
Total comprehensive income
for the year
Dividends paid
10
(407 )
(5,094 )
(5,501 )
Balance at 31 March 2023
For the year ended 31 March 2022
Note
Issued
Capital
£’000
Share
Premium
£’000
Special
Distributable
Reserve
£’000
Capital
Reserve
£’000
Revenue
Reserve
£’000
Total
£’000
Opening balance
(185 )
(363 )
Issue of share capital
15
Total comprehensive income
for the year
Dividends paid
10
(5,565 )
(560 )
(6,125 )
Balance at 31 March 2022
The capital reserve represents the proportion of Investment Management fees and other expenses, where applicable,
charged against capital and realised/unrealised gains or losses on the disposal/revaluation of investments. The
unrealised element of the capital reserve is not distributable. The special distributable reserve was created on court
cancellation of the share premium account. The revenue, special distributable and realised capital reserves are
distributable by way of dividend and total £90.0 million (31 March 2022: £91.6 million).
The accompanying Notes on pages 132 to 153 are an integral part of this statement.
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Statement of Cash Flows
For the year ended 31 March 2023
Note
Year ended
31 March 2023
£’000
Period ended
31 March 2022
£’000
Cash flows from operating activities
Profit before taxation
Gain on revaluation of investments held at fair value through
profit or loss
12
(4,017 )
(3,634 )
Cash flows from operations
Interest income
5
(3,402 )
(2,451 )
Interest received
Decrease in receivables
13
(57 )
Increase/(Decrease) in payables
14
(170 )
Net cash flows from operating activities
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss
12
(9,433 )
(56,019 )
Loan principal repaid
12
Net cash flows used in investing activities
(6,094 )
(53,916 )
Cash flows used in financing activities
Issue of shares
15
Dividends paid
(5,501 )
(6,125 )
Net cash flows from financing activities
(5,501 )
(6,112 )
Net decrease in cash and cash equivalents
(7,887 )
(59,409 )
Reconciliation of net cash flow to movements in cash and
cash equivalents
Cash and cash equivalents at beginning of year
Net decrease in cash and cash equivalents
(7,887 )
(59,409 )
Cash and cash equivalents at end of year
The accompanying Notes on pages 132 to 153 are an integral part of this statement.
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Other Information
/ 1. CORPORATE INFORMATION
The Company is incorporated and domiciled in the
under number 12693305 pursuant to the Act. The
address of its registered office, which is also its principal
place of business, is 1 King William Street, London
On 28 October 2022, the ordinary shares of the
Company were admitted to the premium listing segment
of the Official List of the Financial Conduct Authority
and were admitted to the Premium Segment of the Main
Market of the London Stock Exchange. Prior to which,
with effect from IPO, the Company’s ordinary shares
traded on the Specialist Fund Segment of the Main
Market of the London Stock Exchange.
The financial statements comprise only the results of the
Company, as its investment in TENT Holdings is included
at fair value through profit or loss as detailed in the key
accounting policies below.
The Company has appointed Triple Point Investment
Management LLP as its Investment Manager (the
“Investment Manager”) pursuant to the Investment
Management Agreement dated 25 August 2020. The
Investment Manager is registered in England and Wales
under number OC321250 pursuant to the Act. The
Investment Manager is regulated by the FCA, number
456597.
The Company intends to achieve its Investment
Objective by investing in a diversified portfolio of energy
transition investments mostly in the United Kingdom. The
Company, through TENT Holdings, will invest in a range
of energy transition assets which will contribute, or are
already contributing, to energy transition.
/ 2.
SIGNIFICANT ACCOUNTING
POLICIES
BASIS OF PREPARATION
The financial statements, which aim to give a true and
fair view, have been prepared in accordance with UK-
adopted international accounting standards and the
applicable legal requirements of the Companies Act
2006.
The Company prepares its financial statements in
compliance with UK-adopted International Accounting
Standards.
The financial statements have been prepared in
accordance with the guidelines outlined in the Statement
of Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital Trusts
(“SORP”) issued by the Association of Investment
Companies (“AIC”) in April 2021. This ensures that the
financial statements are relevant and applicable to the
Company.
In line with the SORP, supplementary information
has been provided to analyse the Statement of
Comprehensive Income and distinguish between items
of a revenue and capital nature. This supplementary
information is presented alongside the total Statement
of Comprehensive Income, allowing for a comprehensive
understanding of the Company’s financial performance
and the breakdown between revenue and capital
activities.
The financial statements are prepared on the historical
cost basis, except for revaluation of certain financial
investments at fair value through profit or loss. The
principal accounting policies adopted are set out
below and consistently applied, subject to changes in
accordance with any amendments in IFRS.
The Company regularly reviews estimates and underlying
assumptions. Any revisions to accounting estimates
are recognised in the period in which the estimates are
revised and in future periods affected. The significant
estimates, judgements, or assumptions made during the
period are detailed on pages 137 to 138.
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BASIS OF CONSOLIDATION
The sole objective of the Company, through its subsidiary
TENT Holdings, is to make investments, via individual
corporate entities. The Company typically will subscribe
for equity in or issue loans to TENT Holdings in order for
it to finance its investments.
The Directors have concluded that in accordance
with IFRS 10, the Company meets the definition of an
investment entity having evaluated the criteria that
needs to be met (see below). Under IFRS 10, investment
entities are required to hold subsidiaries at fair value
through the Income Statement rather than consolidate
them on a line-by-line basis, meaning TENT Holdings’
cash, debt and working capital balances are included
in the fair value of the investment rather than in the
Company’s assets and liabilities. However, in substance,
TENT Holdings is investing the funds of the investors of
the Company on its behalf and is effectively performing
investment management services on behalf of many
unrelated beneficiary investors. TENT Holdings Limited
meets the criteria to be classified as an independent
investment entity in accordance with IFRS 10, thereby
meeting the criteria of exemption from consolidating
its subsidiaries. The Company therefore does not
consolidate its Subsidiaries.
CHARACTERISTICS OF AN INVESTMENT
ENTITY
There are three key conditions to be met by the
Company for it to meet the definition of an investment
entity.
For each reporting period, the Directors will
continue to assess whether the Company continues to
meet these conditions:
1. It obtains funds from one or more investors for the
purpose of providing these investors with professional
investment management services;
2. It commits to its investors that its business purpose
is to invest its funds solely for returns (including
having an exit strategy for investments) from capital
appreciation, investment income or both; and
3. It measures and evaluates the performance of
substantially all its investments on a fair value basis.
In satisfying the second criteria, the notion of an
investment time frame is critical. An investment
entity should not hold its investments indefinitely but
should have an exit strategy for their realisation. The
Company intends to hold its investments through
TENT Holdings for the remainder of their useful life to
preserve the capital value of the portfolio. However,
as the energy transition assets are expected to have
no residual value after their life, the Directors consider
that this demonstrates a clear exit strategy from these
investments.
Subsidiaries are therefore measured at fair value
through profit or loss, in accordance with IFRS 13 “Fair
Value Measurement”, IFRS 10 “Consolidated Financial
Statements” and IFRS 9 “Financial Instruments”.
The Directors believe the treatment outlined above
provides the most relevant information to investors.
GOING CONCERN
The Directors have adopted the going concern basis
in preparing the Annual Report for the year ended 31
March 2023. In reaching this conclusion, the Directors
have considered the liquidity of the Company’s portfolio
of investments as well as its cash position, income and
expenditure commitments, until September 2024.
The Group’s business activities, together with
the factors
likely to affect its future development, performance and
position, are set out in the Investment Manager’s Report.
The Group faces a number of risks and uncertainties,
as set out in the Strategic Report. The financial risk
management objectives and policies of the Group,
including exposure to credit risk, price risk and market
risk are disclosed in Note 17 to the financial statements.
The Group continues to meet day to day liquidity needs
through its cash resources.
As at 31 March 2023, the Company had net assets of
£99.4 million including cash balances of £9.3 million.
The Company’s sole wholly owned subsidiary, TENT
Holdings, has a £40 million RCF which is undrawn and
a £2 million cash balance which, on a Group basis, offer
sufficient cash flow to meet the Company’s obligations,
including investment commitments of £44.4 million, as
they fall due. The covenants on the RCF are limited to
gearing and interest cover and the Group is expecting to
comply with these covenants on drawdown and in future
periods. The Company acknowledges the current trend
of rising interest rates, and while the Group’s Revolving
Credit Facility (RCF) interest rate is fixed until March
2025, there is a possibility of future increases. As part of
the assessment of its ongoing operations and viability,
the Group has analysed the potential impact of such a
scenario. The findings indicate that the Company would
continue to operate as a going concern and maintain
ample liquidity.
The Group’s investment portfolio consists of fixed- rate
debt investments, with most of these investments
having contractual maturities between 2031 and 2035.
Additionally, the Group has the Hydroelectric Portfolio,
which is fully operational and has an economic lifespan
of over 30 years. As a result, the Group benefits from
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long-term contractual cash flows and a set of risks that
can be identified and assessed. The loan investments
contribute a fixed return, and the Hydroelectric Portfolio
benefits from upward only RPI linked revenue flow under
a UK government scheme. The Hydroelectric Portfolio
also benefits from fixed price PPAs, with institutional
counterparties, for the next financial year. Forecast
revenues thereafter are subject to wholesale power
prices, the levels of which are based upon qualified
independent forecasts.
