HydrogenOne Capital Growth plc
Annual Report & Accounts 2021
hydrogenonecapitalgrowthplc.com
Contents
Strategic report
01 Investment objective, highlights and financial information
02 At a glance
04 About Clean Hydrogen
06 Chairman’s Statement
08 Company Objectives
10 Investment Adviser’s Report
22 Environmental, Social and Governance
25 Section 172 Statement
27 Other Information
Governance
34 Board of Directors
35 Directors’ Report
39 Corporate Governance
43 Directors’ Remuneration Policy
44 Directors’ Remuneration Implementation Report
46 Report of the Audit and Risk Committee
48 Statement of Directors’ Responsibilities
49 Independent auditor’s report
Financial statements
56 Parent and consolidated statement of comprehensive income
57 Parent and consolidated statement of financial position
58 Parent and consolidated statement of changes in equity
59 Parent and consolidated statement of cash flows
60 Notes to the parent and consolidated financial statements
Other information
83 Alternative Performance Measures (“APMs”)
84 Glossary
86 Directors and Advisers
87 Report of the Alternative Investment Fund Manager
88 Notice of Annual General Meeting
90 Notes to Notice of Annual General Meeting
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HydrogenOne Capital Growth plc Annual Report 2021
Background
Investment objective and policy
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.
The Company will seek to achieve this 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 and Asia Pacific. The Company
intends to implement its investment policy through the acquisition of Private Hydrogen
Assets and Listed Hydrogen Assets.
• Leadership in a new sector
from the first London listed
hydrogen fund. Significant
growth potential identified by
the first mover in a new green
energy technology sector,
addressing Net Zero, air quality
and energy security.
• A unique offering to investors.
Track record in energy and
capital markets. We have a
pipeline to deliver 10-15%
per annum NAV growth.
• Ambition to address the
complexity and scale in a
major new energy sector.
10-15%
Deliver 10-15% per
annum NAV growth
>£500m
Pipeline
1
London listed
hydrogen fund
st
Investment objective, highlights
and financial information
Our purpose
Strategic Report Governance
Financial statements
Other information
£200m+
near term
private e quity
pipeline
£10m
private equity:
HiiRoc
£10m
private equity:
Bramble
£3m
private equity:
Gen
2
Energy
£9m
deployed
to equities
£9m
private equity:
NanoSUN
£20m
private equity:
Sunfire
£7m
private equity:
Cranfield Aerospace
Operational highlights
• Listed on the London Stock Exchange Premium segment on 30 July 2021,
raising net proceeds of £105.2 million
• During the period from listing to 31 December 2021, the Company successfully
completed investment in three Private Hydrogen Assets for £39.2 million. A further
three investments have been completed post period end for total consideration of
£20.5 million
• In addition the Company acquired a portfolio of 19 Listed Hydrogen Assets for
total consideration of £9.5 million
• At 31 December 2021, c. 46% of the equity raised at listing had been deployed.
• The Company has deployed material capital into low carbon growth, with portfolio
companies contributing to avoided greenhouse gas emissions
• Ongoing Charges
1
for the period to 31 December 2021 amount to 2.06% of the
Net Asset Value (“NAV”)
• The Company’s NAV as at 31 December 2021 was £102.8 million or 95.75 pence
per Ordinary Share
• Share price return
1
per share to 31 December 2021 is 19.5%
• Green Economy Mark awarded by the London Stock Exchange which
awards companies that derive more than 50% of their revenues from
products and services that are contributing to environmental objectives
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HydrogenOne Capital Growth plc Annual Report 2021
At a glance
Deployment of funds in the first eight months
Company summary as at 31 December 2021
Portfolio summary as at 31 December 2021
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HydrogenOne Capital Growth plc Annual Report 2021
Market capitalisation
£128.3m
Net asset value
per Ordinary Share
95.75p
Gross asset value
£103.0m
Ordinary Share price
119.50p
Net asset value (“NAV”)
£102.8m
Ordinary Share price
premium to NAV
1
24.8 %
Number of
investments
22
Ongoing
charges
1
2.06%
Capital
deployed
46%
Largest
investment
£20.0m
3
Invested portfolio
by geography
2
Invested portfolio
by theme
2
Total portfolio
by asset class
2
Germany
UK
France
Scandinavia
Asia
North America
Electrolysers
Fuel cells
Supply services
Stora
g
e
Listed
Unlisted
Liquidity Reserve
2. The pie charts above show fund portfolio at 31 December 2021. Private Hydrogen Assets are valued at the price of the recent investment.
1. Alternative Performance Measures (“APMs”): The disclosures above are considered to represent the Company’s APMs. Definitions of these APMs and other
performance measures used by the Company, together with how these measures have been calculated, can be found on page 83.
Strategic Report Governance
Financial statements
Other information
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About Clean Hydrogen
• Clean hydrogen displaces fossil fuels, reducing CO
2
emissions and improving air quality
• Clean hydrogen is an energy carrier that addresses renewables intermittency and energy storage
• Clean hydrogen demand could increase by over 200 times between 2019 and 2030 as the energy
transition gathers pace, abating some 6 billion tonnes/year of CO
2
emissions by 2050
1
With the adoption of legislated Net Zero targets by governments around the world, the focus has shifted to
how exactly these targets can be met.
In addition, the growing share of renewables in the energy mix has created an urgent need for energy storage.
Clean hydrogen can help us to deal with the intermittency of renewables by converting power to a storable,
usable gas to replace hydrocarbons, reduce greenhouse gas emissions and improve air quality. All of this
enables the world to deliver its climate change mitigation ambitions. At the same time, hydrogen combined
with renewables such as wind and solar provides a domestic energy supply option for many countries,
reducing reliance on imported energy.
Decarbonising the energy system
Clean hydrogen is the only Net Zero energy gas and this has been recognised in the plans adopted to date
by the EU and individually by Germany, France, Spain and Portugal – all of which have committed to the use
of clean hydrogen to decarbonise industry and to improve air quality. They have backed this commitment
with over multi-billion Euro funding to kick-start the process. Similar plans are in place in several Asian countries,
and other countries including the United Kingdom are expected to follow suit.
This means that markets for clean hydrogen, and its production processes, are growing fast and accelerating.
The potentially enormous market to replace hydrogen produced from hydrocarbons in the current hydrogen
supply chain is being addressed already by the falling costs of renewable energy and electrolysis as well as
by carbon capture and storage pilots.
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HydrogenOne Capital Growth plc Annual Report 2021
About Clean Hydrogen
Hydrogen policies
in 39 countries
for Net Zero
Energy
Transition
Hydrogen fuel
in
heavy transport
and power
Air
Quality
Distributed
renewables
and storage
Energy
Security
Norsk e-Fuel
…projects
Sunfire SOEC
…supply chains
1. Hydrogen Council, McKinsey: Hydrogen for Net-Zero. A critical cost-competitive energy sector. November 2021.
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HydrogenOne Capital Growth plc Annual Report 2021
Strategic Report Governance
Financial statements
Other information
5
Responsible investment
At the 2015 United Nations Climate Change Conference 196 countries agreed to reduce their carbon output
as soon as possible and to do their best to keep global warming to well below 2 degrees celsius, and pursue
efforts to limit the increase to 1.5 degrees celsius. There is broad consensus that this will require emissions to
be Net Zero by latest 2050. Clean hydrogen has a vital role to play in this, and it can displace fossil fuels and
hence reduce greenhouse gas emissions in transport, power generation, industrial energy, as a feedstock,
and in heating.
The Company’s investment objective is to deliver an attractive level of returns while integrating core ESG
principles into its decision-making and ownership process.
We have a powerful environment – social – governance investment case (ESG), closely aligned with seven
of the United Nations Sustainable Development Goals. By excluding sectors such as fossil fuels producers,
focusing strongly on energy transition themes, and proactively engaging with our investments and other
stakeholders more broadly, we aim to deliver attractive returns and a positive societal impact.
Clean - up of fossil fuel-
derived hydrogen
•
•
•
•
•
•
CCUS integration
Large scale renewables
Electrolysis
Methane pyrolysis re-tools
natural gas grids
Solid carbon extracted
Distributed energy
Building heat
Industrial energy
Feedstock
Transport
Green
Turquoise
Blue
Grid scale storage
• Power to gas
• Geological storage
• Ammonia
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•
Avoid GHG emissons
•
Improve air quality
•
Active engagement
•
Public and private investments
Deliver the Energy Transition
Sustainable
business practices
UN Sustainable Development Goals
|
Principles for Responsible Investment
|
Green Economy Mark
ESG in the
Company
Investing in low
carbon growth
Exclusion:
fossil fuel producers
SDG target:
3.9
7.1, 2, 3 7.1, 2, 3 11.6 12.6 14.3 15.3
Effective
Boards
Hydrogen Value Chain
“On behalf of the Board,
I am delighted to introduce
the first annual report of
HydrogenOne Capital
Growth plc for the period
from inception to the end
of our first financial period
on 31 December 2021.
The Company successfully
listed on 30 July 2021,
raising £105.2 million, post
costs of the launch, and
since then your company
has been investing the
equity raised in a diverse
portfolio of assets in the
clean energy space.”
Simon Hogan Chairman
We have delivered what we said we
would when we listed, and done so
ahead of schedule. Since the formation
of your company, it has become clear
the macro environment has been
moving quickly. Clean energy, and
hydrogen in particular, has a key role
to play in achieving the ambitious Net
Zero target. This was emphasised at
COP26 in Glasgow last November
where hydrogen was highlighted as an
integral part of the energy transition
with numerous declarations made
supporting the acceleration of demand
and investment.
There is wide support and agreement
that clean hydrogen is critical to
achieving a Net Zero outcome. In public
policy terms, Europe has developed a
coherent hydrogen strategy, and a total
of 39 countries have now published
hydrogen roadmaps. In the UK, the
phase out of diesel in heavy goods
vehicles by 2035-40 is one of many
similar policy shifts that further supports
the hydrogen sector. Hydrogen energy
is clearly gaining traction, but there is a
long way to go, and the sector is in need
of further investment.
This backdrop is enabling us as a
business to identify a range of
opportunities with interested parties and
to invest across the whole energy
transition value chain. At the end of 2021,
there were at least 500 hydrogen
projects announced world-wide, an
increase of over 100% in the year. Full
value chain spending on clean hydrogen
could reach $700bn by 2030
1
. The
Company is democratising investment
in a large universe, which to date has
predominantly been funded by private
investment.
This also, however, shows how
underinvested the hydrogen market is
today and highlights that we must pick
up the pace in order for hydrogen to
play its part in the post-COP26 world.
For you, our investors, this is a good
moment to enter this market and to be
patient for the future rewards as we
deploy our capital into our target
portfolio. We are grateful to those who
saw the exciting potential when we
created the Company and who will be
able to participate in the interesting
opportunities ahead.
Results
Since listing the Company has begun
deploying fresh capital into the
hydrogen sector. At 31 December 2021,
the Company has made investments
into three Private Hydrogen Assets
and a portfolio of listed holdings. The
Company has deployed 46% of the
equity raised and has a strong pipeline
of investment opportunities.
The Net Asset Value (“NAV”) per share at
31 December 2021 was 95.75 pence,
compared with 98.0p at listing on
30 July 2021. The main driver for the NAV
per share reduction has been the fall in
global listed hydrogen focussed stocks
in December. We hold these investments
for the long term and our expectation is
that these losses will be recovered once
sentiment in the sector changes.
The loss after tax for the period was
£2.4 million resulting in a loss per share
of 3.78 pence since listing.
Investment performance
During the period from inception to
31 December 2021, shareholders have
seen a share price total return of 19.5%,
whilst over the same period the NAV
total return per share reduced by 2.3%.
The share price has consistently
traded at a premium to NAV since the
July 2021 IPO.
Dividends
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 the Company continues to focus on
growth investments.
Acquisitions
During the period under review, the
Company announced the acquisitions of
equity in Sunfire AG, HiiROC Limited and
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HydrogenOne Capital Growth plc Annual Report 2021
Chairman’s Statement
1. Hydrogen Council, McKinsey: Hydrogen for Net-Zero.
A critical cost-competitive energy sector. November 2021.
NanoSUN Limited. Further details of
these investments are provided in the
Investments Adviser’s Report on pages
19 to 21. In addition the Company has
acquired a portfolio of 19 listed stocks.
Post period end, the Company has
made further investments in Bramble
Energy Limited for £10.0 million, Gen2
Energy for £3.5 million and Cranfield
Aerospace Solutions Ltd for £7.0 million.
This results in total deployment of 66%
of the equity raised as at the date of this
statement and the Company remains on
track for full deployment in Q2 2022.
Valuation
The Net Asset Value at 31 December
2021 is £102.8 million, comprising £68.8
million portfolio valuation, £34.0 million
of cash held by the Company, together
with negative working capital balances
of £0.1 million.
The Investment Adviser has prepared
a fair market valuation of the portfolio
as at 31 December 2021. This valuation
is based on the price of recent
investments for the Private Hydrogen
Assets held and has been calibrated
with a discounted cash flow analysis of
the future expected equity cash flows
accruing to the Company from each
portfolio investment.
This valuation uses key assumptions
which are recommended by the
Investment Adviser using its experience
and judgement, having taken into
account available comparable market
transactions and financial market data in
order to arrive at a fair market value.
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.
The Directors have satisfied themselves
as to the methodology used and the
assumptions adopted and have
approved the valuation of the portfolio of
22 investments as at 31 December 2021.
Share capital
In July 2021, the Company successfully
listed on the LSE and raised £105.2m
million post costs.
ESG
From the outset, the Company has been
determined to combine its funding of
low carbon growth with wider ESG
principles. As set out in the IPO
prospectus, 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 will be
managed thereafter through close
relationships with our private company
investments in particular (including a
preference for Board representation,
or observer status). In terms of metrics,
the Investment Adviser considers the
potential for impact through the lens of
the fossil emissions that new hydrogen
technologies can avoid, and continues
to work on an appropriate methodology
for publication. Meanwhile, all
investments are mapped to the UN
Sustainable Development Goals, and
checked against frameworks such as
the UN Global Compact and the UN
Principles of Responsible Investment.
The Company was very pleased to be
awarded the London Stock Exchange’s
Green Economy Mark in 2021.
Risks and uncertainties
While it is the Investment Adviser
that manages the risks facing the
Company on a day-to-day basis, it is
the Board of the Company which
retains ultimate responsibility.
The Company’s Audit and Risk
Committee, which report to the Board,
regularly reviews the effectiveness of the
Company’s (and that of the Investment
Adviser, Alternative Investment Fund
Manager (“AIFM”), Administrator and
other third-party service providers as it
deems fit) internal control policies and
procedures for the identification,
assessment and reporting of risks.
The Board considers that the principal
risks and uncertainties for the Company
have not materially altered from those
set out in the last published Prospectus
in July 2021. The Prospectus is available
on the Company’s website, and a
summary of the principal risks and
uncertainties is included on pages 30
and 31 of the Strategic Report.
Annual general meeting
The Annual General Meeting will be held
on 24 May 2022 at 12.30pm at the
Company’s registered office, 6th floor,
125 London Wall, London EC2Y 5AS.
This will be my first AGM as Chairman
and we look forward to welcoming
shareholders to the event in person.
The meeting will consider the formal
business of the AGM, as set out in the
Notice of the AGM, and thereafter the
Investment Adviser will provide a
presentation on the Company’s portfolio.
Board matters
As announced on 9 February 2022,
Caroline Cook is stepping down as
director on 7 April 2022 due to the
increased responsibilities in sustainable
investment in her expanding executive
role, and to avoid any potential conflict
of interest with the Company’s future
activities. We thank Caroline for her
contribution on the Board and are
pleased that she will join the Investment
Adviser’s Advisory Board later in 2022.
We welcome Abigail Rotheroe, as
Non-Executive Director of the Company,
and look forward to benefitting from
her expertise.
As Chair of the Company, I would also like
to thank all the Directors of the Company,
the Investment Adviser and our other
advisers for their support and guidance
in our coming to market and the
execution of our strategy going forward.
I am excited by the progress we have
made in the last eight months, and
I believe we are in a unique position
to benefit from the growing importance
of hydrogen both in the UK and
internationally. The Company continues
to consider options for fundraising
over the course of 2022 in order to
fund its significant and growing pipeline
of opportunities.
Simon Hogan
Chairman
31 March 2022
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HydrogenOne Capital Growth plc Annual Report 2021
Strategic Report Governance
Financial statements
Other information
7
“I am excited by the progress we have made in the last
eight months, and I believe we are in a unique position to
benefit from the growing importance of hydrogen both
in the UK and internationally.”
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.
Objectives
KPIs
Principal risks
1
To deliver an attractive level
of capital growth
The Company is targeting a Net Asset Value total
return of 10 per cent to 15 per cent per annum over the
medium to long-term with further upside potential.
2
A diversified portfolio of
hydrogen and complementary
hydrogen focussed assets
3
Maintenance of a reasonable
level of premium or discount
of share price to NAV
4
Maintenance of a reasonable
level of ongoing charges
• Changes in the legislative and regulatory framework
that affect the hydrogen sector
• Operational risks in the portfolio
• Valuation risks (energy prices/inflation/
operational performance)
• Investment process fails to identify new opportunities
• Lack of future pipeline and/or funding
• Increased competition for assets
• Lack of future pipeline and/or funding
• Increased competition for assets
• Changes in the legislative and regulatory framework
that affect the hydrogen sector
• Investment performance
• Changes in the legislative and regulatory framework
that affect the hydrogen sector
• Lack of future pipeline and/or funding
• Costs are inadequately controlled
• Failed investment processes leads to high level
of abort costs
5
Environmental, Social and
Governance principles embedded
in investment approach
• ESG is managed in four categories:
– Allocating capital to low carbon growth
– Engagement to deliver effective boards
– Encourage sustainable business practices
– ESG in the Company
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HydrogenOne Capital Growth plc Annual Report 2021
Company Objectives
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HydrogenOne Capital Growth plc Annual Report 2021
KPIs Re vie w
The Board monitors both the NAV and share price
performance. A review of performance is undertaken
at each quarterly Board meeting and the reasons for
relative under and over performance against various
comparators is discussed.
The Board monitors the portfolio at each quarterly
Board meeting and the reasons for relative under and
over performance of sectors and geographies invested
in, and performance of listed vs. private.
The Company’s Broker monitors the premium or
discount on an ongoing basis and keeps the Board
updated as and when appropriate. At quarterly Board
meetings the Board reviews the premium or discount
in the quarter since the previous meeting.
The Board receives management accounts which
contain an analysis of expenditure which are reviewed
at their quarterly Board meetings. The Board reviews
the ongoing charges on a quarterly basis and considers
these to be reasonable in comparison to peers.
The Board reviews compliance with the ESG policy
ahead of each investment decision, and in the
Company on an on-going basis. The Board
additionally monitors developments in the ESG
landscape more broadly.
NAV
per share
95.75p
Share price return
19.5%
*
Index
-13.2%
NAV Total return
per annum
-2.3%
*
Number of
investments
22
Invested portfolio split by value (Private: Listed)
83%:17%
Capital deployed in low carbon growth
£48.6m
**
Number of
geographies
6
Premium or discount
of share price to NAV
24.8%
*
Ongoing charges ratio
2.06%
*
Avoided GHG emissions: methodology under
development. Board representation in invested
Private Hydrogen Assets: 100%
Return relative to Solactive Hydrogen Economy Index
from date of listing to 31 Dec 2021
* The figures above are considered to represent the Company’s APMs. Definitions of these APMs and other performance measures used by the Company, together with how
these measures have been calculated, can be found on page 83.
** Capital deployed is comprised of the aquisition costs of Listed Hydrogen Assets (£9.4 million) and Private Hydrogen Assets acquired by the Limited Partnership (£39.2 million).
Strategic Report Governance
Financial statements
Other information
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.
Background
The Company’s Alternative Investment
Fund Manager (“AIFM”), Sanne Fund
Management (Guernsey) Limited, (part
of Sanne Group), has appointed
HydrogenOne Capital LLP as the
Investment Adviser to the AIFM in
respect of the Company. Its key
responsibilities are to originate, analyse,
assess and recommend suitable
investments within the hydrogen sector,
and advise the AIFM accordingly.
Additionally, the Investment Adviser
performs asset management services
in relation to the investments in the
portfolio or, to the extent asset
management is delegated to third
parties, oversees and monitors such
asset management.
HydrogenOne Capital LLP was founded
in 2020 by JJ Traynor and Richard Hulf
as an alternative investment firm
focussed specifically on investing in
hydrogen assets and their role in the
energy transition. As a responsible
investor, HydrogenOne Capital LLP is
committed to contributing to the energy
transition through the financing of
sustainable investments and by
providing investment solutions that
reduce carbon emissions.
HydrogenOne Capital LLP employs a
fully integrated investment and asset
management approach and integrates
its focus on ESG criteria throughout the
entire investment process.
The Principals of the
Investment Adviser
The Principals of the Investment Adviser
have in excess of 60 years of combined
experience and a track record of
success in the energy industry and
capital markets which are directly
applicable to the hydrogen industry,
including acquisitions, mergers and
divestments, development of growth
energy projects, supervision of profitable
energy production, ESG track record,
investments in both listed and private
companies and board advisory. Their
biographies are included on page 34 of
the annual report.
The Investment Adviser's team
The Principals have assembled an
experienced team to support the
Company. This group brings a mixture
of finance, technical and sector skills to
support the Investment Adviser in its day
to day activity. The Investment Adviser
has established a team which is
responsible for financial modelling,
corporate and asset valuation analysis,
and opportunity assessment for the
Company. The Principals anticipate a
further increase in headcount as the
Company continues to grow its activities.
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Investment Adviser’s Report
HydrogenOne Capital Growth plc Annual Report 2021
“HydrogenOne Capital LLP was founded
in 2020 by JJ Traynor and Richard Hulf
as an alternative investment firm focussed
specifically on investing in hydrogen assets
and their role in the energy transition.”
Strategy
A highly differentiated strategy,
100% focussed on clean hydrogen
Clean hydrogen has emerged as a key
element of decarbonisation, as
governments, companies and society
come together to address the climate
change underway today caused by
human activities, particularly the burning
of fossil fuels. The 2015 Paris Agreement
set out a pathway for the world to
address these challenges, and this,
combined with further government
commitments on emissions, is driving
an energy transition to a low carbon
economy. Further momentum at the
2021 COP26 meeting adds to the
imperative for clean hydrogen. The
“Breakthrough Agenda”, launched at
COP26, includes a 'hydrogen
breakthrough' goal, which is to ensure
affordable low-carbon hydrogen is
globally available by 2030. Hydrogen
has a vital role to play in the energy
transition, in air quality and in energy
security. Recent EU announcements
on energy security (“REPowerEU”),
triggered by the Russia-Ukraine war,
include plans for a substantially
increased role for clean hydrogen –
now expected to reach 20 million
tonnes per year in 2030, compared to
5.6 million tonnes projected earlier in
the ‘Fit for 55’ plan. The scale of the
challenge, and the impetus to move
faster, cannot be understated.
The Company was established to
provide investors with opportunities in
clean hydrogen and energy storage for
the energy transition.
The Company offers distinctive access
to private investments, across the full
hydrogen value chain, and across the
OECD. The investment objective is to
deliver an attractive level of capital
growth by investing, directly or indirectly,
in a diversified portfolio of hydrogen and
complementary hydrogen focussed
assets whilst integrating core ESG
principles into our decision making and
ownership process.
