TIDMHGEN
RNS Number : 9764M
HydrogenOne Capital Growth PLC
20 September 2023
LEI: 213800PMTT98U879SF45
20 September 2023
HydrogenOne Capital Growth plc
Half-Yearly Report 2023
About us
HydrogenOne Capital Growth Plc ("HGEN", "the Company") is the
first London-listed fund investing in clean hydrogen for a positive
environmental impact.
The Company was launched in 2021 with an investment objective to
deliver an attractive level of capital growth by investing,
directly or indirectly, in a diversified portfolio of hydrogen and
complementary hydrogen focused assets whilst integrating core ESG
principles into its decision making and ownership process. The
Company is an Article 9 climate impact fund under the Sustainable
Finance Disclosure Regulation (the "SFDR").
-- A unique offering to investors - leadership in a new green
energy technology sector from the first London listed hydrogen
fund.
-- Strong orientation to ESG mandates, investing capital in
low-carbon growth and enabling the avoidance of GHG emissions.
-- Significant pipeline of >GBP500m of potential investments
to deliver 10-15% average NAV growth, including exits.
-- First mover advantage in the hydrogen sector, which is
accelerating faster than anticipated with positive growth
outlook.
-- Investment Adviser's track record in energy and capital markets.
>GBP110m
Deployed in low-carbon growth for avoided GHG
GBP129.7m
Net Asset Value
SFDR Article 9
Climate impact fund
>83,000 tonnes
CO2e emissions avoided in half year to 30 June 2023
Highlights and key metrics
At a glance
Financial and operational
-- NAV increased by 3.4% from GBP125.4 million at 31 December
2022 to GBP129.7 million at 30 June 2023. NAV per share increased
to 100.7p at 30 June 2023. The share price has declined by 19.7% in
the same period. NAV increased by 3.9% from GBP124.8 million at 30
June 2022;
-- Positive progress on revenue growth from portfolio companies,
delivering an aggregate GBP52.0 million in total revenue in the
12-month period to 30 June 2023, an increase of 170% compared to
the 12 month period to 30 June 2022;
-- The Company estimates the carrying value of the private
portfolio is at least 30% lower than comparable listed hydrogen
companies, underlining our focus on private assets and our robust
valuation methodology;
-- Investment activity centred on follow-ons, with one new
investment. During the six months ended 30 June 2023, the Company
successfully completed its first investment in a private hydrogen
project (Thierbach project in Germany) and made further investments
in three Private Hydrogen Assets in its portfolio, totalling GBP8.0
million;
-- The portfolio weighted average discount rate at 30 June 2023
was 13.7% (30 June 2022: 12.4%) resulting in a 5.1 pence per share
reduction in NAV between 30 June 2022 and 30 June 2023;
-- The Company has retained an uncommitted cash position of
GBP8.9 million as at 30 June 2023, and GBP3.0 million of listed
hydrogen companies at the end of the period;
-- A further investment has been completed post-period end in NanoSUN for GBP1.0 million; and
-- The fundamentals of the clean hydrogen sector continued to strengthen, despite recent weak macro-economic conditions. The Company has seen some GBP13 billion of investment in green hydrogen year-to-date, a 380% increase over 2022 levels, underscoring the positive industry outlook and supportive regulatory regimes for clean hydrogen.
Environmental, Social and Governance ("ESG")
-- Classified as an Article 9 Fund under the SFDR;
-- Introduction of 6 month reporting of key ESG metrics; 83,497
tonnes of Greenhouse Gas (tCO2e) emissions avoided in the six
months ended 30 June 2023 and 134,076 tCO2e since IPO;
-- 87.6% alignment with EU taxonomy for sustainable activities
(the "EU Taxonomy") assessment on Private Hydrogen Assets at 30
June 2023;
-- GBP111million deployed in low-carbon growth (since fund inception);
-- Potential 592 MWh lifetime clean energy capacity in six
months ended 30 June 2023 and 227,292 MWh since IPO;
-- 1,293 jobs supported; and
-- Continued stewardship activity with portfolio companies to
further enhance ESG credentials and reporting, with 6 month
reporting of key metrics introduced.
At 30 June At 31 December % change
2023 2022 (1,2)
------------------------------------------ ---------- -------------- --------
NAV per Ordinary Share 100.70 p 97.31p 3.5%
NAV GBP129.7 m GBP125.4m 3.5%
Ordinary share price 63.70p 79.30p (19.7%)
Market capitalisation GBP82.1 m GBP102.2m (19.7%)
Share price premium/(discount) to NAV (1) (36.7%) (18.5%) (98.4%)
Ongoing charges 2.62% 2.51% 4.3%
Cumulative capital deployed in low-carbon
growth since inception GBP111.1m GBP102.9m 8.0%
83,497 tCO 42,716 tCO (2)
GHG emissions avoided (2) e e n/a
The EU taxonomy alignment 89% 89% n/a
------------------------------------------ ---------- -------------- --------
1 These are alternative performance measures
2 Total returns in sterling for the six months to 30 June 2023
Alternative Performance Measures ("APMs")
Alternative Performance Measures ("APMs"). The disclosures above
are considered to represent the Company's APMs. Definitions of
these APMs and other performance measures used by the Company,
together with how these measures have been calculated, can be found
below.
Portfolio at a glance
Portfolio composition (as at 30 Jun 2023)
Name Percentage Portfolio theme
of NAV
Sunfire 21% Supply chain
----------- -------------------------
Elcogen 18% Supply chain
----------- -------------------------
Strohm 15% Storage & Distribution
----------- -------------------------
NanoSUN 10% Storage & Distribution
----------- -------------------------
Cranfield Aerospace Solutions 9% Hydrogen applications
----------- -------------------------
HiiROC 9% Supply chain
----------- -------------------------
Bramble Energy 7% Supply chain
----------- -------------------------
HH2E 4% Hydrogen production
----------- -------------------------
Gen2 3% Hydrogen production
----------- -------------------------
HH2E - Thierbach 1% Hydrogen production
----------- -------------------------
Listed 2% Storage and Distribution
----------- -------------------------
Listed 1% Supply chain
----------- -------------------------
Portfolio segmentation by theme
Hydrogen production - 8%
Hydrogen applications - 9%
Supply chain - 56%
Storage & distribution - 27%
Portfolio segmentation by geography
UK - 53%
Germany - 27%
Netherlands - 15%
Scandinavia - 4%
Other - 1%
Chair's statement
On behalf of the Board, I am pleased to report on the six-month
period ended 30 June 2023.
Simon Hogan Chairman
During the period, the Company has continued to deliver
consistent growth in the value of our private portfolio, through
implementing our distinctive strategy of investing in the clean
hydrogen opportunities not readily accessible elsewhere. With the
majority of IPO funds now deployed, our approach has focused on
incremental investments in existing portfolio companies, backing
these management teams to deliver their growth plans, and assessing
new growth opportunities. ESG is fully embedded in our investment
decisions, and the Board is pleased to see the introduction of
six-monthly ESG reporting. The Company is dedicated to further
developing and progressing our ESG framework to achieve the highest
reporting and performance levels.
The Company continues to see strong support for the energy
transition from governments around the world and views the policy
focus in this area as a catalyst for further growth. The
fundamentals of the hydrogen sector continued to strengthen,
despite weak macro-economic conditions, enabling us to identify
unique accretive opportunities to invest in, across the entire
value chain of the sector. Today the Investment Adviser is tracking
over 170 completed projects totalling 800MW globally. In addition,
the Investment Adviser are monitoring 13GW in projects that are
under construction or advanced development with investment in land,
electrolysers and FEED studies. Some 4.5GW of this is under
construction currently.
Overall, despite the uncertainty of the current economic
environment, the Board remains confident that the Company is
investing in a sector with a favourable outlook and believes in its
growth potential as illustrated by the strength of our current
pipeline of private clean hydrogen investments.
So far 2023 has seen the continuation of the market
uncertainties created by the aftermath of COVID-19, and Russia's
on-going invasion of Ukraine. This has resulted in high energy
price volatility and supply chain issues, putting pressure on the
economy, and contributing to inflation and higher interest rates.
The Investment Adviser is seeing fundamental shifts in energy
policy in many countries in response to this, in order to
accelerate the transition to a low carbon economy and improve
energy security.
However, share prices of the innovative growth companies
required to enable this transition, including the Company's, have
seen considerable pressure over the first half of 2023. The global
downturn has also affected our ability to raise capital in 2023,
having last completed an equity raise of GBP21 million in April
2022.
The Board continues to monitor wider market events as they
relate to the Company, including the share price volatility in the
market price of its shares and the discount to NAV at which the
shares have traded through 2023. The Board is not aware of
Company-specific factors that have led to the prevailing discount
to net asset value to which the Company's shares trade and believes
this is primarily driven by wider market events including the
sudden, material rise in interest rates and an unfavourable
macroeconomic backdrop. We are focused as a Board on improving the
share price for our investors, and believe that this can be
achieved by crystalising value through third party investment in
portfolio companies, and asset sales, delivered to maximise NAV,
over time.
In a further parallel development, listed funds have come under
scrutiny from investors regarding the valuation of portfolios of
private investments. The Company applies a consistent approach to
portfolio valuation, centred on discounted cash flows, using the
International Private Equity and Venture Capital Valuation 2022
("IPEV") Guidelines. Share prices in the listed markets are
reflected in the valuation of the Company through listed assets in
the portfolio. The details of these valuations are set out later in
this report. The resulting private valuation that has been set out
in this report has an implied forward revenue multiple of 4 times
2024 expected revenues, which is some 30% lower than listed
hydrogen sector multiples. This, the Company believes, underscores
the robust and conservative approach we are taking to
valuations.
The Board meets quarterly with the Company's Investment Adviser
and holds regular meetings to review all of the Company's
investment valuations. The Board also has regular contact with the
Investment Adviser outside of formal Board meetings. I and other
Board members attended the Company's Capital Markets Day earlier
this year, and met some of our investors and analysts, and the
management teams of all the private companies that we have invested
in. The Investment Adviser has a dedicated investment team, and has
the right to be represented on all of the boards of the private
assets.
The Board and Company is committed to the aim of the Company
that seeks to generate NAV returns of 10-15% over time, including
proceeds from exits, whilst investing in clean hydrogen for a
climate positive impact.
Our diversified approach to portfolio construction has provided
resilience and our investment case has been reinforced further by
macro tailwinds and supportive regulatory regimes in the clean
hydrogen sector, particularly in the EU and the USA. More than ever
before, we remain confident that the Company is investing in a
sector with a favourable outlook and a substantial growth
potential. Macro events have refocused efforts on the need to
reduce global reliance on fossil fuels, with the Company
well-positioned to continue investing in low-carbon growth, aimed
at reducing harmful emissions, improving energy security and
driving the energy transition.
Performance
During the period, the Company continued to selectively deploy
capital into the clean hydrogen sector, totalling GBP8.0 million in
the first half of 2023. The emphasis has been on follow-on
investments in existing positions, with the 2021 IPO proceeds
largely deployed. This comprised -
-- One new private investment completed, at a green hydrogen
production project at Thierbach, in Germany, managed by HH2E AG.
The Company committed to invest GBP2.5 million (EUR 2.8 million)
into further maturing this project, ahead of final investment
decision, alongside other institutional investors and HH2E. To
date, GBP1.9 million of this commitment has been drawn;
-- The Company invested GBP2.9 million follow-on in hydrogen
flight innovator Cranfield Aerospace Solutions Ltd, alongside
Safran Corporate Ventures and the Strategic Development Fund;
-- The Company invested GBP1.8 million follow-on in Sunfire AG,
a leading electrolyser developer and supplier; and
-- The Company invested GBP1.5 million follow-on in NanoSUN, a
hydrogen technology, transportation and distribution business.
Including further follow-on investment completed post period
end, the Company has deployed a total of GBP112 million, or 88% of
the net proceeds raised of GBP126 million, into low-carbon growth
companies.
At 30 June 2023, the Company's Private Hydrogen Assets comprised
ten investments in hydrogen assets in the UK and Europe with an
aggregate value of GBP117.5 million, as well as a small allocation
to strategic listed hydrogen companies.
Eight of the Company's private investments, representing 89% of
its invested portfolio by value, are revenue-generating, producing
equipment and technology solutions for clean hydrogen production.
The aggregate revenue from these investments was GBP52 million in
the 12-month period to 30 June 2023, an increase of 170% from the
prior year.
The total NAV on 30 June 2023 was GBP129.7 million, including a
GBP120.5 million portfolio valuation, of which GBP3 million is in
liquid, listed positions, GBP8.9 million is in cash held by the
Company with other net assets of GBP0.3 million.
At 30 June 2023, the NAV per share of the Company was 100.70
pence, representing an increase of 3.87 pence per share (3.9%) in
the 12 month period. The increase was driven primarily by valuation
uplifts to the Company's portfolio of private investments,
positively contributing 6.75 pence per share to the NAV
increase.
Despite this growth delivery from our Private Hydrogen Assets,
the Company's share price ended the period on a discount to NAV and
in common with much of the investment trust sector, in large part
due to unfavourable macro-economic conditions.
Earnings and dividend
The Company reported a gain after tax of GBP4.4 million for the
period, equal to 3.39 pence per share.
The Company's dividend policy is to only pay dividends in order
to satisfy the ongoing requirements under the Investment Trust
(Approved Company) (Tax) Regulations 2011. The Company has paid no
dividend during the period, as we continue to focus on growth
investments.
ESG
Since our launch in 2021, we have set our focus for the Company
specifically on investing in clean Hydrogen Assets and their role
in the energy transition, combined with wider ESG principles,
leading to avoided GHG emissions and targeting net negative
emissions.
Our commitment to positively contribute to climate change
mitigation, whilst integrating core ESG principles into our
decision making and ownership process, is at the core of everything
that we do as a company. The Company is classified as an Article 9
Fund, the highest classification under the SFDR regulation. We are
a signatory of the PRI, a United Nations supported network of
financial institutions that promote sustainable investments. In
collaboration with our portfolio companies, we will push forward
with our sustainable investment objectives as we continue to deploy
capital in low-carbon growth.
In addition to a climate-positive impact, particular focus is
placed on engagement to deliver effective boards and the
encouragement of sustainable business practices. These, and other
issues, are reviewed and integrated prior to any investment
decision, and managed thereafter through close relationships with
the Company's private company investments.
We are pleased to be once again publishing the external
reporting of the Company's performance, including EU taxonomy
alignment of our portfolio companies and avoided GHG emissions
disclosures, which can be found in the ESG section of this report.
This is the first interim report for the Company that reports on
this basis.
Events after the period end
The Company completed a GBP1.0 million follow-on investment in
NanoSUN alongside Westfalen and NanoSUN management.
Outlook
Our diversified portfolio approach has provided resilience and
our investment case has been reinforced further by macro tailwinds
and supportive regulatory regimes in the clean hydrogen sector,
particularly in the EU and the USA. There are considerable
uncertainties on the near-term macro-economic outlook and capital
raising capacity of the listed funds sector. Nevertheless, we
remain confident that the Company is investing in a sector with a
favourable outlook and a substantial growth potential.
Whilst market sentiment is outside of our control, the Company
anticipates the continued solid performance of our portfolio,
revenue growth and delivery of key milestones will be catalysts for
appreciation in our share price.
All of this underpins our target to deliver 10-15% annual NAV
growth over time, and I believe that our Investment Adviser, whose
principals have over 60 years of combined specialist experience and
track record, is well-placed to deliver on these projected
targets.
On behalf of the Board, I would like to thank all of our
shareholders for their support, as we continue to grow our unique
and diverse portfolio of leading clean hydrogen investments.
Simon Hogan
Chairman
19 September 2023
Investment Adviser's report
About the Investment Adviser
The Company's Alternative Investment Fund Manager ("AIFM"),
Fundrock Management (Guernsey) Limited, (part of Apex Group), and
the Company have appointed HydrogenOne Capital LLP as the
Investment Adviser to the AIFM in respect of the Company.
Its key responsibilities are to originate, analyse, assess and
recommend suitable investments within the hydrogen sector, and
advise the AIFM accordingly. Additionally, the Investment Adviser
performs asset management services in relation to the investments
in the portfolio or, to the extent asset management is delegated to
third parties, oversees and monitors such asset management.