The Group’s cash outflows encompass operational
expenses, debt servicing, dividend payments, and costs
associated with acquiring new assets. These outflows
are anticipated to be covered by the Group’s current
cash reserves and cash generated from its operations.
The Company actively monitors its cash obligations on a
regular basis to ensure it maintains adequate liquidity.
The war in Ukraine continues into 2023 and the impact
of sanctions placed on Russia aimed to weaken the
Russian economy have had considerable impact on its
affiliated countries during the year. Although sanctions
are a foreign policy tool deployed in several contexts,
the coordinated sanctions on Russia are significant to the
global economy due to the size of the Russian economy.
The Company does not have any direct exposure to
Russia and no assets located in nearby jurisdictions,
however we, the Company, continues to monitor the
macroeconomic consequences on the investment
portfolio closely, including energy price volatility, increase
risk of political intervention to regulate prices, change
in inflation, taxes and further sanctions. The Directors
do not consider that the effects of the conflict have
created a material uncertainty over the assessment of the
Company as a going concern.”
On the basis of this review, and after making due
enquiries, the Directors have a reasonable expectation
that the Company has adequate resources to continue
in operational existence for at least 12 months from
the date of approval of this report. Accordingly, they
continue to adopt the going concern basis in preparing
the financial statements.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised
on the Company’s statement of financial position when
the Company becomes a party to the contractual
provisions of the instrument. Financial assets are to
be de-recognised when the contractual rights to the
cash flows from the instrument expire or the asset is
transferred, and the transfer qualifies for de-recognition
in accordance with IFRS 9 Financial Instruments.
Financial assets
The Company classifies its financial assets as either
investments at fair value through profit or loss or financial
assets at amortised cost. The classification depends on
the purpose for which the financial assets are acquired.
The Investment Manager determines the classification of
its financial assets at initial recognition.
Investments at fair value through profit or loss
At initial recognition, the Company measures its
investments, through its investment in TENT Holdings,
at fair value through profit or loss and any transaction
costs are expensed to profit or loss. The Company
subsequently, through its investment in TENT Holdings,
continues to measure all investments at fair value and
any changes in the fair value are recognised as gains or
losses on investments at fair value through profit or loss
within investment income.
Investments at fair value through profit or loss are
recognised upon initial recognition as financial assets at
fair value through profit or loss in accordance with IFRS
9. Investments held at fair value through profit or loss
consist of the Company’s subsidiary, TENT Holdings.
The Company’s investment in TENT Holdings comprises
both equity and loan notes.
The Company measures its
investment as a single class of financial asset at fair value
in accordance with IFRS 13 Fair Value Measurement.
In determining the fair value, the Board will consider
any observable market transactions and will measure fair
value using assumptions that market participants would
use when pricing the asset, including any assumptions
regarding risk surrounding the transaction.
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Financial assets at amortised cost
Trade receivables, loans and other receivables that are
non-derivative financial assets and that have fixed or
determinable payments that are not quoted in an active
market are classified as “financial assets at amortised
cost”. Trade receivables, loans and other receivables are
measured at amortised cost using the effective interest
method, less any impairment. They are included in
current assets, except where maturities are greater than
12 months after the reporting date, in which case they
are to be classified as non-current assets. The Company’s
financial assets held at amortised cost comprise “trade
and other receivables” and “cash and cash equivalents”
in the statement of financial position.
Financial liabilities and equity
Debt and equity instruments are classified as either
financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
Financial liabilities
Financial liabilities are classified as other financial
liabilities, comprising other non-derivative financial
instruments, including trade and other payables, which
are to be measured at amortised cost using the effective
interest method.
Effective interest method
The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts
through the expected life of the financial instrument to
the relevant asset’s carrying amount.
Fair value estimation for investments at fair value
The Group’s investments are not typically traded in
active markets. Fair value is calculated by discounting
at an appropriate discount rate future cash flows
expected to be received, by TENT Holdings, from the
investment portfolio. The underlying cash flows are
from investments in both equity (dividends and equity
redemptions), shareholder, inter-company and third-party
loans (interest and repayments). The valuations are based
on the expected future cash flows, using reasonable
assumptions and forecasts for revenues, operating costs,
macro-level factors and an appropriate discount rate.
The discount rates used in the valuation exercise
represent the Investment Manager’s best assessment
of the rate of return in the market for assets with similar
characteristics and risk profile. The discount rates
are reviewed on a regular basis and updated, where
appropriate, to reflect changes in the market and in the
project risk characteristics.
Investments, which are entered into by TENT Holdings,
are designated upon initial recognition as held at fair
value through profit or loss. Gains or losses resulting
from the movement in fair value of the investments
are reflected in the valuation of TENT Holdings and
recognised in the Statement of Comprehensive Income
at each quarterly valuation point.
The Company’s loan and equity investment in TENT
Holdings is held at fair value through profit or loss which
is measured by reference to the net asset value of TENT
Holdings. Gains or losses resulting from the movement in
fair value are recognised in the Company’s Statement of
Comprehensive Income at each quarterly valuation point.
For each quarterly valuation period the Company
engages external, independent and qualified valuers to
assess the validity of the forecast cash flow assumptions
and discount rates used by the Investment Manager
in determination of fair value. The Board reviews and
approves the valuations following appropriate challenge
and examination.
REVENUE RECOGNITION
Gains and losses on fair value of investments in the
income statement represent gains or losses that arise
from the movement in the fair value of the Company’s
investment in TENT Holdings.
Investment income comprises interest income and
dividend income received from the Company’s subsidiary,
TENT Holdings. Interest income is recognised in the
Income Statement using the effective interest method.
Dividends from TENT Holdings are recognised when
the Company’s right to receive payment has been
established.
SHARE CAPITAL AND SHARE PREMIUM
The Company’s Ordinary Shares are classified as equity
and are not redeemable. Costs associated or directly
attributable to the issue of new equity shares are
recognised as a deduction in equity and are charged
from the share premium account.
Triple Point Energy Transition plc
136
Notes to the Financial
Statements
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash balances,
deposits held on call with banks and other short-term highly
liquid deposits with original maturities of three months or
less. At 31 March 2023, the Company’s cash balances were
held in the Company’s bank current account.
There are no expected credit losses and the counterparty
risk is mitigated as the banking institution that the Company
holds balances with has high credit ratings assigned by
international credit rating agencies.
FOREIGN CURRENCIES
Items included in the financial statements are presented
in Pounds Sterling because that is the currency of the
primary economic environment in which the Company
operates and is the Company’s functional currency.
Transactions and balances
Transactions in foreign currencies are translated at
the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated
in foreign currencies at the reporting date are translated
at the foreign exchange rate ruling at that date.
Foreign exchange differences arising on translation are
recognised in the Income Statement.
DIVIDENDS
Dividends to the Company’s shareholders are recognised
when they become legally payable. In the case of interim
dividends, this is when they are paid. In the case of
final dividends, this is when they are approved by the
shareholders at the Annual General Meeting.
FUND EXPENSES
Expenses are accounted for on an accruals basis. Share
issue expenses of the Company directly attributable
to the issue and listing of shares are charged to the
share premium account. The Company’s investment
management fee, administration fees and all other
expenses are charged through the Income Statement.
CAPITAL EXPENSES
In accordance with the Company’s investment objective,
it is anticipated that income returns will constitute the
majority of the Company’s long-term return and based
on the estimated apportionment of future returns
(which cannot be guaranteed), 25% of the investment
management fee is charged as a capital item within the
Income Statement.
All expenditures are carefully assessed to determine
whether they are related to revenue or capital.
Subsequently, the expenditure will be appropriately
allocated to the respective section in the income
statement.
TAXATION
Under the current system of taxation in the UK, the
Company is liable to taxation on its operations in the UK.
Current tax is the expected tax payable on the taxable
income for the period, using tax rates that have been
enacted or substantively enacted at the date of the
Statement of Financial Position.
Deferred tax is the tax expected to be payable or
recoverable on temporary differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that
it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.
Deferred tax assets and liabilities are not recognised if
the temporary differences arise from goodwill or from
the initial recognition of other assets and liabilities in
a transaction that affects neither the tax profit or the
accounting profit.
Deferred tax liabilities are recognised for taxable
temporary differences arising on investments, except
where the Company is able to control the timing of the
reversal of the difference and it is probable that the
temporary difference will not reverse in the foreseeable
future. Deferred tax is calculated at the tax rates that
are expected to apply in the period when the liability is
settled, or the asset is realised. Deferred tax is charged or
2023 Annual Report
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Company Overview
Strategic Report
Governance
Financial Statements
Other Information
credited to the Income Statement except when it relates
to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to set off tax assets against tax
liabilities and when they relate to income taxes levied by
the same taxation authority and the Company intends to
settle its current tax assets and liabilities on a net basis.
Deferred tax assets and liabilities are not discounted.
NEW, REVISED AND AMENDED STANDARDS
APPLICABLE TO FUTURE REPORTING
PERIODS
There were no new standards or interpretations effective
in the year that have had a significant impact on the
Company’s financial statements. Furthermore, none of
the amendments to the standards summarised below
have had a significant effect on the financial statements.