As the first UK listed investment
company specialising in this sector,
the Company has a clear competitive
advantage as an early mover into a
complex sector, and offers its investors
a unique window into the private
hydrogen asset market. With its emphasis
on Private Hydrogen Assets, the
Company, gives investors an opportunity
to be exposed to liquidity and portfolio
diversity in hydrogen companies and
projects, hard to access elsewhere,
with strong growth potential.
A focus on material ESG factors, and
especially the deployment of capital to
deliver the energy transition to a low
carbon economy, is at the heart of what
the Investment Adviser does, running
hand in hand with a strategy to deliver
the target 10-15% per annum NAV
growth for the investors.
With a pipeline of potential investments
in excess of £500 million in hand today,
the Company is well positioned to
address the scale and complexity of
a substantial new energy industry.
The Investment Adviser is a specialist
investor in this complex and
rapidly-developing growth sector. The
Company believes that this specialised
approach is a competitive advantage
that will only grow over time.
An investment in the Company offers
exposure to the broader hydrogen
sector whilst, at the same time,
diversifying risk for an investor in the
sector. By targeting a diversified portfolio
of listed and private investments across
different jurisdictions and different
technologies, the Company seeks to
spread some of the key underlying risks
relating to clean hydrogen.
The UK and Europe are currently
seeing a high level of political and
societal support for Net Zero and the
role of hydrogen in delivering that goal.
The Company currently intends to focus
its investments in these jurisdictions as
a priority.
By excluding companies or projects that
generate revenues from the extraction
or production of fossil fuels (mining,
drilling or other such extraction of
thermal coal, oil or gas deposits) from
the portfolio and taking on further ESG
screens, the portfolio is expected to
be an early mover to Net Zero in the
energy transition, and will not be
encumbered by the legacy greenhouse
gas emissions inherent in other players
in the hydrogen sector.
The Investment Adviser expects the
hydrogen market to grow substantially
in the coming years, and for the
production scale of individual hydrogen
projects to increase over time. The
Company is well positioned to take
advantage of this growth, by deploying
capital in the best quality companies
and assets, and adopting a long term
investment approach.
The clean hydrogen industry in the
short term is dominated by bespoke
sources of supply, financed by
specialised offtakers, typically at 5MW
to 100MW scale. In the period from
2025 to 2030 the Investment Adviser
expects these facilities to be up-scaled
to 100MW to 500MW scale, and
ultimately to 1GW to 5GW. The
Investment Adviser also believes that
energy storage and Carbon Capture
and Storage (“CCS”) projects will also
increase in scale in this timeframe, with
the development of compressed air
energy storage followed by hydrogen
storage and long-distance transport
through pipelines, as liquid hydrogen
or as ammonia on ships.
11
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HydrogenOne Capital Growth plc Annual Report 2021
“With a pipeline of potential investments
in excess of £500 million in hand today,
the Company is well positioned to address
the scale and complexity of a substantial
new energy industry.”
Strategic Report Governance
Financial statements
Other information
Water vapour is the only by-product of
using hydrogen as a fuel.
Hydrogen can store and transport
intermittent renewable power at a grid
scale. As wind and solar become a large
percentage of electricity supply over
time, the electric grid will need large
scale electricity storage to offset periods
of low wind and low light. By converting
electricity to hydrogen, the energy can
be stored over long periods of time
either in pipelines and tanks, or in
underground salt caverns.
The hydrogen sector has $1 trillion
2
market potential by 2040. A 200x
increase in clean hydrogen supply is
anticipated from 2019 to 2030
3
in order
to achieve Net Zero, as the scale-up
of renewable power alongside the
phase-out of fossil fuels, improves the
economics of established hydrogen
technologies. Clean hydrogen could
be 20% of the energy mix by 2050.
A series of technology developments in
recent decades are rapidly reaching the
stage where they can be deployed
commercially, and at scale, to clean up
today's hydrogen feedstock sector and
to use hydrogen as a low emission fuel.
As an example, Denmark announced
a ’Hydrogen and Power-to-X’ strategy
in March 2022, calling for 4-6GW of
installed hydrogen electrolysis by
2030, using wind and solar power,
putting DKK 1.25 billion of subsidy
funding in place, and the policy and
regulatory frameworks that are
required for this.
As a further example, in 2019 the
Netherlands set targets for 3-4GW of
electrolysis by 2030 with multi-billion
Euro funding support announced by
the Netherlands government. The
government is providing EUR750m 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.
Burning fossil fuels for energy releases
green-house gas and poisonous
particulates. More than 20 countries
have announced sales bans on internal
combustion engine vehicles before
2035, and over 25 cities have pledged
to buy only zero-emission buses from
2025 onwards. This is driven by
Net Zero agendas, plus the imperative
to reduce poisonous emissions from
diesel in urban environments.
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 as
a result of emissions from internal
combustion engines and fossil fuel
power plants.
Access to clean hydrogen is a priority
for refiners and steel and ammonia
producers as they address GHG
emissions. These heavy industries are
under tremendous pressure to reduce
or eliminate grey hydrogen from
processes, to reduce the GHG emissions
that result from this. Much of today’s
demand for clean hydrogen is basically
a clean-up of grey hydrogen.
In the future, clean hydrogen can
displace fossil fuels in hard to
decarbonise sectors, either by burning
it in power plants to replace natural
gas, coal and oil, or by converting it to
electricity through hydrogen fuel cells.
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Policy makers and industry are converging on clean hydrogen as a core technology
to deliver Net Zero and improved air quality. The Paris Agreement has led 39 countries
to set out hydrogen policies and $70 billion of funding as part of Net Zero targets to
deliver the Energy Transition to a low carbon economy.
2013
California
2020
Saudi
Arabia
2016
Taiwan
2018
China
2016
UK
2017
Japan
2019
South
Korea
2017
Australia
2019
Singapore
2020
Spain
2020
Germany
2020
EU
2020
The Netherlands
2020
Chile
What is driving the hydrogen economy? Paris Agreement and Net Zero + urban air quality agenda
• 75 countries announced Net Zero strategies
• c. 39 countries have hydrogen strategies
Source: WWF
• 4.2 million deaths per year from air pollution
• 91% of population live in places exceeding
WHO air quality guidelines
• Battery electric vehicles (“BEV”) and fuel cell vehicles
(“FCV”) are zero-emission ‘tailpipe’
• FCV advantages over BEV in heavy and long distance
applications: trucks, buses, trains, forklift
• California: all new passenger vehicles
zero-emission by 2035
Investment Adviser’s Report
Hydrogen market and investment opportunities
2/3. Hydrogen Council, McKinsey: Hydrogen for Net Zero. A critical cost-competitive energy sector. November 2021.
• 120+ membership of the Hydrogen Council
Green hydrogen: in order to manufacture
hydrogen without the use of fossil fuels as
a feedstock, the ‘green’ hydrogen process
takes electricity sourced from renewables
such as wind and solar, and uses
electrolysis to split water into oxygen and
hydrogen. These technologies are well
established and the Investment Adviser
believes that the industry is on the cusp
of a significant phase of growth.
Blue hydrogen: capturing the GHG
emissions derived from SMR and other
manufacturing processes and storing
them geologically using CCS results in
a cleaner form of hydrogen, known as
‘blue’ hydrogen.
Turquoise hydrogen: methane pyrolysis
(or ‘turquoise’ hydrogen) which uses
pyrolysis of natural gas to make
hydrogen with a solid carbon by-product.
Grey hydrogen: over 95% of today’s
industrial hydrogen is manufactured by
reforming of fossil fuels – coal, oil and,
particularly, natural gas. This source of
hydrogen is generally termed ‘grey’
hydrogen, and is made in large scale
industrial sites using techniques such
as Steam Methane Reforming (“SMR”).
With GHG emissions unabated, grey
hydrogen is not an investment target
for the Company.
A combination of factors is driving strong
growth in the uptake of green hydrogen
for the future, including upscaling and
consequent lower unit costs in
renewable electricity and electrolysers,
increased penalties and regulatory
barriers to further growth in fossil fuels
and the potential to use green hydrogen
as a storage medium for intermittent
renewable power and as a long distance
energy carrier.
Emerging clean hydrogen
technologies: there are a number of
emerging technologies that could result
in low-cost clean hydrogen supplies in
the future. These include, atmospheric
distillation, SMR with CCS facilities,
gasification or plasma processes
applied to city and agricultural waste to
produce methane and hydrogen.
Surplus electricity from nuclear power
plants can be converted to hydrogen
via electrolysis (‘yellow’ hydrogen). The
Investment Adviser intends to monitor
these developments for potential
investment by the Company in the
longer term.
Clean hydrogen is made at industrial
sites with access to low-cost green
electricity (‘green’) or natural gas and
geological CO
2
storage sites (‘blue’).
The hydrogen is shipped or stored in
pipelines and tanks to customers.
For industries such as oil refining,
hydrogen is used in the desulphurisation
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HydrogenOne Capital Growth plc Annual Report 2021
• Significant step-up in clean hydrogen demand to deliver
Net Zero targets
• Clean-up of industrial ‘grey’ hydrogen
• Hydrogen roll-out into transport, heat, power
Source: Hydrogen Council, McKinsey: Hydrogen for Net Zero. A critical cost-competitive energy sector. November 2021
Announced and required direct investments
into hydrogen USD billion until 2030
Clean hydrogen end-use demand in 2023,
MT hydrogen p.a.
1
Production
Transmission
& distribution
End use
~540
~ 700
Announced direct investments Total need
160
>$500 billion
capital markets
opportunity
Gap
Ammonia Methanol Refining
Conventional
steel
Steel Transport Heating 2030
Power
generation
New demandConversion
75
Grey conversion by 2030 of: 50% (EU), 40% (Japan, Korea), 30% (North America) and 20% (China, Middle East, RoW)
1 GT
CO
2
Cumulative
abatement
until 2030
Green hydrogen
Water electrolysis
(AEM/PEM/SOEC)
c.$6/kg
Grey hydrogen
Steam methane
reforming (SMR) of
natural gas $1-2/kg
Turquoise hydrogen
Methane pyrolysis
c.$2-3/kg
Emerging
technologies
Eg. Waste-to-H/PEC cells
Blue hydrogen
SMR with carbon
capture and storage
(CCS) $2-3/kg
CH4+
electricity
Natural gas
Hydrogen
Water
Oxygen
Green
electricity
Hydrogen
Underground
storage
CO
2
Fossil fuel
Hydrogen
Hydrogen +
solid
carbon
2021-30
2030+
Today
• Multiple potential sources of hydrogen
• Innovation to extend traditional portfolio asset lives: oil & gas facilities,
pipeline networks
• Potential for blending and premium markets for clean hydrogen
Accelerating demand outlook for hydrogen to deliver Net Zero
Sources of hydrogen
Hydrogen supply sources
Strategic Report Governance
Financial statements
Other information
of crude oil, amongst other processes.
Alternatively, fuel cells are used to
convert the hydrogen to electricity or
heat – this can take place in trucks, trains
and buses via hydrogen tanks, or in large
buildings such as hotels and offices,
using combined heat and power units.
Investment objectives
and policy
As previously set out on page 8 of this
report, 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.
The Company seeks to achieve its
investment objective through investment
in a portfolio, primarily in developed
markets in Europe, North America, the
GCC and Asia Pacific, comprising:
(i) assets that produce and supply
clean hydrogen;
(ii) large scale energy storage asset;
(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, which may be operational
companies or hydrogen projects
(completed or under construction).
The Company intends to implement
its investment policy through the
acquisition of Private Hydrogen Assets
and Listed Hydrogen Assets. Over time,
the Company will overwhelmingly invest
in Private Hydrogen Assets, with 10% or
less in Listed Hydrogen Assets .
No investments will be made in
companies or projects that generate
revenues from the extraction or
production of fossil fuels. The investment
policy is detailed on pages 27 and 28.
Investment process
The Company follows a proven and
successful process in order to access
and execute its distinctive deal flow.
The Investment Adviser has specialist
insights and strong industry and market
networks to access potential investment
opportunities. The Company typically
invests alongside some of the world’s
largest industrial corporations and
investors. The Investment Adviser's
clear investment and ESG policies
underpin and guide everything that it
does. The Investment Adviser, the
Advisory Board, the technical advisors,
regulatory and legal counsel all
combine to deliver the optimal deal
structures for the shareholders.
Investment portfolio
and valuation
During 2021, the Company has invested
a total of £48.6 million in hydrogen sector
companies, which are the foundation
of a diversified, multi-asset portfolio
for investors in clean hydrogen and
related technologies. The large majority
of this investment is into Private
Hydrogen Assets.
£39.2 million has been invested in
three Private Hydrogen Assets; Sunfire
GmbH, HiiROC Limited and NanoSUN
Limited. A further £9.4 million has been
invested in a portfolio of 19 Listed
Hydrogen Assets .
Uninvested funds of £34.0 million are
currently held in cash and cash
equivalents in the Company’s Liquidity
Reserve, ahead of investment.
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Hydrogen supply
• Green in focus
• Monitor emerging
technologies
Distribution
• H2 / NH3
• Pipelines
• Tankers
• HRS
Carbon capture
• Geological
• Direct Air Capture
• CO2 transport
Energy storage
• Pipes & tanks
Compressed Air
Energy Storage
• Geological
Supply chain
• Electrolysers
• Fuel cells
• Infrastructure
Hydrogen applications
• Transport
• Buildings CHP
• Portable generators
• Power plants
• Feedstock
Hydrogen sector value chains
Investment Adviser’s Report
Hydrogen market and investment opportunities
FUTURE FUEL. NOW
HiiROC
In November 2021, the Company
invested £10 million in UK- based HiiROC
Limited (“HiiROC”), a private company,
which has patented technology that
manufactures clean hydrogen from
natural gas.
HiiROC’s proven technology converts
biomethane or natural gas into clean
hydrogen and solid carbon, through a
proprietary electrolysis process using
thermal plasma. This results in zero
CO
2
hydrogen production, known as
‘turquoise hydrogen’, at a cost
comparable to the predominant, but
high emission, steam methane reforming
process, and using only one fifth of the
energy required by water electrolysis.
The solid carbon by-product, known as
carbon black, has applications ranging
from tyres, building materials and as a
soil enhancer. HiiROC has shown growth
potential in a number of hydrogen
sectors including grid injection and
electricity generation.
The Company’s investment in HiiROC’s
equity share capital forms part of a
c. £26 million fundraising round,
introducing other new investors
including Melrose Industries, Centrica,
Hyundai and Kia, alongside existing
strategic investors Wintershall Dea and
VNG. The Company has a board seat.
Private Hydrogen Assets
acquisitions
Sunfire
In October 2021, the Company
invested £20 million (€24 million) in
Sunfire GmbH’s equity share capital,
and has a board observer seat. The
Company’s investment in Sunfire
formed part of a €109 million
fundraising round, introducing other
new investors including Planet First
Partners, Lightrock and Carbon Direct
Capital Management, alongside
existing strategic investors.
Germany-based Sunfire is, a private
company specialising in the production
of electrolysers. Sunfire has recently
announced plans for the rapid
deployment of its pressurised alkaline
electrolysis technology, building a
large-scale electrolyser production
site in Germany with an annual
manufacturing capacity of 500 MW by
2023. Sunfire intends to significantly
expand its electrolyser manufacturing
capacity to multi-gigawatt scale in the
coming years. In addition, Sunfire is
pioneering the use of its proprietary solid
oxide technologies to the manufacture
of clean ‘e-fuels’, which can be used in
jet aviation, through ownership in
industry joint ventures.
NanoSun
In December 2021, the Company
invested £9 million in UK- based
NanoSUN Limited (“NanoSUN”).
NanoSUN develops hydrogen
distribution and mobile refuelling
equipment. Based in Lancaster, its vision
is for hydrogen to become the major
energy vector in a decarbonised world.
In order to achieve this, NanoSUN’s
founders aim to accelerate hydrogen
use with their innovative technologies
by bridging the gap between the
hydrogen supply industry and the
needs of hydrogen users for convenient,
low-cost, simple-to-use and safe fuelling
systems. NanoSUN’s novel mobile
Pioneer Hydrogen Refuelling Stations
provide a flexible and low-cost
connection between hydrogen
customers such as truck stops, and
concentrated hydrogen supply sources.
NanoSUN has identified substantial
demand for its products, and will
increase its manufacturing capability,
and develop larger units.
The Company has invested in NanoSun’s
equity share capital as part of a £12 million
equity round that included Westfalen,
and has a right to a board seat.
Investment
Process
1. Unique insights into deal flow
• Investment Adviser networks and track record
• Building out opportunities via the investments
• First mover… “see everything”
2. Investment Policy
• Clean Hydrogen and related growth assets
• OECD mandate
• Fossil fuels production excluded
3. ESG Policy
• Investing in low carbon growth
• Effective boards
• Sustainable business practices
• ESG in the Company
4. Transaction
• Autonomy in investment selection and allocation
• Detailed DD including Advisory Board, Arup and other 3rd parties
• Board / AIFM review ahead of completion
Well established investment process and access to deal flow
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HydrogenOne Capital Growth plc Annual Report 2021
Strategic Report Governance
Financial statements
Other information
Listed Hydrogen Assets portfolio
The Company has invested in 19 global
hydrogen sector listed equities with an
average market capitalisation of £1.5 billion
with minimum market capitalisation of
£200 million. The aggregate investment
in these listed companies was £9.5 million
at the time of investment, in the second
half of 2021. These companies are key
players in the electrolysis, fuel cell and
clean hydrogen projects sectors.
These are long term strategic holdings
in companies that the Investment
Adviser expects will be the eventual
leaders in the listed hydrogen market.
Post year end acquisitions
Since 1 January 2022, the Company has
made three further investments in Private
Hydrogen Assets, in Bramble Energy
Limited, Gen2 Energy Limited and
Cranfield Aerospace Solutions Limited.
Bramble Energy
UK-based Bramble Energy is pioneering
revolutionary fuel cell design and
manufacturing techniques, and has
developed the unique Printed Circuit
Board (“PCB”) fuel cell – the PCBFC™.
This patent protected fuel cell can be
manufactured in almost all PCB
factories worldwide. Bramble Energy
have launched a portable power
product range and are developing their
high-power density, liquid-cooled fuel
cell systems under the same scalable
low-cost technology platform.
The Company’s £10 million investment in
Bramble Energy’s equity share capital
formed part of a £35 million fundraising
round, including existing Bramble
investors IP Group, BGF, Parkwalk and
UCL Technology Fund. The Company
has a board seat.
Gen2 Energy
Norway-based Gen2 Energy has the
ambition to manufacture green
hydrogen, at scale, by connecting to
the abundant and low cost renewable
power which is being generated in
excess of market demand in the region.
Hydroelectric power, the key constituent
in the power mix in Norway, has the
additional advantage of very high
uptimes compared to green electricity
from wind and solar sources, meaning
Gen2 Energy’s electrolysers could
operate virtually 24/7, with lower unit
costs of hydrogen as an outcome.
By converting this electricity to green
hydrogen, and shipping the hydrogen to
industrial customers, the company aims
to become a regional supplier of low
cost clean fuel and feedstock. Gen2
Energy Limited has a series of projects in
its pipeline, totalling an estimated initial
700MW, in Norway to begin with, which
could commence production in
2024-2026.
The Company invested c. £3.5 million
investment in Gen2 Energy alongside
existing industrial backers Vitol, Höegh
LNG, HyCap and the Knutsen Group.
The Company has a board seat.
Cranfield Aerospace
UK-based Cranfield Aerospace
Solutions Ltd (“CAeS”) is an aerospace
market leader in the design and
manufacture of new aircraft design
concepts, complex modifications to
existing aircraft and integration of
cutting-edge technologies to meet the
most challenging issues facing the
aerospace industry today. CAeS has
refocused the company on Project
Fresson, in order to unlock commercial
turboprop flight using clean hydrogen
fuel. In the early stages, CAeS will
focus on CAA certification of the
Britten-Norman Islander passenger
aircraft using hydrogen fuel cell
power. Over time, CAeS intends to
take these learnings into larger
airframes, pioneering the way in the
decarbonisation of flight.
HydrogenOne has invested £7 million in
CAeS alongside Safran, a world leader
in aviation technology. In parallel with
its investment, Safran has signed an
MOU with CAeS spanning the area of
hydrogen fuel cell powered, electric
propulsion for aviation. The Company
has a board seat.
Valuation
As set out in note 3 of the financial
statements, the Investment Adviser
has carried out fair market valuations
of the Private Hydrogen Assets at
31 December 2021, 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, and the valuation.
All Private Hydrogen Assets at 31
December 2021 have been valued
using the Price of Recent Investment
methodology as described by the
International Private Equity and Venture
Capital Valuation 2018 (“IPEV”)
Guidelines, and have been calibrated
with a discounted cash flow analysis
of the future expected cash flows
accruing to the Company from each
portfolio investment.
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.
Analysis of financial results
The financial statements of the Company
for the period ended 31 December 2021
are set out on pages 56 to 81 .
Net assets
Net assets decreased from £105.2 million
at listing on 30 July 2021 to £102.8 million
at 31 December 2021, primarily driven by
the fall in global stocks generally and the
hydrogen sector more specifically.
The net assets of £102.8 million
comprise £68.8 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
£34.0 million, and other net liabilities of
£0.1 million.
The Limited Partnership’s net assets of
£60.6 million comprise £39.2 million
portfolio value of investments, cash
balances of £21.5 million, and other net
liabilities of £0.1 million.
Cash
At 31 December 2021, the Group had
a total cash balance of £55.5 million,
including £34.0 million in the Company’s
balance sheet and £21.5 million in the
Limited Partnership, which is included in
the Company’s balance sheet within
‘investments held at fair value through
profit or loss’.
Investment Adviser’s Report
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Loss for period
The Company’s total loss before tax
for the period ended 31 December
2021 is £2.4 million, generating losses
of 3.8 pence per Ordinary Share.
In the period to 31 December 2021,
the losses on fair value of investments
was £1.6 million.
The expenses included in the income
statement for the year were £0.8 million,
in line with expectations. These
comprise £0.3 million Investment
Adviser fees and £0.5 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
period to 31 December 2021 was 2.06%.
The ongoing charges have been
calculated, in accordance with AIC
guidance, as annualised ongoing
charges (i.e. excluding acquisition costs
and other non-recurring items) divided
by the average published undiluted Net
Asset Value in the period. The calculation
is provided on page 83 of the annual
report. 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.
HydrogenOne Capital LLP believes this
to be competitive for the market in which
the Company operates and the stage of
development and size of the Company.
Portfolio Summary
Details of individual holdings
as at 31 December 2021
Country of Market value % of
Company main listing £’000 net assets
Listed Hydrogen investments
Aker Horizons AS Norway 593 0.6
Doosan Fuel Cell Co Ltd South Korea 566 0.6
Powercell Sweden AB Sweden 559 0.6
NEL ASA Norway 531 0.5
AFC Energy plc United Kingdom 524 0.5
SFC Energy AG-BR France 507 0.5
McPhy Energy SA France 500 0.5
Hydrogen-Refueling-Solutions SA Germany 454 0.4
Plug Power Inc United States 446 0.4
Green Hydrogen Systems A/S Denmark 444 0.4
Bloom Energy Corp United States 427 0.4
Ceres Power Holdings plc United Kingdom 418 0.4
ITM Power plc United Kingdom 411 0.4
Hexagon Purus ASA Norway 391 0.4
S-Fuelcell Co Ltd South Korea 391 0.4
Cell Impact AB Sweden 378 0.4
Fuelcell Energy Inc United States 348 0.3
Ballard Power Eystems Inc Canada 320 0.3
Enapter AG Germany 25 0.0
Total listed investments 8,233 8.0
Private Assets investment
HydrogenOne Capital Growth
Investments (1) LP United Kingdom 60,597 59.0
Total investments 68,830 –
Cash 34,019 33.1
Other net assets (63) (0.1)
Total net assets 102,786 100.0
All investment is in equity securities unless otherwise stated.