HydrogenOne Capital LLP was founded in 2020 by Dr JJ Traynor and
Richard Hulf as an alternative investment firm focused specifically
on investing in Hydrogen Assets and their role in the energy
transition. As a responsible investor, HydrogenOne Capital LLP is
committed to contributing to the energy transition through the
financing of sustainable investments and by providing investment
solutions that reduce carbon emissions.
HydrogenOne Capital LLP employs a fully integrated investment
and asset management approach and integrates its focus on ESG
criteria throughout the entire investment process.
The Principals of the Investment Adviser
The principals of the Investment Adviser have in excess of 60
years of combined experience and a track record of success in the
energy industry and capital markets which are directly applicable
to the hydrogen industry, including acquisitions, mergers and
divestments, development of growth energy projects, supervision of
profitable energy production, ESG track record, investments in both
listed and private companies and board advisory.
Dr JJ Traynor - Dr John Joseph "JJ" Traynor has extensive
experience in energy, capital markets, project management, and
M&A. He has held a series of senior energy and banking sector
positions, including Executive Vice President at Royal Dutch Shell,
where he led investor relations and established the company's ESG
programme; Managing Director at Deutsche Bank, where he was the
number one ranked analyst in European and Global oil & gas;
Geologist at BP, in the North Sea, West Africa and Asia Pacific. He
has a Geology BSc from Imperial College and a PhD from Cambridge
University. He attended the INSEAD Advanced Management Programme
and is a Fellow of the Geological Society of London.
Richard Hulf - Richard Hulf is a fund manager with corporate
finance and engineering background. Richard has 30 years of
experience in the Utilities and Energy sectors and is a Chartered
Engineer, originally from Babcock Power and latterly Exxon. In
addition, his financial experience spans stock broking, corporate
finance, and fund management with Henderson Crosthwaite, Ernst
& Young and Artemis Investment Management, where he invested
into renewables companies. He has an MSc in Petroleum Engineering
from Imperial College.
The Investment Adviser's team
The principals have assembled an experienced team to support the
Company. This group brings a mixture of finance, technical and
sector skills to support the Investment Adviser in its day-to-day
activity. The Investment Adviser has established a team which is
responsible for financial modelling, corporate and asset valuation
analysis, and opportunity assessment for the Company.
Advisory Board of the Investment Adviser
The principals of the Investment Adviser are supported by an
experienced team which comprises the Advisory Board. The Advisory
Board has been carefully selected to provide expert advice to the
Investment Adviser on the hydrogen sector, project finance and
capital markets. The Investment Adviser has appointed the members
of the Advisory Board to provide it with advice from time to time.
No members of the Advisory Board are directors, officers, employees
or consultants of the Company, the AIFM or the Investment Adviser.
It is envisaged that the Advisory Board will expand over time, with
additional experts being added or substituted as and when
required.
Market review and outlook
The Investment Adviser recently published its annual review of
the hydrogen industry, The Bluffer's Guide to Hydrogen, which is
available on the Company's website, at
https://hydrogenonecapitalgrowthplc.com/the-hydrogen-market/hydrogen-sector-reports/.
Policy makers and industry are converging on clean hydrogen as a
core technology to deliver net zero, improved air quality and
enhanced energy security.
The Paris Agreement in 2015 has led at least 40 countries to set
out hydrogen policies and US$70 billion of funding as part of net
zero targets to deliver the energy transition.
According to the World Health Organisation ("WHO"), some 4.2
million deaths per year are caused by poor ambient air quality, and
91% of the world's population live in places exceeding the WHO's
air quality guidelines. Much of this pollution is a result of
emissions from internal combustion engines and fossil fuel power
plants.
The 2022 Russian invasion of Ukraine has compelled decision
makers across the world to focus on the importance of sustained
investment and policy support for domestic energy production and,
crucially, less reliance on energy imports from overseas. This new
drive is further amplifying the demand pull for clean hydrogen from
energy transition and air quality needs. As a result, governments
and industries have responded with new initiatives to deliver
affordable, secure, and sustainable low-carbon energy, with clean
hydrogen set to play a vital role.
Alongside this, following Russia's invasion of Ukraine,
consumers have seen a significant increase in fossil fuel prices.
This change, combined with substantial increases in regional
natural gas prices, has improved the relative economics of clean
hydrogen compared to grey hydrogen, which is currently the lowest
cost and most polluting form of hydrogen supply.
2020 saw EU targets for hydrogen to meet 14% of Europe's energy
needs by 2050. In 2022, the EU reshaped its energy policy to the
REPowerEU 2030 plan, which calls for an implied over 300GW of clean
hydrogen by 2030, compared to 80GW in previous plans. Some EUR 5.4
billion in hydrogen subsidies have recently been approved under
Important Projects of Common European Interest ("IPCEI"), which are
expected to unlock a further EUR 8.8 billion of private investment.
The Hy2Tech scheme, also announced in 2022, links 41 projects and
35 companies building out the hydrogen sector, and has qualified
for IPCEI funding. The EU's Hydrogen Bank will auction EUR 800
million of opex subsidy to green hydrogen in 2023. There are
additional sources of grant funding at a country level in multiple
EU countries.
In the United States, the Department of Energy has announced a
US$8 billion programme to develop clean regional hydrogen hubs
across the country, as part of net zero ambitions by 2050. The 2022
Inflation Reduction Act set aside US$369 billion for climate and
energy proposals. This is expected to make green hydrogen cost
competitive with grey hydrogen, and make US clean hydrogen amongst
the lowest cost in the world.
In the UK, 2030 clean hydrogen targets have been doubled this
year to 10GW. The UK Government has recently announced a national
clean hydrogen subsidy scheme called Hydrogen Business Model
("HBM"), which will use a contracts-for-difference style set-up to
help fund an initial 1GW of clean hydrogen projects in 2023, as
part of the target to reach 10GW of low-carbon hydrogen by 2030, in
a potentially GBP9 billion sector. This is in addition to the Net
Zero Hydrogen Fund ("NZHF") with up to GBP240 million of grant
funding to support the upfront costs of developing and building low
carbon hydrogen production projects.
As a further example, in 2019 the Netherlands set targets for
3GW to 4GW of electrolysis by 2030 with multi-billion- Euro funding
support announced by the Netherlands government. The government is
providing EUR 750 million of funding support for a "hydrogen
backbone", retrofitting existing natural gas pipelines to transport
hydrogen between five industrial clusters in the Netherlands, and
at cross-border connection points. In May 2023, the Dutch
government unveiled a EUR 28 billion climate package, which
included EUR 7.5 billion for green hydrogen.
The Investment Adviser tracks deal flow in the hydrogen sector.
So far in 2023, we have seen some GBP13 billion of industry
investment in green hydrogen, which is a 380% increase compared to
full year 2022 levels. Notably, the July 2023 IPO of Thyssenkrupp
Nucera, a Germany electrolyser business, raised over EUR 500
million of fresh equity, with a valuation of some EUR 2.5 billion.
In Saudi Arabia, the world's largest green hydrogen project, at
NEOM, reached financial close, raising GBP6.6 billion for a 2+ GW
project.
All of this underscores the positive industry outlook and
supportive regulatory regimes for clean hydrogen. This improving
outlook for clean hydrogen demand underpins the order books in many
of the Company's investments, particularly in supply chain sectors
such as electrolysers, fuel cells, storage and transportation
businesses. Many of these businesses have world -- wide customer
bases for their products, and are attracting investment from
international financial and strategic investors.
We are tracking over 170 projects on line today around the
world, totalling 800MW, then 13GW in over 140 projects that are
under construction or advanced development, with investment in
land, electrolysers, FEED studies. Some 4.5GW of this is under
construction today, and a further 1,200GW in over 480 projects that
have serious intent to build.
Investment portfolio
During the period, the Company has invested a total of GBP6.2
million into three existing Private Hydrogen Assets, and committed
GBP2.6 million into its first investment in a private hydrogen
project, the Thierbach project in Germany. Of this commitment,
GBP1.9 million has been invested at 30 June 2023.
The Company holds GBP3 million in 15 listed hydrogen companies
world-wide. These listed companies have been selected as having the
best long term growth potential and attractive valuations. The
first half of 2023 has seen general weakness in listed hydrogen
companies, as a result of higher market interest rates, which has
limited investor appetite for earlier stage growth themes.
Uninvested funds of GBP8.9 million are currently held in
uncommitted cash and cash equivalents in the Company's Liquidity
Reserve, ahead of investment.
The Investment Adviser believes that the performance of
portfolio companies is in line with expectations. NAV has increased
by 3.4% to GBP129.7 million in the first half of 2023. This has
been driven by organic growth in private portfolio companies, with
some offset from weaker performance from listed hydrogen companies,
exchange rates and fund expenses.
Private portfolio companies generated some GBP52 million of
revenues for the 12 months to Q2 2023, an increase of 170% from the
12 months to Q2 2022 on a pro-forma basis. This has been delivered
by the conversion of strong order books into sales, particularly in
supply chain and hydrogen distribution equipment companies. The
Investment Adviser expects continued strong organic growth from the
portfolio. In addition, the Investment Adviser anticipates
follow-on funding rounds from new investors in portfolio companies
at higher valuations, and exits from multiple portfolio positions
via trade sales and IPOs over time.
Valuation
As set out in note 4 of the Financial Statements, the Investment
Adviser has carried out fair market valuations of the Private
Hydrogen Assets at 30 June 2023, which have been reviewed by the
Valuation Committee, and the Directors have satisfied themselves as
to the methodology used, the discount rates and key assumptions
applied.
All Private Hydrogen Assets at 30 June 2023 have been valued
using either the discounted cash flow ("DCF") methodology or a
combination of the discounted cash flow methodology and the Price
of Recent Investment methodology as described by the International
Private Equity and Venture Capital Valuation 2018 ("IPEV")
Guidelines.
Listed Hydrogen Assets are valued at fair value, which is the
bid market price, or, if bid price is unavailable, last traded
price on the relevant exchange.
Our approach to valuation remains consistent and unchanged:
-- Valuations updated for all Private Hydrogen Assets on a
quarterly basis, approved by the AIFM and Board
-- The Private Hydrogen Assets are principally valued using
either the DCF method, or a combination of the DCF method and the
Price of Recent Investment. The valuations are also benchmarked
against listed peer group valuations
-- Discount rates are calculated using market parameters for
each investment domicile. The portfolio average discount rate for
30 June 2023 was 13.7% compared with 13.0% at December 2022 and
12.4% at June 2022
-- 30 June 2023 NAV was reduced by 5.1 pence per share compared
to 31 December 2022, as a result of higher discount rates.
The Company notes that its NAV has been steadily increasing over
the last twelve months. This has been driven by organic growth in
the Company's private assets, despite headwinds from lower listed
share prices in the portfolio and higher discount rates. By
contrast, the share prices of listed hydrogen companies, which we
track with the SOLGHYD index, have been volatile and declining
since Q3 2021. This decline is due to market allocation away from
early stage technology businesses as interest rates have risen, and
a correction to the high valuations seen in the market in 2020-21.
The Company's own share price has tracked this decline in listed
hydrogen companies, and listed funds in general, despite the growth
in NAV. Despite this, the Company assesses that the carrying value
of its private assets is some 30% lower than listed hydrogen
companies, based on comparative revenue multiples.
Portfolio
Portfolio summary
Value of investment
Company Country of incorporation GBP'000
--------------------------------------- ------------------------- ------------ -------------------
Private hydrogen assets held by the Limited Partnership
at 30 June 2023
Sunfire GmbH Germany 25,559
Elcogen plc United Kingdom 21,475
Strohm The Netherlands 18,440
NanoSUN Limited United Kingdom 12,555
Cranfield Aerospace Solutions
Limited United Kingdom 10,422
HiiROC Limited United Kingdom 10,325
Bramble Energy Limited United Kingdom 8,439
HH2E AG Germany 4,453
Gen2 Energy Norway 3,999
Thierbach Germany 1,852
--------------------------------------- ------------------------- ------------ -------------------
Total 117,519
------------------------------------------------------------------ ------------ -------------------
Market value
Company Country of main listing GBP'000 % of net assets
--------------------------------------- ------------------------- ------------ -------------------
Listed hydrogen assets held by the Company at 30
June 2023
SFC Energy AG-BR Germany 504 0.4%
Hydrogen-Refueling-Solutions
SA France 339 0.3%
Doosan Fuel Cell Co Ltd South Korea 326 0.3%
Hexagon Purus ASA Norway 322 0.2%
Green Hydrogen Systems A/S Denmark 285 0.2%
S-Fuelcell Co Ltd South Korea 251 0.2%
McPhy Energy SA France 198 0.2%
Fuelcell Energy Inc United States 154 0.1%
AFC Energy plc United Kingdom 136 0.1%
Ceres Power Holdings plc United Kingdom 128 0.1%
Ballard Power Systems Inc Canada 118 0.1%
Aker Horizons AS Norway 107 0.1%
ITM Power plc United Kingdom 75 0.1%
Cell Impact AB Sweden 58 0.0%
Enapter AG Germany 14 0.0%
--------------------------------------- ------------------------- ------------ -------------------
Total listed investments 3,013 2.3%
------------------------------------------------------------------ ------------ -------------------
Private assets investment held by the Company at
30 June 2023
HydrogenOne Capital Growth Investments
(1) LP United Kingdom 117,721 90.8%
--------------------------------------- ------------------------- ------------ -------------------
Total Investments 120,734 93.1%
------------------------------------------------------------------ ------------ -------------------
Cash 8,556 6.6%
Other net assets 430 0.3%
------------------------------------------------------------------ ------------ -------------------
Total net assets 129,720 100.0%
------------------------------------------------------------------ ------------ -------------------
All investments are in equity securities.
Our Portfolio
Word from the top
"We aim for replacing fossil fuels with renewables in all areas
of life - creating a sustainable future for generations to come. We
deliver on our purpose through developing, manufacturing and
servicing high-quality electrolysis solutions. By providing
renewable hydrogen and syngas as substitutes for fossil energy
sources, we enable the transformation of carbon-intensive sectors
towards net zero."
Nils Aldag, CEO
Sunfire GmbH
www.sunfire.de
A German industrial electrolyser producer, which offers both
pressure alkaline (AEL) and solid oxide electrolysers (SOEC).
Total investment size GBP21.9 million
------------------------------ -------------------------------------------------------------
% of NAV 20%
------------------------------ -------------------------------------------------------------
Date of investment October 2021/March 2023
------------------------------ -------------------------------------------------------------
Why invested
* Industry-leading electrolyser manufacturer, investing
for growth and technology development
* Material alkaline and solid oxide business, with
revenues from a growing international customer base
in the global industrial electrolyser market
* Strong product credentials backed by existing
customer base and generated by high quality in --
house engineering and product design
* 500MW / annum electrolyser production site in EU -
with a further extension to gigawatt-scale already in
planning
------------------------------ -------------------------------------------------------------
Total Addressable Market >GBP40 billion (by 2030)
------------------------------ -------------------------------------------------------------
Value catalysts
* GW scale alkaline + SOEC manufacturing scale up
* Conversion of strong revenue growth to EBITDA to
underpin eventual exit for investors
------------------------------ -------------------------------------------------------------
Performance since investment
* Sunfire continued to scale its alkaline electrolysis
manufacturing capacity in Germany and Switzerland.
* The company launched a new serial production facility
in Solingen, Germany with investment of EUR 30
million at the facility.
* Further expansion is underway at Solingen, taking
Sunfire's total capacity to 500MW of alkaline
electrolysis by the end of 2023; and Sunfire
announced a strategic partnership with Vitesco
Technologies, who will combine Sunfire electrolysis
cells into the stacks, that form the main element of
electrolysers.
* Sunfire announced a strategic partnership with
Vitesco Technologies, who will combine Sunfire
electrolysis cells into the stacks, that form the
main element of electrolysers.
* The Bad Lauchstädt Energy Park, a consortium of
Terrawatt, Uniper, VNG Gasspeicher, ONTRAS, DBI and
VNG, in Central Germany, took Final Investment
Decision on a 30MW green hydrogen facility with
associated salt cavern storage. The EUR210 million
project will use Sunfire electrolysers, and should
replace grey hydrogen in the Leuna refinery and
supply transport customers, commencing in 2025.