NEW AND REVISED STANDARDS NOT
APPLIED
At the date of authorisation of these financial statements,
the following amendments had been published and will
be mandatory for future accounting periods beginning
on or after 1 January 2023:
È
Amendments to IFRS 17, “Insurance contracts” – this
standard replaced IFRS 4, which currently permits a
wide variety of practices in accounting for insurance
contracts.
È
Narrow-scope amendments to IAS 1 “Presentation
of Financial Statements”, practise statement 2 and
IAS 8 “Accounting Policies, Changes in Accounting
Estimates and Errors”.
È
Amendments to IAS 12 “Income Taxes” – deferred
tax related to assets and liabilities arising from a
single transaction.
Effective for accounting periods beginning on or after
1 January 2024:
È
Amendments to IAS 1 on classification of liabilities
clarify that liabilities are classified as either current
or non-current, depending on the rights that exist at
the end of the reporting period and amendments to
Non-current Liabilities with covenants.
È
Amendments to IFRS 16 on Lease Liability in a Sale
and Leaseback.
The impact of these standards is not expected to be
material to the reported results of the Company.
SEGMENTAL REPORTING
The Chief Operating Decision Maker (the “CODM”)
being the Board of Directors, is of the opinion that the
Company is engaged in a single segment of business,
being investment. All the investments are based in the
UK.
The Company has no single major customer. The internal
financial information to be used by the CODM on a
quarterly basis to allocate resources, assess performance
and manage the Company will present the business as a
single segment comprising the portfolio of investments
in energy transition assets.
/ 3.
CRITICAL ACCOUNTING
ESTIMATES, JUDGEMENTS
AND ASSUMPTIONS
In the application of the Company’s accounting policies,
which are described in Note 2, the Directors are required
to make judgements, estimates and assumptions about
the fair value of assets and liabilities that affect reported
amounts. It is possible that actual results may differ from
these estimates.
The preparation of the financial statements requires the
Board to make judgements, estimates and assumptions
that affect the application of the accounting policies
and the reported amount of assets, liabilities, income
and expenses. Estimates, by their nature, are based
on judgement and available information, hence actual
results may differ from these judgements, estimates and
assumptions.
The key estimates that have a significant impact on
the carrying values of underlying investments that are
valued by reference to the discounted value of future
cash flows are the useful life of the assets, the discount
rates, the rate of inflation, the price at which the power
and associated benefits can be sold and the amount
of electricity the assets are expected to produce. The
sensitivity analysis of these key assumptions is outlined in
N
ote 12 to the financial statements, on page 142.
For equity investments, entered into by TENT Holdings,
useful lives are based on the Investment Manger’s
estimates of the period over which the assets will
generate revenue which are periodically reviewed for
continued appropriateness. Where land is leased from
an external landlord, the operational life assumed for the
purposes of the asset valuations is valued at lease expiry
or end of contractual extension options. For the loan
investments the future cash flows are as per contractual
maturity of the facility.
Triple Point Energy Transition plc
138
Notes to the Financial
Statements
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
The discount rates are subjective and therefore it is
feasible that a reasonable alternative assumption may
be used resulting in a different value. The discount
rates applied to cash flows are reviewed regularly
by the Investment Manager to ensure they are at an
appropriate level. The Investment Manager will take
into consideration market transactions, of similar nature,
when considering changes to the discount rates used.
For the year end and half-year accounts and the other
quarterly NAV updates, the Company engages external,
independent and qualified valuers to assess the validity
of the discount rates used by the Investment Manager in
determination of fair value.
For equity investments, by TENT Holdings, the
revenues and expenditure of the investee companies
are frequently or wholly subject to indexation and an
assumption is made as to near term and long-term
rates. For debt investments, by TENT Holdings, the
cash flows are determined by reference to contractual
arrangements.
The price at which the output from the generating equity
assets is sold is a factor of both wholesale electricity
prices and the revenue received from the Government
support regimes such as the Feed in Tariffs. Future power
prices are estimated using external third-party forecasts
which take the form of special consultancy reports, which
reflect various factors including gas prices, carbon prices
and renewables deployment.
TENT Holdings’ investments in unquoted investments are
valued by reference to valuation techniques approved
by the Directors and in accordance with the International
Private Equity and Venture Capital (“IPEV”) Guidelines.
As noted above, the Board has concluded that the
Company meets the definition of an investment entity as
defined in IFRS 10. This conclusion involved a degree of
judgement and assessment as to whether the Company
meets the criteria outlined in the accounting standards.
/ 4.
INVESTMENT MANAGEMENT
FEES
The Company and the Investment Manager entered into
an Investment Management Agreement on 25 August
2020.
During the financial year the Annual Management
Fee was calculated at 0.9% of Net Asset Value. In the
prior financial year, the Annual Management Fee was
calculated on the deployed cash funds arising from
IPO, until 10 December 2021. At this date 75% of net
IPO proceeds had been deployed and therefore for the
remaining part of the financial year 2022 the fee was
calculated at 0.9% of NAV.
Under the terms of the agreement, the Investment
Manager must use 20% of the management fee received
(net of taxes) to acquire shares in the Company. On a
semi-annual basis, following the announcement of the
Net Asset Value for the semi-annual periods ending 31
March and 30 September in each year, the Investment
Manager shall procure that the Wider Triple Point Group
shall apply an amount, in aggregate, equal to 20% of
the Annual Management Fee for the relevant six-month
period as follows:
(a) where the Ordinary Shares are trading at, or at a
premium to, the latest published Net Asset Value per
Ordinary Share; the Investment Manager shall procure
that the Wider Triple Point Group shall use the
relevant amount to subscribe for new Ordinary Shares
issued at the latest published Net Asset Value per
Ordinary Share applicable at the date of issuance; or
(b) where the Ordinary Shares are trading at a
discount to the latest published Net Asset Value per
Ordinary Share; the Investment Manager shall procure
that the Wider Triple Point Group shall, as soon as
reasonably practicable, use the relevant amount to
make market purchases of Ordinary Shares within four
months of the relevant Net Asset Value publication
date.
2023 Annual Report
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Strategic Report
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Financial Statements
Other Information
The Annual Management Fee is payable on a quarterly basis, and Ordinary Shares are acquired by the Wider Triple
Point Group on a half-yearly basis. Any such Ordinary Shares acquired by the Wider Triple Point Group are subject to
a minimum lock-in period of 12 months.
Investment management fees paid or accrued during the year were as follows:
For the year ended
31 March 2023
For the year ended
31 March 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Cash element
662
221
883
317
106
423
Equity element*
–
–
–
10
3
13
662
221
883
327
109
436
*
During the financial year ended 31 March 2023, the Investment Manager purchased shares in the Company through the open market, as the share price was trading
at a discount to NAV. In the prior financial year, the Company issued new shares to the Investment Manager, as the shares were trading at a premium to NAV.
/ 5. INVESTMENT INCOME
For the year ended
31 March 2023
For the year ended
31 March 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Interest on cash
deposits
48
–
48
5
–
5
Interest income
from investments
3,354
–
3,354
2,446
–
2,446
Dividend income
from investments
3,880
–
3,880
–
–
–
7,282
–
7,282
2,451
–
2,451
/ 6. OPERATING EXPENSES
For the year ended
31 March 2023
For the year ended
31 March 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Investment Management fees
662
221
883
327
109
436
Directors’ fees*
200
–
200
200
–
200
Company’s audit fees:
- in respect of audit services
109
–
109
70
–
70
- in respect of non-audit services
44
–
44
25
–
25
Premium Listing fees
547
–
547
–
–
–
Other operating expenses
681
22
703
572
21
593
2,243
243
2,486
1,194
130
1,324
*Directors’ fees exclude employer’s national insurance contributions and travel expenses which are included as appropriate in other operating expenses. Travel expenses
for the year ended 31 March 2023 totalled £485 (31 March 2022: £643).
Triple Point Energy Transition plc
140
Notes to the Financial
Statements
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
/ 7.
EMPLOYEES
The Company had no employees during the period.
Full detail on Directors’ fees is provided in Note 19. The Directors’ fees exclude employer’s national insurance
contribution which is included as appropriate in other operating expenses. There were no other emoluments during
the period.
/ 8. TAXATION
Analysis of charge in the period
For the year ended
31 March 2023
For the year ended
31 March 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Corporation tax
–
–
–
–
–
–
The effective UK corporation tax rate applicable to the Company for the period is 19%. The tax charge differs from
the charge resulting from applying the standard rate of UK corporation tax for an investment trust company. The
differences are explained below:
For the year ended
31 March 2023
For the year ended
31 March 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Profit before taxation
5,039
3,774
8,813
1,257
3,504
4,761
Corporation tax at 19%
957
717
1,674
239
666
905
Effect of:
Capital (gain) not deductible
–
(763)
(763)
–
(690)
(690)
Interest distributions
(646)
–
(646)
(239)
–
(239)
Dividends received not taxable
(737)
–
(737)
–
–
–
Disallowed expenditure
108
–
108
–
–
–
Group relief of excess
management expenses
318
46
364
–
24
24
Tax charge for the period
–
–
–
–
–
–
The Directors are of the opinion that the Company has complied with the requirements for maintaining investment
trust status for the purposes of section 1158 of the Corporation Tax Act 2010. This allows certain capital profits of the
Company to be exempt from UK tax.