Private hydrogen assets held by the HydrogenOne Capital
Growth Investments (1) LP
Value of
Country investment
Company of incorporation £’000
Sunfire GmbH Germany 20,180
HiiROC Limited United Kingdom 10,001
NanoSUN Limited United Kingdom 9,050
Total 39,231
FUTURE FUEL. NOW
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HydrogenOne Capital Growth plc Annual Report 2021
Strategic Report Governance
Financial statements
Other information
Investment Adviser’s Report
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Investment pipeline
At the end of 2021, the Investment
Adviser had identified an Investible
Universe of over £17 billion in Private
Hydrogen Assets, in operational
companies and hydrogen projects.
This large and distinctive opportunity
set has only continued to grow, with
over 200 Private Hydrogen Assets
opportunities now identified, compared
to 120 at the time of the 2021 IPO, and
the sizes of potential investments
has also increased. The Investment
Adviser believes that the Investible
Universe represents less than 25%
of the total worldwide hydrogen
opportunities, and represents a ‘long
list' of potential investments for the
Company that have been reviewed
by the Investment Adviser.
The Company today has an active
Pipeline of over £500 million of private
opportunities for potential investment
including a near term pipeline in excess
of £200 million of potential transactions
under NDA. This is a strong and
distinctive opportunity set for investors
and underscores the Company’s strong
growth potential.
£17bn investible universe > £500m private Pipeline
Invested across the value chain
• Diversified portfolio across companies and projects
• Clean hydrogen supply projects
• Supply chain and developer companies
• c. 10% allocation to strategic listed companies in £42bn sector
> £200m
> £300m
Private
companies
Private
projects
£8bn
£9bn
90%
Potential
investment
No. of
positions
Allocation
Investible
Universe
> £500m
Pipeline
> £17bn
Investible
Universe
17
4
Distribution
Supply chain
Carbon capture
Energy storage
Hydrogen supply
Hydrogen
applications
Portfolio strategy not available for institutions elsewhere
Strategic Report Governance
Financial statements
Other information
HydrogenOne Capital Growth plc Annual Report 2021
NanoSUN develops and manufactures hydrogen refuelling stations, providing the
infrastructure needed to accelerate the adoption of hydrogen-powered vehicles
and facilitate hydrogen mobility.
Key technologies
NanoSUN’s flagship Pioneer Hydrogen Refuelling Station is a portable hydrogen refuelling station,
delivering renewable hydrogen for use in a wide range of applications, including buses, vans, trucks,
material handling, construction and backup solutions. By providing access to an efficient refuelling
method, Pioneer encourages the development of hydrogen-powered fleets and industrial processes,
displacing the use of fossil fuels and supporting decarbonisation in hard-to-abate industries.
Project spotlight – Double-decker Hydrogen Bus
Pioneer is a fully mobile, self-contained, automated refuelling solution
that offers an affordable way of delivering transportation-grade
hydrogen directly to the point of use, where it is dispensed into
hydrogen powered vehicles efficiently and safely.
Pioneer relies on innovative cascade fuelling technology to ensure
more vehicle tanks are refuelled at higher fill pressures, providing
faster refuel times and better hydrogen gas utilisation.
Pioneer has already travelled across Europe. In October 2021, Pioneer delivered hydrogen refuelling
to the world’s first hydrogen double-deck bus developed by Wrightbus. As it made its UK Hydrogen
Roadshow journey from London to Glasgow for COP26, the bus undertook two hydrogen refuelling
stops, facilitated by Pioneer.
Company perspectives –
our Private Hydrogen Assets
19
FUTURE FUEL. NOW
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.” Dean O’Connor, CEO
Strategic Report Governance
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Other information
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Sunfire is a global leader in the development and production of industrial
electrolyser, the technology that transforms renewable electricity into renewable
hydrogen or syngas for industrial applications.
Key technologies
Sunfire-HyLink for Renewable Hydrogen Production: Sunfire’s HyLink electrolysers utilise pressurised
alkaline and solid oxide technologies to produce renewable hydrogen at scale. With applications as both
an energy carrier and feedstock, this clean hydrogen is deployed to decarbonise industrial processes,
such as refining, steelmaking and chemical production.
Sunfire-SynLink for Syngas Production: Sunfire’s SynLink solid oxide electrolyser processes water steam
and captured CO
2
to produce syngas – a mixture of hydrogen and carbon monoxide. As a renewable feed
gas, syngas displaces fossil fuels and decarbonises industrial supply chains – particularly within the fuels
and chemical industry. Syngas can be further processed into synthetic crude, a sustainable substitute for
crude oil. This renewable fuel can then be refined into different blends of e-fuels – used as an alternative
fuel in aviation, maritime and road transport – supporting net-zero mobility.
Project spotlight – Salzgitter
In the European steel industry, hydrogen has the potential to reduce
today’s process-related CO
2
emissions by more than 95%. Sunfire
realises a flagship hydrogen project with the steel producer Salzgitter.
The project marks the implementation of the world’s largest solid
oxide electrolyser in an industrial environment to date. Until the end
of 2022, the electrolyser will produce 100 tons of renewable, high-
purity hydrogen that will be used for annealing processes in
Salzgitter’s integrated steelwork as a replacement for hydrogen
produced from natural gas.
Company perspectives –
our Private Hydrogen Assets
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 Andag, CEO
Renewable
electricit
y
Renewable
h
y
drogen
Water
HyLink Alkaline HyLink SOEC
Renewable
electricity
Renewable
syngas
Water Captured
CO
2
SynLink SOEC
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HydrogenOne Capital Growth plc Annual Report 2021
HiiROC is focused on developing and commercialising its thermal plasma electrolysis
technology, which significantly lowers the cost of zero-emission hydrogen, by
‘breaking down’ other hydrocarbons like methane and biomethane.
Key technologies
HiiROC’s proprietary technology converts biomethane,
flare gas or natural gas into clean hydrogen and carbon
black, through an innovative electrolysis process using
thermal plasma. This results in zero CO
2
‘turquoise
hydrogen’ at a comparable cost to steam methane
reforming but without the emissions and using only
one fifth of the energy required by water electrolysis.
The zero-carbon hydrogen can be integrated into
grid networks for clean electricity generation or used
to decarbonise industrial activities, and the carbon black
also has a range of applications including tires, building
materials and as a soil enhancer.
HiiROC’s modular technology can be placed at the point of demand, enabling the use of existing infrastructure
and avoiding hydrogen transportation and storage costs.
Project spotlights
HiiROC is pursuing deployment of pilot units into a range of
key customer segments, including:
• blending hydrogen in the natural gas grid, with Northern Gas
Networks and its partners as part of its hydrogen programme;
• decarbonising industry, including power generation and the
manufacture of steel and cement, alongside developing
specific use cases for carbon black;
• mitigating gas flaring, working with Boeing, with a pilot to
be deployed onto an existing onshore flare;
• mobility, working with Hyundai, supplying to fuel cells
for vehicle, rail freight and passenger transport; and
• production of low carbon synthetic fuels, including from biomethane, working with EPi in Chelmsford.
By working in close partnership with its pilot unit customers, HiiROC aims to position the technology
for future roll-out.
Company perspectives –
our Private Hydrogen Assets
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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. The recent funding ensures we’re well
positioned to move forward with both the technical and
commercial development of the business.” Tim Davies, CEO
Strategic Report Governance
Financial statements
Other information
Environmental, Social and Governance (“ESG”)
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ESG Policy: The Company has set out that when it invests, that ESG criteria will be fully considered
in its investment and divestment decisions, and in its asset monitoring. The Board has oversight
of and monitors the compliance of the AIFM, and the Investment Adviser and any undertaking
advised by the Investment Adviser in which it invests, with the Company’s ESG policy, and ensures
that the ESG policy is kept up-to-date with developments in industry and society.
Our ESG principles: The Company has embedded four ESG principles into its policy:
Objectives Principal risks 2021 progress
1
Allocating
capital to
low-carbon
growth
2
Engagement
to deliver
effective
boards
3
Encourage
sustainable
business
practices
4
ESG in the
Company
The Company is focused on investing for a climate-positive
environmental impact, accelerating the energy transition and
the drive for cleaner air. The Directors will prioritise this
long-term goal over short-term maximisation of Shareholder
returns or corporate profits. The Company will enable investors
to back innovators in low carbon industries by supporting the
access of such companies to the capital markets.
The Company prioritises positive and proactive engagement
with the boards of its Private Hydrogen Assets. The Directors
recognise that structure and composition cannot be uniform,
but must be aligned with long term investors while supporting
managements to innovate and grow. The presence of effective
and diverse independent directors is important to the Company,
as are simple and transparent pay structures that reward
superior outcomes.
The Company expects its Hydrogen Assets to be transparent
and accountable and to uphold strong ethical standards. This
includes a demonstrated awareness of the interests of material
stakeholders and engagement to deliver positive impacts on
the environment and society. Hydrogen Assets should support
the letter, and spirit, of regional laws and regulations. The
Company and the Investment Adviser will encourage adoption
of initiatives such as the Task Force on Climate-related Financial
Disclosures and the EU Sustainable Finance Taxonomy, and will
encourage transparency and alignment of lobbying activities.
Given the nature of its investments, the Company intends to
disclose key performance metrics (“KPIs”) that describe the
environmental impact of its portfolio. The Company is
particularly focused on the greenhouse gas emissions from
investments and the emissions that have been avoided
(“avoided emissions”) as a result of the investments, and intends
to actively engage with portfolio companies to be able to adopt
an appropriate reporting framework in this area. The Company
frames its investments around positive contributions to UN
Sustainable Development Goals (“UN SDGs”), and works within
responsible frameworks such as those promoted by the UN
Global Compact (“UN GC”), the London Stock Exchange’s Green
Economy Mark, and the UN Principles for Responsible
Investment (“UN PRI”). The Company manages its own direct
carbon footprint.
The Company has no employees, physical assets, property or
operations of its own, does not provide goods or services and
does not have its own customers. It follows that the Company
has little to no direct environmental impact. Consequently, the
Company is exempt from the disclosures required under the
Streamlined Energy and Carbon Reporting criteria.
As an investment trust the fundamental environmental impact
the Company makes is indirectly through the investments in
its portfolio.
HGEN has invested £48.6 million in low-carbon growth in
22 companies across its private and listed portfolios
in 2021.
The Investment Adviser is represented on all of the three
Boards of its Private Hydrogen Assets, either as a
Director or a Board Observer, and is actively engaged
in ESG matters in these businesses. The Company and
the Investment Adviser support the UK Stewardship
code issued by the Financial Reporting Council and
the Investment Adviser on behalf of the Company votes
at all meetings where they are able to exercise the
Company’s vote.
The Investment Adviser is actively and constructively
engaged with the invested companies in
implementation of sustainable business practices.
The Investment Adviser has implemented ESG
screening on key metrics and UN SDGs, spanning
22 assessments within the Company’s four ESG
principals. This results in an aggregate scoring of ESG
performance, which frames engagement with invested
companies to drive continuous improvement, and in
some cases may mean the Company decides not
invest in the relevant company.
The estimation of the emissions that might be avoided
through the deployment of new hydrogen and related
technologies forms an important part of the investment
assessments made by the Investment Adviser.
These estimates complement perspectives on total
addressable markets in revenue terms. Work continues
on an avoided emissions framework that is broad and
robust enough for useful publication and comparison
across assets.
The Company has elected to comply with article 8 of
the Sustainable Finance Disclosure Regulation (“SFDR”)
and relevant SFDR disclosures will be included in
any annual / periodic reports published on or after
1 January 2022.
Strategic Report Governance
Financial statements
Other information
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HydrogenOne Capital Growth plc Annual Report 2021
k
ESG screens for the investments
Allocating capital
to carbon growth
• Significant revenue from hydrogen and
related technologies
• Avoided GHG emissions (annual/life cycle)
• Excludes fossil fuels extraction or production
Engagement for
effective Boards
• Effective board
• Alignment with long term minorities
• Alignment of Executive pay with long
term shareholders
• Independence of Audit Committee
• Board qualifications (skills, tenure, diversity)
Encourage
sustainable
business practices
• Board oversight of HSSE process
and reporting
• Transparency incl. Task Force on Climate-
Related Financial Disclosures (“TCFD”)
• Company policy and disclosure of supply
chain practices
• UN GC
Mapping
vs. UN SDGs
• 3.9 Reduce deaths from pollution
• 7.1 Increase access to electricity
• 7.2 Increase renewables in the energy mix
• 7.3 Increase energy efficiency
• 9.4 Upgrade industries for sustainability
• 9.5 Increase R&D in industrial technologies
• 11.6 Reduce environmental impact of cities
• 12.6 Adopt sustainable practices and reporting
• 14.3 Reduce acidification (water)
• 15.3 Desertification and land degradation
ESG screens applied to
invested assets
As part of the investment process, the
Investment Adviser scores each
proposed investment against the criteria
set out below, which align with the four
ESG principles into its policy. These criteria
have been established by the Investment
Adviser and approved by the Board.
Each investment is scored against these
criteria in the initial investment review,
and investments which do not meet
the expected level of the Board and
Investment Adviser are not progressed.
After investment, each investee
company is regularly reviewed against
these criteria to ensure the company is
meeting expectations in accordance
with the ESG principles.
Environmental, Social and Governance (“ESG”)
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HydrogenOne Capital Growth plc Annual Report 2021
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• Reduce deaths from
pollution
(3.9)
Fuel cell vehicles to displace
diesel and fuel oil. Direct use in
industrial activities to displace
fuel oil and coal.
• Increase renewable energy
in the global energy mix
(7.2)
• Increase access to electricity
(7.1)
• Increase energy efficiency
(7.3)
Enable the expansion of
renewable energy through direct
use of clean hydrogen and as a
form of energy storage. Exclude
those involved in the production
of fossil fuels.
• Upgrade industries for
sustainability
(9.4)
• Increase R&D in industrial
technologies
(9.5)
Enabling the decarbonisation of
processes in heavy industry and
enhancing innovation for a more
circular economy,
• Reduce the environmental
impacts of cities
(11.6)
Enabling the adoption of cleaner
fuels for transportation and in
heavy industry to reduce pollution
and advance a more sustainable
economy,
• Adopt sustainable practices
and reporting
(12.6)
Engagement for good
governance and transparency
across the portfolio,
• Reduce acidification
(14.3)
Enabling the replacement
of fossil fuels, to reduce
CO
2
emissions and the
corresponding negative
impacts on ocean chemistry,
• Combatting desertification
and land degradation
(15.3)
Enabling the replacement of
fossil fuels to reduce GHG
emissions and the associated
acceleration of global warming,
Goal UN SDG target The Company’s focus
Green Economy Mark
The Company has been awarded the
London Stock Exchange’s Green
Economy Mark, which recognises
companies that derive 50% or more of
their total annual revenues from products
and services that contribute to the
global green economy. The underlying
methodology incorporates the Green
Revenues data model developed by
FTSE Russell, which helps investors
understand the global industrial
transition to a green and low carbon
economy with consistent, transparent
data and indexes.
UN Principles for
Responsible Investment
The UN Principles for Responsible
Investment is a United Nations-
supported international network of
investors working together to implement
its six aspirational principles. The goal
of the UN PRI is to understand the
implications of sustainability for investors,
and to facilitate incorporating these
issues into their investment decision-
making and ownership practices.
United Nations Sustainable
Development Goals
In 2015, the member states of the United
Nations adopted Agenda 2030. A key
component of the Agenda 2030 are the
seventeen UN SDGs. These long-term
goals are designed to end poverty,
improve health and education, reduce
inequality, create sustainable economic
growth and combat climate change.
They are intended to create incentives to
implement measures in the interests of
people, the planet and prosperity, and
therefore contribute to changing the
world significantly by 2030.
The Company's investment objective
and investment policy is closely aligned
with seven of these goals, namely Good
Health and Wellbeing (Goal 3), Affordable
and Clean Energy (Goal 7), Industry,
Innovation and Infrastructure (Goal 9),
Sustainable cities and communities
(Goal 11), Responsible Production and
Consumption (Goal 12) Life Below Water
(Goal 14), and Life on Land (Goal 15).
Section 172 Statement: Company
Sustainability and Stakeholders
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HydrogenOne Capital Growth plc Annual Report 2021
Strategic Report Governance
Financial statements
Other information
Stakeholder group Methods of engagement Benefits of engagement
Shareholders
The significant shareholders of
the Company are set out on
page 38.
A well-informed and
supportive shareholder base
is crucial to the long-term
sustainability of the business.
Understanding the views and
priorities of shareholders is,
therefore, fundamental to
retaining their continued
support and to have the
potential to access equity
capital in order to continue to
expand the Company’s
portfolio over time in order to
further diversify the
investment portfolio and
create economies of scale.
The Company engages with its shareholders through
the issue of regular portfolio updates in the form of
RNS announcements, quarterly factsheets, daily
NAVs and as well as other useful information posted
on its website.
The Company provides in-depth commentary on the
investment portfolio, corporate governance and
corporate outlook in its annual and interim reports.
In addition, the Company, through its broker and
Investment Adviser undertake regular meetings to
meet with existing and prospective investors to solicit
their feedback, understand any areas of concern,
and share forward looking investment commentary.
The Chairman may also meet with major
shareholders in conjunction with its broker.
The Company holds its Annual General Meeting in
London which provides shareholders with the
opportunity to listen to a presentation by the
Investment Adviser and meet with the Directors
and representatives of the AIFM.
The Board receives semi-annual feedback from its
broker in respect of their investor engagement and
investor sentiment.
Shareholder engagement was
rewarded by support for the
Company’s growth and
diversification strategy through
the successful listing of the
Company in July 2021.
Service
providers
The Company does not have
any direct employees;
however, it works closely with
a number of service providers
(the Investment Adviser,
Administrator, Company
Secretary, auditor, broker and
other professional advisers).
The independence, quality
and timeliness of their service
provision is critical to the
success of the Company.
The Company has identified its key service providers
and will undertake on an annual basis a review of
performance based on a questionnaire through
which it also seeks feedback.
Furthermore, the Board and its committees engage
regularly with its service providers on a formal and
informal basis.
The Company will also regularly review all material
contracts for service quality and value.
The feedback given by the
service providers is used to
review the Company’s policies
and procedures to ensure open
lines of communication, and
operational efficiency.
The Company is able to identify
and resolve problems with
service provider relationships
via this process.
Portfolio
companies
The Company held an
operational portfolio of 19
Listed Hydrogen Assets listed
investments and three Private
Hydrogen Assets with the
portfolio displaying strong
geographical diversity.
The Board reviews the financial and operating
performance of its portfolio companies on a regular
basis. In many cases, investments in Private
Hydrogen Assets are linked to operational and
financial targets, which the Board monitors.
A quarterly update on performance of portfolio
companies is provided in the Investment Adviser’s
Report within the Board Packs.
The feedback given by the
Investment Adviser is used to
review the Company’s policies
and procedures to ensure open
lines of communication, and
operational efficiency regarding
its Portfolio Companies.
Community
and
environment
The Company does not
have any direct employees.
However, ensuing the
Company’s investment
creates a positive social
impact is core to the
sustainability approach.
The Company aims to maximise its positive
environmental impact. See ESG section on
pages 22 to 24.
The Investment Adviser and
other clean energy providers
are doing their part to reduce
the carbon emissions, however
there are already damaging
long term effects which may
impact the Investment Adviser
during its life. The control of
such an outcome is largely out
of the Investment Adviser’s
control. The Company and
the Directors are minimising
air travel by making maximum
use of video conferencing for
Company related matters.
The Directors have a statutory duty to promote the success of the Company, whilst also having regard to certain broader matters,
including the need to engage with employees, suppliers, customers, and others, and to have regard to their interests. However, the
Company has no employees and no customers in the traditional sense. In accordance with the Company’s nature as an investment
trust the Board’s principal concern is the interests of the Company’s shareholders taken as a whole. In doing so, it has due regard to
the impact of its actions on shareholders, the environment and the wider community. The Company’s engagement with key
stakeholders and the key decisions that were made by the Board during the period are set out below.
Section 172 Statement: Company
Sustainability and Stakeholders
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Other Matters
Modern slavery disclosure
The Company is committed to
maintaining the highest standards of
ethical behaviour and expects the
same of its business partners. The use
of slavery and human trafficking is
unacceptable and entirely incompatible
with its ethics as a business. The Company
believes that all efforts should be made
to eliminate it from its supply chains.
The majority of services supplied to
or on behalf of the Company are from
the financial services, energy and
construction industries and other
services associated with those
industries. Given what the Company
understands to be a low risk profile
of anyone supplying it with services
being involved in slavery and/or
human trafficking, it believes its current
procedures and ability to rely on
regulatory oversight in relation to
professional services are sufficient in
this regard.
Social, community
and human rights issues
The Investment Adviser screens the
Company’s investable universe as
part of the Environmental Social
and Governance analysis for any
breaches of the principles of the
UN Global Compact, including human
rights, labour rights, environmental
breaches and corruption. Any
non‑compliant companies are
excluded from investment.
Anti-bribery and corruption
In accordance with the UK Bribery Act
2010, the Company has developed
appropriate anti-bribery policies and
procedures. The Company has a
zero-tolerance policy towards bribery
and is committed to carrying out its
business fairly, honestly and openly.
The anti-bribery policies and procedures
apply to all its officers and to those
who represent the Company (including
its business partners). The Company
expects those providing services to it,
or on its behalf, to undertake their
business without bribery.
Prevention of the
facilitation of tax evasion
The Criminal Finances Act
(Commencement No. 1) Regulations
2017 (SI 2017/739) brought Part 3 of the
Criminal Finances Act 2017, the
corporate offences of failure to prevent
facilitation of tax evasion, into force on
30 September 2017. The Company
does not tolerate tax evasion in any of
its forms in its business. The Company
complies with the relevant UK law and
regulation in relation to the prevention
of facilitation of tax evasion and
supports efforts to eliminate the
facilitation of tax evasion worldwide,
and works to make sure its business
partners share this commitment.
Other Information
27
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HydrogenOne Capital Growth plc Annual Report 2021
Strategic Report Governance
Financial statements
Other information
Investment policy, results
and other 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 is an approved
investment trust under sections 1158
and 1159 of the Corporation Tax Act
2010 and Part 2 Chapter 1 of Statutory
Instrument 2011/2999.
Business model
The Company is an investment
company and its purpose, strategy,
investment objective and policy are set
out on pages 27 to 29. Any material
change to the investment policy
requires shareholder approval.
The Company is the first UK listed
investment company with a mandate
to invest in a diversified portfolio of
hydrogen and complementary
hydrogen focussed assets principally in
developed markets in Europe, North
America, the GCC and Asia Pacific.
The Company’s differentiated strategy
provides exposure to the broader
hydrogen sector whilst, at the same
time, diversifying risk for an investor,
through a diversified portfolio of listed
and private investments across different
jurisdictions and different technologies.
The Company makes its investment in
unquoted Hydrogen Assets (“Private
Hydrogen Assets”) through
HydrogenOne Capital Growth
Investments (1) LP (the “HydrogenOne
Partnership” or the “Limited Partnership”),
in which the Company is the sole limited
partner. The Company may also acquire
Private Hydrogen Assets directly or by
way of holdings in special purpose
vehicles or intermediate holding entities.
The General Partner of the Limited
Partnership is HydrogenOne Capital
Growth (GP) Limited (the “General
Partner”), a wholly owned subsidiary
of the Company. Details of the
Company and Group structure are given
in note 1 to the Financial Statements.