* In August 2023, Sunfire received a purchase order for
a 100 MW pressurized alkaline electrolyzer. The
supply agreement with a leading European refinery
marks a key milestone for Sunfire, supplying one of
the worlds largest electrolyser systems.
* Sunfire received EUR169 million funding under the EU
IPCEI scheme, to establish the first industrial
series production of its solid oxide and pressurized
alkaline electrolysis technologies.
------------------------------ -------------------------------------------------------------
Word from the top
"We believe the fuel of the future is green hydrogen and our
technology is a key enabler in making this transition affordable
for everyone. We develop and manufacture the world's most efficient
solid oxide technology, allowing our customers and partners to
deliver emission-free electricity, green hydrogen and energy
storage solutions. This investment from HydrogenOne will enable us
to continue to develop our cutting-edge technology, grow our
customer base and revenues, and scale production to drive net-zero
ambitions forward."
Enn Õunpuu, CEO
Elcogen plc
www.elcogen.com
Fuel cell and electrolyser manufacturer with presence in Estonia
and Finland
Total investment size GBP20.5 million
------------------------------ -------------------------------------------------------------
% of NAV 17%
------------------------------ -------------------------------------------------------------
Date of investment May 2022
------------------------------ -------------------------------------------------------------
Why invested
* Industry-leading innovator and supplier of solid
oxide cells and stacks, with manufacturing facilities
in Finland and Estonia, ready for expansion
* High end offering based on advanced solid oxide (SO)
technology with low operating temperatures and
superior economics
* Developed a reversible ceramic technology that
converts hydrogen into emission-free electricity and
vice versa
* Over 10-year track record
* Over 60 established industrial customers worldwide
------------------------------ -------------------------------------------------------------
Total Addressable Market >GBP40 billion (by 2030)
------------------------------ -------------------------------------------------------------
Value catalysts
* Brownfield expansion of existing Tallinn plant
* Construction of greenfield plant in Tallinn
------------------------------ -------------------------------------------------------------
Performance since investment
* Brownfield expansion increased, which has doubled
cells capacity to 95,000/year
* Site selection and detailed design for new production
site in Tallinn for annual capacity 360MW cells /
200MW stacks (SOEC mode)
* Elcogen signed a memorandum of understanding with
Korea Shipbuilding and Offshore Engineering, a member
of Hyundai Heavy Industries Group, one of the world's
largest shipbuilders, and the Germany based
Fraunhofer Institute for Ceramic Technologies and
Systems. The MOU covers close R&D collaboration in
green hydrogen elcogen.com production and
emission-free power generation systems
------------------------------ -------------------------------------------------------------
Word from the top
"Strohm is moving quickly along a steep growth path, growing our
revenue 3-fold year on year, while expanding our product offering.
Where we recently announced our first offshore hydrogen project, we
see tremendous potential in the hydrogen market as well as carbon
capture and storage where recent policy announcement underpin the
broad consensus of carbon capture being a fundamental long term
part of the journey to achieve the Paris obligations. Our
technology provides the most optimal solution for both hydrogen and
carbon dioxide transfer due the combination of total lack of
corrosion, fatigue, lower cost and smaller footprint."
Martin van Onna, CEO
Strohm Holding B.V
www.strohm.eu
The Netherlands-based hydrogen pipeline company
Total investment size GBP9.5 million
----------------------------- ------------------------------------------------------------
% of NAV 15%
----------------------------- ------------------------------------------------------------
Date of investment August & December 2022
----------------------------- ------------------------------------------------------------
Why invested
* Industry leaders in offshore hydrogen and CO2
pipelines, where we see significant market growth
* Thermoplastic Composite Pipe ("TCP") has c.50% less
greenhouse gas emissions than metal. Can transfer up
to nine times the amount of hydrogen energy compared
to a cable.
* TCP's flexibility, lack of corrosion, fatigue and
embrittlement make it the superior pipeline solution
for offshore wind farms, generating hydrogen
----------------------------- ------------------------------------------------------------
Total Addressable Market >100GW (2040)
----------------------------- ------------------------------------------------------------
Value catalysts
* Material growth in CO2 and H2 businesses
* Conversion of strong revenue growth to EBITDA 2024+
----------------------------- ------------------------------------------------------------
Performance since investment
* Strohm delivered a major milestone by completing its
plant expansion in the Netherlands. The new facility
can produce 140km of thermo-composite plastic ("TCP")
pipeline per year, a three-times increase on previous
levels.
* Strohm was awarded its second contract for TCP
pipeline for deployment in Guyana. This is the
largest contract ever secured by Strohm.
* Strohm was selected as partner for the Hydrogen
Offshore Production for Europe ("HOPE") project. HOPE
is an important milestone in the industry trend to
produce green hydrogen offshore. The project is
planned to be 10MW (4 tonnes of hydrogen per day),
installed off the port of Ostend, in Belgium. The
project has been selected by the European Clean
Hydrogen Partnership, under which it has been awarded
a EUR20 million grant. HOPE is being coordinated by
Lhyfe, and implemented by eight European partners:
Alfa Laval, Plug Netherland, Strohm, EDP NEW, ERM,
CEA, POM-West-Vlaanderen and DWR eco;
* Strohm, alongside BW Offshore, Switch2, MARIN and TU
Delft, have received a EUR3 million grant from the
Dutch government for project OFFSET - an industrial
scale floating green hydrogen and ammonia project,
based on the proven concept of a floating production
and offloading vessel ("FPSO"). The objective of the
OFFSET project will be to demonstrate a decrease in
the cost of green fuel production and thereby
increase its accessibility.
----------------------------- ------------------------------------------------------------
Word from the top
"NanoSUN's mission is to accelerate the adoption of hydrogen
fuel as key element of the transition to clean energy. Our strategy
is to bridge the gap between low-cost, green sources of hydrogen
and hydrogen vehicles by providing operators with safe, low-cost
and convenient refuelling products and services."
Neil Tierney, CEO
NanoSUN Limited
www.nanosun.co.uk
UK-based developer of hydrogen distribution and mobile
refuelling equipment
Total investment size GBP10.5 million
----------------------------- -------------------------------------------------------------
% of NAV 10%
----------------------------- -------------------------------------------------------------
Date of investment December 2021 and February 2023
----------------------------- -------------------------------------------------------------
Why invested
* NanoSUN technology allows for shipping of clean
hydrogen from production sites to customers, both
cheaply and safely.
* Provides flexible and low-cost connection between
hydrogen customers such as truck stops, and
concentrated hydrogen supply sources
* Flat-bed solution with 60% lower cost than
alternative systems
* Accelerating large-scale roll out of fleets of
hydrogen buses, trucks, vans and forklifts
* High quality order book with clients such as
Westfalen, and Octopus Hydrogen.
----------------------------- -------------------------------------------------------------
Total Addressable Market GBP800 million (2025 UK/EU) to >GBP20 billion (2030
globally)
----------------------------- -------------------------------------------------------------
Value catalysts
* Continued roll out and delivery of Pioneer units to
hydrogen refuelling customers, driving financial
growth
* Germany distribution agreement pending
* Pathway to market entry across Europe, in Asia and US
----------------------------- -------------------------------------------------------------
Performance since investment
* NanoSUN continued deliveries of new Pioneer Mobile
Refuelling Stations to customers, including this year
four units to Octopus Hydrogen in the UK and eight
units to Westfalen in German.
* Westfalen and NanoSUN have deployed Pioneer Mobile
Hydrogen Refuelling Station in German city Brühl,
in the Cologne area, to fuel Solaris Hydrogen City
Buses with RVK. The filling station was developed in
cooperation between Westfalen Group and NanoSUN. The
system will avoid emissions of 393 tons of CO2 and
0.55 tons of Nox per year. Filling a fuel cell bus
with the Pioneer system less than 20 minutes.
* NanoSUN appointed Dr. Graham Cooley, who was
previously the CEO of ITM Power Ltd, as Chairman of
the Board. Dr. Meike Schaeffler, from NanoSUN
investor Westfalen, was appointed as a Board Member.
Neil Tierney, who is the founder of ONZO, a home
energy management company that was later acquired by
SSE and GEO, and who has had senior roles at UBCO and
PURE Electric, focusing on lightweight electric
vehicles, was appointed as CEO.
----------------------------- -------------------------------------------------------------
Word from the top
"Phase 1 of Cranfield Aerospace Solutions' zero emissions
aircraft roadmap is "Project Fresson" - the conversion of a
Britten-Norman Islander 9-seat aircraft from conventional fossil
fuel to that of gaseous hydrogen propulsion. This development is
set to deliver the world's first fully certified, truly green,
passenger-carrying aircraft using hydrogen fuel cell technology.
The end solution will deliver emissions-free commercial air travel
and is planned to be certified for passenger flight in 2026."
Paul Hutton, CEO
Cranfield Aerospace Solutions Limited
www.cranfieldaerospace.com
UK-based passenger flight innovator, powering turboprop flight
with hydrogen
Total investment size GBP8.5 million
----------------------------- ------------------------------------------------------------
% of NAV 8%
----------------------------- ------------------------------------------------------------
Date of investment March 2022 and April 2023
----------------------------- ------------------------------------------------------------
Why invested
* Cranfield is a technology leader in delivering
hydrogen powered turboprop flight ("Project Fresson")
* Aerospace market leader in the design and manufacture
of new aircraft design concepts, complex
modifications to existing aircraft and integration of
cutting-edge technologies
* Working on CAA certification of the Britten-Norman
Islander passenger aircraft using hydrogen powered
fuel cells supplying electricity to DC motors for
rotational power
----------------------------- ------------------------------------------------------------
Total Addressable Market US$51 billion (by 2035)
----------------------------- ------------------------------------------------------------
Value catalysts
* Test flight 2024/25
* Commercial certification 2026
----------------------------- ------------------------------------------------------------
Performance since investment
* The company achieved the key Critical Design
milestones for Project Fresson.
* Continued to increase growth outlook for the business
by signing a multiple number of potential commitments
for modification kits to convert Britten-Norman
Islanders to hydrogen-electric power. The company has
also made significant progress on enlarging the
market for its technology development through
application to cargo UAV applications.
* As previously announced, Cranfield Aerospace
Solutions and Britten-Norman have been in merger
discussions, which remain ongoing. The original
timetable to deliver this merger in mid 2023 has now
been extended.
* Cranfield welcomed Evolito, a ground-breaking UK
technology innovator onboard as the motor & inverter
supplier for its hydrogen-powered aircraft
demonstrator, and;
* Cranfield celebrated 75 years of continuous Design
Approvals, which have enabled the company to deliver
world-leading complex modifications and underpin its
future as a global leader in the development of
zero-emissions aircraft.
----------------------------- ------------------------------------------------------------
Word from the top
"HiiROC's technology brings a truly differentiated proposition
to the hydrogen story. We will produce low cost, zero emission
hydrogen, delivered to customers on a modular, scalable basis at
the point of demand, avoiding transportation and storage costs.
We're building the infrastructure and working with our strategic
partners to allow deployment of the initial pilot units in selected
industry segments."
Tim Davies, CEO
HiiROC Limited
www.hiiroc.com
UK-based thermal plasma electrolysis developer, with proprietary
technology for low-cost, zero-emission hydrogen, also enabling
flare/waste gas mitigation and CO2 reduction using biomethane.
Total investment size GBP10.0 million
----------------------------- -------------------------------------------------------------
% of NAV 8%
----------------------------- -------------------------------------------------------------
Date of investment November 2021
----------------------------- -------------------------------------------------------------
Why invested
* Proprietary technology to convert natural gas, flare
gas and biomethane into hydrogen and solid carbon
black
* Multiple applications across all sectors of hydrogen
use from blending in natural gas grids to industrial
decarbonisation to transport
* Opportunity to support methane reduction targets
through the global imperative to halt gas flaring and
venting
* Industrial off-takers of the product such as Centrica,
Hyundai and CEMEX also on the shareholder register
* Highly scalable modular solution, producing 100kg /
day of hydrogen from a single unit through to large
plants capable of 100's of tonnes / day of hydrogen,
alongside carbon black
----------------------------- -------------------------------------------------------------
Total Addressable Market >GBP40 billion (by 2030)
----------------------------- -------------------------------------------------------------
Value catalysts
* Demonstrators deployed in 2022 and 2023, across a
range of hydrogen use cases
* Commercial roll-out of HiiROC units
----------------------------- -------------------------------------------------------------
Performance since investment
* Since investment, HiiROC has completed its
demonstrator unit (in 2022) and the deployment of its
first pilot (in 2023) with further units expected
through the coming year.
* HiiROC continues to deploy demonstrator units in
order to validate its technology and achieve
certification.
* With UK Government grant support, HiiROC and Centrica,
won the first UK project to inject hydrogen at Brigg
Gas Fired Power station, as part of the Net Zero
Technology Centres GBP8 million Open Innovation
Programme.
----------------------------- -------------------------------------------------------------
Word from the top
"At Bramble Energy we aim to enable the transition from diesel
to hydrogen by providing high-performance, affordable technology
solutions. PCBFC(TM) is the first of our platform technologies to
reach the market and we continue to develop core offerings in
sensing and electrolysis."
Dr Tom Mason, CEO
Bramble Energy Limited
www.brambleenergy.com
UK-based fuel cell and portable power solutions company
Total investment size GBP10.0 million
----------------------------- ------------------------------------------------------------
% of NAV 7%
----------------------------- ------------------------------------------------------------
Date of investment February 2022
----------------------------- ------------------------------------------------------------
Why invested
* Pioneering revolutionary fuel cell design and
manufacturing techniques
* Novel printed circuit board design PCBFC(TM) - low
cost, scalable and recyclable fuel cell modules
* Leading global automotive businesses working closely
with Bramble to scale up product offering
* Developing high-power density, mobility fuel cell
systems
----------------------------- ------------------------------------------------------------
Total Addressable Market >GBP100 billion (by 2030)
----------------------------- ------------------------------------------------------------
Value catalysts
* Business strategy pivoted towards the mobility
technology development based on a number of
approaches from the automotive and power train
segments.
* Mobility technology development and testing of
PCBFC(TM) by end users in automotive
----------------------------- ------------------------------------------------------------
Performance since investment
* Moved into better equipped facility in 2022 as part
of scaling up power output of units to 30kw-100kw
* With funding from the Advanced Propulsion Centre UK
(APC) as part of the UK government's Automotive
Transformation Fund (ATF) Feasibility Study Round 3,
the PCBFC(TM) Range Extender feasibility study will
develop a robust and detailed business case to
manufacture Bramble Energy's printed circuit board
fuel cell (PCBFC(TM)) for the automotive sector in
the UK.
* Bramble Energy has secured GBP12 million UK
Government funding to provide fuel cell technology to
hydrogen buses. Bramble Energy's innovative, low-cost
printed circuit board fuel cell ("PCBFC") technology
will power an all-new hydrogen double-decker bus,
which will be developed in conjunction with
consortium partners Equipmake, Aeristech and the
University of Bath.
----------------------------- ------------------------------------------------------------
Word from the top
"HH2E is a new green energy company in Germany established to
change the game of energy. HH2E's technology mix can turn a
fluctuating input of solar or wind energy into a constant supply of
green hydrogen, heat, and carbon-free electricity at competitive
prices to serve local industries and communities."
Alexander Voigt, Founder of HH2E AG
HH2E AG
www.hh2e.de
German green hydrogen project developer with a focus on
industrial customers
Total investment size GBP5.1 million
----------------------------- -------------------------------------------------------------
% of NAV 4%
----------------------------- -------------------------------------------------------------
Date of investment May 2022
----------------------------- -------------------------------------------------------------
Why invested
* A prominent leader in Germany focused on green
hydrogen and battery storage project development.