Additionally, the Company has in the financial year utilised the interest streaming election which allows the Company
to designate dividends wholly or partly as interest distributions for UK tax purposes. Interest distributions are treated
as tax deductions against taxable income of the Company so that investors do not suffer double taxation on their
returns.
2023 Annual Report
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Company Overview
Strategic Report
Governance
Financial Statements
Other Information
The financial statements do not directly include the tax charges for the Company’s intermediate holding company, as
TENT Holdings is held at fair value. TENT Holdings is subject to taxation in the United Kingdom at the current main
rate of 19%.
/ 9. EARNINGS PER SHARE
For the year ended
31 March 2023
For the year ended
31 March 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Profit attributable to the equity
holders of the Company
(£’000)
5,039
3,774
8,813
1,257
3,504
4,761
Weighted average number of
Ordinary Shares in issue (000)
100,014
100,014
100,014
100,014
100,014
100,014
Profit per Ordinary share
(pence) – basic and diluted
5.04p
3.77p
8.81p
1.26p
3.50p
4.76p
Dilution of the earnings per share
as a result of the equity element of the investment management fee as disclosed in
Note 4, is not expected to have a material impact on the basic earnings per share.
There is no difference between the weighted average Ordinary and diluted number of Shares.
/
10. DIVIDENDS AND INTEREST DISTRIBUTIONS
Interim dividends paid during year
ended 31 March 2023
Dividend per
share pence
Interest distribution
per share pence
Total dividend
£’000
Final quarter interim dividend for the year
ended 31 March 2022
0.678
0.697
1,375
First quarter interim dividend for year
ended 31 March 2023
0.799
0.576
1,375
Second quarter interim dividend for year
ended 31 March 2023
0.799
0.576
1,375
Third quarter interim dividend for year
ended 31 March 2023
0.799
0.576
1,376
3.075
2.425
5,501
Interim dividends declared after 31 March
2023 and not accrued in the year
Dividend per
share pence
Interest distribution
per share pence
Total dividend
£’000
Fourth quarter interim dividend for the
year ended 31 March 2023
0.370
1.005
1,375
0.370
1.005
1,375
As at the date of this report, the Board declared a fourth quarter interim dividend of 1.375 pence per share with
respect to the period ended 31 March 2023. The dividend is expected to be paid on or around
14 July 2023 to
shareholders on the register on 30 June 2023 The ex-dividend date is 29 June 2023. The Company has chosen to
designate part of this interim dividend as an interest distribution. 1.005 pence per share will be paid as an interest
payment and 0.370 as an ordinary dividend.
Shareholders in receipt of an interest distribution will be treated for UK tax purposes as though they received a
payment of interest. This will result in a reduction in the corporation tax payable by the Company.
Triple Point Energy Transition plc
142
Notes to the Financial
Statements
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
/ 11. NET ASSETS PER ORDINARY SHARE
31 March 2023
£’000
31 March 2022
£’000
Total shareholders’ equity (£’000)
99,449
96,137
Number of Ordinary Shares in issue (‘000)
100,014
100,014
Net asset value per Ordinary Share (pence)
99.44p
96.12p
/ 12.
INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
As set out in Note 2, the Company designates its interest in its wholly owned direct subsidiary as an investment at fair
value through profit or loss.
Summary of the Company’s valuation is below:
31 March 2023
£’000
31 March 2022
£’000
Fair value at start of the year
78,952
20,883
Loan advanced to TENT Holdings Limited in the year
7,964
32,704
Shareholding in TENT Holdings Limited invested in the year
1,469
23,315
Capitalised interest
99
7
519
Loan principal repaid
(3,339)
(2,103)
Fair value of other net assets in intermediate holding company
4,017
3,634
Fair Value of Company’s investments as at end of the year
90,060
78,952
Loans advanced to TENT Holdings in the year totalled £7,964,000.
The advances were made at an interest rate of 7%
to enable TENT Holdings to complete the loan investment in BESS and LEDs.
The Company owns five shares in TENT Holdings, representing 100% of issued share capital, allotted for a
consideration of £24.8 million. The fair value of the investment in TENT Holdings on 31 March 2023 is £90.1 million
(31 March 2022: £79.0 million).
Capitalised interest represents interest recognised in the income statement but not paid. This is instead added to the
loan balance on which interest for future periods is computed. The loan from the Company to TENT Holdings, which
enabled TENT Holdings to complete investments into Harvest, Glasshouse and Spark Steam, carry commensurate
terms and repayment profiles. All payments from the borrower and capitalised interest are in accordance and in line
with the contractual repayments with the respective underlying facility agreements with Harvest, Glasshouse and
Spark Steam as agreed at inception.
2023 Annual Report
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Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Reconciliation of Portfolio Valuation:
31 March 2023
£’000
31 March 2022
£’000
Portfolio Valuation
87,680
78,787
Intermediate holding company cash
1,982
293
Intermediate holding company debt*
329
454
Intermediate holding company net working capital
69
(582)
Fair Value of Company’s investments as at end of the period
90,060
78,952
*
Debt arrangement costs of £329,000 (31 March 2022: £454,000) which are capitalised and expensed to profit or loss under amortised cost. At 31 March 2023 nil debt
was drawn (31 March 2022: nil).
FAIR VALUE MEASUREMENTS
As set out in Note 2, the Company accounts for its interest in its wholly owned direct subsidiary, TENT Holdings, as an
investment at fair value through profit or loss.
IFRS 13 requires disclosure of fair value measurement by level. The level of fair value hierarchy within the financial
assets or financial liabilities is determined on the basis of the lowest level input that is significant to the fair value
measurement. Financial assets and financial liabilities are classified in their entirety into only one of the following three
levels:
È
level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
È
level 2 – inputs other than quoted prices included within level 1 that are observable for the assets or liabilities,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
È
level 3 – inputs for assets or liabilities that are not based on observable market data (unobservable inputs).
The determination of what constitutes “observable” requires significant judgement by the Company. Observable data
is considered to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively involved in the relevant market.
The financial instruments held at fair value are the instruments held by the Group in the investee companies, which
are fair valued at each reporting date. The investments have been classified within level 3 as the investments are not
traded and contain certain unobservable inputs. The Company’s investments in TENT Holdings are also considered to
be level 3 assets.
As the fair value of the Company’s equity and loan investments in TENT Holdings is ultimately determined by the
underlying fair values of the equity and loan investments, made by TENT Holdings, the Company’s sensitivity analysis
of reasonably possible alternative input assumptions is the same as for those investments.
There have been no transfers between levels during the period.
Valuations are derived using a discounted cash flow methodology in line with IPEV Valuation Guidelines and consider,
inter alia, the following:
i. due diligence findings where relevant;
ii. the terms of any material contracts including PPAs;
iii. asset performance;
iv. power price forecasts from leading consultants; and
v. the economic, taxation or regulatory environment.
Triple Point Energy Transition plc
144
Notes to the Financial
Statements
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
The DCF valuation of the Group’s investments represents the largest component of GAV and the key sensitivities are
considered to be the discount rate used in the DCF valuation and assumptions relating to inflation, energy yield and
power prices.
The shareholder loan and equity investments, in TENT Holdings, are valued as a single asset class at fair value in
accordance with IFRS 13 Fair Value Measurement.
SENSITIVITY
Sensitivity analysis is produced to show the impact of changes in key assumptions adopted to arrive at the valuation.
For each of the sensitivities, it is assumed that potential changes occur independently of each other with no effect on
any other base case assumption, and that the number of investments in the portfolio remains static throughout the
modelled life.
The analysis below shows the sensitivity of the portfolio value (and its impact on NAV) to changes in key assumptions
as follows:
DISCOUNT RATE
The weighted average valuation discount rate applied to calculate the portfolio valuation is 6.57%
(31 March 2022: 6.11%).
An increase or decrease in this rate by 0.5% points has the following effect on valuation.
Discount Rate
NAV
per share
impact
Pence
-0.5%
change
£’000
Total
portfolio
value
£’000
+0.5%
change
£’000
NAV
per share
impact
£’000
Valuation – March 2023
2.84
92,896
90,060
87,478
(2.58)
ENERGY YIELD
The table below shows the sensitivity of the Hydroelectric Portfolio valuation to a sustained decrease or increase
of energy generation by minus or plus 5% on the valuation, with all other variables held constant. The fair value of
the Hydroelectric Portfolio is assessed on a “P50” level of electricity generation, representing the expected level of
generation over the long term.
A change in the forecast energy yield assumptions by plus or minus 5% has the following effect.
Energy Yield
NAV
per share
impact
Pence
-5%
change
£’000
Total
portfolio
value
£’000
+5%
change
£’000
NAV
per share
impact
£’000
Valuation – March 2023
(3.18)
86,880
90,060
93,193
3.13
2023 Annual Report
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Company Overview
Strategic Report
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Financial Statements
Other Information
POWER PRICES
The sensitivity considers a flat 10% movement in power prices for all years, i.e. the effect of adjusting the forecast
electricity price assumptions applicable to the Hydroelectric Portfolio down by 10% and up by 10% from the base
case assumptions for each year throughout the operating life of the Hydroelectric Portfolio.
A change in the forecast electricity price assumptions by plus or minus 10% has the following effect.