Other than where specified, references
to the Company in this document refer
to the Company together with its
wholly-owned subsidiary and
investment as sole limited partner in
the Limited Partnership.
The Company is governed by a Board
of Directors (the “Board”), all of whom
are non-executive, and it has no
employees. The business model
adopted by the Board to achieve the
Company’s objective has been to
contract the services of Sanne Fund
Management (Guernsey) Limited
(formerly International Fund
Management Limited) as the alternative
investment fund manager of the
Company, pursuant to the AIFM
Agreement (the “AIFM”). The AIFM has
appointed HydrogenOne Capital LLP
to provide investment advisory services
in respect of the Company (the
“Investment Adviser”). The Investment
Adviser will advise on the portfolio in
accordance with the Board’s strategy
and under its and the AIFM’s oversight.
The Principals of the Investment Adviser
responsible for the day-to-day
monitoring of the portfolio are Dr John
Joseph “JJ” Traynor and Richard Hulf.
The Board and the AIFM monitor
adherence to the Company’s
investment policy and regularly reviews
the Company’s performance in meeting
its investment objective.
All administrative support is provided
by third parties under the oversight of
the Board. Company secretarial and
administration services have been
delegated to Sanne Fund Services
(UK) Limited (formerly PraxisIFM Fund
Services (UK) Limited (“Sanne” or the
“Administrator”); custody services to
Northern Trust Company (“Northern
Trust”); registrar services to
Computershare Investor Services plc
(“Computershare”); and the Company’s
broker is Panmure Gordon (UK) Limited
(“Panmure Gordon” or the “Broker”).
The Board reviews the performance
of the AIFM, the Investment Adviser and
other key service providers on an
ongoing basis. Further details of the
material contracts of the Company are
given in note 13 to the Financial
Statements.
Investment objective
and policy
Investment objective
The Company’s investment objective
detailed in the Strategic Report on page 1.
Investment policy
The Company seeks to achieve its
investment objective through
investment in a diversified portfolio of
hydrogen and complementary hydrogen
focussed assets, primarily in developed
markets in Europe, North America, the
GCC and Asia Pacific, comprising:
(i) assets that supply 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. No investments will be made in
companies or projects that generate
revenues from the extraction or
production of fossil fuels.
Private Hydrogen Assets
The Company will invest in unquoted
Hydrogen Assets, which may be
operational companies or hydrogen
projects (completed or under
construction). 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 will
observe 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 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 will also invest 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 will be
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$200 million. The
Company’s approach is to be a
long-term investor and will not ordinarily
adopt short-term trading strategies.
The Company will observe 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, with a targeted
average stock weighting of 1.5 per
cent of the Gross Asset Value;
• the portfolio of Listed Hydrogen
Assets will comprise no fewer than
15 Listed Hydrogen Assets at times
when the Company is substantially
invested; and
• each Listed Hydrogen Asset must
derive at least 50 per cent of
revenues from hydrogen and/or
related technologies.
Liquidity reserve
The Company intends to allocate the
relevant net proceeds of any capital
raise/realisation of Private Hydrogen
Assets to cash (in accordance with the
Company’s cash management policy
set out below) and/or to 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.
It is anticipated that, once the Initial
Net Proceeds are fully invested (with
the Liquidity Reserve having been
subsequently invested in Private
Hydrogen Assets), at least 70% of the
Company’s assets will be invested in
Private Hydrogen Assets with the
balance invested in Listed Hydrogen
Assets. Over the medium term, it is
expected that the weighting to Listed
Hydrogen Assets will reduce further, to
approximately 10% of the Company’s
assets, as the allocation to Private
Hydrogen Assets grows, with Listed
Hydrogen Assets primarily focussed on
strategic equity holdings derived from
the listing of operational companies
within the Private Hydrogen Assets
portfolio over time.
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;
Other Information
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Strategic Report Governance
Financial statements
Other information
• 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
will be 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% 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 an 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 SPVs or any
such intermediate holding entities (such
as the Limited 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. 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.
Asset allocation at period end
The breakdown of the structure of the
portfolio at the Company’s period end is
shown on page 17.
Dividends and dividend policy
The Ordinary Shares carry a right to
receive dividends. Interim dividends are
determined by the Board and a final
dividend is subject to shareholder
approval at the AGM.
(i) Dividend policy
The Company is targeting a Net Asset
Value total return of 10 to 15% per annum
over the medium to long-term with
further upside potential. The Company
intends to invest in Hydrogen Assets
with cash flow typically re-invested for
further accretive growth.
The Company only intends to pay
dividends in order to satisfy the ongoing
requirements under the Investment
Trust (Approved Company) (Tax)
Regulations 2011 for it to be approved
by HMRC as an investment trust save
that, in the medium term, the
Company’s Hydrogen Assets may also
generate free cash flow which the
Company may decide not to re-invest
and, in such case(s), the Company
currently intends to distribute these
amounts to Shareholders.
The Company’s revenue return after tax
for the period amounted to a loss of
£805,000. The Company made a capital
loss after tax of £1,612,000. Therefore
the total return after tax for the Company
was a loss of £2,417,000. No dividends
have been paid or are proposed for the
period to 31 December 2021.
Other Information
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Principal Risks and Uncertainties Mitigation
Regulatory
Changes in political or environmental conditions in the hydrogen sector
(for example, changes in government policy or support) could affect the
Company’s prospects.
The Board and Investment Adviser has significant experience in the
energy sector and is familiar with its volatile political and regulatory
environment. Extensive contacts across the sector inform its ongoing
monitoring of these risks, which are reported to the Board at least
quarterly. More specific due diligence occurs prior to any investments
and during the lifetime of their ownership.
The Administrator has a strong track record in administering listed
companies and the various rules and regulation required to be
adhered to.
Policy support
The technologies required to produce and use green hydrogen need
policy support to underpin the scale needed to drive stand-alone cost
competitiveness. Governments worldwide are showing such support
today, but that may be volatile over the investment time horizon of
the Company.
As noted under ‘regulatory’, the Investment Adviser has longstanding
experience in the energy sector and monitors the policy environment
closely. Such experience and awareness is also present among the
Company’s Non-Executive Directors. It is the intent of the Investment
Adviser to access a range of hydrogen projects in different countries and
at different points in the emerging value chain, to further mitigate the risk
of policy volatility.
Power price
The income and value of the Company's investments may be affected
by changes in the market prices of electricity and hydrogen, both current
and expected.
Risks include refinancing risk, exposure to interest rate risk due to
fluctuations in the prevailing market rates, covenant breaches and
possible enhanced loss on poor performing assets.
The Investment Adviser monitors the outlook for electricity and hydrogen
prices. The Company may hedge the exposure to fluctuating electricity
and hydrogen prices in respect of its investments.
As a result, the Investment Adviser oversee power revenues and monitor
regularly against expectations.
Portfolio allocations are monitored on an ongoing basis by both the
Investment Adviser and AIFM, to ensure compliance with investment
limits. Reporting by the Investment Adviser and AIFM are provided to
the Board at least quarterly.
Operational
Initial pre-deal due diligence may not uncover all risks associated to a
transaction.
Investments are subject to operating and technical risks. While the
Company will seek investments with creditworthy and appropriately
insured counterparties who bear the majority of these risks, there can
be no assurance that all risks can be mitigated.
In addition, the long-term profitability of hydrogen investments will be
partly dependent upon the efficient operation and maintenance of the
assets. Inefficiency, or limitations in the skills, experience or resources
of operating companies, may reduce revenue.
As a result, profitability of the Company may be impaired leading to
reduced returns for Shareholders.
The Investment Adviser conducts a vigorous due diligence process and
works very closely with external and technically skilled consultancy firms
to review all potential transactions, with an aim to provide a fully scoped
and informed recommendation.
The portfolio is constantly monitored by the Investment Adviser and the
AIFM to address risks as they are identified.
Diversification in counterparties and service providers ensures any impact
is limited. Furthermore, the Company invests in a diversified portfolio.
Performance
Underperforming investment or investment strategy can lead to
underperformance to the Company’s target return and ultimate
investment objective.
The Board reviews at least quarterly, the portfolio performance as well
as underlying key asset risks identified as part of the Company’s risk
register and how those risks are actively being mitigated which include
but is not limited to:
• Non Controlling interest risk • Market risk
• Interest rate risk • Inflation risk
At each Board meeting a report on risks, portfolio performance and any
macro and micro considerations is provided by the Investment Adviser
and the AIFM, and reviewed accordingly with the aim to mitigate
such risks.
New investment recommendations are reviewed and approved in line
with the investment policy agreed with the Company and key parties.
Principal risks and uncertainties
The Board, through delegation to the Audit and Risk Committee, has carried out a robust assessment of the emerging and principal
risks facing the Company. These include those that would threaten its business model, future performance, solvency and liquidity
(see Audit and Risk Committee Report on pages 46 and 47). The Audit and Risk Committee reviews ongoing monitoring of both
risks and controls. This ensures heightened and emerging risks are identified outside of the normal cycle of Board and Audit and
Risk Committee meetings. The Audit and Risk Committee undertook a comprehensive review of the Company’s risk management
framework and controls during the period. The risks are documented on a risk register and each risk is rated by impact and
probability with the assessed risk given a risk score and a residual rating. The risk register is reviewed on an ongoing basis in an
attempt to capture all risks and put appropriate mitigation in place. The review takes into account changing factors including, but
not restricted to, changes to markets (both macro and micro), stakeholders, operations, regulation and emerging risks. The top
risks identified by this process are set out in the table below together with the mitigated approach, and the Board considers these
to be the principal risks of the Company.
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Other information
Principal Risks and Uncertainties Mitigation
Future acquisitions and capital raises
Ongoing capital raises are intended. Should there be a deterioration of
the intended investment pipeline and the capital unable to be deployed
into suitable opportunities in the expected time frame, this will result in
‘cash drag’.
Cash drag will have the potential to impact on the ongoing dividend target
and investment objective.
The Board and AIFM oversee the investment pipeline and monitor its
progress in relation to Company targets.
Certain assets will be identified in advance by the Investment Adviser as
being potentially available for acquisition by the Company.
The pipeline is managed by the Investment Adviser and monitored by
the AIFM, with onward reporting to the Board.
The Board is unlikely to agree to capital raises without a strong pipeline.
Refinancing
The operational risks of the company including market, counterparty,
credit and liquidity risk.
Extreme market volatility can disrupt capital raising process and ability
to raise monies to repay a debt demand in full.
The Investment Adviser closely monitors the liquidity in the market.
Should new credit not be forthcoming, liquidity may be gained through
a capital raise, or liquidation of an asset.
Service providers
Disruption to, or failure of the Company’s Administrator or
other parties to complete their role efficiently, on time and in line with
expectation
All counterparties to the Company are reviewed as part of the risk
register. A material credit risk is that of banks holding un-invested cash,
the credit rating and credit worthiness of these are considered. A review
of operational counterparties such as the Administrator for operational
procedures, disaster recovery and system security is undertaken.
Counterparties of Company’s Special Purpose Vehicles (“SPV”) and
underlying assets are carried out as part of the investment due
diligence process.
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.
The Investment Adviser has significant experience in valuation
of these assets.
The valuation polices will be considered by the Valuation Committee
on a quarterly basis, together with signing off on the Private Hydrogen
Asset values.
Key person
The Investment Adviser is a newly formed Company, with minimum
employees. As such, there are significant Key Person risks at this time
and should they become unavailable, this could have a negative impact
on the Company’s ability to achieve its investment objective.
The Investment Adviser is committed to expand its business / staffing
levels in order to diversify knowledge across the expanding team.
This risk is covered in the risk register and reported on at each Board
meeting.
Tax
Breaches of Section 1158 of the Corporation Tax Act could result in loss
of investment trust status.
Changes in tax legislation such as BEPS, WHT rules and structural
requirements result in increased tax and resulting
The corporate structure of the Company is reviewed periodically by the
Company and its advisors.
All investments receive professional structural advice prior to investment.
Political and associated economic risk
Exposure to Russia and/or Ukraine 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 Board and Investment Adviser have reviewed the portfolio for
exposure and will continue to keep this under review.
Viability statement
The Directors have assessed the viability
of the Group for the period to 31
December 2026 (the “Viability Period”).
The Board believes that the Viability
Period, being approximately five years, is
an appropriate time horizon over which
to assess the viability of the Group,
particularly when taking into account the
long-term nature of the Group’s
investment strategy, the principal risks
outlined on pages 30 and 31 and the
next continuation vote.
In accordance with the Articles, the
continuation of the Company is subject
to the approval of shareholders every
five years, with the first vote to be
proposed as an ordinary resolution at
the Company's AGM in 2026. If passed,
the Articles provide that the Directors
propose an ordinary resolution that the
Company continue its business as
presently constituted at each fifth annual
general meeting thereafter.
In its assessment of the prospects of the
Group, the Board carried out a robust
assessment of the emerging and
principal risks and considered each of
the uncertainties set out on pages 30
and 31 which included consideration of
severe but plausible downside
scenarios (such as a market downturn
and the liquidity and solvency of the
Group). The Board also considered the
Group’s income and expenditure
projections and cash projections. These
metrics were subjected to stress testing
of the assumptions to evaluate the
potential impact on the Group, including
long term downturn of the listed equity
markets, longer investment hold periods
and increased inflation. Portfolio
changes, market developments, level of
premium / discount to NAV and share
buybacks / share issues are discussed
at quarterly Board meetings. The internal
control framework of the Group is
subject to a formal review on at least
an annual basis.
The level of the ongoing charges is
dependent to a large extent on the level
of net assets, the most significant
contributor being the Investment Adviser
fee. The Group’s cash realisable from the
sale of its investments and expected
dividend income from investments
provide substantial cover to the Group’s
operating expenses, and any other costs
likely to be faced by the Group over the
Viability Period of their assessment.
Since admission to the London Stock
Exchange on 30 July 2021 (“Admission”),
the Company’s shares have traded at
a premium to NAV.
The Directors' assessment also
considered the market and operational
risks associated with the COVID-19
pandemic and subsequent lifting of
restrictions. The ongoing economic
impact of measures introduced to
combat its spread were discussed and
monitored by the Board throughout the
period. The Investment Adviser and
other key service providers have
provided regular updates on operational
resilience in light of the pandemic. The
Board is satisfied that the key service
providers have the ability to continue
their operations efficiently in a remote
or hybrid working environment.
The Director’s assessment considered
the market risks associated with the
Russian invasion of Ukraine in February
2022. The ongoing market volatility and
uncertainty this has caused, has been
discussed and will continue to be
monitored. The Investment Adviser has
reviewed the investment portfolio for
exposure and while limited exposure
has been identified the Board will keep
the situation under continued review.
Based on this assessment, the Directors
have a reasonable expectation that the
Group will be able to continue to
operate and to meet its liabilities as they
fall due over the Viability Period.
Employees
The Company has no employees. As at
the date of this report, the Company had
five Directors, of whom two are male
and three are female.
Outlook
The outlook for the Company is
described in the Chairman’s Statement
and the Investment Adviser's Report.
Strategic report
The Strategic Report set out on pages
1 to 32 of this Annual Report was
approved by the Board of Directors on
31 March 2022.
For and on behalf of the Board
Simon Hogan
Chairman
31 March 2022
Other Information
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Governance
34 Board of Directors
35 Directors’ Report
39 Corporate Governance
43 Directors’ Remuneration Policy
44 Directors’ Remuneration Implementation Report
46 Report of the Audit and Risk Committee
48 Statement of Directors’ Responsibilities
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Financial statements
Other information
Board of Directors
4
Simon Hogan
1,2,3
(Chairman of the Board)
Appointed 20 May 2021
Mr Hogan has significant capital
markets, legal and management
experience. He was previously a
Managing Director of Morgan Stanley
and Chief Operating Officer across their
Commodities, Fixed Income and Equity
divisions. Mr Hogan has held multiple
board positions and was a member of
the FCA Practitioners committee.
Mr Hogan’s contribution is invaluable to
the Company in formulating its
short-term and long-term strategic
direction as well as managing a newly
established Board and Company.
Caroline Cook
1,2,3
(Chairman of the Audit and Risk
Committee and the Valuation Committee)
Appointed 20 May 2021
Mrs Cook has over 30 years of
experience in energy and sustainable
investing, and currently leads on climate
change and environment at a large UK
asset manager. Caroline was previously
the co-head of Deutsche Bank’s number
one rated global and European oils equity
research team and an independent
consultant. In 2016 Caroline initiated and
then led Deutsche Bank’s integrated,
cross-sector equity coverage of the
accelerating energy transition.
Mrs Cook will retire as a Non-Executive
Director effective 7 April 2022.
Afkenel Schipstra
1,2,3
(Chairman of the Management
Engagement Committee,
Nomination Committee and the
Remuneration Committee)
Appointed 20 May 2021
Mrs Schipstra has over 18 years
experience in Energy in Europe and
Sub-Sahara Africa. She is Senior Vice
President in Hydrogen Business
Development at ENGIE where she is
responsible for ENGIE’s large scale
green hydrogen developments in
the Netherlands including the
HyNetherlands Project: a large-scale,
green hydrogen value chain (1.85 GW) in
the Northern Netherlands. Afkenel has
previously held senior positions at
Gasunie, Shell and NAM.
Mrs Schipstra’s extensive knowledge of
hydrogen projects strengthens the Board’s
commercial knowledge of the sector.
Roger Bell
2,3
(Non-Executive Director)
Appointed 1 October 2021
Mr Bell is currently Chief Financial Officer
of the INEOS Oil and Gas group of
companies and has been nominated as
the Board representative of INEOS UK
E&P Holdings Limited (“INEOS Energy”)
pursuant to the relationship and
co-investment agreement entered into
between, inter alia, INEOS Energy and
the Company at launch.
Mr Bell brings a wealth of accounting and
commercial experience through his role
held at INEOS Energy for over 20 years.
Abigail Rotheroe
1,2,3
(Non-Executive Director)
Appointed 8 February 2022
Ms Rotheroe has over twenty years of
investment experience and is currently
Investment Director at Snowball Impact
Management, a sustainable and impact
focussed asset manager. Ms Rotheroe
was a Director of Threadneedle
Investment, following positions at
HSBC Asset Management and
Schroders and has experience of
institutional and retail investment.
Ms Rotheroe also brings knowledge of
fund governance, manager selection
and impact measurement.
1. Member of the Audit and Risk, Valuation,
Management Engagement, Nomination and
Remuneration Committees.
2. Mr Bell is not a member of the committees of
the Board but attends by invitation. Considered
independent by the Board. Refer to page 39 for
an assessment of independence for Roger Bell.
3. Each Director has also been appointed as a
Director of HydrogenOne Capital Growth (GP)
Limited (a wholly owned subsidiary of the
Company which has been appointed as the
general partner of the Limited Partnership) in
order to ensure that the Board are in a position
to effectively monitor and manage the
performance of the service providers of the
HydrogenOne Partnership in accordance
with the Listing Rules.
4. Mr Giles Morland, Mr Richard Hulf and
Dr JJ Traynor were appointed as Directors on
incorporation of the Company on 16 April 2021
and resigned on 20 May 2021. Mr Giles Morland
was appointed as a Director on 20 May 2021
and resigned on 15 June 2021.
The Principals of the
Investment Adviser
Dr JJ Traynor
Dr John Joseph “JJ” Traynor has
extensive experience in energy, capital
markets, project management, and
M&A. He has held a series of senior
energy and banking sector positions,
including Executive Vice President at
Royal Dutch Shell, where he led investor
relations and established the company’s
ESG programme; Managing Director at
Deutsche Bank, where he was the
number one ranked analyst in European
and Global oil & gas; Geologist at BP, in
the North Sea, West Africa and Asia
Pacific. He has a Geology BSc from
Imperial College, a PhD from Cambridge
University. He attended the INSEAD
Advanced Management Programme,
and is a Fellow of the Geological
Society of London.
Richard Hulf
Richard Hulf is a fund manager with
corporate finance and engineering
background. Richard has 30 years of
experience in the Utilities and Energy
sectors and is a Chartered Engineer,
originally from Babcock Power and
latterly Exxon. In addition, his financial
experience spans stock broking,
corporate finance and fund
management with Henderson
Crosthwaite, Ernst & Young and Artemis
Investment Management, where he
invested into renewables companies.
He has an MSc in Petroleum
Engineering from Imperial College.
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Directors’ Report
The Directors present their report and accounts for the Company and Group for
the period ended 31 December 2021.
Strategic report
The Directors’ Report should be read in
conjunction with the Strategic Report on
pages 1 to 32.
Corporate governance
The Corporate Governance Statement on
pages 39 to 42 forms part of this report.
Legal and taxation status
The Company is an investment
company within the meaning of Section
833 of the Companies Act 2006. The
Company conducts its affairs in order to
meet the requirements for approval as
an investment trust under section 1158 of
the Corporation Tax Act 2010. The
Company has received approval as an
investment trust and the Company must
meet eligibility conditions and ongoing
requirements in order for investment
trust status to be maintained. In the
opinion of the Directors, the Company
has met the conditions and
requirements for approval as an
investment trust for the period ended
31 December 2021.
Risk and risk management
The Principal Risks and Uncertainties for
the Company and their mitigation on
pages 30 to 31 forms part of this report.
Viability statement
The Viability Statement is on page 32.
Market information
The Company’s Ordinary Shares are
premium listed on the London Stock
Exchange (“LSE”). The NAV per Ordinary
Share is calculated in Pound Sterling for
each business day that the LSE is open
for business based upon the quarterly
valuation of the Private Hydrogen Assets
and daily valuation of Listed Hydrogen
Assets. The daily NAV per Ordinary
Share is published through a regulatory
information service.
Retail distribution promotion
As a result of the Financial Conduct
Authority (“FCA”) rules determining which
investment products can be promoted
to retail investors, certain investment
products are classified as
‘non-mainstream pooled investment’
products and face restrictions on their
promotion to retail investors.
The Company has concluded that the
distribution of its shares, being shares in
an investment trust, is not restricted as a
result of the FCA rules described above.
The Company currently conducts its
affairs so that the shares issued by the
Company can be recommended by
financial advisers to retail investors and
intends to continue to do so for the
foreseeable future.
Shareholder relations and
Annual General Meeting (AGM)
The Board encourages all shareholders
to attend the AGM and generally seeks
to provide twenty one clear days’ notice
of that meeting.
The Notice of AGM sets out the business
of the AGM and any special business is
explained in the Directors’ Report on
pages 35 and 36. Separate resolutions are
proposed for each substantive issue. The
Investment Adviser has a programme of
meetings with shareholders and reports
back to the Board on its findings. The
Board also welcomes direct feedback
from shareholders. The Chairman is
available to meet shareholders and may
be contacted by email via the Company
Secretary at hydro1cosec@praxisifm.com.
The Company’s AGM will be held at
12.30pm on 24 May 2022 and the
Chairman’s Statement on page 7 sets
out the arrangements for the meeting.
Details of how shareholders can cast
their votes can be found in the Notes to
the Notice of Meeting on pages 90 to
92. Shareholders will also have the
opportunity to hear a presentation from
the Investment Adviser, and ask
questions of the Board and the
Investment Adviser.
Special business of the AGM
Authority to issue and
purchase own shares
The Board recommends that the
Company be granted a new authority to
allot up to a maximum of 10,735,000
Ordinary Shares (representing
approximately 10% of the Ordinary Shares
in issue at the date of this document) and
to dis-apply pre-emption rights when
allotting those Ordinary Shares and/or
selling Ordinary Shares from treasury.