* HH2E has secured attractive German brownfield sites
close to hydrogen offtake with grid connections
capable of 1GW capacity
* Provides HGEN with investment rights in multiple
large-scale green hydrogen based decarbonization
projects
* The battery and alkaline electrolyser combination
enables near-constant production using the cheapest
hours of renewable electricity supply
----------------------------- -------------------------------------------------------------
Total Addressable Market >GBP100 billion (based on German government forecasts
for green hydrogen demand by 2045)
----------------------------- -------------------------------------------------------------
Value catalysts
* First hydrogen projects Thierbach and Lubmin expected
to reach Final Investment Decision in 2023/24, for
mid-decade commercial launch
----------------------------- -------------------------------------------------------------
Performance since investment
* HH2E has continued to develop green hydrogen projects,
with Thierbach and Lubmin close to completing their
FEED studies and submitting planning/permit
applications. HH2E announced its second major green
hydrogen production project in Germany, a 100MW
facility at Thierbach. HGEN committed GBP2.5 million
(EUR 2.8 million) alongside other institutional
investors and HH2E for engineering and commercial
works. A Final Investment Decision is planned for the
end of 2023 subject to a series of commercial targets
being fulfilled.
* Advanced offtake negotiations with customers in the
mobility and industrial/wholesale gas segments, with
a potential value of several hundred million euros,
are underpinned by favourable regulatory
developments. HH2E agreed to purchase of 120MW of
alkaline electrolyser equipment from NEL ASA earlier
in 2023 and has reserved long-lead components with
other major equipment manufacturers to supply its
first projects.
* A further pipeline of projects is being developed by
HH2E across northern and eastern Germany.
----------------------------- -------------------------------------------------------------
Word from the top
"We target to develop, build, own and operate large scale
facilities for production of zero emission green hydrogen and
develop an integrated hydrogen value chain. Norway, our home
market, has a strong advantage for hydrogen production with both
cheap and base load renewable energy available, and our large-scale
facilities allows for economies of scale while transporting the
volumes to Europe."
Jonas Meyer, CEO
Gen2 Energy
www.gen2energy.com
Norwegian green hydrogen project developer
Total investment size GBP3.5 million
----------------------------- ------------------------------------------------------------
% of NAV 3%
----------------------------- ------------------------------------------------------------
Date of investment March 2022
----------------------------- ------------------------------------------------------------
Why invested
* The leading Norwegian green hydrogen project
developer, with clear plans to convert low-cost
hydroelectric power to hydrogen, for export and
domestic use.
* Up to 700MW green hydrogen projects in Norway, with
expected production in 2025-2027
* Specialist in low-cost 24/7 hydroelectric power
* Co invested with Norwegian LNG and ship operators
that provides input to the Gen2 hydrogen export
solution
* HGEN has follow-on investment rights in multiple
project SPVs
----------------------------- ------------------------------------------------------------
Total Addressable Market >GBP100 billion
----------------------------- ------------------------------------------------------------
Value catalysts
* Final investment decision for first hydrogen project
in Mosjøen in 2024
----------------------------- ------------------------------------------------------------
Performance since investment
* Gen2 Energy continued to mature their projects
throughout the year, with core focus on the c.120MW
green hydrogen plant at Nesbruket in Mosjøen.
* Major milestones in the project includes the
unanimous approval of detail zoning plan in the
municipality, and completion of FEED study with Wood
Group, making it the most mature large-scale green
hydrogen project in Norway. The company made a
strategic investment in UMOE Advanced Composite,
worlds largest producer of glass fibre containers for
transport of hydrogen. In addition, the two companies
signed a purchase and collaboration agreement for
development of seaborn transport of hydrogen.
* In relation to the potential expansion of the first
project, Nesbruket 2, the company signed a
collaboration agreement with Norsk e-Fuel, a producer
of e--fuel based on hydrogen and CO2. The
collaboration agreement includes the intent of
building an industrial supply chain for green
hydrogen, common access to additional land and joint
infrastructures for green industrial processes in
Mosjøen.
* Over the last year, Gen2 Energy grew its project
portfolio to 925MW, with the most proposal of a new
project in Åfjord.
* Gen2 Energy and Provaris Energy Ltd signed a
collaboration agreement, to study producing and
supplying compressed green hydrogen from the Gen2
Energy hydrogen project in Åfjord, Norway, to
European ports, using Provaris' marine storage and
shipping solutions. Provaris has developed a
portfolio of hydrogen shipping and storage solutions,
including two sizes of GH2 Carriers (H2Neo 26,000m3
and H2Max 120,000m3) and a floating storage (H2Leo),
with a design capacity range of 300 - 600 tonnes
hydrogen. The H2Neo, which is intended to be utilised
in the Åfjord project, was granted Design
Approval based on an extensive FEED package in
December 2022, with final construction approval
targeted for early 2024.
----------------------------- ------------------------------------------------------------
Word from the top
"Domestic green hydrogen production is essential to secure
cost-competitive energy supply and deliver energy sovereignty and
decarbonisation. Building a plant in Thierbach (Saxony), on the
site of a former coal power station, is a tangible step towards
sustainable green energy in Germany."
Mark Page, CFO HH2E AG and Managing Director HH2E Thierbach
Thierbach project
Green hydrogen production project in Germany
Total investment size GBP2 million
----------------------------- ------------------------------------------------------------
% of NAV 1%
----------------------------- ------------------------------------------------------------
Date of investment January 2023
----------------------------- ------------------------------------------------------------
Why invested
* First direct project investment by the Company
* Large-scale green hydrogen production opportunity
with leading players in the mobility sector, energy
and industrial consumers as potential offtakers
* The technology mix and design developed by the
operator (HH2E AG) enables constant production of
cost-competitive green hydrogen without a permanent
supply of power
----------------------------- ------------------------------------------------------------
Total Addressable Market Via pipeline connections Thierbach will be able to
serve the German market (value >GBP100bn) but its customers
will be mainly based in central/eastern Germany
----------------------------- ------------------------------------------------------------
Value catalysts
* Confirmation of key regulatory dimensions (e.g. RED
II, GHG certificates, pipeline admixture)
* Final Investment Decision - end 2023
* Phase 1 (100MW): c.6,000 tonnes green H2 pa
60,000tpa avoided GHGs
----------------------------- ------------------------------------------------------------
Performance since investment
* Preliminary Investment Decision (PID) approved by the
consortium of HH2E, Foresight and HydrogenOne.
Detailed technical planning will complete in Q4,
stakeholder engagement, planning/permit applications
are advanced.
* Extensive engagement with key component suppliers and
offtakers as well as a sourcing exercise to secure
RED II compliant energy supply.
* Thierbach has been included in the draft plan for the
German national hydrogen backbone network and the
Company is in advanced discussions on timelines.
----------------------------- ------------------------------------------------------------
Listed Hydrogen Assets portfolio
The Company holds investments in 15 global hydrogen sector
listed equities with an average market capitalisation of GBP1.5
billion with minimum market capitalisation of GBP100 million. The
aggregate investment in these listed companies was GBP7.4 million
at the time of investment. These companies are key players in the
electrolysis, fuel cell and clean hydrogen projects sectors.
During the six months ended 30 June 2023, one listed holding has
been sold at a small loss.
Post period end acquisition
In July 2023, the Company has made a follow-on investment of
GBP1.0 million into NanoSUN.
Net assets
Net assets increased from GBP125.4 million at 31 December 2022
to GBP129.7 million at 30 June 2023. The increase is principally
due to an uplift in the value of the Private Hydrogen Assets of
GBP6.4 million.
The net assets of GBP129.7 million comprise GBP120.7 million
portfolio value of investments, including the holding in the
HydrogenOne Capital Growth Investments (1) LP ("Limited
Partnership"), and the Company's cash balances of GBP8.6 million,
and other net assets of GBP0.4 million.
The Limited Partnership's net assets of GBP117.7 million
comprise GBP117.5 million portfolio value of investments, cash
balances of GBP0.3 million, and other net liabilities of GBP0.1
million.
Cash
At 30 June 2023, the Group had a total cash balance of GBP8.9
million, including GBP8.6 million in the Company's balance sheet
and GBP0.3 million in the Limited Partnership, which is included in
the Company's balance sheet within 'investments held at fair value
through profit or loss' (31 December 2022: GBP19.7 million).
The Company had cash and cash equivalents of GBP8.9 million, and
GBP3.0 million of listed hydrogen companies at the end of the
period, and remains well funded for its day-to-day activities.
Gain for period
The Company's total gain before tax for the period ended 30 June
2023 is GBP4.4 million, generating gains of 3.39 pence per Ordinary
Share.
In the period to 30 June 2023, the gains on fair value of
investments were GBP5.1 million.
The expenses included in the income statement for the year were
GBP0.8 million, in line with expectations. These comprise GBP0.1
million Investment Adviser fees and GBP0.7 million operating
expenses. The details on how the Investment Adviser fees are
charged are as set out in note 5 to the financial statements.
Ongoing charges
The 'ongoing charges' ratio is an indicator of the costs
incurred in the day-to-day management of the Company.
The ongoing charges percentage for the six-month period to 30
June 2023 was 2.62% (30 June 2022: 2.46%). The ongoing charges have
been calculated, in accordance with AIC guidance, as annualised
ongoing charges (i.e. excluding acquisition costs and other
non-recurring items) divided by the average published undiluted Net
Asset Value in the period. The ongoing charges percentage has been
calculated on the consolidated basis and therefore takes into
consideration the expenses of Limited Partnership as well as the
Company.
Richard Hulf, Dr JJ Traynor
HydrogenOne Capital LLP
19 September 2023
Environmental, social and governance ("ESG")
ESG highlights:
HGEN is a climate impact fund with an ESG policy integrated into
investment decisions and asset monitoring;
The Company is classified as an Article 9 Fund under the SFDR
and EU Taxonomy Regulation; and
Continued stewardship activity with portfolio companies to
further enhance ESG credentials and reporting.
Our Impact:
GBP111.1 million
(FY22 GBP102.9 million) deployed to date in low-carbon
growth;
83,497 tCO2e
(FY22 42,716 tCO2e) emissions avoided in HY23 (99.7% by NanoSUN
and 0.1% by Elcogen) and 134,076 tCO2e since IPO (29% by Sunfire,
70% by NanoSUN and 2% by Elcogen)*;
592 MWh
Potential (FY22 201,000 MWh) lifetime clean energy capacity in
HY23 and 227,292 MWh since IPO*;
0.2 MW
(FY22 3.4 MW) of units sold (fuel cells and electrolysers) in
HY23 and 4 MW since IPO - all adjusted for the Company's
shareholding*;
1,293
(FY22 1,135) jobs supported;
Displace fossil fuels
Most of the Company's investments either directly or indirectly
displace fossil fuels, making a clear contribution to achieving the
Paris Accord's target of limiting global temperature rises to below
2 degrees and ideally limiting them to 1.5 degrees
* note - Sunfire was unable to provide data for HY22 so these
figure is expected to increase in future periods
GHG emissions (tCO2e) HY 23 FY 22
---------------------------------------------------------- -------- ------
Scope 1 14 48
---------------------------------------------------------- -------- ------
Scope 2 19 28
---------------------------------------------------------- -------- ------
Scope 3 92 134
---------------------------------------------------------- -------- ------
Carbon footprint (tCO2e / EUR m investments value) 1.1 1.9
---------------------------------------------------------- -------- ------
GHG Intensity of Portfolio Companies (KG / EUR m revenue) 31.0 823.4*
---------------------------------------------------------- -------- ------
Avoided emissions (tCO2e) 83,497** 42,716
---------------------------------------------------------- -------- ------
Avoided cumulative (tCO2e) 134,076 50,579
---------------------------------------------------------- -------- ------
EU Taxonomy alignment 87.6% 89%
---------------------------------------------------------- -------- ------
Hazardous waste (tonnes / EUR m investment cost) 0.03 N/A
---------------------------------------------------------- -------- ------
Energy consumption (GWh / EUR m revenue / per high
impact climate sector) 0.15 N/A
---------------------------------------------------------- -------- ------
Methodology
The greenhouse gas emissions have been calculated in accordance
with the Greenhouse Gas Protocol equity share approach and
presented in line with guidance from the EU Sustainable Finance
Disclosure Regulation. This means that the aggregate of each
portfolio company's scopes are presented (as opposed to being
disclosed in the Fund's scope 3 category 15). Each portfolio
company has been engaged during to develop a greenhouse gas
inventory. This process includes the identification of appropriate
data sources for each inventory item. Data has been collected,
reviewed and processed to calculate the emissions by an external
provider. In line with expectations there are limitations to data
(gaps or quality), these are addressed in accordance with the
Greenhouse Gas Protocol via the use of estimates and each portfolio
company receives feedback on data quality based on relevance,
completeness, availability, consistency, transparency and
accuracy.
Estimates form a necessary part of the greenhouse gas emission
process and emission factors are central to this. Primarily the UK
Department for Environment Food and Rural Affairs ("DEFRA")
emission factors have been used or, where more appropriate, the
Intergovernmental Panel on Climate Change ("IPPC") emission factors
can be relied upon. Both of these sources are recognised by the
Greenhouse Gas Protocol.
Avoided emissions have been calculated on a consequential basis
using the International Financial Institution Framework for a
Harmonised Approach to Greenhouse Gas Accounting. The membership
behind this approach includes the United Nations Climate Change
Secretariat, the World Bank, the European Investment Bank, and many
others constituting 25 financial institutions. This standard also
produces and updates a data set on grid emissions for many
countries, this has been used as a key input into the estimation
process. In accordance with the framework, portfolio companies who
provide products (e.g. fuel cells or electrolysers) take the
expected lifetime emissions of those products as sold. During the
year, no projects were operationally producing hydrogen yet as they
are still under development, when they do the annual avoided
emissions from the hydrogen produced will be reported.
* In the prior period one portfolio company that is pre-revenue
actually recorded c.GBP16k of revenue which significantly impacted
this metric, removing that outlier gives a comparable of
40KG/GBPm.
** The HY23 is more than double the FY22 because of an increase
in sales from Elcogen. The sales from Sunfire have not been
included in the HY23 as they could not provide data so these
figures are expected to increase in future reporting periods.
Governance
Investment objective and policy
Investment objective
The Company's investment objective is to deliver an attractive
level of capital growth by investing, directly or indirectly, in a
diversified portfolio of hydrogen and complementary hydrogen
focussed assets whilst integrating core ESG principles into its
decision making and ownership process.
Investment policy
The Company will seek to achieve its investment objective
through investment in a diversified portfolio of hydrogen and
complementary hydrogen focussed assets, with an expected focus in
developed markets in Europe, North America, the GCC and Asia
Pacific, comprising:
i. assets that produce clean hydrogen;
ii. large scale energy storage assets;
iii. carbon capture, use and storage assets;
iv. hydrogen distribution infrastructure assets;
v. assets involved in hydrogen supply chains, such as electrolysers and fuel cells; and
vi. businesses that utilise hydrogen applications such as
transport, power generation, feedstock and heat (together "Hydrogen
Assets").
The Company intends to implement its investment policy through
the acquisition of hydrogen and complementary hydrogen focussed
assets.
Private Hydrogen Assets
The Company invests in unquoted Hydrogen Assets, which may be
operational companies or hydrogen projects (completed or under
construction) ("Private Hydrogen Assets"). Investments are expected
to be mainly in the form of equity, although investments may be
made by way of debt and/or convertible securities. The Company may
acquire a mix of controlling and non-controlling interests in
Private Hydrogen Assets, however the Company intends to invest
principally in non-controlling positions (with suitable minority
protection rights to, inter alia, ensure that the Private Hydrogen
Assets are operated and managed in a manner that is consistent with
the Company's investment policy).
Given the time frame required to fully maximise the value of an
investment, the Company expects that investments in Private
Hydrogen Assets will be held for the medium to long term, although
short term disposals of assets cannot be ruled out in exceptional
or opportunistic circumstances. The Company intends to re-invest
the proceeds of disposals in accordance with the Company's
investment policy.
The Company observes the following investment restrictions,
assessed at the time of an investment, when making investments in
Private Hydrogen Assets:
-- no single Private Hydrogen Asset will account for more than
20 per cent. of Gross Asset Value;
-- Private Hydrogen Assets located outside developed markets in
Europe, North America, the GCC and Asia Pacific will account for no
more than 20 per cent. of Gross Asset Value; and
-- at the time of an investment, the aggregate value of the
Company's investments in Private Hydrogen Assets under contract to
any single Offtaker will not exceed 40 per cent. of Gross Asset
Value.