Power Prices
NAV
per share
impact
Pence
-10%
change
£’000
Total
portfolio
value
£’000
+10%
change
£’000
NAV
per share
impact
Pence
Valuation – March 2023
(2.37)
87,686
90,060
92,855
2.79
INFLATION
The Hydroelectric Portfolio’s income streams are principally subsidy based, which is amended each year with inflation,
with the remaining income being from the power price, which the sensitivity assumes will move with inflation.
Operating expenses relating to the Hydroelectric Portfolio, typically move with inflation, but debt payments on the
shareholder loans are fixed. This results in the portfolio returns and valuations being positively correlated to inflation.
The average long-term inflation assumptions across the portfolio are 3.00% for RPI from 2024 to 2030 (inclusive) and
2.40% thereafter, 2.25% for CPI from 2024. The Company models wholesale power prices inflating at 3% from 2024
onwards as power prices are not intrinsically linked to consumer prices, unlike costs of sales and labour.
The sensitivity illustrates the effect on the portfolio of a 0.5% decrease and a 0.5% increase from the assumed annual
inflation rates in the financial model throughout the operating life of the portfolio.
Inflation
NAV
per share
impact
Pence
-0.5%
change
£’000
Total
portfolio
value
£’000
+0.5%
change
£’000
NAV
per share
impact
Pence
Valuation – March 2023
(2.34)
87,721
90,060
92,540
2.48
/
13. TRADE AND OTHER RECEIVABLES
For the year ended
31 March 2023
£’000
For the year ended
31 March 2022
£’000
Prepayments
111
114
Other receivables
263
339
374
453
/
14. TRADE AND OTHER PAYABLES
For the year ended
31 March 2023
£’000
For the year ended
31 March 2022
£’000
Accrued expenses
219
125
Other payables
23
287
242
412
Triple Point Energy Transition plc
146
Notes to the Financial
Statements
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
/ 15. SHARE CAPITAL AND RESERVES
FOR THE YEAR ENDED 31 MARCH 2023
Allotted, issued and fully paid:
Number of shares
Nominal value of shares (£)
Opening balance as at 1 April 2022
100,014,079
1,000,140.79
Ordinary Shares of 1p each
–
–
Closing balance of Ordinary Shares at 31 March 2023
100,014,079
1,000,140.79
FOR THE YEAR ENDED 31 MARCH 2022
Allotted, issued and fully paid:
Number of shares
Nominal value of shares (£)
Opening balance as at 1 April 2021
100,000,000
1,000,000.00
Ordinary Shares of 1p each
14,079
140.79
Closing balance of Ordinary Shares at 31 March 2022
100,014,079
1,000,140.79
The Company did not issue any new shares to the Investment Manager in year ending March 2023 under the terms
of the Investment Management Agreement. Shares acquired by the Investment Manager in the year have been
purchased to fulfill that requirement.
Shareholders are entitled to all dividends paid by the Company and, on a winding up, provided the Company has
satisfied all its liabilities, the shareholders are entitled to all of the residual assets of the Company.
/
16. SPECIAL DISTRIBUTABLE RESERVE
On 19 October 2020 the Company’s Ordinary Shares were admitted to trading on the Specialist Fund Segment of the
London Stock Exchange, the Directors applied to the Court and obtained a judgement on 12 January 2021 to cancel
the amount standing to the credit of the share premium account of the Company.
As stated by the Institute of Chartered Accountants in England and Wales (“ICAEW”) and the Institute of Chartered
Accountants in Scotland (“ICAS”) in the technical release TECH 02/17BL, the Companies (Reduction of Share Capital)
Order 2008 SI 2008/1915 (“the Order”) specifies the cases in which a reserve arising from a reduction in a company’s
capital (i.e., share capital, share premium account, capital redemption reserve or redenomination reserve) is to be
treated as a realised profit as a matter of law.
The Order also disapplies the general prohibition in section 654 on the distribution of a reserve arising from a
reduction of capital. The Order provides that if a limited company having a share capital reduces its capital and the
reduction is confirmed by order of court, the reserve arising from the reduction is treated as a realised profit unless the
court orders otherwise.
The amount of the share premium account cancelled and credited to the Company’s Special reserve was £97.0 million
which can be utilised to fund distributions by way of dividends to the Company’s shareholders. As at the year ending
31 March 2023, the special distributable reserve balance is £
91
.0 million (31 March 2022: £91.4 million).
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Strategic Report
Governance
Financial Statements
Other Information
/
17. FINANCIAL RISK MANAGEMENT
The Company’s investment activities expose it to a variety of financial risks; including, interest rate risk, power price
risk, credit risk and liquidity risk. The Board of Directors has overall responsibility for overseeing the management of
financial risks, however the review and management of financial risks are delegated to the AIFM.
Each risk and its management are summarised below.
INTEREST RATE RISK
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values
of financial instruments. The Company is exposed to interest rate risk on its cash balances held with counterparties,
bank deposits, revolving credit facility, advances to counterparties through loans to its subsidiary. The Company
may be exposed to changes in variable market rates of interest as this could impact the discount rate and therefore
the valuation of the investments as well as the fair value of the loan receivable. Furthermore, the Company may be
exposed to interest rates rises when the revolving credit facility is refinanced. The Company is not considered to be
materially exposed to interest rate risk so no sensitivity has been performed. Sensitivity analysis is disclosed in
N
ote
12 to show the impact of changes in key assumptions adopted to arrive at the valuation of investments.
The Company’s interest and non-interest-bearing assets and liabilities are summarised below:
For the year ended 31 March 2023
Interest
bearing
£’000
Non-interest
bearing
£’000
Total value
£’000
Assets:
Investments at fair value through profit or
loss
57,537
32,523
90,060
Other receivables
–
263
263
Cash and cash equivalents
9,257
–
9,257
Total Assets
66,794
32,786
99,580
Liabilities:
Trade and other payables
–
242
242
Total Liabilities
–
242
242
For the year ended 31 March 2022
Interest
bearing
£’000
Non-interest
bearing
£’000
Total value
£’000
Assets:
Investments at fair value through profit or
loss
52,116
26,836
78,952
Other receivables
–
339
339
Cash and cash equivalents
17,144
–
17,144
Total Assets
69,260
27,175
96,435
Liabilities:
Trade and other payables
–
412
412
Total Liabilities
–
412
412
Triple Point Energy Transition plc
148
Notes to the Financial
Statements
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
LIQUIDITY RISK
Liquidity risk is the risk that the Company may not be able to meet its financial obligations as they fall due. The AIFM
and the Board continuously monitor forecast and actual cash flows from operating, financing, and investing activities
to consider payment of dividends, repayment of trade and other payables or funding further investing activities.
The Company maintains appropriate reserves and has through TENT Holdings established a revolving credit facility.
This facility will be utilised to fund the Group’s investment commitments, ensuring sufficient liquidity to meet
obligations The Company will continuously monitor forecast and actual cash flows to seek to match the maturity
profiles of financial assets and liabilities.
At the period end, the Company’s investments, through TENT Holdings, were in equity and secured loan investments
in private companies, in which there is no listed market and therefore such investments would take time to realise,
and there is no assurance that the valuations placed on the investments would be achieved from any such sale
process. The Company’s wholly owned subsidiary TENT Holdings, is the entity through which the Company holds its
investments. The liquidity of TENT Holdings is reflective of the investments which it holds.
Financial liabilities by maturity at the period end are shown below:
For year ended March 2023
Less than 1
year
£’000
1-5 years
£’000
More than 5
years
£’000
Total
£’000
Liabilities:
Trade and other Payables
(242)
–
–
(242)
For year ended March 2022
Less than 1
year
£’000
1-5 years
£’000
More than 5
years
£’000
Total
£’000
Liabilities:
Trade and other Payables
(412)
–
–
(412)
CREDIT RISK
Credit risk is the risk that a counterparty of the Group will be unable or unwilling to meet a commitment that it has
entered into with the Group. It is a key part of the pre-investment due diligence. The credit standing of the companies
which the Group intends to lend to or invest in is reviewed, and the risk of default estimated for each significant
counterparty position. Monitoring is on-going, and period end positions are reported to the Board on a quarterly
basis.
Credit risk also arises from cash and cash equivalents, derivative financial instruments, loan investments held through
TENT Holdings and deposits with banks and financial institutions. The Company and its subsidiaries may mitigate their
risk on cash investments and derivative transactions by only transacting with major international financial institutions
with high credit ratings assigned by international credit rating agencies, this is in line with the Company’s treasury
policy.
2023 Annual Report
149
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
The Company had no derivatives during the period and the Company’s cash balances were held in the Company’s
current account. In light of the collapse of long-standing financial institutions in recent times, the Company intends to
further mitigate its risk by assessing the viability of holding cash balances in an additional bank account with a credit
rating of at least Fitch A- or Moody’s A3.
To further mitigate counterparty risk, the credit rating and key financials such as cash balance and net asset positions,
of the banking provider is reviewed on a regular basis.
The carrying value of the investments, trade and other receivables and cash represent the Company’s maximum
exposure to credit risk.
PRICE RISK
Price risk is defined as the risk that the fair value of a financial instrument held by the Group will fluctuate. Investments
are measured at fair value through profit and loss. As at 31 March 2023, the Company held
11
indirect investments
through its intermediary holding company, TENT Holdings. The value of the investments held by TENT Holdings will
vary according to a number of factors including; discount rate used, asset performance and forecast power prices.
Sensitivity analysis is disclosed in
N
ote 12.