Ordinary resolution 10 and special
resolution 11 will be put to shareholders at
the AGM. Ordinary Shares will be issued
under this authority only at the Board’s
discretion and when it is deemed to be in
the best interests of shareholders as a
whole to do so. The advantages are to
lower the Company’s ongoing charges as
expenses are diluted and, in the short
term, to address volatility in the share
price. Unless otherwise authorised by
shareholders, new Ordinary Shares will
not be issued at less than NAV and
Ordinary Shares held in treasury will not
be sold at less than NAV.
The maximum number of Ordinary
Shares which can be admitted to trading
on the London Stock Exchange without
the publication of a prospectus is 20% of
the Ordinary Shares on a rolling previous
12-month basis at the time of admission
of the Ordinary Shares.
The Directors recommend that a new
authority to purchase up to 16,091,765
Ordinary Shares (subject to the condition
that not more than 14.99% of the Ordinary
Shares in issue at the date of the AGM are
purchased) be granted and special
resolution 12 to that effect will be put to
the AGM. Any Ordinary Shares purchased
will either be cancelled or, if the Directors
so determine, held in treasury. Ordinary
Shares are purchased at the discretion of
the Board and when it is deemed to be in
the best interests of shareholders.
Ordinary Shares will be purchased for
cancellation or for treasury only when the
Ordinary Shares are trading at a discount
to the Net Asset Value.
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HydrogenOne Capital Growth plc Annual Report 2021
Directors’ Report
The Companies Act 2006 allows
companies to hold shares acquired by
way of market purchases as treasury
shares, rather than having to cancel
them. This gives the Company the ability
to sell Ordinary Shares quickly and cost
effectively, thereby improving liquidity
and providing the Company with
additional flexibility in the management
of its capital base. At the period end and
at the date of this report, no Ordinary
Shares were held in treasury.
Notice of General Meetings
Special resolution 13 in the notice to the
AGM is required to reflect the
requirements of the Shareholder Rights
Directive. The Company is currently able
to call General Meetings, other than an
AGM, on 14 clear days’ notice and would
like to preserve this ability. In order to be
able to do so, shareholders must have
given their prior approval.
Special resolution 13 seeks such
approval, which would be effective until
the Company’s next AGM, when it is
intended that a similar resolution will be
proposed. The Company will ensure that
it offers the facility for shareholders to
vote by electronic means, and that this
facility is accessible to all shareholders,
if it is to call General Meetings on 14 days’
notice. Short notice of this kind will be
used by the Board only under
appropriate circumstances.
Continuation vote
The Articles of Association require that
an ordinary resolution be proposed at
every fifth AGM of the Company that the
Company should continue as an
investment trust for a further five-year
period. In accordance with the Articles of
Association, the initial vote for the
continuation of the Company will be
proposed at the AGM to be held in
2026. In the event that such a resolution
is not passed, the Directors are required
to draw up proposals for shareholders’
approval for the voluntary liquidation or
unitisation or other reorganisation of the
Company, which would require a special
resolution of shareholders.
Articles of association
Amendments to the Company’s Articles
of Association require an Ordinary
Resolution to be passed by Shareholders.
Management
The Board
The independent Board is responsible
to Shareholders for the overall
management of the Company. The
Board has adopted a Schedule of
Matters Reserved for the Board which
sets out the division of responsibilities
between the Board and its various
committees, the Chairman and the
Chairman of the various committees,
together with the duties of the Board,
further details can be found on
pages 39 and 40.
Through the Committees and the use
of external independent advisers, the
Board manages risk and governance
of the Company.
Appointment of Board Members
The rules concerning the appointment
of Directors are contained in the
Company’s Articles of Association which
require that a Director shall be subject
to election at the first AGM after
appointment and annual re-election
thereafter. Further details of the Board’s
process for the appointment of Board
members can be found on page 40.
Alternative Investment Fund
Manager (“AIFM”)
Sanne Fund Management (Guernsey)
Limited, formerly known as International
Fund Management Limited, has been
appointed as the Company’s and
Limited Partnership’s AIFM. The AIFM
has delegated the provision of portfolio
management services to the Investment
Adviser pursuant to the Investment
Adviser Agreement.
The AIFM Agreement shall continue in
force until terminated by either the AIFM
or the Company by giving to the other
no less than six months’ prior written
notice, provided that such notice may
not be served earlier than the date being
twelve months from the date of the
AIFM Agreement. The AIFM Agreement
may be terminated earlier by either party
with immediate effect in certain
circumstances, including, if the other
party shall go into liquidation or an order
shall be made or a resolution shall be
passed to put the other party into
liquidation or the other party has
committed a material breach of any
obligation the AIFM Agreement, and in
the case of a breach which is capable of
remedy fails to remedy it within 30 days.
Details of the fee the AIFM is entitled to
receive are given in note 13 to the
Financial Statements.
The AIFM shall maintain, at its cost,
professional indemnity insurance to
cover any professional liability which it
may incur under the AIFM Agreement,
with a limit not less than £5,000,000.
The Company has granted to the AIFM
and certain other indemnified parties,
a customary indemnity against losses
which may arise in relation to the AIFM’s
performance of its duties under the
AIFM Agreement.
The Board confirms that it has reviewed
whether to retain Sanne Fund
Management (Guernsey) Limited as the
AIFM of the Company. It has been
concluded that it is in the best interests
of shareholders as a whole to continue
with the AIFM’s engagement.
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Investment Adviser
The AIFM has appointed HydrogenOne
Capital Growth LLP as the Investment
Adviser. The Investment Adviser has
been given responsibility for investment
advisory services in respect of any Private
Hydrogen Assets the Company invests
in directly or indirectly through holding
entities and the Listed Hydrogen Assets
(including Listed Hydrogen Assets
forming part of the Liquidity Reserve and
uninvested cash) in accordance with the
Company’s investment policy, subject to
the overall control and supervision of the
AIFM. Details of the Investment Advisory
fees are given in note 5 to the Financial
Statements. As at 31 December 2021,
Dr JJ Traynor held 100,000 Ordinary
Shares and Mr Richard Hulf held
100,000 Ordinary Shares in the
Company.
The Limited Partnership has entered
into a Limited Partnership Investment
Adviser Agreement dated 5 July 2021
and as amended on 26 November 2021
(the “Limited Partnership Investment
Adviser Agreement”) between the
General Partner (in its capacity as
general partner of the Limited
Partnership), the AIFM and the
Investment Adviser, pursuant to which
the Investment Adviser has been given
responsibility for investment advisory
services in respect of the Private
Hydrogen Assets in accordance with
the investment policy of the Limited
Partnership, subject to the overall
control and supervision of the AIFM.
The Investment Adviser Agreements are
for an initial term of four years from the
date of Admission and thereafter subject
to termination on not less than twelve
months’ written notice by any party. The
Investment Adviser Agreements can be
terminated at any time in the event of,
inter alia, the insolvency of the Company,
the AIFM or the Investment Adviser or if
certain key members of the Investment
Adviser’s team cease to be involved in
the provision of services to the
Company and are not replaced by
individuals satisfactory to the Company
(acting reasonably).
The Company and the Limited
Partnership have given an indemnity in
favour of the Investment Adviser (subject
to customary exceptions) in respect of
the Investment Adviser’s potential losses
in carrying on its responsibilities under
the Investment Adviser Agreement.
The Board confirms that it has reviewed
whether to retain HydrogenOne Capital
Growth LLP as the Investment Adviser of
the Company and the Limited
Partnership. It has been concluded that,
given the Investment Adviser’s depth of
knowledge in the sector and the recent
growth and performance record of the
Company, it is in the best interests of
shareholders as a whole to continue
with the Investment Adviser’s
engagement.
Alternative Investment Fund Portfolio
Managers’ Directive (“AIFMD”)
In accordance with the AIFMD, the AIFM
must ensure that an annual report
containing certain information on the
Company is made available to investors
for each financial year. The investment
funds sourcebook of the FCA (the
“Sourcebook”) details the requirements
of the annual report. All the information
required by those rules are included in
this Annual Report or will be made
available on the Company’s website.
Company Secretary
and Administrator
Sanne Fund Services (UK) Limited,
formerly known as PraxisIFM Fund
Services (UK) Limited, has been
appointed to provide company
secretarial and administration services
to the Company.
Custodian
The Northern Trust Company has been
appointed as the Company’s custodian
for the Listed Hydrogen Assets.
Registrar
Computershare Investor Services plc
has been appointed as the Company’s
registrar.
Continuing appointment
of service providers
The Board has committed to undertake
a detailed review of the continued
appointment of these service providers
on an annual basis to ensure these are
in the best long term interests of the
Company’s Shareholders and will
undertake a comprehensive service
provider review during the year ending
31 December 2022.
Capital structure and
voting rights
At the period end and to the date of this
report, the Company’s issued share
capital comprised 107,350,000 Ordinary
Shares, with no Ordinary Shares held in
treasury. Each Ordinary Share held
entitles the holder to one vote. All
Ordinary Shares carry equal voting rights
and there are no restrictions on those
voting rights. Voting deadlines are stated
in the Notice of Meeting and Form of
Proxy and are in accordance with the
Companies Act 2006. There are no
restrictions on the transfer of Ordinary
Shares, nor are there any limitations or
special rights associated with the
Ordinary Shares.
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HydrogenOne Capital Growth plc Annual Report 2021
Directors’ Report
Notifiable interest
As at 31 December 2021 and 31 March 2022, the Directors have been formally notified of the following shareholdings comprising
3% or more of the issued share capital of the Company.
Holding of Holding of
Ordinary % Holding – Ordinary % Holding –
Shares – As at As at Shares – As at As at
31 December 31 December 31 March 31 March
Company 2021 2021 2022 2022
INEOS UK E&P Holdings Limited 25,000,000 23.3 25,000,000 23.3
Rathbone Investment Management International Ltd 7,990,757 7.4 7,990,757 7.4
Investec Wealth & Investment Limited 5,376,857 5.0 5,296,197 4.9
City of Bradford - West Yorkshire Pension Fund 5,000,000 4.7 5,000,000 4.7
Stichting Juridisch Eigendom Privium
Sustainable Impact Fund 4,280,000 4.0 4,280,000 4.0
FS Wealth Management Limited 3,670,000 3.4 3,670,000 3.4
Political donations
There were no political donations
made during the financial period to
31 December 2021.
Disclosure required by
listing rule 9.8.4
The above rule requires listed
companies to report certain information
in a single identifiable section of their
annual financial reports. The Company
confirms that, other than the allotment
of equity securities for cash (LR 9.8.4(7))
which is detailed in note 10 to the
financial statements, all such reporting
applied only to non-applicable events
for the period ended 31 December 2021.
Future trends
Details of the main trends and factors
likely to affect the future development,
performance and position of the
Company’s business can be found in the
Investment Adviser’s Report section of this
Strategic Report. Further details as to the
risks affecting the Company are set out in
the ‘Principal Risks and Uncertainties’ on
pages 30 to 31.
Directors’ indemnities
Subject to the provisions of the
Companies Act 2006 and certain
provisions contained in the deeds of
indemnity issued by the Company, the
Company has indemnified each of the
Directors against all liabilities which each
Director may suffer or incur arising out of
or in connection with any claim made or
proceedings taken against them, or any
application made under sections 661(3),
661(4) or 1157 of the Companies Act
2006 by them, on the grounds of their
negligence, default, breach of duty or
breach of trust, in relation to the
Company or any associated company.
The indemnities would provide financial
support from the Company after the
level of cover provided by the
Company’s Directors’ and Officers’
insurance policy has been fully utilised.
Going concern
The Directors consider that it is
appropriate to adopt the going concern
basis in preparing the Financial
Statements. Details of the Directors’
assessment of the going concern status
of the Company and Group, which
considered the adequacy of the
Company and Group’s resources and
the impacts of the COVID-19 pandemic
and the recent Russian invasion of
Ukraine, are given in note 2 to the
Financial Statements.
Auditor information
Each of the Directors at the date of the
approval of this report confirms that:
(i) so far as the Director is aware, there
is no relevant audit information of
which the Company’s auditor is
unaware; and
(ii) the Director has taken all steps that
he or she ought to have taken as
Director to make himself or herself
aware of any relevant information
and to establish that the Company’s
auditor is aware of that information.
This confirmation is given and should
be interpreted in accordance with the
provisions of Section 418 of the
Companies Act 2006.
Appointment of auditor
In accordance with Section 489 of the
Companies Act 2006, the Board
appointed KPMG Channel Islands
Limited (“KPMG”) as the Company’s
auditor effective 15 June 2021. A
resolution will be put forward at the
forthcoming AGM on 24 May 2022
to re-appoint KPMG as auditor.
By order of the Board
Brian Smith
For and on behalf of
Sanne Fund Services (UK) Limited
Company Secretary
31 March 2022
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Corporate Governance
Introduction
This Corporate Governance statement
forms part of the Directors’ Report.
The Listing Rules and the Disclosure
Guidance and Transparency Rules of the
UK Listing Authority require listed
companies to disclose how they have
applied the principles and complied
with the provisions of The UK Corporate
Governance Code 2018 (the “UK Code”),
as issued by the Financial Reporting
Council (“FRC”). The UK Code can be
viewed on the FRC’s website.
The Board has considered the principles
and provisions of the AIC Code of
Corporate Governance 2019 (the “AIC
Code”) which addresses those set out in
the UK Code, as well as setting out
additional provisions on issues that are of
specific relevance to the Company, as
an investment trust.
The Board considers that reporting
against the AIC Code, which has been
endorsed by the Financial Reporting
Council, provides more relevant
information to shareholders.
The AIC Code is available on the AIC
website (www. theaic.co.uk). It includes
an explanation of how the AIC Code
adapts the Principles and Provisions set
out in the UK Code to make them
relevant for investment companies.
The Company has complied with the
AIC Code and the relevant provisions of
the UK Code, except as set out below.
The UK Code includes provisions
relating to:
• the role of the chief executive
(provision 14);
• the need for an internal audit function
(provision 25); and
• executive Directors’ remuneration
(provision 33).
The Board considers these provisions
are not relevant to the Company, being
an externally managed investment
company with no employees. The
Company has therefore not reported
further in respect of these provisions,
other than the need for an internal audit
function specific to the Company, which
has been addressed on page 47.
The Board
Composition
At the date of this report the Board
consists of five Non-Executive Directors.
The Chairman is Simon Hogan, and the
Directors are Caroline Cook, Afkenel
Schipstra, Roger Bell and Abigail
Rotheroe. Mrs Cook is the Chairman of
the Audit and Risk Committee and the
Valuation Committee and Mrs Schipstra
is the Chairman of the Management
Engagement Committee, the
Nomination Committee and the
Remuneration Committee. With effect
from 7 April 2022, Mrs Schipstra will
assume the role of Chairman of the
Audit and Risk Committee and the
Valuation Committee, Ms Rotheroe will
assume the role of Chairman of the
Management Engagement Committee,
and the Remuneration Committee and
Mr Hogan will assume the role of
Chairman of the Nomination Committee
when Mrs Cook steps down from the
Board and its Committees. Due to the
size and nature of the Company’s
business, the Board has not deemed
it necessary to appoint a Senior
Independent Director as the role can be
performed by the Board as a whole.
Mr Hogan, Mrs Cook and Mrs Schipstra
were appointed as Non-Executive
Directors 22 May 2021. Mr Bell was
appointed 1 October 2021 and Ms
Rotheroe 8 February 2022.The Board
believes that during the period ended 31
December 2021 its composition was
appropriate for an investment company
of the Company’s nature and size. All of
the Directors are independent of the
Investment Adviser and are able to
allocate sufficient time to the Company
to discharge their responsibilities
effectively. In accordance with the
Co-Investment Agreement between
INEOS Energy and the Company,
Mr Bell will recuse himself from any
decision relating to a transaction by the
Company or any member of the Group
with INEOS Energy or any of its
Associates. The Board has noted the
inference of the provisions in the AIC
Code that Non-Executive Directors who
represent a significant shareholder
should be presumed not to be
independent. However, it is the Board’s
assessment that the provisions in place
to manage actual or potential situational
conflicts of interest are sufficiently robust
and always promote the success of the
Company. The Board has concluded
that Mr Bell continues to demonstrate
independence of character and
judgement. His skills and experience
have added significantly to the strength
of the Board and his continued service is
invaluable to the long-term success of
the Company. The Directors have a
broad range of relevant experience to
meet the Company’s requirements and
their biographies are given on page 34.
In line with the AIC Code and the Articles
of Association, each Director is subject to
election at its first AGM and annual
re-election thereafter by shareholders.
The Board recommends all the
Directors for election except for Caroline
Cook who will be stepping down from
the Board on 7 April 2022.
The Directors have appointment letters
which do not provide for any specific
term. Copies of the Directors’
appointment letters are available on
request from the Company Secretary.
Upon joining the Board, any new
Director will receive an induction and
relevant training is available to Directors
on an ongoing basis.
A policy of insurance against Directors’
and Officers’ liabilities is maintained by
the Company.
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HydrogenOne Capital Growth plc Annual Report 2021
Corporate Governance
The Directors, in the furtherance of their
duties, may take independent
professional advice at the expense of
the Company.
Board Committees
The Board decides upon the
membership and chairmanship of its
committees. Each Committee has
adopted formal terms of reference,
which are reviewed at least annually,
and copies of these are available on the
Company’s website or on request from
the Company Secretary.
Audit and Risk Committee
A report on pages 46 and 47 provides
details of the role and composition of
the Audit and Risk Committee together
with a description of the work of the
Audit and Risk Committee in discharging
its responsibilities.
Remuneration Committee
All of the Directors, except Mr Bell, are
members of this Committee, and Mrs
Schipstra is the Chairman. The
Remuneration Committee has been
established to meet formally on at least
an annual basis to review the
remuneration policy of the Company
and consider the fees of the
Non-Executive Directors. The
Company’s remuneration policy will be
put forward for approval at the AGM and
details of the fees of Non-Executive
Directors is given on pages 44 and 45.
The Directors’ Remuneration
Implementation Report is included
on pages 44 and 45.
Management Engagement
Committee (“MEC”)
All of the Directors, except Mr Bell, are
members of the MEC, and Mrs Schipstra
is the Chairman. The MEC has been
established to conduct a formal annual
review of the AIFM and the Investment
Adviser, assessing investment and other
performance, the level and method of
their remuneration and the continued
appointment of them as AIFM and
Investment Adviser to the Company. The
MEC met and reviewed the AIFM and
Investment Adviser’s performance and
remuneration structure. In conclusion
the Committee’s recommendation to the
Board was that it was in the best
interests of shareholders as a whole to
continue with their engagements and
that the current management fee
structure remained appropriate. (See
page 37 for further details).
The MEC will conduct a detailed service
review of the main service providers to
the Company in 2022 once they have
been operational for at least a year.
Nomination Committee
All of the Directors, except Mr Bell, are
members of this Committee and Mrs
Schipstra is the Chairman. The
Nomination Committee has been
established for the purpose of
identifying and putting forward
candidates for the office of Director of
the Company. The Nomination
Committee considers job specifications
and assesses whether candidates have
the necessary skills and time available to
devote to the job. It also undertakes an
annual performance evaluation of the
Board. Due to the fact the Company
launched in July 2021, a performance
evaluation of the Board, its committees
and the individual Directors has not
taken place. An evaluation requiring the
Directors to complete detailed
questionnaires on the operation of the
Board, its committees and the individual
contribution of Directors as well as the
performance of the Chairman will take
place before the year ending 31
December 2022. The Board succession
plan is reviewed and maintained
through the Nomination Committee to
promote regular refreshment and
diversity, whilst maintaining stability and
continuity of skills and knowledge on
the Board.
While no new appointments were made
during the year, subsequent to the
year-end it was agreed that Ms Abigail
Rotheroe should join the Board. Ms
Rotheroe’s appointment was made
following a review by the Board of its
composition, diversity, efficacy and
length of service.
Having regard to the Company’s Articles
of Association and the Board’s succession
plan, the Board drew up a list of desirable
skills and industry experience for a new
Director. Ms Rotheroe’s appointment was
made following an extensive interview
process where it was determined that
she was the best candidate for the role.
No external search agency was used in
this process.
Valuation Committee
All of the Directors, except Mr Bell, are
members of this Committee, and Mrs
Cook is the Chairman. The Valuation
Committee has been established to
meet formally on at least a quarterly
basis to formulate valuation policies for
investments of the Company, consider
whether independent valuation of the
portfolio is required and approve the
valuations or valuation methodology of
the Private and Listed Hydrogen Assets.
A summary of the valuation of the
Company’s investment portfolio is
given on page 17.
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Board diversity
Appointments are based on merit with
due regard to the benefits of diversity.
The Board considers many factors,
including the balance of skills,
knowledge, experience, gender,
ethnicity, cognitive and personal
strengths when reviewing its
composition and appointing new
Directors. The aim of the policy is to
identify those with the best range of
skills and experience to complement
existing Directors in order to provide
effective oversight of the Company and
constructive support and challenge to
the Investment Adviser. Summary
biographical details of the Directors,
including their relevant experience,
are set out on page 34.
The Board currently comprises five
Non-Executive Directors of which three
are female thereby constituting 60%
female representation and complies
with the Hampton Alexander target of
33% female membership. However,
although the Board has considered the
recommendations of the Davies and
Hampton-Alexander reviews as well as
the Parker review, it does not consider it
appropriate to establish targets or
quotas in these regards. The Company
has no employees.
Tenure policy
It is the Board’s policy that all Directors,
including the Chairman, shall normally
have tenure limited to nine years from
their appointment to the Board, except
that the Board may determine otherwise
if it is considered that the continued
participation on the Board of an
individual Director is in the best interests
of the Company and its shareholders.
This is also subject to the Director’s
re-election annually by shareholders.
The Board considers that this policy
encourages regular refreshment and is
conducive to fostering diversity.
Internal control
The Board is responsible for establishing
the Company’s system of internal
controls and for monitoring their
effectiveness. The system of internal
controls is designed to manage rather
than eliminate the risk of failure to
achieve business objectives. It can
provide only reasonable assurance
against material misstatement or loss.
The Board, through the Audit and Risk
Committee, regularly reviews the
effectiveness of the internal control
systems to identify, evaluate and
manage the Company’s significant risks.
If any significant failings or weaknesses
are identified the Board, and where
required the Investment Adviser, ensure
that necessary action is taken to remedy
the failings. Taking into account the
principal risks and uncertainties section
on pages 30 and 31, during the period,
the Board – through the Audit and Risk
Committee – established the
Company’s risk management
framework and controls. This identified
a detailed number of risks facing the
Company and resulted in enhanced risk
documentation and reporting to the
Board and Audit and Risk Committee.
Following its review, the Board is not
aware of any significant failings or
weaknesses arising in the period
under review.
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HydrogenOne Capital Growth plc Annual Report 2021
Meeting attendance
Management
Audit and Risk Remuneration Engagement Nomination Valuation
Board Committee Committee Committee Committee Committee
Number of meetings held 1 1 1 1 1 –
Simon Hogan 1 1 1 1 1 –
Caroline Cook 1 1 1 1 1 –
Afkenel Schipstra 1 1 1 1 1 –
Roger Bell
1
1 1 1 1 1 –
1. Mr Bell is not a member of the committees of the Board but attends by invitation.
In addition, a number of ad hoc Board and committee meetings were held to deal with administrative matters and the formal
approval of documents.
Corporate Governance
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The Board believes that the existing
arrangements, including those set out
below, represent an appropriate
framework to meet the internal control
requirements. By these procedures the
Directors have kept under review the
effectiveness of the internal control
system throughout the period and up
to the date of this report.