The Company will initially acquire Private Hydrogen Assets via
HydrogenOne Capital Growth Investments (1) LP (the 'HydrogenOne
Partnership'), a wholly owned subsidiary undertaking of the Company
structured as an English limited partnership which is controlled by
the Company and advised by the Investment Adviser. The HydrogenOne
Partnership's investment policy and restrictions are the same as
the Company's investment policy and restrictions for Private
Hydrogen Assets and cannot be changed without the Company's
consent. In due course, the Company may acquire Private Hydrogen
Assets directly or by way of holdings in special purpose vehicles
or intermediate holding entities (including successor limited
partnerships established on substantially the same terms as the
HydrogenOne Partnership) or, if the Company is considered a 'feeder
fund' under the Listing Rules, other undertakings advised by the
Investment Adviser and, in such circumstances, the investment
policy and restrictions will also be applied on a look-through
basis and such undertaking(s) will also be managed in accordance
with the Company's investment policy.
Listed Hydrogen Assets
The Company also invests in quoted or traded Hydrogen Assets,
which will predominantly be equity securities but may also be
corporate debt and/or other financial instruments ("Listed Hydrogen
Assets"). The Company is free to invest in Listed Hydrogen Assets
in any market or country with a market capitalisation (at the time
of investment) of at least US$100 million. The Company's approach
is to be a long-term investor and will not ordinarily adopt
short-term trading strategies. As the allocation to Private
Hydrogen Assets grows the Listed Hydrogen Assets are expected to
include strategic equity holdings derived from the listing of
operational companies within the Private Hydrogen Assets portfolio
over time.
The Company observes the following investment restrictions,
assessed at the time of an investment, when making investments in
Listed Hydrogen Assets:
-- no single Listed Hydrogen Asset will account for more than 3
per cent. of the Gross Asset Value;
-- the portfolio of Listed Hydrogen Assets will typically
comprise no fewer than 10 Listed Hydrogen Assets at times when the
Company is substantially invested;
-- each Listed Hydrogen Asset must derive at least 50 per cent.
of revenues from hydrogen and/or related technologies; and
-- once fully invested, the target allocation to Listed Hydrogen
Assets will be approximately 10 per cent or less of Gross Asset
Value, subject to a maximum allocation of 30 per cent of Gross
Asset Value.
Cash
During the initial Private Hydrogen Asset investment period
after a capital raise and/or a realisation of a Private Hydrogen
Asset, the Company intends to hold the relevant net proceeds of
such capital raise/realisation in cash (in accordance with the
Company's cash management policy set out below) pending subsequent
investment in Private Hydrogen Assets.
Investment restrictions
The Company, in addition to the investment restrictions set out
above, comply with the following investment restrictions when
investing in Hydrogen Assets:
-- the Company will not conduct any trading activity which is
significant in the context of the Company as a whole;
-- the Company will, at all times, invest and manage its assets
i. in a way which is consistent with its object of spreading investment risk; and
ii. in accordance with its published investment policy;
-- the Company will not invest in other UK listed closed-ended investment companies; and
-- no investments will be made in companies or projects that
generate revenues from the extraction or production of fossil fuels
(mining, drilling or other such extraction of thermal coal, oil or
gas deposits).
Compliance with the above restrictions is measured at the time
of investment and non-compliance resulting from changes in the
price or value of Hydrogen Assets following investment will not be
considered as a breach of the investment policy or
restrictions.
Borrowing policy
The Company may take on debt for general working capital
purposes or to finance investments and/or acquisitions, provided
that at the time of drawing down (or acquiring) any debt (including
limited recourse debt), total debt will not exceed 25 per cent of
the prevailing Gross Asset Value at the time of drawing down (or
acquiring) such debt. For the avoidance of doubt, in calculating
gearing, no account will be taken of any investments in Hydrogen
Assets that are made by the Company by way of a debt
investment.
Gearing may be employed at the level of a special purpose
vehicle ("SPV") or any intermediate subsidiary undertaking of the
Company (such as the HydrogenOne Partnership) or, if the Company is
considered a 'feeder fund' under the Listing Rules, other
undertakings advised by the Investment Adviser in which the Company
has invested or the Company itself. The limits on debt shall apply
on a consolidated and look-through basis across the Company, the
SPV or any such intermediate holding entities (such as the
HydrogenOne Partnership) or, if the Company is considered a 'feeder
fund' under the Listing Rules, other undertakings advised by the
Investment Adviser in which the Company has invested but
intra-group debt will not be counted.
Gearing of one or more Hydrogen Assets in which the Company has
a non-controlling interest will not count towards these borrowing
restrictions. However, in such circumstances, the matter will be
brought to the attention of the Board who will determine the
appropriate course of action.
Currency and hedging policy
The Company has the ability to enter into hedging transactions
for the purpose of efficient portfolio management. In particular,
the Company may engage in currency, inflation, interest rates,
energy prices and commodity prices hedging. Any such hedging
transactions will not be undertaken for speculative purposes.
Cash management
The Company may hold cash on deposit and may invest in cash
equivalent investments, which may include short-term investments in
money market type funds ("Cash and Cash Equivalents").
There is no restriction on the amount of Cash and Cash
Equivalents that the Company may hold and there may be times when
it is appropriate for the Company to have a significant Cash and
Cash Equivalents position. In particular, the Company anticipates
holding cash to cover the near-term capital requirements of the
Pipeline of Private Hydrogen Assets and in periods of high market
volatility. For the avoidance of doubt, the restrictions set out
above in relation to investing in UK listed closed-ended investment
companies do not apply to money market type funds.
Interim management report
The Directors are required to provide an Interim Management
Report in accordance with the Financial Conduct Authority ("FCA")
Disclosure Guidance and Transparency Rules ("DTR").
The Directors consider that the Chair's Statement and the
Investment Adviser's Report of this Half-yearly Financial Report,
provide details of the important events which have occurred during
the six months ended 30 June 2023 ("Period") and their impact on
the financial statements. The statement on related party
transactions and the Directors' Statement of Responsibility
(below), the Chairman's Statement and the Investment Adviser's
Report together constitute the Interim Management Report of the
Company for the Period. The outlook for the Company for the
remaining six months of the year ending 31 December 2023 is
discussed in the Chairman's Statement and the Investment Adviser's
Report.
Details of the Private and Listed Hydrogen Assets held at the
Period end are provided above.
Principal risks and uncertainties
The principal risks and uncertainties facing the Company are
summarised below:
Principal Risks and Uncertainties
Regulatory
Changes in political or environmental conditions in the hydrogen
sector (for example, changes in government policy or support) could
affect the Company's prospects.
Policy support
The technologies required to produce and use green hydrogen need
policy support to underpin the scale needed to drive stand-alone
cost competitiveness. Governments worldwide are showing such
support today, but that may be volatile over the investment time
horizon of the Company.
Power price
The income and value of the Company's investments may be
affected by changes in the market prices of electricity and
hydrogen, both current and expected. Risks include refinancing
risk, exposure to interest rate risk due to fluctuations in the
prevailing market rates, covenant breaches and possible enhanced
loss on poor performing assets.
Operational
Initial pre-deal due diligence may not uncover all risks
associated to a transaction. Investments are subject to operating
and technical risks. While the Company will seek investments with
creditworthy and appropriately insured counterparties who bear the
majority of these risks, there can be no assurance that all risks
can be mitigated.
In addition, the long-term profitability of hydrogen investments
will be partly dependent upon the efficient operation and
maintenance of the assets. Inefficiency, or limitations in the
skills, experience or resources of operating companies, may reduce
revenue. As a result, profitability of the Company may be impaired
leading to reduced returns for Shareholders.
Performance
Underperforming investment or investment strategy can lead to
underperformance to the Company's target return and ultimate
investment objective.
Future acquisitions and capital raises
Ongoing capital raises are intended. The Company's share price
trading at an excessive discount to its net asset value may mean it
is difficult to raise further capital through share issues for both
onward investment and the continued running and management of the
Company.
Refinancing
The operational risks of the Company including market,
counterparty, credit and liquidity risk. Extreme market volatility
can disrupt capital raising process and ability to raise monies to
repay a debt demand in full. Investments in Private Hydrogen Assets
are illiquid in nature and may take a longer period of time to
realise in order to fund the Company's operations or meet its
expenses. The Company may be forced to sell liquid assets to meet
its expenses at a time when valuations are low.
Service providers
Disruption to, or failure of the Company's Administrator or
other parties to complete their role efficiently, on time and in
line with expectation.
Portfolio valuation
Risk that portfolio asset valuations published do not represent
the Fair Market Values in accordance with the accounting
requirements. Investment valuations are based on modelling /
financial projections for the relevant investments. Projections
will primarily be based on the Investment Adviser's assessment and
are only estimates of future results based on assumptions made at
the time of the projection. Actual results may vary significantly
from the projections, which may reduce the profitability of the
Company leading to reduced returns to Shareholders. A further rise
in interest rates will lead to an increase in the Discount Rate
applied to the Private Hydrogen Assets' valuation, leading to a
reduction in the Company's net asset value.
Key person
The Investment Adviser is a newly formed Company, with minimum
employees. As such, there are significant Key Person risks at this
time and should they become unavailable, this could have a negative
impact on the Company's ability to achieve its investment
objective.
Tax
Breaches of Section 1158 of the Corporation Tax Act could result
in loss of investment trust status. Changes in tax legislation such
as BEPS, WHT rules and structural requirements result in increased
tax and resulting in a drop in returns from the Company's
investments.
Political and associated economic risk
Exposure to Russia and/or Ukraine within the investment
portfolio could lead to losses on investments.
The impact on the global equity markets, and hydrogen stocks in
particular, of a prolonged downturn caused by the situation, could
lead to reduced valuations of the Company.
The Company's Annual Report for the year ended 31 December 2022
contains more detail on the Company's principal risks and
uncertainties, including the Board's ongoing process to identify,
and where possible mitigate, emerging risks (pages 56 to 58). The
Annual Report can be found on the Company's website at
www.hydrogenonecapitalgrowthplc.com.
The Board is of the opinion that these principal risks are
equally applicable to the remaining six months of the financial
year as they were to the six months being reported on.
Related party transactions
Details of the investment management arrangements were provided
in the Annual Report. There have been no changes to the related
party transactions described in the Annual Report that could have a
material effect on the financial position or performance of the
Company. Amounts payable to the Investment Adviser and the
Directors in the period are detailed in note 13 to the financial
statements.
Going concern
This Half-yearly Financial Report has been prepared on a going
concern basis. The Directors consider this the appropriate basis as
they have a reasonable expectation that the Company and Group has
adequate resources to continue in operational existence for at
least twelve months from the date of this report.
In reaching this conclusion, the Directors considered the income
and expense projections and the liquidity of the investment
portfolio, and considered the impact to the Company and portfolio
of investments from the economic conditions such as higher interest
rates and inflationary pressures and market volatility arising from
the ongoing war in Ukraine.
The Company and Group continue to meet day-to-day liquidity
needs through its cash resources. The Company and Group had
unrestricted cash of GBP8.6 million (31 December 2022: GBP18.2
million) as well as GBP3.0 million in Listed Hydrogen Assets at 30
June 2023 (31 December 2022: GBP3.7 million). The Company and
Group's net assets at 30 June 2023 were GBP129.7 million (31
December 2022: GBP125.4 million) and total expenses for the period
ended 30 June 2023 were GBP3.4 million (30 June 2022: GBP2.7
million), which represented approximately 2.6% (30 June 2022: 2.5%)
of the average net assets value of the Company in the six months to
30 June 2023 of GBP128.0 million (30 June 2022: GBP110.7
million).
Following the declaration of the Company's Net Asset Value as at
the 30 June 2023 on the 7 August 2023, the Company's share price
was 54.4p representing a 46.0% discount to the Net Asset Value (31
December 2022: discount of 18.5%).
The Directors also recognise that the continuation of the
Company is subject to the approval of shareholders at the Annual
General Meeting ("AGM") in 2026, and every fifth AGM thereafter.
The Board has considered the long-term prospects of the Company and
has no reason to believe that the continuation vote will fail.
Based on the foregoing, the Directors have adopted the going
concern basis in preparing the Financial Statements. The Directors
have a reasonable expectation that the Company and Group have
adequate operational resources to continue in operational existence
for at least twelve months from the date of approval of these
Financial Statements.
Board of Directors
19 September 2023
Directors' statement of responsibility
The Directors confirm to the best of their knowledge that:
-- The condensed set of financial statements contained within
the Half-yearly Financial Report has been prepared in accordance
with IAS 34 Interim Financial Reporting and gives a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and its subsidiary undertakings;
-- The Interim Management Report includes a fair review of the
information required by Disclosure and Transparency Rule 4.2.7R
(indication of important events during the first six months, their
impact on the condensed set of Financial Statements and a
description of the principal risks and uncertainties for the
remaining six months of the year); and
-- The Interim Financial Report includes a fair review of the
information required by Disclosure and Transparency Rule 4.2.8R
(disclosure of related party transactions and changes therein).
Simon Hogan
Chairman of the Board of Directors
19 September 2023
Financial statements
Condensed parent and consolidated statement of comprehensive
income
For the six months ended 30 June 2023
For the six months For the six months
ended 30 June 2023 ended 30 June 2022
(unaudited) (unaudited)
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ----- ------- ------- ------- ------- ------- -------
Gains on investments - 5,070 5,070 - 1,794 1,794
Gains/(losses) on currency movements - (5) (5) - - -
------------------------------------- ----- ------- ------- ------- ------- ------- -------
Gross investment gains - 5,065 5,065 - 1,794 1,794
------------------------------------- ----- ------- ------- ------- ------- ------- -------
Income 114 - 114 20 - 20
------------------------------------- ----- ------- ------- ------- ------- ------- -------
Total gain 114 5,065 5,179 20 1,794 1,814
------------------------------------- ----- ------- ------- ------- ------- ------- -------
Investment Adviser fee 5 (82) - (82) (206) - (206)
Other expenses 6 (730) - (730) (475) - (475)
------------------------------------- ----- ------- ------- ------- ------- ------- -------
(Loss)/profit before finance
costs and taxation (698) 5,065 4,367 (661) 1,794 1,133
------------------------------------- ----- ------- ------- ------- ------- ------- -------
Finance costs - - - - - -
Operating (loss)/profit before
taxation (698) 5,065 4,367 (661) 1,794 1,133
Taxation 7 - - - - - -
------------------------------------- ----- ------- ------- ------- ------- ------- -------
(Loss)/profit for the period (698) 5,065 4,367 (661) 1,794 1,133
------------------------------------- ----- ------- ------- ------- ------- ------- -------
Return per Ordinary Share (basic
and diluted) 11 (0.54)p 3.93p 3.39p (0.57)p 1.54p 0.97p
------------------------------------- ----- ------- ------- ------- ------- ------- -------
There is no other comprehensive income and therefore the
'Profit/(loss) for the period' is the total comprehensive income
for the period.
The total column of the above statement is the Parent and
Consolidated Statement of Comprehensive Income, including the
return per Ordinary Share, which has been prepared in accordance
with IFRS. The supplementary revenue and capital columns, including
the return per Ordinary Share, are prepared under guidance from the
Association of Investment Companies.
All revenue and capital items in the above statement derive from
continuing operations.
The accompanying notes form part of these financial
statements.
Condensed parent and consolidated statement of financial
position
At 30 June 2023 and 31 December 2022
31 December
30 June
2023 2022
(Unaudited) (Audited)
Notes GBP'000 GBP'000
------------------------------------------------- ----- ----------- -----------
Assets
Non-current assets
Investments held at fair value through profit or
loss 4 120,734 106,673
------------------------------------------------- ----- ----------- -----------
Current assets
Cash and cash equivalents 8,556 18,192
Trade and other receivables 8 615 641
------------------------------------------------- ----- ----------- -----------
Total current assets 9,171 18,833
------------------------------------------------- ----- ----------- -----------
Total assets 129,905 125,506
------------------------------------------------- ----- ----------- -----------
Current liabilities
Trade and other payables 9 (185) (153)
------------------------------------------------- ----- ----------- -----------
Total liabilities (185) (153)
------------------------------------------------- ----- ----------- -----------
Net assets 129,720 125,353
------------------------------------------------- ----- ----------- -----------
Equity
Share capital 10 1,288 1,288
Share premium account 124,928 124,928
Capital reserve 6,412 1,347
Revenue reserve (2,908) (2,210)
------------------------------------------------- ----- ----------- -----------
Total equity 129,720 125,353
------------------------------------------------- ----- ----------- -----------
Net asset value per Ordinary Share 12 100.70P 97.31p
------------------------------------------------- ----- ----------- -----------
Approved by the Board of Directors and authorised for issue on
19 September 2023 and signed on their behalf by:
Simon Hogan
Chairman
HydrogenOne Capital Growth plc is incorporated in England and
Wales with registration number 13340859.