CAPITAL RISK MANAGEMENT
The capital structure of the Company at the year-end consists of equity attributable to equity holders of the Company,
comprising issued capital and reserves. The Board continues to monitor the balance of the overall capital structure so
as to maintain investor and market confidence. The Company is not subject to any external capital requirements.
MARKET RISK
Returns from the Company’s indirect investments are affected by the price at which the investments are acquired. The
value of these investments will be a function of the discounted value of their expected future cash flows, and as such
will vary with, inter-alia, movements in interest rates, market prices and competition for such assets. The Investment
Manager carries out a full valuation quarterly and this valuation exercise takes into account such changes.
/
18. SUBSIDIARIES
The following table shows subsidiaries of the Group. As the Company is regarded as an Investment Entity as referred
to in Note 2, the subsidiaries have not been consolidated in the preparation of the financial statements.
Investment
Place of Business
Ownership interest as
at 31 March 2023
TENT Holdings*
UK
100.00%
Achnacarry Hydro Limited**
UK
100.00%
Elementary Energy Limited**
UK
99.32%
Triple Point Energy Transition plc
150
Notes to the Financial
Statements
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Investment
Place of Business
Ownership interest as
at 31 March 2023
Green Highland ALLT Choire A Bhalachain (255) Limited**
UK
100.00%
Green Highland ALLT Ladaidh (1148) Limited**
UK
100.00%
Green Highland ALLT Luaidhe (228) Limited**
UK
100.00%
Green Highland ALLT Phocachain (1015) Limited**
UK
100.00%
Investment
Place of Business
Ownership interest as
at 31 March 2022
TENT Holdings*
UK
100.00%
Achnacarry Hydro Limited**
UK
100.00%
Elementary Energy Limited**
UK
99.32%
Green Highland ALLT Choire A Bhalachain (255) Limited**
UK
100.00%
Green Highland ALLT Ladaidh (1148) Limited**
UK
100.00%
Green Highland ALLT Luaidhe (228) Limited**
UK
100.00%
Green Highland ALLT Phocachain (1015) Limited**
UK
100.00%
*
Direct shareholding in a financial services investment holding company.
** Indirect shareholding in an electricity production company.
/
19. RELATED PARTY TRANSACTIONS
DIRECTORS’ FEES
The amounts incurred in respect of Director’s fees during the period to 31 March 2023 was £200,000 (31 March 2022:
£200,000). These amounts have been fully paid at 31 March 2023. The amounts paid to individual directors during the
period were as follows:
For the year ended
31 March 2023
For the period ended
31 March 2022
Dr John Roberts (Chair)
£75,000
£75,000
Rosemary Boot
£45,000
£45,000
Sonia McCorquodale
£40,000
£40,000
Dr Anthony White
£40,000
£40,000
2023 Annual Report
151
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
DIRECTORS’ EXPENSES
The expenses claimed by the Directors during the period to 31 March 2023 was £485 (31 March 2021: £643). These
amounts have been fully paid at 31 March 2023. The amounts paid to individual directors during the period were as
follows:
For the year ended
31 March 2023
For the period ended
31 March 2022
Dr John Roberts (Chair)
£156
£551
Rosemary Boot
£61
£51
Sonia McCorquodale
£216
–
Dr Anthony White
£52
£41
DIRECTORS’ INTERESTS
Details of the direct and indirect interests of the Directors and their close families in the ordinary share of one pence
each in the Company at 31 March 2023 were as follows:
Number of Shares
% of Issued share Capital
Dr John Roberts (Chair)
40,000
0.04%
Rosemary Boot
40,000
0.04%
Sonia McCorquodale
10,000
0.01%
Dr Anthony White
40,000
0.04%
THE COMPANY AND SUBSIDIARIES
During the year interest totalling £3,353,665 was earned on the Company’s long-term interest-bearing loans between
the Company and its subsidiary (31 March 2022: £2,445,736). At the period end, £195,417 was outstanding
(31 March 2022: £344,105).
The loans to TENT Holdings are unsecured; the underlying loan from TENT Holdings to the investment portfolio are
secured against the assets of the companies by a fixed and floating charge.
On 13 April 2022, the Company subscribed for one ordinary share for a total consideration of £1,000,000 in TENT
Holdings. The share subscription was used to fund payment of the subsidiary’s arrangement fees in connection with
the revolving credit facility and to partially fund the first drawdowns into the LED lighting portfolio. A further share
subscription of one ordinary share, was executed on 26 August 2022, for a total consideration of £469,281 in TENT
Holdings. The subsidiary used the proceeds to further fund the deployment into the LED lighting portfolio.
On 22 September 2022, TENT Holdings paid a £1,148,426 dividend to the Company. On 30 March 2023 an
additional dividend of £2,731,501 was paid by TENT Holdings to the Company. The dividends represent a
commensurate dividend received by TENT Holdings from the Hydroelectric Portfolio in the same period.
Triple Point Energy Transition plc
152
Notes to the Financial
Statements
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
THE AIFM AND INVESTMENT MANAGER
The Company and Triple Point Investment Management LLP have entered into the Investment Management
Agreement pursuant to which the Investment Manager has been given responsibility, subject to the overall supervision
of the Board, for active discretionary investment management of the Company’s Portfolio in accordance with the
Company’s Investment Objective and Policy.
As the entity appointed to be responsible for risk management and portfolio management, the Investment Manager
is the Company’s AIFM. The Investment Manager has full discretion under the Investment Management Agreement to
make investments in accordance with the Company’s Investment Policy from time to time.
This discretion is, however, subject to: (i) the Board’s ability to give instructions to the Investment Manager from time
to time; and (ii) the requirement of the Board to approve certain investments where the Investment Manager has a
conflict of interest in accordance with the terms of the Investment Management Agreement.
Under the terms of the Investment Management Agreement, the Investment Manager is entitled to a fee calculated at
the rate of:
È
0.9%, per annum of the adjusted NAV in respect of the Net Asset Value of up to, and including, £650 million; and
È
0.8%, per annum of the adjusted NAV in respect of the Net Asset Value in excess of £650 million.
The management fee is calculated and accrues quarterly and is invoiced quarterly in arrears. During the period ended
31 March 2023, management fees of £883,215 (31 March 2022: £436,478) were incurred of which £nil (31 March 2022:
£207,765) was payable at the period end.
INVESTMENT MANAGER’S INTEREST IN SHARES OF THE COMPANY
On 27 September 2022, the Investment Manager purchased on the open market 41,500 Ordinary Shares in the
Company in accordance with the terms of the Investment Management Agreement pursuant to which 20% of the
management fee paid is used to acquire new ordinary shares of £0.01 each in the capital of the Company. The
average price per Investment Management Ordinary Share was £0.8086.
On 22 December 2022, the Investment Manager purchased on the open market 57,616 Ordinary Shares in the
Company in accordance with the terms of the Investment Management Agreement pursuant to which 20% of the
management fee paid is used to acquire new ordinary shares of £0.01 each in the capital of the Company. The
average price per Investment Management Ordinary Share was £0.8.
The below table details of the interests of the Investment Manager, held by an entity within the Wider Triple Point
Group, in the ordinary shares of one pence each in the Company as at 31 March 2023. In the year, Perihelion One
limited increased its shareholding in the Company by 369,195, through acquiring shares on the open market.
Number of Shares
% of Issued share Capital
Perihelion One Limited
1,042,157
1%
Perihelion One Limited is a company within the Wider Triple Point Group.
2023 Annual Report
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Company Overview
Strategic Report
Governance
Financial Statements
Other Information
GUARANTEES AND OTHER COMMITMENTS
The Company is the guarantor of the £40 million RCF between its sole wholly owned subsidiary TENT Holdings and
TP Leasing Limited. The RCF was entered into on 13 March 2022 and extended on 29 March 2023 for a 12 month
period to 28 March 2025. The facility remains undrawn at year end 31 March 2023. Alongside the extension, the
pricing terms were adjusted to reflect the current interest rate environment, and for the 2nd year of the RCF facility,
the interest rate charged will be a fixed rate coupon of 6% pa on drawn amounts. In the 3rd year of the facility, the
interest will be calculated on the lower of a fixed rate coupon of 6% pa; or the sum of the one year SONIA swap rate
plus a fixed rate coupon of 2.5% pa, calculated no later than 30 days prior to the 2nd anniversary of the facility term.
TP Leasing Limited is an established private credit and asset leasing business which is managed by the Investment
Manager and, as a result, is deemed to be a related party as defined in the Listing Rules. The RCF extension is
deemed to be a “smaller related party transaction” for the purposes of LR11.1.10R. Prior to entering into the Facility
Agreement, (i) the terms of the RCF extension were approved as fair and reasonable by the Directors and (ii) the
Company obtained a fair and reasonable opinion for shareholders from a qualified, independent adviser. The Board
was satisfied with the conflict management procedures put in place, including team segregation within the Investment
Manager.
/
20. COMMITMENTS AND CONTINGENT LIABILITIES
The Company’s wholly owned subsidiary, TENT Holdings, has entered a £45.6 million investment commitment to
fund the build of a portfolio of four geographically diverse BESS assets in the UK. £39.4 million of the commitment is
outstanding at the year end date, and is forecast to be fully deployed in 2024.
The commitment will be funded by the
undrawn £40 million RCF available to TENT Holdings.