Financial aspects of
internal control
These are detailed in the Report of the
Audit and Risk Committee.
Other aspects of internal control
The Board holds at least four regular
meetings each year, plus additional
meetings as required. Between these
meetings there is regular contact with
the Investment Adviser and the
Company’s Administrator and
Company Secretary.
The Administrator, Sanne Fund Services
(UK) Limited, reports separately in
writing to the Board concerning risks
and internal control matters within its
remit, including internal financial control
procedures and company secretarial
matters. Additional ad hoc reports are
received as required and Directors have
access at all times to the advice and
services of the Company Secretary,
which is responsible to the Board for
ensuring that Board procedures are
followed and that applicable rules and
regulations are complied with.
The contact with the Investment Adviser,
the AIFM and the Administrator enable
the Board to monitor the Company’s
progress towards its objectives and
encompass an analysis of the risks
involved. The effectiveness of the
Company’s risk management and internal
controls systems is monitored regularly
and a formal review, utilising a detailed
risk assessment programme, takes place
at least annually. This includes review of
the internal controls reports of the
Administrator, the AIFM and the Registrar.
Principal risks
The Directors confirm that they have
carried out a robust assessment of the
Company’s emerging and principal risks,
including those that would threaten its
business model, future performance,
solvency or liquidity. The principal risks
and how they are being managed are
set out in the Strategic Report on
pages 30 and 31.
Directors’ Remuneration Policy
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HydrogenOne Capital Growth plc Annual Report 2021
The remuneration policy (the “Policy”)
must be put forward for shareholder
approval at its first AGM and thereafter at
a maximum interval of three years.
Accordingly, the Policy of the Company
will be put forward for approval by
shareholders at the forthcoming AGM to
be held on 24 May 2022 and will
continue in force until the Annual
General Meeting to be held in May 2025.
The provisions set out in the Policy apply
until they are next submitted for
shareholder approval. In the event of any
proposed material variation to the Policy,
shareholder approval will be sought for
the proposed new policy prior to its
implementation. The Policy sets out the
principles the Company follows in
remunerating Directors and the result of
the shareholder vote on the Policy is
binding on the Company. The
Remuneration Committee will take
account of any views expressed by
shareholders in formulating this policy.
All the Directors are Non-Executive
Directors and the Company has no
other employees.
Service contracts
The Directors do not have service
contracts with the Company. The
Directors have appointment letters and,
following initial election by shareholders,
are subject to annual re-election.
Fees
Directors’ fees are determined by the
Board according to their duties and
responsibilities and by reference to the
time commitment required by each
Director to carry out their roles
effectively. In setting fees, the Board also
has regard to the need to recruit and
retain Directors with appropriate
knowledge and experience, the fees
paid to Directors of the Company’s peers
and industry practice. Directors’ fees are
also subject to the aggregate annual
limit set out in the Company’s Articles of
Association (the “Articles”), which is
currently £300,000. The aggregate
limit of Directors’ fees in the Articles can
only be amended by an ordinary
resolution put to shareholders at a
general meeting.
Directors are not eligible for bonuses,
pension benefits, share benefits, share
options, long-term incentive schemes
or other benefits.
Directors’ fees are paid at fixed annual
rates and do not have any variable
elements. Directors are also entitled to
be reimbursed for all reasonable
out-of-pocket expenses incurred in
performance of their duties. These
expenses are unlikely to be of a
significant amount.
Fees are payable from the date of
appointment as a Director of the
Company and cease on the date of
termination of appointment. Any new
Directors will be paid at the same rate
as existing Directors. Directors are not
entitled to compensation for loss of
office, and there is no notice period
upon early termination of appointment.
No incentive fees will be paid to any
person to encourage them to become a
Director of the Company. The Company
may, however, pay fees to external
agencies to assist the Board in the
search and selection of Directors or in
reviewing remuneration. Where a
consultant is appointed, the consultant
shall be identified in the Annual Report
alongside a statement about any other
connection it has with the Company or
individual Directors. No consultants
were appointed during the period.
Independent judgement will be
exercised when evaluating the advice
of external third parties.
Statement of consideration
of conditions elsewhere
in the Company
As stated above, the Company has no
employees. Therefore, the process of
consulting with employees on the
setting of the Remuneration Policy is
not applicable.
Review of the Policy
This Policy will be reviewed on an annual
basis by the Remuneration Committee
and any changes approved by the
Board. As part of the review, the
Remuneration Committee will consider
whether the Policy supports the
long-term success of the Company and
takes into consideration all relevant
regulatory requirements. Any material
change to the Policy must be approved
by shareholders.
Effective date
The Policy is effective from the date of
approval by shareholders.
Current and future policy
Component Director Purpose of reward Operation
Annual fee Chairman of the Board For services as Determined by the Board
Chairman of a plc
Annual fee Other Directors For services as Non-Executive Determined by the Board
Directors of a plc
Additional fee Chairman of the For additional responsibility Determined by the Board
Audit Committee and time commitment
Expenses All Directors Reimbursement of expenses Submission of appropriate
incurred in the performance supporting documentation
of duties
Directors’ Remuneration
Implementation Report
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HydrogenOne Capital Growth plc Annual Report 2021
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This Directors’ Remuneration
Implementation Report (“the Report”)
has been prepared in accordance
with Schedule 8 of the Large and
Medium-sized Companies and Groups
(Accounts and Reports) (Amendment)
Regulation 2013. An ordinary resolution
for the approval of this Report will be put
forward at the forthcoming AGM.
The Report is put forward for approval
by shareholders on an annual basis.
The result of the shareholder resolution
on the Report is non-binding on the
Company, although it gives
shareholders an opportunity to express
their views, which will be taken into
account by the Board and the
Remuneration Committee.
The law requires the Company’s auditor
to audit certain of the disclosures
provided. Where disclosures are audited
they are indicated as such. The auditor’s
opinion is shown on pages 49 to 54.
Remuneration Committee
The Company currently has five
Non-Executive Directors.
In accordance with clause 5 of the
Relationship and Co-Investment
Agreement, INEOS Energy is entitled to
nominate one Non-Executive Director
for appointment to the Board. Roger Bell
has been nominated for this purpose,
and as set out in his appointment letter,
is not remunerated for his role as a
Non-Executive Director.
The current annual fees of the Directors
are as follows:
Name Role Fee
Simon Hogan Chairman £65,000
Caroline Cook Audit Chair £55,000
Afkenel Schipstra* Director £45,000
Abigail Rotheroe Director £45,000
Roger Bell Director –
*Upon Mrs Cook’s retirement from the Board on
7 April 2022, Mrs Schipstra will become Audit
Chair with an annual fee of £55,000.
The Remuneration Committee
believes that the level of fees
appropriately reflects prevailing market
rates for an investment trust of the
Company’s complexity and size, the
increasing complexity of regulation
and resultant time spent by the
Directors on matters, and will also
enable the Company to attract
appropriately experienced additional
Directors in the future.
The Remuneration Committee
comprises the whole Board.
Further detail on the duties of the
Remuneration Committee can be
found in the Corporate Governance
statement on page 40.
The maximum level of fees payable,
in aggregate, to the Directors of the
Company is currently £300,000 per
annum as set out in the Company’s
Articles of Association.
Directors’ appointment letters
and shareholding rights
The Directors have appointment letters
which do not provide for any specific
term. The Directors are not entitled to
compensation on loss of office. There
are no restrictions on transfers of the
Company’s Ordinary Shares held by
the Directors or any special rights
attached to such shares.
Performance
The following chart shows the
performance of the Company’s share
price by comparison to the Solactive
Hydrogen Economy Index on a total
return basis. The Company does not have
a specific benchmark but has deemed
the Solactive Hydrogen Economy Index
to be the most appropriate as at least
60% of the companies included in the
index generate 100% of their revenue
from clean Hydrogen.
Directors’ emoluments for
the period (Audited)
The Directors who served during the
period
1
received the following
remuneration for qualifying services.
2021
Taxable
Fees benefits Total
£ £ £
Simon Hogan 39,917 – 39,917
Caroline Cook 33,776 – 33,776
Afkenel
Schipstra 27,634 – 27,634
Roger Bell
2
– – –
Total 101,327 – 101,327
1. Abigail Rotheroe was appointed as a
Non-Executive Director on 8 February 2022.
2. Appointed as a Non-Executive Director on
1 October 2021 and is not remunerated for
his services.
130
120
110
100
90
80
70
60
HGEN Share Price
30/7/21 30/8/21 30/9/21 31/10/21 30/11/21 31/12/21
HGEN NAV SOLGHYD Index
Total return performance
HGEN Share Price vs NAV from date of listing to 31 December 2021
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Other information
HydrogenOne Capital Growth plc Annual Report 2021
There are no other taxable benefits
payable by the Company other than
certain expenses which may be
deemed to be taxable such as travel
expenses. None of the above fees were
paid to third parties.
The following table sets out the total level
of Directors’ remuneration compared to
the distributions to shareholders by way
of dividends and share buybacks, and
the management fees and other
expenses incurred by the Company.
2021
£’000
Spend on Directors’ fees 101,326
Management fees and
other expenses 807,000
Dividends paid
to shareholders 0
The disclosure of the information in the
table above is required under The Large
and Medium-sized Companies and
Groups (Accounts and Reports)
(Amendment) Regulations 2013 with the
exception of management fees and
other expenses which have been
included to show the total operating
expenses of the Company.
Directors’ holdings (Audited)
At 31 December 2021 and at the date
of this report the Directors had the
following holdings in the Company.
All holdings were beneficially owned.
Ordinary Ordinary
Shares at Shares at
31 Dec 31 Mar
2021 2022
Simon Hogan 40,000 40,000
Caroline Cook 20,100 20,100
Afkenel Schipstra 10,100 10,100
Roger Bell – –
Abigail Rotheroe
1
– –
1. Abigail Rotheroe was appointed as a
Non-Executive Director on 8 February 2022.
Statement
On behalf of the Board and in
accordance with Part 2 of Schedule 8
of the Large and Medium-sized
Companies and Groups (Accounts and
Reports) (Amendment) Regulations
2013, I confirm that the above
Remuneration Report and
Remuneration Policy summarises,
as applicable, for the period to
31 December 2021:
(a) the major decisions on Directors’
remuneration;
(b) any substantial changes relating
to Directors’ remuneration made
during the period; and
(c) the context in which the changes
occurred and decisions have
been taken.
Afkenel Schipstra
Chairman of the
Remuneration Committee
31 March 2022
Report of the Audit and Risk Committee
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As Chairman of the Audit and Risk Committee (the “Committee”), I am pleased to present
the Committee’s report to shareholders for the period ended 31 December 2021.
The Audit and Risk Committee
Composition
All of the Directors, except Roger Bell,
are members of the Committee. In
accordance with the UK Code, the
Chairman of the Board should not be a
member. However, the AIC Code
permits the Chairman of the Board to be
a member of, but not chair the
Committee if they were independent on
appointment – which the Chairman was
and continues to be. In view of the size
of the Board, the Directors feel it is
appropriate for him to continue as a
member, so that the Committee can
continue to benefit from his experience
and knowledge. As noted earlier in the
Annual Report, I will be stepping down
from the Audit and Risk Committee and
the Board on 7 April 2022 and Afkenel
Schipstra will succeed me as Chairman
of this Committee.
The members of the Committee
consider that they have the requisite
skills and experience to fulfil the
responsibilities of the Committee. The
Committee considers that at least one of
its members has recent and relevant
financial experience and competence
relevant to the sector in which the
Company operates.
Role and responsibilities
The main role and responsibilities of
the Committee are set out in the
Committee’s terms of reference. The
terms are updated annually and are
available on the Company’s website or
on request from the Company Secretary.
The Committee meets formally at least
twice a year for the purpose, amongst
other things, of advising the Board on
the appointment, effectiveness,
independence, objectivity and
remuneration of the external auditor. The
Committee monitors the integrity of the
Financial Statements of the Company
and any formal announcements relating
to the Company’s financial performance,
reviewing significant financial reporting
judgements contained in them. The
Committee also reviews the Company’s
risk management, internal financial
controls and internal control systems
and reviews the Investment Adviser’s
whistleblowing arrangements. The
provision of non-audit services by the
auditor are reviewed against the
Committee’s policy described below.
Meetings
There was one Committee meeting
during the period ended 31 December
2021. In addition, the Committee met
the auditor, without any other party
present, for a private discussion and the
Chairman of the Committee met with
the auditor prior to the Audit Committee
meeting in March 2022.
Financial statements and
significant accounting matters
The Committee reviewed the financial
statements and considered the
following significant accounting matters
in relation to the Company’s financial
statements for the period ended
31 December 2021.
Valuation of Private Hydrogen
Assets investments
The Company’s investment through the
Limited Partnership at 31 December
2021 was £60,597,000 representing a
substantial portion of the Company’s net
assets and as such is the biggest factor
in relation to the accuracy of the
Financial Statements. The valuation of
the Company’s Private Hydrogen Assets
held through the Limited Partnership is
the most material matter in the
production of the financial statements.
The Board has appointed a Valuation
Committee which sets out the valuation
policies and process. The Committee
met once in February 2022 to review
the valuations as at 31 December 2021.
The process includes considering and
approving valuations or valuation
methodology made by the Investment
Adviser and provided to the AIFM, using
fair market valuations of the Listed
and Private Hydrogen Assets on a
quarterly basis as at 31 March, 30 June,
30 September and 31 December
each year. The valuation principles
used to calculate the fair value of the
Private Hydrogen Assets are based
on IPEV Guidelines.
For Private Hydrogen Assets, as the
Company typically invests in early stage,
pre or early revenue investments, a
number of valuation methodologies in
line with IPEV Guidelines have been
considered and/or employed to value
the investments including Price of
Recent Investment and Discounted
Cash Flow. The Valuation Committee
reviewed and approved the
appropriateness of the valuation
methodology employed and the
assumptions and made in the
calculation of the fair value of each of
the Private Hydrogen Assets. Details of
the valuation methodology and
assumptions used for each of the
Private Hydrogen Assets are given in
note 3 to the Financial Statements.
The Audit and Risk Committee
reviewed, along with the Valuation
Committee, the procedures in place for
ensuring the appropriate valuation of
investments and approved the valuation
of the Company’s Private Hydrogen
Assets at the period end with the
Investment Adviser and AIFM.
Emerging risks
The Committee considered the risks from
the COVID-19 pandemic and the Russian
invasion of Ukraine on the Company’s
ability to continue in operation due to the
impact on the Company’s portfolio, and
on the operational resilience of the
Company’s key service providers, and
concluded that the pandemic or invasion
had not resulted in any significant issue
to the financial statements.
As part of the annual report review,
the Committee:
• obtained assurances from the
Investment Adviser and the
Administrator that the financial
statements had been prepared
appropriately;
• reviewed the consistency of, and any
changes to, accounting policies;
• reviewed the tax compliance of the
Company during the period with the
eligibility conditions and ongoing
requirements in order for investment
trust status to be maintained;
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HydrogenOne Capital Growth plc Annual Report 2021
• reviewed the Company’s financial
resources and concluded that it is
appropriate for the Company’s
financial statements to be prepared
on a going concern basis as
described in the Directors’ Report
on page 38;
• considered the risk to the Company
and market volatility from the Russian
invasion of Ukraine. The Board and
the Investment Adviser have reviewed
the investment portfolio and have
identified limited direct impact on
the portfolio but continue to monitor
any impact to the Company, the
Group, its investee companies
and overall valuations; and
• concluded that the Annual Report for
the period ended 31 December 2021,
taken as a whole, is fair, balanced and
understandable and provides the
information necessary for
shareholders to assess the Company’s
position and performance, business
model and strategy. The Committee
reached this conclusion through a
process of review of the document
and enquiries to the various parties
involved in the production of the
Annual Report, and the external
auditor’s report thereon.
The Committee reported the results of
this work, including its assessment that
the Annual Report is fair, balanced and
understandable, to the Board.
External auditor
KPMG Channel Islands Limited (“KPMG”)
were selected as the Company’s auditor
at the Company’s launch following a
competitive process and review of the
auditor’s credentials. The current audit
Director, David Alexander, has held the
role since that date. The auditor was
formally appointed on 15 June 2021.
The appointment of the auditor is
reviewed annually by the Audit and Risk
Committee and the Board and is subject
to approval by Shareholders. In
accordance with the FRC guidance, the
audit will be put out to tender within ten
years of the initial appointment of KPMG.
Additionally, the audit Director must be
rotated every five years and is next
eligible for rotation in 2026.
Effectiveness of audit
The Committee reviewed the audit
planning and the standing, skills and
experience of the firm and the audit
team. The Committee also considered
the independence of KPMG and the
objectivity of the audit process. KPMG
has confirmed that it is independent of
the Company and has complied with
relevant auditing standards. No
modifications were required to the
external audit approach. The Audit Plan
was presented to the Audit and Risk
Committee at its November 2021
Committee meeting, ahead of the
commencement of the Company’s
period end audit. The Audit Plan set out
the audit process, materiality scope and
significant risks. A presentation of the
results of the audit following completion
of the main audit testing was provided at
the March 2022 meeting. Additionally,
the Committee received feedback from
the Investment Adviser and Administrator
regarding the effectiveness of the
external audit process.
The Committee is satisfied that KPMG
has provided effective independent
challenge in carrying out its
responsibilities. After due consideration,
the Committee recommended the
re-appointment of KPMG and a
resolution will be put forward to the
Company’s shareholders at the
2022 AGM.
Provision of non-audit services
The Committee has put in place a policy
on the supply of any non-audit services
provided by the external auditor. During
the period, the Company’s policy was
reviewed and aligned with the FRC’s
Revised Ethical Standard 2019.
Non-audit services are considered on a
case-by-case basis and may only be
provided to the Company if such
services meet the requirements of the
Standard, including: at a reasonable and
competitive cost; do not constitute a
conflict of interest for the auditor; and
all non-audit services must be
approved in advance.
KPMG LLP UK provided reporting
accountant services in respect of the
Company’s Initial Public Offering (“IPO”).
The reporting accounting services are
considered a non-recurring service and
KPMG LLP UK are a separate team
independent of the audit team and the
audit team place no reliance on the
output of the reporting accountant
services provided.
The Audit and Risk Committee does not
believe that the provision of these
services affect the independence of
KPMG. The auditor has provided
assurance that they complied with the
relevant UK professional and regulatory
requirements. Details of the fees paid
in respect of reporting accountant
services in the period to 31 December
2021 are given in note 6 to the
Financial Statements.
Internal audit
The Audit and Risk Committee has
considered the need for an internal audit
function and considers that this is not
appropriate given the nature and
circumstances of the Company as an
externally managed investment
company with external service providers.
The Audit and Risk Committee keeps
the needs for an internal audit function
under periodic review.
Caroline Cook
Audit and Risk Committee Chairman
31 March 2022
Statement of Directors’ Responsibilities
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HydrogenOne Capital Growth plc Annual Report 2021
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The Directors are responsible for
preparing the Annual Report and the
Group and Parent Company Financial
Statements in accordance with
applicable laws and regulations.
Company law requires the Directors to
prepare Group and Parent Company
financial statements for each financial
year. Under that law the Directors they are
required to prepare the Group Financial
Statements in accordance with
UK-adopted international accounting
standards and applicable law and have
elected to prepare the parent Company
financial statements on the same basis.
Under company law the Directors must
not approve the Financial Statements
unless they are satisfied that they give a
true and fair view of the state of affairs of
the Group and Parent Company and of
the Group’s profit or loss for that period.
In preparing each of the Group and
Parent Company Financial Statements,
the Directors are required to:
• select suitable accounting policies
and then apply them consistently;
• make judgements and estimates
which are reasonable relevant
and reliable;
• state whether they have been
prepared in accordance with
UK-adopted international
accounting standards;
• assess the Group and Parent
Company’s ability to continue as
a going concern, disclosing, as
applicable, matters related to
going concern; and
• use the going concern basis of
accounting unless they either intend
to liquidate the Group or the Parent
Company or to cease operations,
or have no realistic alternative but
to do so.
The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Company’s transactions and which
disclose with reasonable accuracy at
any time the financial position of the
Company and enable them to ensure
that its financial statements comply
with the Companies Act 2006.
They are responsible for such internal
control as they determine is necessary
to enable the preparation of financial
statements that are free from material
misstatement, whether due to
fraud or error, and have general
responsibility for taking such steps
as are reasonably open to them to
safeguard the assets of the Group
and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations,
the Directors are also responsible for
preparing a Strategic Report, Directors’
Report, Directors’ Remuneration
Report and Corporate Governance
Statement that complies with that
law and those regulations.
The Directors are responsible for
the maintenance and integrity of
the corporate and financial
information included on the
company’s website. Legislation in
the UK governing the preparation
and dissemination of financial
statements may differ from
legislation in other jurisdictions.
Responsibility statement of
the Directors in respect of
the annual report
The Directors each confirm to the best
of their knowledge that:
• the Financial Statements, prepared in
accordance with the applicable set of
accounting standards, give a true and
fair view of the assets, liabilities,
financial position and profit or loss of
the Company and the undertakings
included in the consolidation taken
as a whole; and
• the Strategic Report includes a fair
review of the development and
performance of the business and
the position of the issuer and the
undertakings included in the
consolidation taken as a whole,
together with a description of the
principal risks and uncertainties
that they face.
The Directors consider the annual report
and accounts, taken as a whole, is fair,
balanced and understandable and
provides the information necessary for
shareholders to assess the Group’s
position and performance, business
model and strategy.
For and on behalf of the Board
Simon Hogan
Chairman
31 March 2022
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HydrogenOne Capital Growth plc Annual Report 2021
Independent auditor’s report
to the members of HydrogenOne Capital Growth plc (the “Company”)
Our opinion is unmodified
We have audited the parent and consolidated financial statements of HydrogenOne Capital Growth plc (the “Company” or “Parent”)
and its subsidiary (together, the “Group”), which comprise the parent and consolidated statement of financial position as at
31 December 2021, the parent and consolidated statements of comprehensive income, changes in equity and cash flows for the
period from 16 April 2021 (date of incorporation) to 31 December 2021, and notes, comprising significant accounting policies and
other explanatory information.
In our opinion, the accompanying parent and consolidated financial statements:
• give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2021 and of the Group’s and
of the Company’s loss for the period from 16 April 2021 (date of incorporation) to 31 December 2021;
• are properly prepared in accordance with UK-adopted international accounting standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our report to the Audit and Risk Committee.
We were first appointed as auditor by the Directors on 15 June 2021. The period of total uninterrupted engagement is for the
financial period ended 31 December 2021. We have fulfilled our ethical responsibilities under, and we remain independent of the
Company and Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to public interest
entities. No non-audit services prohibited by that standard were provided.
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the parent and
consolidated financial statements and include the most significant assessed risks of material misstatement (whether or not due to
fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. We summarise below the key audit matters, in arriving at our audit opinion
above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from
those procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and
solely for the purpose of, our audit of the parent and consolidated financial statements as a whole, and in forming our opinion
thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.
Independent auditor’s report
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Key audit matter The risk Our response
Valuation of Private
Hydrogen Assets held
through HydrogenOne
Capital Growth
Investments (1) LP (the
“Limited Partnership”)
£39,231,000
Refer to the Report of the Audit
and Risk Committee (page 46),
note 3 (significant accounting
policies), note 4(c) (investments
held at fair value through profit
or loss) and note 14 (financial
instruments and capital
disclosures).
Basis:
The Group and Company’s investment in the
Limited Partnership is carried at fair value through
profit or loss and represents a significant
proportion of the Group and Company’s net assets.