The accompanying notes form part of these financial
statements.
Condensed parent and consolidated statement of changes in
equity
For the six months ended 30 June 2023 (Unaudited)
Share
Share premium Capital Revenue
Capital account reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------ ------- ------- ------- ------- -------
Opening balance as at 1 January
2023 1,288 124,928 1,347 (2,210) 125,353
Profit/(loss) for the period - - 5,065 (698) 4,367
---------------------------------------- ------- ------- ------- ------- -------
Closing balance as at 30 June
2023 1,288 124,928 6,412 (2,908) 129,720
---------------------------------------- ------- ------- ------- ------- -------
For the six months ended 30 June 2022 (Unaudited)
Share
Share premium Capital Revenue
Capital account reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----- ------- ------- ------- ------- -------
Opening balance as at 1 January
2022 1,074 104,129 (1,612) (805) 102,786
Issue of Ordinary Shares 10 214 21,255 - - 21,469
Ordinary Share issue costs - (621) - - (621)
Profit/(loss) for the period - - 1,794 (661) 1,133
-------------------------------- ----- ------- ------- ------- ------- -------
Closing balance as at 30 June
2022 1,288 124,763 182 (1,466) 124,767
-------------------------------- ----- ------- ------- ------- ------- -------
The accompanying notes form part of these financial
statements.
Condensed parent and consolidated statement of cash flows
For the six months ended 30 June 2023
For the six For the six
months ended months ended
30 June 2023 30 June 2022
(Unaudited) (Unaudited)
GBP'000 GBP'000
------------------------------------------------ ------------ ------------
Cash flows from operating activities
Income 114 20
Management expenses (812) (681)
Foreign exchange gains/(losses) (5) -
Decrease in trade and other receivables 26 20
Increase/(decrease) in trade and other payables 32 (18)
------------------------------------------------ ------------ ------------
Net cash flow used in operating activities (645) (659)
------------------------------------------------ ------------ ------------
Cash flows from investing activities
Purchase of investments (9,103) (24,345)
Sale of investments 112 -
------------------------------------------------ ------------ ------------
Net cash flow used in investing activities (8,991) (24,345)
------------------------------------------------ ------------ ------------
Cash flows from financing activities
Proceeds from issue of Ordinary Shares - 21,469
Ordinary Share issue costs - (621)
------------------------------------------------ ------------ ------------
Net cash flow from financing activities - 20,848
------------------------------------------------ ------------ ------------
Decrease in cash and cash equivalents (9,636) (4,156)
------------------------------------------------ ------------ ------------
Cash and cash equivalents at start of period 18,192 34,019
------------------------------------------------ ------------ ------------
Cash and cash equivalents at end of period 8,556 29,863
------------------------------------------------ ------------ ------------
The accompanying notes form part of these financial
statements.
Notes to the financial statements
1. General information
Company information
HydrogenOne Capital Growth plc (the "Company" or "Parent") was
incorporated in England and Wales on 16 April 2021 with registered
number 13340859 as a public company limited by shares and is an
investment company within the terms of Section 833 of the Companies
Act 2006 (the "Act"). The Company is listed and began trading on
the Main Market of the London Stock Exchange and was admitted to
the premium segment of the Official List on 30 July 2021 (the
"IPO"). The Company has applied for and been accepted as an
approved investment trust under sections 1158 and 1159 of the
Corporation Tax Act 2010 and Part 2 Chapter 1 of Statutory
Instrument 2011/2999.
FundRock Management Company (Guernsey) Limited acts as the
Company's Alternative Investment Fund Manager ("AIFM").
Apex Listed Companies Services (UK) Limited (the "Company
Secretary and Administrator") provides administrative and company
secretarial services to the Company.
The Company's Investment Adviser is HydrogenOne Capital LLP.
The Company's registered office is 6th Floor, 125 London Wall,
London, EC2Y 5AS.
Investment objective
The Company's investment objective is to deliver an attractive
level of capital growth by investing, directly or indirectly, in a
diversified portfolio of hydrogen and complementary hydrogen
focussed assets whilst integrating core environmental, social and
governance ("ESG") principles into its decision making and
ownership process.
Company structure
The Company makes its investment in unquoted Hydrogen Assets
("Private Hydrogen Assets") through HydrogenOne Capital Growth
Investments (1) LP (the "Limited Partnership"), in which the
Company is the sole Limited Partner. The Limited Partnership is
registered as a private fund limited partnership in England and
Wales under the Limited Partnerships Act 1907 with registered
number LP021814. The Limited Partnership has been established
pursuant to a Limited Partnership Agreement dated 5 July 2021 as
amended and restated on 26 November 2021 (the "Limited Partnership
Agreement") in order to make investments pursuant to the investment
policy of the Limited Partnership. The Limited Partnership's
investment policy and restrictions are consistent with the
Company's investment policy and restrictions for Private Hydrogen
Assets.
The General Partner of the Limited Partnership is HydrogenOne
Capital Growth (GP) Limited (the "General Partner"), a wholly owned
subsidiary of the Company. The General Partner was incorporated in
England and Wales on 19 May 2021 with registered number 13407844.
The General Partner undertakes the responsibility for the
management, operation and administration of the business and
affairs of the Limited Partnership. The General Partner's Profit
Share for each accounting period shall be an amount equal to 1.5%
per annum of the prevailing NAV of the Limited Partnership, which
shall be allocated to the General Partner as a first charge on the
profits of the Limited Partnership. For so long as the Company is
the sole Limited Partner, the General Partner's Profit Share shall
be allocated and distributed to the Company rather than the General
Partner.
The carried interest partner of the Limited Partnership is
HydrogenOne Capital Growth (Carried Interest) LP (the "Carried
Interest Partner") which, in certain circumstances, will receive
carried interest on the realisation of Private Hydrogen Assets by
the Limited Partnership. The Carried Interest Partner has been set
up for the benefit of the principals of the Investment Adviser.
Private Hydrogen Assets
The Company invests via the Limited Partnership in Private
Hydrogen Assets, which may be operational companies or hydrogen
projects. Investments are mainly in the form of equity, although
investments may be made by way of debt and/or convertible
securities. The Company may acquire a mix of controlling and
non-controlling interests in Private Hydrogen Assets, however the
Company invests principally in non-controlling positions (with
suitable minority protection rights to, inter alia, ensure that the
Private Hydrogen Assets are operated and managed in a manner that
is consistent with the Company's investment policy).
The Company acquires Private Hydrogen Assets via the Limited
Partnership. In due course, the Company may acquire Private
Hydrogen Assets directly or by way of holdings in special purpose
vehicles or intermediate holding entities (including successor
limited partnerships established on substantially the same terms as
the Limited Partnership) or, if the Company is considered a 'feeder
fund' under the Listing Rules, other undertakings advised by the
Investment Adviser and, in such circumstances, the investment
policy and restrictions will also be applied on a look-through
basis and such undertaking(s) will also be managed in accordance
with the Company's investment policy.
Listed Hydrogen Assets
The Company also invests directly in quoted or traded Hydrogen
Assets, which are predominantly equity securities but may also be
corporate debt and/or other financial instruments ("Listed Hydrogen
Assets"). The Company has the ability to invest in Listed Hydrogen
Assets in any market or country with a market capitalisation (at
the time of investment) of at least US$100 million. The Company's
approach is to be a long-term investor and will not ordinarily
adopt short-term trading strategies.
Liquidity reserve
During the initial Private Hydrogen Asset investment period
after a capital raise and/or a realisation of a Private Hydrogen
Asset, the Company intends to allocate the relevant net proceeds of
such capital raise/realisation to cash (in accordance with the
Company's cash management policy) and/or additional Listed Hydrogen
Assets and related businesses pending subsequent investment in
Private Hydrogen Assets (the "Liquidity Reserve").
The Company anticipates holding cash to cover the near-term
capital requirements of the pipeline of Private Hydrogen Assets and
in periods of high market volatility.
2. Basis of preparation and accounting policies
The principal accounting policies are set out below:
Reporting entity
These Parent and Consolidated Financial Statements (the
"Financial Statements") present the results of both the Parent; and
the Parent and the General Partner (together referred to as the
"Group").
As at 30 June 2023, the statement of financial position of the
General Partner consisted of issued share capital and corresponding
share capital receivable in the amount of GBP1. The General Partner
had no income, expenditure or cash flows for the period.
Due to the immaterial balances of the General Partner there is
no material difference between the results of the Parent and the
results of the Group. As a result, the Financial Statements as
presented represent both the Parent's and the Group's financial
position, performance, and cash flows.
Basis of accounting
The Financial Statements have been prepared in accordance with
UK-adopted international accounting standards ("IFRS") and the
applicable legal requirements of the Companies Act 2006.
The Financial Statements have also been prepared as far as is
relevant and applicable to the Company and Group in accordance with
the Statement of Recommended Practice ("SORP") issued by the
Association of Investment Companies ("AIC") in July 2022.
The Financial Statements are prepared on the historical cost
basis, except for the revaluation of financial instruments measured
at fair value through profit or loss.
Fair value is the price that would be received on sale of an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of
whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of an
asset or liability, the Company and Group take into account the
characteristics of the asset or liability if market participants
would take those characteristics into account when pricing the
asset or liability at the measurement date. Fair value for
measurement and/or disclosure purposes in these Financial
Statements is determined on such a basis.
The Financial Statements are presented in Pounds Sterling
because that is the currency of the primary economic environment in
which the Company and Group operate.
The accounting policies applied in these Financial Statements
are consistent with those applied in the last Annual Audited
Financial Statements for the year ended 31 December 2022. These
condensed financial statements do not include all information and
disclosures required in the annual financial statements and should
be read in conjunction with the Company's annual financial
statements as of 31 December 2022. The audited annual accounts for
the year ended 31 December 2022 have been delivered to Companies
House and the audit report thereon was unqualified.
Going concern
Having reassessed the principal risks, the Directors considered
it appropriate to adopt the going concern basis of accounting in
preparing these Financial Statements. Details of the Directors'
assessment of the going concern status of the Company and Group,
which considered the adequacy of resources and the impacts of
economic conditions and market volatility arising from the war in
Ukraine are given above.
Critical accounting judgements, estimates and assumptions
There have been no changes to the critical accounting judgements
estimates and assumptions from those applied in the Company's
Audited Annual Financial Statements for the year ended 31 December
2022.
Comparatives
Comparative information is included for the six months ended 30
June 2022 and as at 31 December 2022.
3. Segmental reporting
The Board has considered the requirements of IFRS 8 - 'Operating
Segments'. The Company has entered into an Investment Advisory
Agreement with the Investment Adviser under which the Investment
Adviser is responsible for the management of the Company's
investment portfolio, subject to the overall supervision of the
Board of Directors. Subject to its terms and conditions, the
Investment Advisory Agreement requires the Investment Adviser to
manage the Company's investment portfolio in accordance with the
Company's investment guidelines as in effect from time to time,
including the authority to purchase and sell investments and to
carry out other actions as appropriate to give effect thereto.
However, the Board retains full responsibility to ensure that the
Investment Adviser adheres to its mandate. Moreover, the Board is
fully responsible for the appointment and/or removal of the
Investment Adviser. Accordingly, the Board is deemed to be the
'Chief Operating Decision Maker' of the Company.
The Directors are of the opinion that the Company is engaged in
a single segment of business being investment into the hydrogen
focused investments. Segment information is measured on the same
basis as that used in the preparation of the Company's Financial
Statements.
4. Investments held at fair value through profit or loss
(a) Summary of valuation
30 June 31 December
2023 2022
As at GBP'000 GBP'000
------------------------------------------------------ ------- -----------
Investments held at fair value through profit or loss
Listed Hydrogen Assets 3,013 3,667
Limited Partnership 117,721 103,006
------------------------------------------------------ ------- -----------
Closing valuation of financial assets at fair value
through profit or loss 120,734 106,673
------------------------------------------------------ ------- -----------
(b) Movements in valuation
Year ended
Six months
ended 31 December
30 June
2023 2022
GBP'000 GBP'000
------------------------------------------------------------ ---------- -----------
Opening valuation of financial assets at fair value through
profit or loss 106,673 68,830
Opening unrealised (gain)/loss on Investments (1,426) 1,608
Opening cost of financial assets at fair value through
profit or loss 105,247 70,438
Additions, at cost - Listed Hydrogen Assets 74 137
Additions, at cost - Limited Partnership 9,029 36,581
Disposals at cost - Listed Hydrogen Assets (142) (1,909)
Cost of financial assets at fair value through profit
or loss at the end of the period/year 114,208 105,247
Unrealised losses on investments - Listed Hydrogen Assets (4,608) (4,022)
Unrealised gains on investments - Limited Partnership 11,134 5,448
------------------------------------------------------------ ---------- -----------
Closing valuation of financial assets at fair value
through profit or loss 120,734 106,673
------------------------------------------------------------ ---------- -----------
(c) Gain/(loss) on investments
Year ended
Six months
ended 31 December
30 June
2023 2022
GBP'000 GBP'000
--------------------------------------------------------- ---------- -----------
Movement in unrealised loss - Listed Hydrogen Assets (586) (2,794)
Movement in unrealised gain - Limited Partnership 5,686 5,828
Realised (losses)/gains on investments - Listed Hydrogen
Assets (30) 143
--------------------------------------------------------- ---------- -----------
Total gain on investments 5,070 3,177
--------------------------------------------------------- ---------- -----------
Under IFRS 13 'Fair Value Measurement', an entity is required to
classify investments using a fair value hierarchy that reflects the
significance of the inputs used in making the measurement
decision.
The following shows the analysis of financial assets recognised
at fair value based on:
Level 1
The unadjusted quoted price in an active market for identical
assets or liabilities that the entity can access at the measurement
date.
Level 2
Inputs other than quoted prices included within Level 1 that are
observable (i.e. developed using market data) for the asset or
liability, either directly or indirectly.
Level 3
Inputs are unobservable (i.e. for which market data is
unavailable) for the asset or liability.
Transfers between levels of the fair value hierarchy are
recognised as at the end of the reporting period during which the
change has occurred. There have been no transfers between levels
during the period ended 30 June 2023. (December 2022: no
transfers).
The classification of the Company and Group's investments held
at fair value through profit or loss is detailed in the table
below:
30 June 2023
-------------------------------------
Level
1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ------- -------- -------- --------
Listed Hydrogen Assets 3,013 - - 3,013
Limited Partnership - - 117,721 117,721
---------------------------------------- ------- -------- -------- --------
Total 3,013 - 117,721 120,734
---------------------------------------- ------- -------- -------- --------
31 December 2022
-------------------------------------
Level
1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ------- -------- -------- --------
Listed Hydrogen Assets 3,667 - - 3,667
Limited Partnership - - 103,006 103,006
---------------------------------------- ------- -------- -------- --------
Total 3,667 - 103,006 106,673
---------------------------------------- ------- -------- -------- --------
The Company and Group's Level 3 investment is the investment in
the Limited Partnership. The NAV of the Limited Partnership as of
30 June 2023 is GBP117,721,000 (31 December 2022: GBP103,006,000).
The movement on the Level 3 investments during the period is shown
below:
31 December
30 June
2023 2022
GBP'000 GBP'000
------------------------------------------------------ ------- -----------
Opening balance 103,006 60,597
Investment in Limited Partnership 9,029 36,581
Unrealised gains on investment in Limited Partnership 5,686 5,828
------------------------------------------------------ ------- -----------
Closing balance 117,721 103,006
------------------------------------------------------ ------- -----------
Look-through financial information
The NAV of the Limited Partnership consists of the fair value of
its Private Hydrogen Assets and the carrying value of its assets
and liabilities. As at the period end, the Limited Partnership held
ten Private Hydrogen Assets (31 December 2022: nine).