On 31 March 2023, the Company’s wholly owned subsidiary, TENT Holdings, entered into a 12 month secured lending
facility agreement of £5 million with Innova for the purpose of financing the repayment of shareholder loans and the
funding of the project development and acquisition of new renewables projects.
/
21. EVENTS AFTER THE REPORTING PERIOD
On 3 April 2023, the £5.0 million Innova facility was fully drawn.
On 8 June 2023, the BESS Portfolio completed a drawdown of a further £3.9 million, which was partly funded by the
Group’s revolving credit facility.
DIVIDEND
As at the date of this report, the Board declared a fourth quarter interim dividend of 1.375 pence per share with
respect to the period ended 31 March 2023. The dividend is expected to be paid on or around 14 July 2023 to
shareholders on the register on 30 June 2023. The ex-dividend date is 29 June 2023. The Company has chosen to
designate part of this interim dividend as an interest distribution. 1.005 pence per share will be paid as an interest
payment and 0.370 as an ordinary dividend.
/
22. ULTIMATE CONTROLLING PARTY
In the opinion of the Board, on the basis of the shareholdings advised to them, the Company has no ultimate
controlling party.
Triple Point Energy Transition plc
154
Notes to the Financial
Statements
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
/
ALTERNATIVE PERFORMANCE MEASURES
In reporting financial information, the Company presents alternative performance measures (“APMs”), which
are defined or specified under the requirements of IFRS. The Company believes that these APMs, which are
not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful
information on the performance of the Company. The APMs presented in this report are shown below:
/
GROSS ASSET VALUE OR GAV
A measure of total asset value including third party debt held in unconsolidated subsidiaries.
Page
31 March 2023
£’000
31 March 2022
£’000
GAV
a
129
99,691
96,549
Drawn Debt held in unconsolidated
subsidiaries
b
N/A
–
–
Gross Asset Value
a + b
99,691
96,549
/
GROSS LOAN TO VALUE
A measure expressed as a percentage of the Group’s financial debt relative to GAV.
Page
31 March 2023
£’000
31 March 2022
£’000
Drawn Debt held in unconsolidated
subsidiaries
a
N/A
–
–
Gross Asset Value
b
N/A
99,691
96,549
Gross Loan to Value
a/b
0.0%
0.0%
/
NAV TOTAL RETURN
A measure of NAV performance over the reporting period (including dividends paid). NAV total return is shown as a
percentage change from the start of the period.
Page
31 March 2023
31 March 2022
Opening NAV
pence
a
N/A
96.12
97.49
Closing NAV
pence
b
129
99.44
96.12
Dividends paid
pence
c
131
5.50
6.13
Total NAV Return
((b + c)/a)-1
9.2%
4.9%
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Company Overview
Strategic Report
Governance
Financial Statements
Other Information
/
ONGOING CHARGES
A measure expressed as a percentage of average net assets, of the regular, recurring annual costs of running the
Company per Ordinary Share. The calculation and disclosure have been performed following the AIC methodology,
wherein any one-time expenses have been excluded from the ongoing expenses:
Page
31 March 2023
£’000
31 March 2022
£’000
Average NAV
a
N/A
97,794
96,041
Ongoing Expenses
b
N/A
1,895
1,324
Ongoing charges ratio
b / a - 1
1.94%
1.38%
/
CASH INCOME
A measure which illustrates the cash generated by the Company’s operations.
Page
31 March 2023
£’000
31 March 2022
£’000
Investment income as per statement
of comprehensive income
a
128
7,282
2,451
Trade receivables at start of period
b
N/A
339
53
Trade receivables at end of period
c
129
263
339
Total Cash Income
(a + b - c)
7,358
2,165
/
CASH DIVIDEND COVER
A measure which illustrates the number of times the Company’s cash flow can cover dividend payments to
Shareholders.
Page
31 March 2023
£’000
31 March 2022
£’000
Cash income*
a
131
8,975
2,165
Cash expenditure*
b
131
3,042
1,324
Dividends paid per Statement of
Changes in Equity
c
130
5,501
6,125
Total Cash Income
(a – b) / c
1.1x
0.14x
*
Cash income and expenditure is representative of the Company and TENT Holdings based on a look through methodology
Other
Information
Triple Point Energy Transition plc
158
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Glossary and Definitions
The Act
Companies Act 2006
AIC Code
The AIC Code of Corporate Governance produced by the Association of
Investment Companies
AIFM
The alternative investment fund manager of the Company, Triple Point
Investment Management LLP
AIFMD
The EU Alternative Investment Fund Managers Directive 2011/61/EU
BESS
Battery Energy Storage Systems
BESS Portfolio
£45.6 million debt facility to a subsidiary of Virmati Energy Ltd (trading as Field),
to fund a portfolio of four Battery Energy Storage Systems assets
CfDs
Contracts for difference
CHP
Combined heat and power
CHP Portfolio
A total debt investment of £29 million into Harvest and Glasshouse and Spark
Steam
CODM
Chief Operating Decision Maker
The Company
Triple Point Energy Transition plc (company number 12693305)
DCF
Discounted Cash Flow
DTR
FCA Disclosure and Transparency Rules
EGL
Electricity Generator Levy
ESG
Environmental, Social and Governance
ESS
Energy Storage Systems
EU
European Union
EV
Electric Vehicle
FCA
Financial Conduct Authority
FRC
Financial Reporting Council
GAV
Gross Asset Value
GHG
Greenhouse Gas
Group
The Company and any subsidiary undertakings from time to time
Harvest and Glasshouse
Harvest Generation Services Limited and Glasshouse Generation Limited
HVAC
Heating, Ventilation and Air Conditioning
Hydroelectric Portfolio
Elementary Energy Limited
Green Highland Allt Ladaidh (1148) Limited
Green Highland Allt Choire A Bhalachain (255) Limited
Green Highland Allt Phocachain (1015) Limited
Green Highland Allt Luaidhe (228) Limited
Achnacarry Hydro Limited
IEA
International Energy Agency
Innova
Innova Renewables Limited
IPEV
International Private Equity and Venture Capital
ITC
Investment Trust Company
2023 Annual Report
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Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Investment Manager or TPIM
Triple Point Investment Management LLP
IPO
The admission by the Company of 100 million Ordinary Shares to trading on
the Specialist Fund Segment of the Main Market, which were the subject of the
Company’s initial public offering on 19 October 2020
IPO Prospectus
The Company’s Prospectus for its initial public offering, published on
25 August 2020
kWh
Kilowatt-hour
LED
Light-emitting Diode
Listing Rules
Financial Conduct Authority Listing Rules
MW
Megawatt
MWh
Megawatt-hour
NAV
The net asset value, as at any date, of the assets of the Company after
deduction of all liabilities determined in accordance with the accounting
policies adopted by the Company from time-to-time
NGFS
Network for Greening the Financial System
Net Zero
A target of completely negating the amount of greenhouse gases produced
by human activity, to be achieved by reducing emissions and implementing
methods of absorbing carbon dioxide from the atmosphere
OCR
Ongoing charges ratio
O&M
Operations & Maintenance
PPA
Power Purchase Agreement
PRI
Principals for Responsible Investing
Project SPV
Special Purpose Vehicle in which energy transition assets are held
RCF
The Group’s £40 million Revolving Credit Facility, via TENT Holdings, with
TP Leasing Limited
SDG
Sustainable Development Goals
SDR
Sustainable Disclosure Regulation
SECR
Streamlined Energy and Carbon Reporting
SFDR
Sustainable Finance Disclosure Regulation
SONIA
Sterling Overnight Index Average
SORP
Statement of Recommended Practi
c
e
Spark Steam
Spark Steam Limited
tCO2
Tonnes of carbon dioxide emissions
tCO2e
Tonnes of carbon dioxide equivalent. Emissions of all greenhouse gases,
expressed in units of carbon dioxide equivalence, based on global warming
potential
TCFD
Task Force on Climate-related Financial Disclosures
TENT Holdings
The wholly owned subsidiary of the Company: TENT Holdings Limited
(company number 12695849)
UN SDGs
United Nations Sustainable Development Goals
Wider Triple Point Group
Triple Point LLP (company number OC310549) and any subsidiary undertakings
from time to time
Triple Point Energy Transition plc
160
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Shareholder Information
NON-EXECUTIVE DIRECTORS
Dr John Roberts CBE
Rosemary Boot
Sonia McCorquodale
Dr Anthony White MBE
REGISTERED OFFICE
1 King William Street
London
EC4N 7AF
ALTERNATIVE INVESTMENT FUND MANAGER
Triple Point Investment Management LLP
1 King William Street
London
EC4N 7AF
FINANCIAL ADVISER
Akur Capital
66 St James’s Street
London
SW1A 1NE
SOLE BROKER
J.P. Morgan Securities plc (which conducts its UK
investment banking activities as J.P. Morgan Cazenove)
25 Bank Street
Canary Wharf
London
E14 5JP
LEGAL ADVISER
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
ADMINISTRATOR AND COMPANY
SECRETARY
Hanway Advisory Limited
1 King William Street
London
EC4N 7AF
INDEPENDENT AUDITOR
BDO LLP
55 Baker Street
London
W1U 7EU
TAX ADVISER
Deloitte LLP
1 New Street Square
London
EC4A 3HQ
DEPOSITARY
INDOS Financial Limited
54 Fenchurch Street
London
EC3M 3JY
REGISTRARS
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
INDEPENDENT VALUER
Mazars LLP
30 Old Bailey
London
EC4N 7AU
2023 Annual Report
161
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Forward-Looking
Statements
The Front Section of this report (including but not limited to the Chair’s Statement, Strategic Report, Investment
Manager’s Review and Directors’ Report) has been prepared to provide additional information to shareholders to
assess the Company’s strategies and the potential for those strategies to succeed. These should not be relied on by
any other party or for any other purpose.