The fair value of the Limited Partnership has been
determined as its net asset value, the most
significant component of which is its underlying
portfolio of non-controlling positions in unquoted
hydrogen assets valued at £39,231,000 (“Private
Hydrogen Assets”).
As Private Hydrogen Assets are unquoted and
illiquid, their fair values are determined through
the application of valuation techniques. The
application of valuation techniques requires the
exercise of judgement in relation to the selection
of the valuation technique employed and the
assumptions and data used in their application.
For the period ended 31 December 2021, Private
Hydrogen Assets are valued, in accordance with
the International Private Equity and Venture Capital
Valuation 2018 (“IPEV”) Guidelines, using the
approach laid out in the valuation of Limited
Partnership policy on pages 65 and 66.
Risk:
The valuation of Private Hydrogen Assets may not
be representative of their fair value due to the
nature of the transaction and/ or changes in the
market or their performance since the date of the
transaction. The calibration of this valuation against
an income approach may not provide a reasonable
fair value comparison due to the application of
unreasonable inputs and assumptions.
Further, the judgements inherent in the valuation
approach may expose the valuation of Private
Hydrogen Assets to management bias.
Therefore, there is a risk of material misstatement
through error as well as a potential for fraud
through possible management bias.
Our audit procedures included:
Control evaluation
We tested the design and implementation of the
Valuation Committee’s review control in relation to
the valuation of Private Hydrogen Assets.
Challenging management’s valuation approach
For each of the Private Hydrogen Assets, with the
support of our KPMG valuation specialist, we:
• held discussions with the Investment Adviser to
understand the valuation approach; and
• assessed and challenged the reasonableness
of the valuation approach and methodology
applied.
Assessing fair value
For each of the Private Hydrogen Assets, we:
• corroborated the acquisition price used in
the valuation to supporting acquisition
documents; and
• with the support of our KPMG valuation
specialist, challenged whether the approach
and application of the methodology
represented fair value.
Income approach model integrity,
inputs and assumptions
For each of the Private Hydrogen Assets, we:
• tested the model for mathematical accuracy
including but not limited to material
formula errors;
• corroborated material inputs used in the model
to supporting documentation; and
• with the support of our KPMG valuation
specialist, benchmarked the discount rate and
key macro-economic assumptions applied in
the model to observable market data and our
KPMG valuation specialist’s experience in
valuing similar investments.
Assessing disclosures
We considered the appropriateness of the Group
and Company’s investment valuation policies and
the adequacy of the Group and Company’s
disclosures in relation to the use of estimates and
judgements in arriving at fair value.
We assessed whether the disclosures around the
sensitivities to changes in key assumptions reflect
the risks inherent in the valuation of the Private
Hydrogen Assets.
Our results
As a result of our procedures, we found the
valuation of Private Hydrogen Assets and related
disclosures to be acceptable.
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Our application of materiality and an overview of the scope of our audit
Materiality for the parent and consolidated financial statements as a whole was set at £2,055,000, determined with reference to a
benchmark of net assets of £102,786,000, of which it represents approximately 2%.
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in
individual account balances add up to a material amount across the parent and consolidated financial statements as a whole.
Performance materiality for the Group and Company was set at 75% of materiality for the parent and consolidated financial
statements as a whole, which equates to £1,541,000. We applied this percentage in our determination of performance materiality
because we did not identify any factors indicating an elevated level of risk.
We reported to the Audit and Risk Committee any corrected or uncorrected identified misstatements exceeding £102,000, in
addition to other identified misstatements that warranted reporting on qualitative grounds.
Our audit of the Group and Company was undertaken to the materiality level specified above, which has informed our identification
of significant risks of material misstatement and the associated audit procedures performed in those areas as detailed above.
Going concern
The Directors have prepared the parent and consolidated financial statements on the going concern basis as they do not intend to
liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group and the Company’s
financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast
significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the parent and
consolidated financial statements (the “going concern period”).
In our evaluation of the Directors’ conclusions, we considered the inherent risks to the Group and the Company’s business model
and analysed how those risks might affect the Group and the Company’s financial resources or ability to continue operations over
the going concern period. The risk that we considered most likely to affect the Group and the Company’s financial resources or
ability to continue operations over this period was availability of capital to meet operating costs and other financial commitments.
We considered whether this risk could plausibly affect the liquidity in the going concern period by comparing severe, but plausible
downside scenarios that could arise from this risk against the level of available financial resources indicated by the Company’s
financial forecasts.
We considered whether the going concern disclosure in note 2 to the financial statements gives a full and accurate description of
the Directors’ assessment of going concern.
Our conclusions based on this work:
• we consider that the Directors’ use of the going concern basis of accounting in the preparation of the parent and consolidated
financial statements is appropriate;
• we have not identified, and concur with the Directors’ assessment that there is not, a material uncertainty related to events or
conditions that, individually or collectively, may cast significant doubt on the Group and the Company’s ability to continue as
a going concern for the going concern period;
• we have nothing material to add or draw attention to in relation to the Directors’ statement in the notes to the parent and
consolidated financial statements on the use of the going concern basis of accounting with no material uncertainties that may
cast significant doubt over the Group and the Company’s use of that basis for the going concern period, and that statement is
materially consistent with the parent and consolidated financial statements and our audit knowledge, and
• the related statement under the Listing Rules set out on page 38 is materially consistent with the parent and consolidated
financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that
the Group and the Company will continue in operation.
Strategic Report Governance
Financial statements
Other information
Independent auditor’s report
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Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
• enquiring of management as to the Group’s policies and procedures to prevent and detect fraud as well as enquiring whether
management have knowledge of any actual, suspected or alleged fraud;
• reading minutes of meetings of those charged with governance; and
• using analytical procedures to identify any unusual or unexpected relationships.
As required by auditing standards, and taking into account possible incentives or pressures to misstate performance and our overall
knowledge of the control environment, we perform procedures to address the risk of management override of controls, in particular
the risk that management may be in a position to make inappropriate accounting entries, and the risk of bias in accounting
estimates such as valuation of Private Hydrogen Assets. On this audit we do not believe there is a fraud risk related to revenue
recognition because the Group’s and Company’s revenue streams are simple in nature with respect to accounting policy choice,
and are easily verifiable to external data sources or agreements with little or no requirement for estimation from management.
We did not identify any additional fraud risks.
We performed procedures including:
• identifying journal entries and other adjustments to test based on risk criteria and comparing any identified entries to supporting
documentation;
• incorporating an element of unpredictability in our audit procedures; and
• assessing significant accounting estimates for bias.
Further detail in respect of valuation of Private Hydrogen Assets is set out in the key audit matter section of in this report.
Identifying and responding to risks of material misstatement due to non-compliance
with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the parent and
consolidated financial statements from our sector experience and through discussion with management (as required by auditing
standards), and from inspection of the Group’s regulatory and legal correspondence, if any, and discussed with management the
policies and procedures regarding compliance with laws and regulations. As the Group is regulated, our assessment of risks involved
gaining an understanding of the control environment including the entity’s procedures for complying with regulatory requirements.
The Group is subject to laws and regulations that directly affect the parent and consolidated financial statements including financial
reporting legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of
our procedures on the related financial statement items.
The Group is subject to other laws and regulations where the consequences of non-compliance could have a material effect on
amounts or disclosures in the parent and consolidated financial statements, for instance through the imposition of fines or litigation
or impacts on the Group and the Company’s ability to operate. We identified financial services regulation as being the area most
likely to have such an effect, recognising the regulated nature of the Group’s activities and its legal form. Auditing standards limit the
required audit procedures to identify non-compliance with these laws and regulations to enquiry of management and inspection of
regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the parent and consolidated financial statements, even though we have properly planned and performed our
audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from
the events and transactions reflected in the parent and consolidated financial statements, the less likely the inherently limited
procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance
with all laws and regulations.
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HydrogenOne Capital Growth plc Annual Report 2021
Other information
The Directors are responsible for the other information, which comprises the strategic report, the Directors’ report and the other
information included in the annual report, but does not include the parent and consolidated financial statements and our auditor’s
report thereon. Our opinion on the parent and consolidated financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our parent and consolidated financial
statements audit work, the information therein is materially misstated or inconsistent with the parent and consolidated financial
statements or our audit knowledge. Based solely on that work:
• we have not identified material misstatements in the other information;
• in our opinion the information given in the strategic report and the Directors’ report for the financial period is consistent with the
parent and consolidated financial statements; and
• in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer term viability
We are required to perform procedures to identify whether there is a material inconsistency between the Directors’ disclosures in
respect of emerging and principal risks and the viability statement, and the parent and consolidated financial statements and our
audit knowledge. We have nothing material to add or draw attention to in relation to:
• the Directors’ confirmation within the Viability Statement (page 32) that they have carried out a robust assessment of the
emerging and principal risks facing the Group, including those that would threaten its business model, future performance,
solvency or liquidity;
• the emerging and principal risks disclosures describing these risks and explaining how they are being managed or mitigated;
• the Directors’ explanation in the Viability Statement (page 32) as to how they have assessed the prospects of the Group, over what
period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement, set out on page 32 under the Listing Rules. Based on the above procedures,
we have concluded that the above disclosures are materially consistent with the parent and consolidated financial statements and
our audit knowledge.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material inconsistency between the Directors’ corporate
governance disclosures and the parent and consolidated financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is materially consistent with the parent and consolidated
financial statements and our audit knowledge:
• the Directors’ statement that they consider that the annual report and parent and consolidated financial statements taken as a
whole is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Group’s and
the Company’s position and performance, business model and strategy;
• the section of the annual report describing the work of the Audit and Risk Committee, including the significant issues that the
Audit and Risk Committee considered in relation to the financial statements, and how these issues were addressed; and
• the section of the annual report that describes the review of the effectiveness of the Group’s and the Company’s risk
management and internal control systems.
We are required to review the part of Corporate Governance Statement relating to the Group’s and the Company’s compliance
with the provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report
in this respect.
Strategic Report Governance
Financial statements
Other information
Independent auditor’s report
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We have nothing to report on other matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 48, the Directors are responsible for: the preparation of the parent and
consolidated financial statements including being satisfied that they give a true and fair view; such internal control as they determine
is necessary to enable the preparation of parent and consolidated financial statements that are free from material misstatement,
whether due to fraud or error; assessing the Group and Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group
or the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the parent and consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance
is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the parent and
consolidated financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The purpose of this report and restrictions on its use by persons other than the
Company’s members as a body
This report is made solely to the Company’s members, as a body, in accordance with chapter 3 of part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and its members, as a body, for our audit work, for this report, or for the opinions
we have formed.
David Alexander (Senior Statutory Auditor)
For and on behalf of KPMG Channel Islands Limited (Statutory Auditor)
Chartered Accountants
Guernsey
31 March 2022
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Strategic Report Governance
Financial statements
Other information
Financial
statements
56 Parent and consolidated statement of comprehensive income
57 Parent and consolidated statement of financial position
58 Parent and consolidated statement of changes in equity
59 Parent and consolidated statement of cash flows
60 Notes to the parent and consolidated financial statements
Parent and consolidated
statement of comprehensive income
For the period from incorporation on 16 April 2021 to 31 December 2021
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Period ended 31 December 2021
Revenue Capital Total
Note £’000 £’000 £’000
Losses on investments 4 – (1,608 ) (1,608 )
Gains on currency movements – 1 1
Gross investment losses – (1,607 ) (1,607 )
Income – – –
Total loss – (1,607 ) (1,607 )
Investment Adviser fee 5 (265 ) – (265 )
Other expenses 6 (540 ) (5 ) (545 )
Loss before finance costs and taxation (805 ) (1,612 ) (2,417 )
Finance costs – – –
Operating loss before taxation (805 ) (1,612 ) (2,417 )
Taxation 7 – – –
Loss for the period (805 ) (1,612 ) (2,417 )
Return per Ordinary Share (basic and diluted) 11 (1.26 )p (2.52 )p (3.78 )p
There is no other comprehensive income and therefore the ‘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 following notes on pages 60 to 81 form an integral part of these Financial Statements.
Parent and consolidated
statement of financial position
At 31 December 2021
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Strategic Report
Governance
Financial statements Other information
31 December
2021
Note £’000
Assets
Non-current assets
Investments held at fair value through profit or loss 4 68,830
Current assets
Cash and cash equivalents 34,019
Trade and other receivables 8 183
Total current assets 34,202
Total assets 103,032
Current liabilities
Trade and other payables 9 (246 )
Total liabilities (246 )
Net assets 102,786
Equity
Share capital 10 1,07 4
Share premium account 104,129
Capital reserve (1,612 )
Revenue reserve (805 )
Total equity 102,786
Net asset value per Ordinary Share 12 95.75 p
Approved by the Board of Directors on and authorised for issue on 31 March 2022 and signed on their behalf by:
Simon Hogan
Director
HydrogenOne Capital Growth plc is incorporated in England and Wales with registration number 13340859.
The following notes pages 60 to 81 form an integral part of these Financial Statements.
Parent and consolidated
statement of changes in equity
For the period from incorporation on 16 April 2021 to 31 December 2021
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Share
Share premium Capital Revenue
Capital account reserve reserve Total
Notes £’000 £’000 £’000 £’000 £’000
Opening balance as at 16 April 2021 – – – – –
Issue of Ordinary Shares 10 1,07 4 106,276 – – 107 ,350
Ordinary Share issue costs – (2,147 ) – – (2,147 )
Loss for the period – – (1,612 ) (805 ) (2,417 )
Closing balance as at 31 December 2021 1,07 4 104,129 (1,612 ) (805 ) 102,786
The following notes pages 60 to 81 form an integral part of these Financial Statements.
Parent and consolidated
statement of cash flows
For the period from incorporation on 16 April 2021 to 31 December 2021
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Strategic Report
Governance
Financial statements Other information
Period ended
31 December
2021
£’000
Cash flows from operating activities
Management expenses (810 )
Foreign exchange gains 1
Increase in trade and other receivables (183 )
Increase in trade and other payables 246
Net cash flow used in operating activities (7 46 )
Cash flows from investing activities
Purchase of investments (70,438 )
Net cash flow used in investing activities (70,438 )
Cash flows from financing activities
Proceeds from issue of Ordinary Shares 10 7 ,350
Ordinary Share issue costs (2,147 )
Net cash flow from financing activities 105,203
Increase in cash and cash equivalents 34,019
Cash and cash equivalents at start of period –
Cash and cash equivalents at end of period 34,019
The following notes pages 60 to 81 form an integral part of these Financial Statements.
Notes to the financial statements
1. General information
Company information
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.
Sanne Fund Management (Guernsey) Limited acts as the Company’s Alternative Investment Fund Manager (“AIFM”).
Sanne Fund 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
registered as a private fund limited partnership in England and Wales under the Limited Partnerships Act 1907 with registered
number LP021814. The Limited Partnership has been established pursuant to the Limited Partnership Agreement dated 5 July 2021
as amended and restated on 26 November 2021 (the “Limited Partnership Agreement”) in order to make investments pursuant to
the investment policy of the Limited Partnership. The Limited Partnership’s investment policy and restrictions are consistent with the
Company’s investment policy and restrictions for Private Hydrogen Assets.
The General Partner of the Limited Partnership is HydrogenOne Capital Growth (GP) Limited (the “General Partner”), a wholly owned
subsidiary of the Company. The General Partner was incorporated in England and Wales on 19 May 2021 with company registered
number 13407844. The General Partner undertakes the responsibility for the management, operation and administration of the
business and affairs of the Limited Partnership. The General Partner’s Profit Share for each accounting period shall be an amount
equal to 1.5% per annum of the prevailing NAV of the Limited Partnership, which shall be allocated to the General Partner as a first
charge on the profits of the Limited Partnership. For so long as the Company is the sole Limited Partner, the General Partner’s Profit
Share shall be allocated and distributed to the Company rather than the General Partner.
The carried interest partner of the Limited Partnership is HydrogenOne Capital Growth (Carried Interest) LP (the “Carried Interest
Partner”) which, in certain circumstances, will receive carried interest on the realisation of Private Hydrogen Assets by the Limited
Partnership. The Carried Interest Partner has been set up for the benefit of the principals of the Investment Adviser.
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 will initially acquire 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.
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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$200 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 (currently anticipated to be up to 18 months in
respect of the IPO) 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 to 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. The Investment Adviser anticipates that the Liquidity Reserve will be allocated to cash for the
foreseeable future.
2. Basis of preparation
The principal accounting policies are set out below:
Reporting entity
These Parent and Consolidated Financial Statements (the “Financial Statements”) present the results of both the Parent; and the
Parent and the General Partner (together referred to as the “Group”).
As at 31 December 2021, the statement of financial position of the General Partner consisted of issued share capital and corresponding
share capital receivable in the amount of £1. 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 April 2021.
The Financial Statements are prepared on the historical cost basis, except for the revaluation of financial instruments measured at
fair value through profit or loss.
Fair value is the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or liability, the Company and Group take into account the characteristics of the asset
or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement
date. Fair value for measurement and/or disclosure purposes in these Financial Statements is determined on such a basis.
The Financial Statements are presented in Pounds Sterling because that is the currency of the primary economic environment in
which the Company and Group operate.
The principal accounting policies adopted are set out below. These policies are consistently applied.
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Strategic Report
Governance
Financial statements Other information
Notes to the financial statements
Accounting for subsidiaries
The Board of Directors has determined that the Company has all the elements of control as prescribed by IFRS 10 in relation to:
(1) the Limited Partnership; as the Company is the sole limited partner in the Limited Partnership (100% of the Limited Partnership’s
commitments are held by the Company), is exposed to and has rights to the returns of the Limited Partnership, and has the
ability through its control of the General Partner to affect the amount of its returns from the Limited Partnership; and
(2) the General Partner; as the Company wholly owns the General Partner, is exposed to and has rights to the returns of the
General Partner, and has the ability through its control of the General Partner’s activities to affect the amount of its returns from
the General Partner.
The Investment entities exemption requires that an investment entity that has determined that it is a parent under IFRS 10 shall not
consolidate certain of its subsidiaries; instead, it is required to measure its investment in these subsidiaries at fair value through profit
or loss in accordance with IFRS 9. The criteria which define an investment entity are as follows:
(i) the company obtains funds from one or more investors for the purpose of providing those investors with investment
management services;
(ii) the company commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation,
investment income, or both; and
(iii) the company measures and evaluates the performance of substantially all of its investments on a fair value basis.
The Company is an investment company, providing investors exposure to a diversified portfolio of hydrogen and complementary
hydrogen focussed assets that are managed for investment purposes. The investments were made in line with the stated objective
of the Company to deliver an attractive level of capital growth in accordance with the strategy that has been set by the Directors.
The Directors assessed each new investment carefully to determine whether the Company as a whole still meets the definition of
an investment entity.
In assessing whether the Company meets the definition of an investment entity set out in IFRS 10 the Directors’ note that:
(i) the Company has multiple investors with shares issued publicly on the London Stock Exchange and obtains funds from a
diverse group of shareholders who would otherwise not have access individually to investing in hydrogen focussed assets;
(ii) the Company’s purpose is to invest funds for capital appreciation but with potential for some investment income. The Limited
Partnership has a ten-year life however the underlying assets have minimal residual value because they do not have unlimited
lives, are not to be held indefinitely and have appropriate exit strategies in place; and
(iii) the Company measures and evaluates the performance of all of its investments on a fair value basis which is the most relevant
for investors in the Company. The Directors use fair value information as a primary measurement to evaluate the performance of
all of the investments and in decision making.
The Board of Directors has determined that the Company meets all the typical characteristics of an investment entity and therefore
meets the definition set out in IFRS 10.
Accounting for the Limited Partnership
The Limited Partnership serves as an asset holding entity and does not provide investment-related services. Therefore, when the
Limited Partnership is assessed based on the overall structure as a means of carrying out the Company’s activities, the Board of
Directors has determined that the Limited Partnership meets the definition of an investment entity. Accordingly, the Company is
required under IFRS 10 to hold its investment in the Limited Partnership at fair value through the Statement of Comprehensive
Income rather than consolidate them. The Company has determined that the fair value of the Limited Partnership is its net asset
value and has concluded that it meets the definition of an unconsolidated subsidiary under IFRS 12 and has made the necessary
disclosures in these Financial Statements.
Accounting for the General Partner
The General Partner provides investment related services to the Limited Partnership on behalf of the Company. IFRS 10 requires
subsidiaries that provide services that relate to the investment entity’s investment activities to be consolidated. Accordingly, the
Company is required under IFRS 10 to consolidate the results of the General Partner.
The Directors agree that the investment entity accounting treatment outlined above appropriately reflects the Company’s activities
as an investment trust and provides the most relevant information to investors.
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Going concern
The Directors consider that it is appropriate to adopt the going concern basis in preparing the Financial Statements. In forming this
opinion, the Directors have considered the ongoing impact of the COVID-19 pandemic and impact as restrictions begin to be lifted
in the UK and other jurisdictions, on the going concern and viability of the Company and Group. In making their assessment, the
Directors have reviewed income and expense projections and the liquidity of the investment portfolio, and considered the mitigation
measures which key service providers, including the Investment Adviser, have in place to maintain operational resilience particularly
in light of COVID-19.
The Company and Group continue to meet day-to-day liquidity needs through its cash resources. The Company and Group had
unrestricted cash of £34.0 million as well as £8.2 million in Listed Hydrogen Assets at 31 December 2021. The Company and Group’s
net assets at 31 December 2021 were £102.8 million and total expenses for the period ended 31 December 2021 were £0.8 million,
which represented approximately 0.8% of the average net assets value of the Company in the period from the Company’s IPO on
22 June 2021 to the 31 December 2021 (£104,565,796). At the date of approval of these financial statements, the Company and
Group had cash resources of £33.4 million and annual expenses are estimated to be £1.7 million.
The Directors also recognise that the continuation of the Company is subject to the approval of shareholders at the Annual General
Meeting (“AGM”) in 2026, and every fifth AGM thereafter. Since the Company’s IPO, the shares have traded at a premium to NAV,
reflecting strong shareholder support for the Company and market demand for its shares.
Since the period end date, the Russian invasion of Ukraine has resulted in considerable market volatility and uncertainty. However
the Board and the Investment Adviser have reviewed the investment portfolio and have identified limited direct impact on the
portfolio, but continues to monitor situation and impact on the Company’s investment portfolio.
Based on the foregoing, the Directors have adopted the going concern basis in preparing the Financial Statements. The Directors
have a reasonable expectation that the Company and Group have adequate operational resources to continue in operational
existence for at least twelve months from the date of approval of these Financial Statements.
Critical accounting judgements, estimates and assumptions
The preparation of Financial Statements in accordance with IFRS requires the Directors to make judgements, estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the Financial Statements and the reported amounts of income and expense during the period. Actual results could differ from
those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision only affects that period or in the period and future periods if the revision
affects both current and future periods.
Judgements
Investment entity
In accordance with the Investment Entities exemption contained in IFRS 10, the Board has determined that the Company satisfies
the criteria to be regarded as an investment entity and that the Company provides investment related services and, as a result,
measures its investment in the Limited Partnership at fair value.
The Limited Partnership serves as an asset holding entity and does not provide investment-related services. Therefore, when the
Limited Partnership is assessed based on the overall structure as a means of carrying out the Company’s activities, the Board of
Directors has determined that the Limited Partnership meets the definition of an investment entity. Accordingly, the Company is
required under IFRS 10 to hold its investment in the Limited Partnership at fair value through the Statement of Comprehensive
Income rather than consolidate them.