The following table reconciles the fair value of the Private
Hydrogen Assets and the NAV of the Limited Partnership.
31 December
30 June 2023 2022
GBP'000 GBP'000
---------------------------------------------- ------------ -----------
Investment in Private Hydrogen Assets 117,519 103,115
Plus(minus): net current assets/(liabilities) 202 (109)
---------------------------------------------- ------------ -----------
NAV of the Limited Partnership 117,721 103,006
---------------------------------------------- ------------ -----------
The Level 3 Private Hydrogen Assets at 30 June 2023 have been
valued using either the DCF methodology or a combination of the DCF
and Price of Recent Investment methodology, as outlined in note 3.
The key inputs considered in the valuation are described in note
15.
Value
of Primary
Country of Investment valuation Significant unobservable
Name Incorporation GBP'000 technique inputs Range input
-------------------- ---------------- ----------- ------------------ ------------------------ -----------
Sunfire GmbH Germany 25,559 DCF Discount rates 12.5%-12.9%
-------------------- ---------------- ----------- ------------------ ------------------------ -----------
Elcogen Group plc United Kingdom 21,475 DCF Discount rates 12.6%-13.4%
-------------------- ---------------- ----------- ------------------ ------------------------ -----------
Strohm Holding The Netherlands 18,440 Weighted Discount rates applied 12.9%-13.8%
BV DCF and Price in full
of recent DCF valuation
Investment (14%)
Weighting between
Price of
Recent Investment
and DCF
valuation
-------------------- ---------------- ----------- ------------------ ------------------------ -----------
NanoSUN Limited United Kingdom 12,555 DCF Discount rates 15.3%-15.9%
-------------------- ---------------- ----------- ------------------ ------------------------ -----------
Cranfield Aerospace United Kingdom 10,422 DCF Discount rates 15.2%-16.0%
Solutions Limited
-------------------- ---------------- ----------- ------------------ ------------------------ -----------
HiiROC Limited United Kingdom 10,325 DCF Discount rates 15.0%-15.3%
-------------------- ---------------- ----------- ------------------ ------------------------ -----------
Bramble Energy
Limited United Kingdom 8,439 DCF Discount rates 13-2%-13.9%
-------------------- ---------------- ----------- ------------------ ------------------------ -----------
HH2E AG Germany 6,305 DCF Discount rates 14.3%-14.8%
-------------------- ---------------- ----------- ------------------ ------------------------ -----------
GEN2 Energy AS Norway 3,999 DCF Discount rates 13.3%-14.0%
-------------------- ---------------- ----------- ------------------ ------------------------ -----------
HH2E Werk Thierbach Germany 1,852 Price of Third-party pricing n/a
GmbH recent investment (without adjustment)
-------------------- ---------------- ----------- ------------------ ------------------------ -----------
The following table shows the Directors best estimate of the
sensitivity of the Level 3 Private Hydrogen Assets to changes in
the principle unobservable input, with all other variables held
constant.
Effect on fair value of investments GBP'000
-----------------------------------------------------
Possible reasonable change 31 December
Unobservable input in input 30 June 2023 2022
----------------------------------- -------------------------- ------------ -----------
Discount rates applied in full
DCF valuation +1% (14,716) (6,515)
-1% 18,133 7,815
----------------------------------- -------------------------- ------------ -----------
plus one calendar quarter
of tapering from Price
Weighting between Price of Recent of Recent Investment to
Investment and full DCF valuation full DCF valuation (975) (324)
----------------------------------- -------------------------- ------------ -----------
minus one calendar quarter
of tapering from Price
of Recent Investment to
full DCF valuation 2,926 286
----------------------------------- -------------------------- ------------ -----------
The European Central Bank ('ECB') and the Bank of England
('BOE') base rates at 30 June 2023 were 4.0% and 5.0% respectively
(31 December 2022: 2.5% and 3.5% respectively). We anticipate that
the terminal base rate hikes (based on independent research) could
reach 4.5% for ECB and 5.5% for BOE. As such, we have performed
sensitivities of +/- 1% on the discount rate assumptions.
The valuations are weighted towards the full DCF valuation based
on the time since the price of recent investment until the full DCF
valuation is applied (typically the valuations are tapered from the
price of recent investment to the full DCF valuation over four
calendar quarters after the price of recent investment).
Accordingly, we have applied a sensitivity of +/- one calendar
quarter of this weighting as this is deemed the most likely period
by which the tapering may be delayed or brought forward.
For those investments that have been fair valued using the price
of a recent investment based on unadjusted third-party pricing
information, the Company is not required to disclose any
quantitative information regarding the unobservable inputs as they
have not been developed by the Company and are not reasonably
available to the Company.
5. Investment adviser fee
For the six months ended For the six months ended
30 June 2023 30 June 2022
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- -------- -------- -------- --------
Investment Adviser fee 82 - 82 206 - 206
----------------------- -------- -------- -------- -------- -------- --------
At 30 June 2023 an amount of GBP13,000 was receivable from the
Investment Adviser in respect of the Investment Adviser fee (31
December 2022: 12,554 payable). Additionally, the Company agreed
with the Investment Adviser that the costs and expenses of the IPO
would be capped at 2% of the gross proceeds received, with any cost
above this amount to be paid by the Investment Adviser by way of
rebate of its adviser fee. At 30 June 2023, GBP74,322 in respect of
excess issue costs is due to be received from the Investment
Adviser (31 December 2022: GBP111,432).
Investment Adviser fee
The Company has entered into an Investment Adviser Agreement
dated 5 July 2021 between the Company, the AIFM and the Investment
Adviser (the "Investment Adviser Agreement"), pursuant to which the
Investment Adviser has been given responsibility for investment
advisory services in respect of any Private Hydrogen Assets the
Company invests in directly and the Listed Hydrogen Assets
(including Listed Hydrogen Assets forming part of the Liquidity
Reserve and uninvested cash) in accordance with the Company's
investment policy, subject to the overall control and supervision
of the Board and the AIFM.
Under the Investment Adviser Agreement, the Investment Adviser
receives from the Company, quarterly in advance, an advisory fee
equal to:
i. 1.0% of the Net Asset Value per annum of the Listed Hydrogen Assets up to GBP100 million:
ii. 0.8% of the Net Asset Value per annum of the Listed Hydrogen
Assets from GBP100 million (save that the Investment Adviser has
agreed to reduce this fee to 0.5% in respect of the Liquidity
Reserve pending its re-investment in Private Hydrogen Assets for 18
months following Admission, being to and including 30 January
2023);
iii. 1.5% of the Net Asset Value per annum of any Private
Hydrogen Assets held by the Company directly (i.e. not held by the
Limited Partnership or any other undertaking advised by the
Investment Adviser where the Investment Adviser is receiving a
separate advisory fee); and
iv. for so long as the Company is not considered a 'feeder fund'
for the purposes of the Listing Rules, 1.5% per annum of the Net
Asset Value of the Private Hydrogen Assets held by the Limited
Partnership.
The Limited Partnership has entered into a Limited Partnership
Investment Adviser Agreement dated 5 July 2021 (the "Limited
Partnership Investment Adviser Agreement") between the General
Partner (in its capacity as general partner of the Limited
Partnership), the AIFM and the Investment Adviser, pursuant to
which the Investment Adviser has been given responsibility for
investment advisory services in respect of the Private Hydrogen
Assets in accordance with the investment policy of the Limited
Partnership, subject to the overall control and supervision of the
General Partner and the AIFM.
Under the Limited Partnership Investment Adviser Agreement, the
Investment Adviser, if the Company was considered a 'feeder fund'
for the purposes of the Listing Rules by virtue of additional
investors co-investing via the Limited Partnership in the future,
shall receive from the Limited Partnership an advisory fee equal to
1.5% per annum of the Net Asset Value of the Private Hydrogen
Assets held by the Limited Partnership, payable quarterly in
advance. Advisory fees paid or payable by the Limited Partnership
are reflected through the NAV of the Limited Partnership.
No performance fee is paid or payable to the Investment Adviser
under either the Investment Adviser Agreement or the Limited
Partnership Investment Adviser Agreement but the principals of the
Investment Adviser are, subject to certain performance conditions
being met, entitled to carried interest fees from the Limited
Partnership. Refer to 'Carried Interest Partner Fees' section
below.
Carried Interest Partner Fees
Pursuant to the terms of the Limited Partnership Agreement dated
5 July 2021 as amended and restated on 26 November 2021 (the
"Limited Partnership Agreement"), the Carried Interest Partner is,
subject to the limited partners of the Limited Partnership
receiving an aggregate annualised 8% realised return (i.e. the
Company and, in due course, any additional co-investors), entitled
to a carried interest fee in respect of the performance of the
Private Hydrogen Assets.
Subject to certain exceptions, the Carried Interest Partner will
receive, in aggregate, 15% of the net realised cash profits from
the Private Hydrogen Assets held by the Limited Partnership once
the limited partners of the Limited Partnership (i.e. the Company
and, in due course, any additional co-investors) have received an
aggregate annualised 8% realised return. This return is subject to
a 'catch-up' provision in Carried Interest Partner's favour. Any
realised or unrealised carried interest fee paid or payable to the
Carried Interest Partner is reflected through the NAV of the
Limited Partnership. During the period carried interest fees of
GBP116,065 (31 December 2022: GBPnil) were accrued as payable to
the Carried Interest Partner.
20% of any carried interest received (net of tax) will be used
by the principals of the Investment Adviser to acquire Ordinary
Shares in the market. Any such acquired shares will be subject to a
12-month lock-up from the date of purchase.
General Partner's priority profit share
Under the Limited Partnership Agreement, the General Partner of
the Limited Partnership shall be entitled to a General Partner's
Profit Share ("GPS"). The GPS for each accounting period shall be
an amount equal to 1.5% of the prevailing NAV of the Limited
Partnership. For so long as the Company is the sole limited partner
of the Limited Partnership, the GPS shall be distributed to the
Company rather than the General Partner. The Company is currently
the sole limited partner of the Limited Partnership. Therefore,
under the Investment Adviser Agreement, the investment adviser fee
in relation to the Private Hydrogen Assets held by the Limited
Partnership is settled by the Company which for the period totalled
GBP803,722 (30 June 2022: GBP444,856). During the period the
Limited Partnership did not call any GPS from the Company as the
net effect of the calling and distributing GPS from/to the Company
is GBPnil (30 June 2022: GBPnil).
6. Other expenses
For the For the
six six
months ended months ended
30 June 30 June
2023 2022
GBP'000 GBP'000
---------------------------------- ------------ ------------
Administration & Secretarial Fees 105 93
AIFM Fees 54 40
Directors' Fees 96 84
Custodian Charges 25 24
Brokers Fees 36 30
Registrar's Fees 8 9
Website Fees 25 8
Legal Fees 13 12
LSE Fees 16 7
Audit Fees 77 47
D & O Insurances 24 24
PR & Marketing 152 57
Printing Fees 32 3
Other expenses 67 37
================================== ============ ============
Total revenue expenses 730 475
================================== ============ ============
Expenses charged to capital:
================================== ============ ============
Capital transaction costs - -
================================== ============ ============
Total expenses 730 475
================================== ============ ============
During the period to 30 June 2023, KPMG LLP UK received
GBP12,000 (including VAT of GBP2,000) for non-audit services in
relation to the share issuance Circular and Prospectus published in
September 2022 (the "share issuance Circular and Prospectus").
Non-audit service costs applicable to the share issuance
Circular and Prospectus have been treated as an other debtor and
will be reclassified and included in share issue costs disclosed in
the Statement of Changes in Equity when shares are issued; or
reclassified as abort costs in the Statement of Comprehensive
Income should no shares be issued at the share issuance Circular
and Prospectus expiry date.
During the period to 30 June 2022, the auditors received
GBP159,000 (including VAT of GBP12,000) for non-audit services in
respect of the Company's equity raise, which were treated as a
capital expense and included in 'share issue costs' disclosed in
the Statement of Changes in Equity. This service is required by law
or regulation and is therefore a permissible non-audit service
under the FRC Ethical Standard.
7. Taxation
Analysis of charge in the period
For the six months ended For the six months ended
June 2023 June 2022
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- -------- -------- -------- --------
Withholding tax expense - - - - - -
======================= ======== ======== ======== ======== ======== ========
Total tax charge for
the period - - - - - -
======================= ======== ======== ======== ======== ======== ========
8. Trade and other receivables
As at 30 As at 31
June December
2023 2022
GBP'000 GBP'000
================== ======== =========
Prepayments 115 37
Other receivables 500 604
================== ======== =========
Total 615 641
================== ======== =========
Other receivables includes GBP500,000 in respect of costs
applicable to the share issuance Circular and Prospectus published
in September 2022 and expiring in September 2023 (31 December 2022:
GBP470,000). These costs will be reclassified and included in
'share issue costs' disclosed in the Statement of Changes in Equity
when shares are issued or reclassified as abort costs in the
Statement of Comprehensive Income should no shares be issued at the
Circular and Prospectus expiry date.
9. Trade and other payables
As at 30
June As at 31
December
2023 2022
GBP'000 GBP'000
------------------------------------- -------- --------
Amounts falling due within one year:
Accrued expenses 185 153
===================================== ======== ========
Total 185 153
===================================== ======== ========
10. Share capital
As at 31 December
As at 30 June 2023 2022
------------------------- -------------------------
Nominal Nominal
value value
of shares of shares
No. of No. of
Allotted, issued and fully paid: shares (GBP) shares (GBP)
====================================== =========== ============ =========== ============
Shares in issue at the beginning of
the period 128,819,999 1,288,199.99 107,350,000 107,350,000
Allotted/redeemed following admission
to LSE
Ordinary Shares issued - - 21,469,999 214,699.00
====================================== =========== ============ =========== ============
Closing balance 128,819,999 1,288,199.99 128,819,999 1,288,199.99
====================================== =========== ============ =========== ============
During the six months ended 30 June 2023 no shares were issued.
During the year ended 31 December 2022, 21,469,999 shares were
issued by way of a Placing at an issue price of 100 pence per
Ordinary Share.
The Company is permitted to hold Ordinary Shares acquired by way
of market purchase in treasury, rather than having to cancel them.
Such Ordinary Shares may be subsequently cancelled or sold for
cash. No Ordinary Shares have been repurchased during the
period.
Each Ordinary Share held entitles the holder to one vote. All
shares carry equal voting rights and there are no restrictions on
those voting rights.
11. Return per ordinary share
Return per share is based on the weighted average number of
Ordinary Shares in issue during the six months ended 30 June 2023
of 128,819,999.
For the six months ended For the six months ended
30 June 2023 30 June 2023
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= ======== ======== ======== ======== ======== ========
Profit/(loss) for the period
(GBP'000) (698) 5,065 4,367 (661) 1,794 1,133
============================= ======== ======== ======== ======== ======== ========
Return per Ordinary Share (0.54)p 3.93p 3.39p (0.57)p 1.54p 0.97p
============================= ======== ======== ======== ======== ======== ========
There is no dilution to return per share as the Company has only
Ordinary Shares in issue.
12. Net asset value per ordinary share
As at As at
30 June 31 December
2023 2022
GBP'000 GBP'000
========================== =========== ===========
Net Asset Value (GBP'000) 129,720 125,353
Ordinary Shares in issue 128,819,999 128,819,999
========================== =========== ===========
NAV per Ordinary Share 100.70p 97.31p
========================== =========== ===========
There is no diluted Net Asset Value per share as the Company has
only Ordinary Shares in issue.
13. Related party transactions and material contracts
Directors
During the period, fees were payable to the Directors at an
annual rate of GBP68,250 to the Chairman, GBP57,750 to the Chairman
of the Audit and Risk and Valuation Committees and GBP47,250 to the
Chair of the Management Engagement and Remuneration Committees. Mr
Bucknall is not remunerated for his role as a Non-Executive
Director. These fees were effective from the 1 January 2023.