The Review Section may include statements that are, or may be deemed to be, “forward-looking statements”.
These forward-looking statements can be identified by the use of forward-looking terminology, including the terms
“believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative
or other variations or comparable terminology.
These forward-looking statements include all matters that are not historical facts. They appear in a number of places
throughout this document and include statements regarding the intentions, beliefs or current expectations of the
Directors and the Investment Manager concerning, amongst other things, the Investment Objectives and Investment
Policy, financing strategies, investment performance, results of operations, financial condition, liquidity, prospects, and
NAV total return and dividend targets of the Company and the markets in which it invests.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend
on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future
performance. The Company’s actual investment performance, results of operations, financial condition, liquidity,
distribution policy and the development of its financing strategies may differ materially from the impression created
by the forward-looking statements contained in this document.
Subject to their legal and regulatory obligations, the Directors expressly disclaim any obligations to update or revise
any forward-looking statement contained herein to reflect any change in expectations with regard thereto or any
change in events, conditions or circumstances on which any statement is based.
In addition, the Review Section may include target figures for future financial periods. Any such figures are targets only
and are not forecasts. This Annual Report has been prepared for the Company as a whole and therefore gives greater
emphasis to those matters which are significant in respect of Triple Point Energy Transition plc.
Triple Point Energy Transition plc
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Financial Statements
Other Information
Annex 1 – Reporting
Principles and Methodologies
Given the focus of the fund, TENT aims to ensure that all its investments result in avoided carbon, when compared to
a suitable and robust counterfactual. This is one of the key measures that is used to assess the overall impact of the
fund. Avoided carbon analysis utilises consequential accounting methods that aim to quantify the change in emissions
caused by decisions, interventions or, in this case, investments. This is in contrast with the attributional accounting
methods used to determine the Company’s Scope 1 and 2 emissions.
No universal standard exists for quantifying avoided emissions. TENT has aimed to align its analysis with the methods
used in the wider industry and relevant standards as far as possible. This document aims to provide transparency
on the methods employed. All avoided carbon figures presented in the report should be considered alongside this
methodology. Avoided emissions are attributed to the Company using PCAF’s project finance guidance
13
.
/
ELECTRICITY AND MARGINAL EMISSIONS
Hourly marginal emissions factors from an external data provider, WattTime
14
, are used to calculate the avoided
emissions impact resulting from the electricity generation of each of TENT’s investments. This marks a slight change
in methodology from the previous year, where an annual average Operating Margin Grid Emissions factor from the IFI
dataset of marginal grid emissions factors was used
15
. The average hourly marginal emissions factor was 428 gCO
2
/
kWh, compared to the annual factor of 380 gCO
2
/kWh used previously and the overall average carbon intensity of
grid electricity of 193 gCO
2
/kWh published by BEIS in 2022
16
.
In principle, when generating electricity, TENT’s investments are avoiding emissions that would have otherwise been
generated at any moment in time by generation from the cheapest power plant with spare capacity – the marginal
power plant. As renewable generators are typically non-dispatchable, this is usually a power plant with a higher
carbon intensity than the average grid mix, except in the cases where renewable generation is meeting the vast
majority of demand and additional generation would lead to curtailment.
13. https://carbonaccountingfinancials.com/files/downloads/PCAF-Global-GHG-Standard.pdf
15
(version%203.0,Default%20Grid%20Emission%20Factor%20Dataset%22.
16
2023 Annual Report
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Strategic Report
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Financial Statements
Other Information
Dispatch order
Cost
(£/MWh)
Current
Demand
(MW)
Capacity (MW)
Capacity (MW)
Dispatch order
Cost
(£/MWh)
Current
Demand
(MW)
Renewables
Nuclear
Coal
Gas
Renewables
Nuclear
Coal
Gas
High electricity demand:
if demand wasn’t
being met by TENT’s assets, it would be met
by the marginal
gas
generator.
Hence the
avoided emissions here are those associated
with generation of electricity from gas
Low electricity demand:
if demand wasn’t
being met by TENT’s assets, it would be met by
the marginal
renewable
generator. Hence the
avoided emissions here are those associated
with generation of electricity from renewables
The WattTime factors used to calculate avoided emissions are an estimate of the marginal emissions factor based on
the grid power units that are most likely to be reduced by additional renewable generation within any hourly dispatch
block.
The Investment Manager believes that utilisation of the hourly emissions factors increases the quality of its avoided
emissions. As identified in the Company’s previous annual report, the generation profile of the Company’s renewable
assets are not distributed evenly over the course of a day or a year, which has implications for the marginal emissions.
The Company’s avoided emissions calculated on the same basis as previous reporting, for comparison, would be
20,680tCO
2
.
/
RENEWABLE ENERGY ASSETS
The total generation of the asset across the year is multiplied by the IFI marginal emissions factor.
/
COMBINED HEAT AND POWER (CHP)
Avoided emissions from the CHP Portfolio use the heating system in place before the investment as their
counterfactual. As part of due diligence, the Company commissioned technical analysis of the assets, including
a review of the efficiencies of the previous heating systems. Data collected was supplemented with engineering
calculations and estimates.
The analysis compares the emissions generated by the new system with the emissions that would have been
generated if the equivalent amount of heat was generated using the old system, and the equivalent electricity
generated by the marginal generators on the grid (or a mix of the resulting electricity generation from the old system
and the excess from the grid, where a CHP has been replaced).
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Other Information
ELECTRICITY:
If operating in the wholesale market, gas CHP should not displace low-carbon generation, as it will respond to real-
time wholesale price signals wherever low-carbon generation is marginal and stop generating. TENT’s CHPs are not
responsive to wholesale price signals, as they operate primarily to satisfy on-site demand for heat. CHPs are classified
as a “must run” asset, don’t respond to wholesale price signals, and thus sit outside of the merit order.
Because of this, the generation profile of the assets was analysed to determine the types of generation they were
most likely to prevent. Overall, the assets run during the day, generating electricity when market prices are highest,
and switch off at night. An example of this is shown for an asset below.
00:00
235
225
215
205
195
185
175
5,000
4,000
3,000
2,000
1.000
0
01:00
02:00
03:00
04:00
05:00
06:00
07:00
08:00
09:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
Generation (MWh)
Carbon Intensity (gCO2/kWh)
TENT’s investments, on average, generate power during periods of high demand where prices and carbon intensities
are the highest. Given this generation profile, marginal gas generators are likely to be online and, therefore, the
marginal emissions factors are used.
A modelling study conducted by LCP on behalf of BEIS
17
was consulted that produced marginal factors specifically for
electricity exporting CHPs that were in broad agreement with the WattTime factors. The WattTime factors were chosen
in preference to these factors for consistency across the Company’s asset types. The IFI factors used are also based on
actual real-time data, as opposed to data modelled for 2022 from 2014.
ADDITIONAL EFFICIENCY UPGRADES
Data of sufficient quality was not available to quantify the energy savings and avoided carbon of some efficiency
upgrades made during and after investment into the CHP Portfolio. These include upgrades to the water storage
tanks associated with the CHPs, as well as the new private wire arrangement between Spark Steam and a large food
manufacturer.
Annex 1 – Reporting
Principles and Methodologies
2023 Annual Report
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Company Overview
Strategic Report
Governance
Financial Statements
Other Information
/
BATTERY ENERGY STORAGE SYSTEMS (BESS)
The net of the import carbon intensity compared to the export carbon intensity is currently used as a proxy measure
of the avoided carbon impact for BESS assets. This methodology was designed to quantify the avoided emissions
resulting from wholesale arbitrage: importing and storing excess energy from renewable assets with a low carbon
intensity and exporting at times of high demand and a high grid carbon intensity. During the initial operation of BESS
assets within the portfolio, the assets have been operating mostly ancillary services, providing frequency response
to help stabilise the grid. While the Investment Manager believes that these services result in avoided carbon due to
a reduction in the inertia and Mandatory Frequency Response services typically provided by Combined Cycle Gas
Turbine generators, this is not captured by the current methodology. As a result, the assets are net emitters of carbon
using the current methodology. The methodology used to assess BESS assets will be refined for future reporting.
Triple Point Energy Transition plc
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1 King William Street | London | EC4N 7AF
For further information about the Triple Point Group
please call
020 7201 8990
or send an email to
contact@triplepoint.co.uk
Triple Point is the trading name for the Triple Point Group which includes the following companies and associated entities: Triple
Point Investment Management LLP registered in England & Wales no. OC321250, authorised and regulated by the Financial
Conduct Authority no. 456597, Triple Point Administration LLP registered in England & Wales no. OC391352 and authorised and
regulated by the Financial Conduct Authority no. 618187, and TP Nominees Limited registered in England & Wales no.07839571,
all of 1 King William Street, London, EC4N 7AF, UK.
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