Details of the Directors remuneration paid during the period is
given in note 6. At the period end, the Directors had the following
holdings in the Company:
Ordinary
Shares
Ordinary
Shares at at 31 December
30 June
2023 2022
================== ========== ==============
Simon Hogan 40,000 40,000
Afkenel Schipstra 10,100 10,100
Abigail Rotheroe 10,000 10,000
David Bucknall - -
================== ========== ==============
Investment Adviser
Fees payable to the Investment Adviser are shown in the
Statement of Comprehensive Income. Fees details of the Investment
Adviser are shown in note 5. At 30 June 2023, the principals of the
Investment Adviser, Dr JJ Traynor and Mr R Hulf, each held 100,000
Ordinary Shares of the Company (31 December 2022: 100,000).
Transactions between the Company and the Investment Adviser during
the period are disclosed in note 5.
INEOS Energy
The Relationship and Co-Investment Agreement dated 19 June 2021
between INEOS UK E&P Holdings Limited ("INEOS Energy"), the
Investment Adviser, the Company and the General Partner (acting in
its capacity as the general partner of the Limited Partnership),
pursuant to which the parties agreed that: (i) INEOS Energy would
subscribe for and/or shall procure that its associates shall
subscribe for at least 25 million Ordinary Shares in the IPO; (ii)
such Ordinary Shares subscribed by INEOS Energy would be subject to
a 12 month lock-up from the date of purchase pursuant to which
INEOS Energy agreed that it will not sell, grant options over or
otherwise dispose of any interest in any such Ordinary Shares
purchased by them (subject to the usual carve-outs); (iii) INEOS
Energy was entitled to nominate one Non-Executive Director for
appointment to the Board; (iv) prior to making any co-investment
opportunity in relation to a Private Hydrogen Assets that is a
project to any limited partner of the Limited Partnership, the
Company and the Investment Adviser will give INEOS Energy a right
of first refusal to acquire up to 100% of such co-investment
opportunity (provided that the 'related party transaction'
requirements set out in the Listing Rules are complied with); (v)
INEOS Energy are provided with certain information rights relating
to Private Hydrogen Assets and co-investment opportunities; and
(vi) INEOS Energy shall be entitled to second one or more employees
to the Investment Adviser from time-to-time. INEOS Energy has
agreed that all transactions between INEOS Energy and its
associates and any member of the Company and Group and/or the
Investment Adviser are conducted at arm's length on normal
commercial terms.
At the IPO, INEOS Energy subscribed for and received 25 million
Ordinary Shares of the Company. At 30 June 2023, INEOS Energy held
25 million Ordinary Shares of the Company (31 December 2022: 25
million Ordinary Shares).
David Bucknall is currently Chief Executive Officer of the INEOS
Energy group of companies and was appointed as the Board
representative of INEOS Energy on 20 May 2022 pursuant to the
Relationship and Co-Investment Agreement entered into between,
inter alia, INEOS Energy and the Company at the Company's
launch.
Alternative Investment Fund Manager
FundRock Management Company (Guernsey) Limited is appointed to
act as the Company's and the Limited Partnership's alternative
investment fund manager (the "AIFM") for the purposes of the UK
AIFM Rules. The AIFM has delegated the provision of portfolio
management services to the Investment Adviser. The AIFM, Company
Secretary and Administrator are part of the same Apex Group.
Under the AIFM Agreement between the AIFM and the Company dated
5 July 2021, and with effect from Admission, the AIFM shall be
entitled to receive from the Company a fee of 0.05% of Net Asset
Value per annum up to GBP250 million, 0.03% of Net Asset Value per
annum from GBP250 million up to GBP500 million and 0.015% of Net
Asset Value per annum from GBP500 million, in each case adjusted to
exclude any Net Asset Value attributable to any Private Hydrogen
Assets held through the Limited Partnership and subject to a
minimum annual fee of GBP85,000.
Under the AIFM Agreement between the AIFM and the Limited
Partnership dated 5 July 2021, the AIFM receives from the Limited
Partnership a fee of 0.05% of the net asset value of the Limited
Partnership per annum up to GBP250 million, 0.03% of the net asset
value of the Limited Partnership per annum from GBP250 million up
to GBP500 million and 0.015% of the net asset value of the Limited
Partnership per annum from GBP500 million, subject to a minimum
annual fee of GBP25,000. AIFM fees paid or payable by the Limited
Partnership are reflected through the NAV of the Limited
Partnership.
The AIFM is also entitled to reimbursement of reasonable
expenses incurred by it in the performance of its duties.
Administration and Company Secretarial services fee
The Company has entered into an Administration and Company
Secretarial Services Agreement dated 5 July 2021 (the
"Administrator and Company Secretary Agreement") between the
Company and Apex Listed Companies Services (UK) Limited (the
"Company Secretary and Administrator") pursuant to which the
Company Secretary and Administrator has agreed to act as Company
secretary and administrator to the Company.
Under the terms of the Administration and Company Secretarial
Services Agreement, the Company Secretary and Administrator
receives a fee from the Company of 0.06% of Net Asset Value per
annum up to GBP250 million, 0.05% of Net Asset Value per annum from
GBP250 million up to GBP500 million and 0.025% of Net Asset Value
per annum from GBP500 million and subject to a minimum annual fee
of GBP147,695 plus a further GBP10,000 per annum to operate the
Company's Liquidity Reserve.
Under the terms of the Limited Partnership Administration
Agreement 5 July 2021, pursuant to which the Company Secretary and
Administrator has agreed to act as administrator to the Limited
Partnership, the Company Secretary and Administrator receives an
annual fee from the Limited Partnership of GBP69,151 and of
GBP16,596 (excluding VAT) in respect of the General Partner.
Administration fees paid or payable by the Limited Partnership are
reflected through the NAV of the Limited Partnership. For so long
as the Company is the sole Limited Partner, the administration fee
in respect of the General Partner shall be allocated settled by the
Company rather than the General Partner.
Custodian fee
The Company has entered into a Custodian Agreement between the
Company and The Northern Trust Company (the "Custodian") dated 23
June 2021 (the "Custodian Agreement"), pursuant to which the
Custodian has agreed to act as custodian to the Company.
The Custodian is entitled to a minimum annual fee of GBP50,000
(exclusive of VAT) per annum. The Custodian is also entitled to a
fee per transaction taken on behalf of the Company.
Registrar fee
The Company utilises the services of Computershare Investor
Services plc (the "Registrar") as registrar to the transfer and
settlement of Ordinary Shares. Under the terms of the Registrar
Agreement dated 5 July 2021, the Registrar is entitled to a fee
calculated based on the number of shareholders, the number of
transfers processed and any Common Reporting Standard on-boarding,
filings or changes. The annual minimum fee is GBP4,800 (exclusive
of VAT). In addition, the Registrar is entitled to certain other
fees for ad hoc services rendered from time to time.
14. Subsidiary and related entities
Subsidiary
The Company owns 100% of HydrogenOne Capital Growth (GP) Limited
as at 30 June 2023 and 31 December 2022.
Effective Country of Issued share Registered
Subsidiary name ownership ownership Principal activity capital address
==================== ========= ============== ================== ============ ===============
HydrogenOne Capital 100% United Kingdom General partner GBP1 6th Floor,
Growth (GP) Limited
of HydrogenOne 125 London
Capital Growth Wall, London,
Investments (1)
LP
EC2Y 5AS
==================== ========= ============== ================== ============ ===============
Related entities
The Company holds Private Hydrogen Assets through its investment
in the Limited Partnership, which has not been consolidated as a
result of the adoption of IFRS 10: Investment entities exemption to
consolidation. There are no cross guarantees amongst related
entities. Below are details of the unconsolidated Private Hydrogen
Asset held through the Limited Partnership.
30 June 2023
Value of
Purpose of Country of investment Registered
Name the entity Incorporation GBP'000 address
====================== ====================== =============== ========== ========================
Sunfire GmbH Electrolyser Germany 25,559 Gasanstaltstraße
producer 2
01237 Dresden,
Germany
====================== ====================== =============== ========== ========================
Elcogen Group plc Solid oxide United Kingdom 21,475 Highdown House,
fuel cell supply Yeoman Way, Worthing,
West Sussex,
BN99 3HH
====================== ====================== =============== ========== ========================
Strohm Holding BV Supplier of The Netherlands 18,440 Monnickendamkade 1,
thermoplastic
composite pipe
1976 EC IJmuiden
====================== ====================== =============== ========== ========================
NanoSUN Limited Supplier of United Kingdom 12,555 Abraham Heights Farm,
mobile hydrogen Westbourne Road,
storage and Lancaster, LA1 5EF
refueling systems
====================== ====================== =============== ========== ========================
Cranfield Aerospace Aviation design United Kingdom 10,422 Hanger 2, Cranfield
Solutions Limited and maintenance Airport, Cranfield,
Bedfordshire,
MK43 0AL
====================== ====================== =============== ========== ========================
HiiROC Limited Supplier of United Kingdom 10,325 22 Mount Ephraim,
clean hydrogen Tunbridge Wells, Kent,
production technology TN4 8AS
====================== ====================== =============== ========== ========================
Bramble Energy Limited Printed Circuit United Kingdom 8,439 6 Satellite Business
Board fuel cell Village, Fleming Way,
solutions Crawley, England,
RH10 9NE
====================== ====================== =============== ========== ========================
HH2E AG Supplier of Germany 6,305 HRB 167243, Kaiser-
green electrolysis Wilhelm-Straße
and energy storage 93,
facilities 20355 Hamburg
====================== ====================== =============== ========== ========================
GEN2 Energy AS Green Hydrogen Norway 3,999 Raveien 205, 3184 Borre,
development Norway
====================== ====================== =============== ========== ========================
HH2E Werk Thierbach Green Hydrogen Germany 1,852 HRB 40987, Kaiser-
GmbH development Wilhelm-Straße
93,
20355 Hamburg
====================== ====================== =============== ========== ========================
31 December 2022
Value of
Purpose of Country of investment Registered
Name the entity Incorporation GBP'000 address
====================== ====================== =============== =========== =======================
Gasanstaltstraße
Electrolyser 2 01237
Sunfire GmbH producer Germany 21,763 Dresden, Germany
====================== ====================== =============== =========== =======================
Highdown House,
Solid oxide Yeoman Way, Worthing,
Elcogen Group plc fuel cell supply United Kingdom 20,430 West Sussex, BN99 3HH
====================== ====================== =============== =========== =======================
Supplier of 22 Mount Ephraim,
clean hydrogen Tunbridge Wells, Kent,
HiiROC Limited production technology United Kingdom 12,914 TN4 8AS
====================== ====================== =============== =========== =======================
Monnickendamkade 1,
Supplier of
thermoplastic
Strohm Holding BV composite pipe The Netherlands 11,606 1976 EC IJmuiden
====================== ====================== =============== =========== =======================
Supplier of
mobile hydrogen Abraham Heights Farm,
storage and Westbourne Road,
NanoSUN Limited refueling systems United Kingdom 11,519 Lancaster, LA1 5EF
====================== ====================== =============== =========== =======================
6 Satellite Business
Printed Circuit Village, Fleming Way,
Board fuel cell Crawley, England, RH10
Bramble Energy Limited solutions United Kingdom 10,032 9NE
====================== ====================== =============== =========== =======================
Hanger 2, Cranfield
Airport, Cranfield,
Cranfield Aerospace Aviation design Bedfordshire, MK43
Solutions Limited and maintenance United Kingdom 6,296 0AL
====================== ====================== =============== =========== =======================
Supplier of HRB 167243, Kaiser-
green electrolysis Wilhelm-Straße
and energy storage 93,
HH2E AG facilities Germany 5,134 20355 Hamburg
====================== ====================== =============== =========== =======================
Green Hydrogen Raveien 205, 3184
GEN2 Energy AS development Norway 3,421 Borre, Norway
====================== ====================== =============== =========== =======================
The maximum exposure to loss from the unconsolidated entities is
the carrying amount of the financial assets held.
During the period the Company did not provide financial support
and has no intention of providing financial or other support to the
subsidiary and the unconsolidated Private Hydrogen Assets held
through the Limited Partnership.
15. Post balance sheet events
The Company completed a GBP1.0 million follow-on investment in
NanoSUN, alongside Westfalen and NanoSUN management.
16. Status of this report
These Half-yearly Financial Statements are not the Company's
statutory accounts for the purposes of section 434 of the Companies
Act 2006. They are unaudited. The unaudited Half-yearly Financial
Report will be made available to the public at the registered
office of the Company.
The report will also be available in electronic format on the
Company's website https://hydrogenonecapitalgrowthplc.com/
The information for the year ended 31 December 2022 has been
extracted from the last published audited financial statements,
unless otherwise stated. The audited financial statement has been
delivered to the Registrar of Companies. KPMG Channel Islands
Limited reported on those accounts and their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under sections 498(2) or
498(3) of the Companies Act 2006.
The Half-yearly Financial Report was approved by the Board on 19
September 2023.
Other information
Alternative Performance Measures ("APM")
APMs are often used to describe the performance of investment
companies although they are not specifically defined under IFRS.
APM calculations for the Company are shown below.
(Discount)/Premium
The amount, expressed as a percentage, by which the share price
is less than/ more than the Net Asset Value per Ordinary Share.
31 December
30 June
2023 2022
============================================= ======= ===========
NAV per Ordinary Share (pence) a 100.70 97.31
Share price (pence) b 63.70 79.30
=============================== ============== ======= ===========
Discount (b÷a)-1 (36.7)% (18.5)%
=============================== ============== ======= ===========
Ongoing charges
A measure, expressed as a percentage of average net assets
during the period, of the regular, recurring annual costs of
running an Investment Company.
For the six months ended 30 June 2023 2022
=============================================== =========== ===========
Average NAV a 127,965,802 110,669,477
Annualised expenses b 3,358,733 2,721,440
--------------------------------- ------------ ----------- -----------
Ongoing charges (b÷a) 2.62% 2.46%
--------------------------------- ------------ ----------- -----------
The ongoing charges percentage is on a consolidated basis and
therefore takes into consideration the expenses of the Limited
Partnership as well as the Company and is calculated in accordance
with the methodology set out by the AIC.
The recurring expenses of the Company and Limited Partnership
charged in the six months to 30 June 2023 have been annualised for
the ongoing charges calculation.
Total return
A measure of performance that includes both income and capital
returns. This takes into account capital gains and reinvestment of
dividends paid out by the Company into the Ordinary Shares of the
Company on the ex-dividend date.
Share price
Six months to 30 June 2023 Page (1) NAV (2)
============================= ============= ===== =========== =======
Opening at 1 January 2023(p) a n/a 79.30 97.31
Closing at 30 June 2023(p) b -- 63.70 100.70
============================= ============= ===== =========== =======
Total return (b÷a)-1 (19.7)% 3.5%
============================= ==================== =========== =======
1 Share price total return is based on an opening share price of 79.3p.
2 NAV total return is based on an opening NAV 97.31p per Ordinary Share.
n/a = not applicable.
Notes
For further information, please visit
www.hydrogenonecapitalgrowthplc.com or contact:
HydrogenOne Capital LLP - Investment
Adviser +44 20 3830 8231
JJ Traynor/Richard Hulf
Barclays Bank PLC - Corporate +44 20 7623 2323
Broker BarclaysInvestmentCompanies@barclays.com
Dion Di Miceli
Stuart Muress
Buchanan Communications - Financial Tel: +44 (0) 20 7466 5000
PR Email: HGEN@buchanancomms.co.uk
Henry Harrison-Topham
Henry Wilson
George Beale
About HydrogenOne Capital Growth plc:
HydrogenOne is the first London-listed hydrogen fund investing
in clean hydrogen for a positive environmental impact. The Company
was launched in 2021 with an investment objective to deliver an
attractive level of capital growth by investing in a diversified
portfolio of hydrogen and complementary hydrogen focussed assets.
INEOS Energy is a strategic investor in HydrogenOne. The Company is
listed on the London Stock Exchange's main market (ticker code:
HGEN). The Company is an Article 9 climate impact fund with an ESG
policy integrated in investment decisions and asset monitoring.
The Company's Investment Adviser, HydrogenOne Capital LLP (FRN:
954060), is an appointed representative of Thornbridge Investment
Management LLP (FRN: 713859) which is authorised and regulated by
the Financial Conduct Authority.
END
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IR BLGDCIXBDGXC
(END) Dow Jones Newswires
September 20, 2023 02:00 ET (06:00 GMT)
Hydrogenone Capital Growth (LSE:HGEN)
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