The General Partner provides investment related services to the Limited Partnership on behalf of the Company. IFRS 10 requires
subsidiaries that provide services that relate to the investment entity’s investment activities to be consolidated. Accordingly, the
Board of Directors have determined that the Company is required under IFRS 10 to consolidate the results of the General Partner.
As described in the Reporting Entity section, the Financial Statements as presented represent both the Parent’s and the Group’s
financial position, performance and cash flows.
These conclusions involved a degree of judgement and assessment as to whether the Company, the Limited Partnership and the
General Partner met the criteria outlined in the accounting standards.
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Financial statements Other information
Notes to the financial statements
Estimates
Investment valuations
The key estimate in the Financial Statements is the determination of the fair value of the Private Hydrogen Assets, held by the
Limited Partnership, by the Investment Adviser for consideration by the Directors. This estimate is key as it significantly impacts the
valuation of the Limited Partnership at the period end. The fair valuation process involves estimation using subjective inputs that are
unobservable (for which market data is unavailable). The key inputs considered in the valuation are described in note 14.
Comparatives
There are no comparatives as this is the first accounting period.
New standards, interpretations and amendments adopted from 1 January 2021
A number of new standards, amendments to standards are effective for the annual periods beginning after 1 January 2021.
None of these have had a significant effect on the measurement of the amounts recognised in the Financial Statements.
New standards and amendments issued but not yet effective
The relevant new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of
the Financial Statements are disclosed below. These standards are not expected to have a material impact on the entity in future
reporting periods and on foreseeable future transactions.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities
as current or non-current. The amendments are effective for annual reporting periods beginning on or after 1 January 2023.
Reference to the Conceptual Framework – Amendments to IFRS 3
In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations – Reference to the Conceptual Framework.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022.
Definition of Accounting Estimates – Amendments to IAS 8
In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of ‘accounting estimates’.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023.
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements.
The amendments to IAS 1 are applicable for annual periods beginning on or after 1 January 2023.
3. Significant accounting policies
(a) Financial instruments
Financial assets – Classification, recognition, derecognition and measurement
The Company and Group’s financial assets principally comprise of: investments held at fair value through profit or loss (Listed
Hydrogen Assets and the Limited Partnership); and trade and other receivables, which are initially recognised at fair value and
subsequently measured at amortised cost.
Financial assets are recognised in the Statement of Financial Position when the Company or Group become a party to the
contractual provisions of the instrument. Transaction costs that are directly attributable to the acquisition or issue of financial assets
(other than financial assets at fair value through profit or loss) are added to or deducted from the fair value of the financial assets,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets at fair value through
profit or loss are recognised immediately in profit or loss.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Gains and losses
resulting from the movement in fair value are recognised in the Statement of Comprehensive Income at each valuation point within
‘gains/(losses) on investments’.
Financial assets are derecognised when the rights to receive cash flows from the investments have expired or the Company or
Group have transferred substantially all risks and rewards of ownership.
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Financial liabilities – Classification, recognition, derecognition and measurement
The Company and Group’s financial liabilities include trade and other payables and other short term monetary liabilities which are
initially recognised at fair value and subsequently measured at amortised cost.
Financial liabilities are recognised in the Statement of Financial Position when the Company or Group become a party to the
contractual provisions of the instrument. Transaction costs that are directly attributable to the acquisition or issue of financial liabilities
(other than financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial liabilities at fair value through
profit or loss are recognised immediately in profit or loss. Financial liabilities are subsequently measured at amortised cost.
A financial liability (in whole or in part) is derecognised when the Company or Group have extinguished the contractual obligations,
it expires or is cancelled.
Valuation of Listed Hydrogen Assets
Upon initial recognition Listed Hydrogen Assets are classified by the Company and Group ‘at fair value through profit or loss’. They
are accounted for on the date they are traded and are included initially at fair value which is taken to be their cost. Subsequently they
are valued at fair value, which is the bid market price, or if bid price is unavailable, last traded price on the relevant exchange.
Valuation of the Limited Partnership
The Company and Group has determined that the fair value of the Limited Partnership is the Limited Partnership’s Net Asset Value
(“NAV”). The NAV of the Limited Partnership is prepared in accordance with accounting policies that are consistent with IFRS and
consists of the fair value of its Private Hydrogen Assets, and the carrying value of its assets and liabilities.
The Investment Adviser values the Private Hydrogen Assets according to IPEV Guidelines.
The techniques applied are predominantly market based approaches and/or discounted cash flows (“DCF”) where appropriate
forecasts can be done.
The market-based approaches available under IPEV Guidelines are set out below and are followed by an explanation of how they
are applied to the Private Hydrogen Assets:
• Multiples;
• Industry Valuation Benchmarks; and
• Available Market Prices.
The nature of the Private Hydrogen Assets will influence the valuation technique applied. The valuation approach recognises that, as
stated in the IPEV Guidelines, the price of a recent investment, if resulting from an orderly transaction, generally represents fair value
as at the transaction date and may be an appropriate starting point for estimating fair value at subsequent measurement dates.
However, consideration is given to the facts and circumstances as at the subsequent measurement date, including changes in the
market or performance of the investee company. Milestone analysis is used where appropriate to incorporate the operational
progress of the investee company into the valuation. Additionally, the background to the transaction must be considered. As a result,
various multiples-based techniques are employed to assess the valuations particularly in those Private Hydrogen Assets with
established revenues and/or earnings. An absence of relevant industry peers may preclude the application of the industry valuation
benchmarks technique and an absence of observable prices may preclude the available market prices approach. All valuations
are cross-checked for reasonableness by employing relevant alternative techniques.
Fair values for operational Private Hydrogen Assets may be derived from a DCF methodology and the results benchmarked against
appropriate multiples and key performance indicators (“KPIs”), where available for the relevant sector/industry.
In a DCF valuation, the fair value represents the present value of the investment’s expected future cash flows, based on appropriate
assumptions for revenues and costs, and suitable cost of capital assumptions. Judgement is applied in arriving at appropriate discount
rates, based on the knowledge of the market, taking into account market intelligence gained from bidding activities, discussions with
financial advisers, consultants, accountants and lawyers and publicly available information.
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Notes to the financial statements
A range of sources are reviewed in determining the underlying assumptions to apply in a DCF valuation used in calculating the fair
value of a Private Hydrogen Asset. These sources include but are not limited to:
• macroeconomic projections adopted by the market as disclosed in publicly available resources;
• macroeconomic forecasts provided by expert third party economic advisers;
• discount rates publicly disclosed in the global renewables sector;
• discount rates applicable to comparable infrastructure asset classes, which may be procured from public sources or
independent third-party expert advisers;
• discount rates publicly disclosed for comparable market transactions of similar assets; and
• capital asset pricing model outputs and implied risk premia over relevant risk free rates.
Where available, assumptions are based on observable market and technical data.
The Private Hydrogen Assets have been valued at 31 December 2021 using the price of recent investment which was calibrated/
cross-checked using a DCF valuation.
The Company may make investments in Private Hydrogen Assets directly, via the Limited Partnership and/or by way of holdings in
special purpose vehicles or intermediate holding entities. These vehicles will be measured at fair value through profit or loss based
on their NAV at the period end, which is principally derived from the valuation of their Private Hydrogen Assets.
(b) Foreign currency
Functional and presentation currency
Items included in the Financial Statements are measured using the currency of the primary economic environment in which the
entity operates, the functional currency. The Financial Statements are presented in Pounds Sterling which is the Company and
Group’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into Pounds Sterling using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement
of Comprehensive Income.
(c) Income
Investment income has been accounted for on an ex-dividend basis or when the right to the income is established. Special
dividends are credited to capital or revenue in the Statement of Comprehensive Income, according to the circumstances
surrounding the payment of the dividend. Overseas dividends are included gross of withholding tax recoverable.
(d) Dividend payable
Interim dividends are recognised when the Company pays the dividend. Final dividends are recognised in the period in which they
are approved by the shareholders.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses directly related to the acquisition or disposal of an investment
(transaction costs) are taken to the Statement of Comprehensive Income as a capital item. All other expenses, including Investment
Adviser fees, are taken to the Statement of Comprehensive Income as a revenue item.
(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the
taxable profit for the period. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because
it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never
taxable or deductible. The Company’s liability for current tax is calculated using tax rates that were applicable at the financial
reporting date.
Where expenses are allocated between capital and revenue any tax relief in respect of the expenses is allocated between
capital and revenue returns on the marginal basis using the Company’s effective rate of corporation taxation for the relevant
accounting period.
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Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the financial reporting
date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have
occurred at the financial reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely
than not that there will be suitable profits from which the future reversal of the timing differences can be deducted. Deferred tax
assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise.
Since the General Partner does not have any income or expenditure in the period, the Group tax position is the same as the
Company tax position.
(g) Segmental reporting
The Board has considered the requirements of IFRS 8 – ‘Operating Segments’. The Company has entered into an Investment
Advisory Agreement with the Investment Adviser under which the Investment Adviser is responsible for the management of the
Company’s investment portfolio, subject to the overall supervision of the Board of Directors. Subject to its terms and conditions, the
Investment Advisory Agreement requires the Investment Adviser to manage the Company’s investment portfolio in accordance with
the Company’s investment guidelines as in effect from time to time, including the authority to purchase and sell investments and to
carry out other actions as appropriate to give effect thereto. However, the Board retains full responsibility to ensure that the
Investment Adviser adheres to its mandate. Moreover, the Board is fully responsible for the appointment and/or removal of the
Investment Adviser. Accordingly, the Board is deemed to be the ‘Chief Operating Decision Maker’ of the Company.
The Directors are of the opinion that the Company is engaged in a single segment of business being investment into the hydrogen
focussed investments. Segment information is measured on the same basis as that used in the preparation of the Company’s
Financial Statements.
(i) Cash and cash equivalents
Cash comprises cash and demand deposits. Cash equivalents, include bank overdrafts, and short-term, highly liquid investments
that are readily convertible to known amounts of cash, are subject to insignificant risks of changes in value, and are held for the
purpose of meeting short-term cash commitments rather than for investment or other purposes.
(j) Nature and purpose of equity and reserves:
Share capital represents the 1p nominal value of the issued share capital.
The share premium account arose from the net proceeds of new shares issued. Costs directly attributable to the issue of new
shares are charged against the value of the ordinary share premium.
The capital reserve reflects any:
• gains or losses on the disposal of investments;
• exchange movements of a capital nature;
• the increases and decreases in the fair value of investments which have been recognised in the capital column of the Statement
of Comprehensive Income; and
• expenses which are capital in nature.
The revenue reserve reflects all income and expenditure recognised in the revenue column of the Statement of Comprehensive
Income and is distributable by way of dividend.
The Company’s distributable reserves consist of the revenue reserve and the capital reserve. However any gains in the fair value of
investments that are not readily convertible to cash are treated as unrealised gains in the capital reserve and are non-distributable.
Ordinary Shares are classified as equity.
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Financial statements Other information
Notes to the financial statements
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4. Investments held at fair value through profit or loss
(a) Summary of valuation
As at
31 December
2021
£’000
Investments held at fair value through profit or loss
Listed Hydrogen Assets 8,233
Limited Partnership 60,597
Closing valuation of financial assets at fair value through profit or loss 68,830
(b) Movements in valuation
£’000
Opening valuation of financial assets at fair value through profit or loss –
Opening unrealised gains on investments –
Opening cost of financial assets at fair value through profit or loss –
Additions, at cost – Listed Hydrogen Assets 9,461
Additions, at cost – Limited Partnership 60,977
Cost of financial assets at fair value through profit or loss at the end of the period 70,438
Loss on investments – Listed Hydrogen Assets (1,228)
Loss on investments – Limited Partnership (380)
Closing valuation of financial assets at fair value through profit or loss 68,830
(c) Loss on investments
£’000
Movement in unrealised loss – Listed Hydrogen Assets (1,228)
Movement in unrealised loss – Limited Partnership (380)
Total loss on investments (1,608)
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 31 December 2021.
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The classification of the Company and Group’s investments held at fair value through profit or loss is detailed in the table below:
31 December 2021
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Listed Hydrogen Assets 8,233 – – 8,233
Limited Partnership – – 60,597 60,597
8,233 – 60,597 68,830
The Company and Group’s Level 3 investment is the investment in the Limited Partnership. The NAV of the Limited Partnership as
of 31 December 2021 is £60,597,000. The movement on the Level 3 investments during the period is shown below:
31 December
2021
£’000
Opening balance –
Investment in Limited Partnership 60,977
Unrealised loss on investment in Limited Partnership (380)
Closing balance 60,597
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 three Private Hydrogen Assets.
The following table reconciles the fair value of the Private Hydrogen Assets and the NAV of the Limited Partnership.
31 December
2021
£’000
Investment in Private Hydrogen Assets 39,231
Plus: net current assets 21,366
NAV of the Limited Partnership 60,597
The Level 3 Private Hydrogen Assets are valued by the Investment Adviser in accordance with IPEV Guidelines, as outlined in note
3. The key inputs considered in the valuation are described in note 14. At 31 December 2021, the valuation of the Limited
Partnership’s underlying investment in Private Hydrogen Assets was determined as follows:
Value of Primary Significant
Country of Investment valuation unobservable
Name Incorporation £’000 technique inputs Range input
Sunfire GmbH Germany 20,180 Price of recent Third-party pricing n/a
Investment (without adjustment)
HiiROC Limited United Kingdom 10,001 Price of recent Third-party pricing n/a
Investment (without adjustment)
NanoSUN Limited United Kingdom 9,050 Price of recent Third-party pricing n/a
Investment (without adjustment)
The investments have been fair valued using the price of a recent investment based on unadjusted third-party pricing information.
Therefore, 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.
Notes to the financial statements
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5. Investment Adviser fee
Period ended 31 December 2021
Revenue Capital Total
£’000 £’000 £’000
Investment Adviser fee 265 – 265
At 31 December 2021 an amount of £48,349 was payable to the Investment Adviser in respect of the Investment Adviser fee.
Additionally, the Company has agreed with the Investment Adviser that the costs and expenses of the IPO would be capped at 2%
of the gross proceeds received, with any cost above this amount to be paid by the Investment Adviser by way of rebate of its adviser
fee. At 31 December 2021, £141,493 in respect of excess issue costs is due to be received from the Investment Adviser.
Investment Adviser fee
The Company has entered into an Investment Adviser Agreement dated 5 July 2021 between the Company, the AIFM and the
Investment Adviser (the “Investment Adviser Agreement”), pursuant to which the Investment Adviser has been given responsibility
for investment advisory services in respect of any Private Hydrogen Assets the Company invests in directly and the Listed Hydrogen
Assets (including Listed Hydrogen Assets forming part of the Liquidity Reserve and uninvested cash) in accordance with the
Company’s investment policy, subject to the overall control and supervision of the AIFM.
Under the Investment Adviser Agreement, the Investment Adviser receives from the Company, quarterly in advance, an advisory
fee equal to:
(i) 1.0% of the Net Asset Value per annum of the Listed Hydrogen Assets up to £100 million:
(ii) 0.8% of the Net Asset Value per annum of the Listed Hydrogen Assets from £100 million (save that the Investment Adviser has
agreed to reduce this fee to 0.5% in respect of the Liquidity Reserve pending their investment in Private Hydrogen Assets for
18 months following Admission to 30 January 2023);
(iii) 1.5% of the Net Asset Value per annum of any Private Hydrogen Assets held by the Company directly (i.e. not held by the Limited
Partnership or any other undertaking advised by the Investment Adviser where the Investment Adviser is receiving a separate
advisory fee); and
(iv) for so long as the Company is not considered a ‘feeder fund’ for the purposes of the Listing Rules, 1.5% per annum of the Net
Asset Value of the Private Hydrogen Assets held by the Limited Partnership.
The Limited Partnership has entered into a Limited Partnership Investment Adviser Agreement dated 5 July 2021 (the “Limited
Partnership Investment Adviser Agreement”) between the General Partner (in its capacity as general partner of the Limited
Partnership), the AIFM and the Investment Adviser, pursuant to which the Investment Adviser has been given responsibility for
investment advisory services in respect of the Private Hydrogen Assets in accordance with the investment policy of the Limited
Partnership, subject to the overall control and supervision of the AIFM.
Under the Limited Partnership Investment Adviser Agreement, the Investment Adviser, if the Company was considered a ‘feeder
fund’ for the purposes of the Listing Rules by virtue of additional investors co-investing via the Limited Partnership in the future, shall
receive from the Limited Partnership an advisory fee equal to 1.5% per annum of the Net Asset Value of the Private Hydrogen Assets
held by the Limited Partnership, payable quarterly in advance. Advisory fees paid or payable by the Limited Partnership are
reflected through the NAV of the Limited Partnership.
No performance fee is paid or payable to the Investment Adviser under either the Investment Adviser Agreement or the Limited
Partnership Investment Adviser Agreement but the principals of the Investment Adviser are, subject to certain performance conditions
being met, entitled to carried interest fees from the Limited Partnership. Refer to ‘Carried Interest Partner Fees’ section below.
Carried Interest Partner Fees
Pursuant to the terms of the Limited Partnership Agreement dated 5 July 2021 as amended and restated on 26 November 2021
(the “Limited Partnership Agreement”), the Carried Interest Partner is, subject to the limited partners of the Limited Partnership
receiving an aggregate annualised 8% realised return (i.e. the Company and, in due course, any additional co-investors), entitled to
a carried interest fee in respect of the performance of the Private Hydrogen Assets.
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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 there was no realised or unrealised
carried interest fee paid or payable.
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 £71,558. 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 £nil.
6. Other expenses
For the
period ended
31 December
2021
£’000
Administration & Secretarial Fees 94
AIFM Fees 45
Directors’ Fees 101
Custodian Charges 21
Brokers Fees 24
Registrar’s Fees 9
Legal Fees 8
Audit Fees 135
D & O Insurances 21
PR & Marketing 36
Other expenses 46
Total revenue expenses 540
Expenses charged to capital:
Capital transaction costs 5
Total expenses 545
Prior to appointment as the Company and Group’s Auditor, the auditors received £138,000 (including VAT of £23,000) for non-audit
initial public offering-related services, which have been 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.
Notes to the financial statements
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7. Taxation
(a) Analysis of charge in the period
For the period ended 31 December 2021
Revenue Capital Total
£’000 £’000 £’000
Withholding tax expense – – –
Total tax charge for the period – – –
(b) Factors affecting total tax charge for the period
For the period ended 31 December 2021
Revenue Capital Total
£’000 £’000 £’000
Loss on ordinary activities before taxation (805) (1,612) (2,417)
Corporation tax at 19% (153) (306) (459)
Effects of:
Deferred tax asset not recognised 153 – 153
Loss on investments held at fair value not taxable – 306 306
– – –
The Company is not liable to tax on capital gains due to its status as an investment trust. The Company and Group has an
unrecognised deferred tax asset of £201,000 based on the long term prospective corporation tax rate of 25%. The March 2021
Budget announced an increase to the main rate of corporation tax to 25% from 1st April 2023. This increase in the standard rate of
corporation tax was substantively enacted on 24th May 2021.
This asset has accumulated because deductible expenses exceeded taxable income for the period ended 31 December 2021.
No asset has been recognised in the Financial Statements because, given the composition of the Company and Group’s portfolio,
it is not likely that this asset will be utilised in the foreseeable future.
8. Trade and other receivables
As at
31 December
2021
£’000
Prepayments 24
Other receivables 159
183
9. Trade and other payables
As at
31 December
2021
£’000
Amounts falling due within one year:
Accrued expenses 246
246
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10. Share capital
As at 31 December 2021
Nominal value
Allotted, issued and fully paid: No. of shares of shares (£)
Allotted upon incorporation
Ordinary Shares of 1p each 1 0.01
Management Shares of £1.00 each 50,000 50,000.00
Allotted/redeemed following admission to LSE
Ordinary Shares issued 107,349,999 1,073,499.99
Management Shares redeemed (50,000) (50,000.00)
Closing balance as at 31 December 2021 107,350,000 1,073,500.00
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 therefore there were no Treasury shares at the end of 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 period ended 31 December 2021
of 63,997,115.
For the period ended 31 December 2021
Revenue Capital Total
£’000 £’000 £’000
Loss for the period (£’000) (805) (1,612) (2,417)
Return per Ordinary Share (1.26)p (2.52)p (3.78)p
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
31 December
2021
£’000
Net Asset Value (£’000) 102,786
Ordinary Shares in issue 107,350,000
NAV per Ordinary Share 95.75p
There is no diluted Net Asset Value per share as the Company has only Ordinary Shares in issue.
Notes to the financial statements
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13. Related party transactions and material contracts
Directors
Fees are payable to the Directors at an annual rate of £65,000 to the Chairman, £55,000 to the Chairman of the Audit and Risk
Committee and £45,000 to the other Directors with the exception of Mr Bell who is not remunerated for his role as a Non-Executive
Director. These fees were effective from the date of appointment of each Director being 20 May 2021 for each Board member
with the exception of Mr Bell who was appointed 1 October 2021 and Mrs Rotheroe who was appointed 8 February 2022.
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 at
31 December
2021
Simon Hogan 40,000
Caroline Cook 20,100
Afkenel Schipstra 10,100
Roger Bell –
Abigail Rotheroe
1
–
1. Abigail Rotheroe was appointed as a Non-Executive Director on 8 February 2022.
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 31 December 2021, the principals of the Investment Adviser, Dr JJ Traynor and Mr R Hulf, each held
100,000 Ordinary Shares of the Company. 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 31 December 2021, INEOS
Energy held 25 million Ordinary Shares of the Company.
Roger Bell is currently Chief Financial Officer of the INEOS Oil and Gas group of companies and was appointed as the Board
representative of INEOS Energy on 1 October 2021 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
Sanne Fund Management (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 Sanne
Group plc.
Under the AIFM Agreement between the AIFM and the Company dated 5 July 2021, and with effect from Admission, the AIFM shall
be entitled to receive from the Company a fee of 0.05% of Net Asset Value per annum up to £250 million, 0.03% of Net Asset Value
per annum from £250 million up to £500 million and 0.015% of Net Asset Value per annum from £500 million, in each case adjusted
to exclude any Net Asset Value attributable to any Private Hydrogen Assets held through the Limited Partnership and subject to a
minimum annual fee of £85,000.
Under the AIFM Agreement between the AIFM and the Limited Partnership dated 5 July 2021, the AIFM receives from the Limited
Partnership a fee of 0.05% of the net asset value of the Limited Partnership per annum up to £250 million, 0.03% of the net asset
value of the Limited Partnership per annum from £250 million up to £500 million and 0.015% of the net asset value of the Limited
Partnership per annum from £500 million, subject to a minimum annual fee of £25,000. AIFM fees paid or payable by the Limited
Partnership are reflected through the NAV of the Limited Partnership.
The AIFM is also entitled to reimbursement of reasonable expenses incurred by it in the performance of its duties.
Administration and Company Secretarial services fee
The Company has entered into an Administration and Company Secretarial Services Agreement dated 5 July 2021 (the
“Administrator and Company Secretary Agreement”) between the Company and Sanne Fund Services (UK) Limited (the “Company
Secretary and Administrator”) pursuant to which the Company Secretary and Administrator has agreed to act as Company secretary
and administrator to the Company.
Under the terms of the Administration and Company Secretarial Services Agreement, the Company Secretary and Administrator
receives a fee from the Company of 0.06% of Net Asset Value per annum up to £250 million, 0.05% of Net Asset Value per annum
from £250 million up to £500 million and 0.025% of Net Asset Value per annum from £500 million and subject to a minimum annual
fee of £135,000 plus a further £10,000 per annum to operate the Company’s Liquidity Reserve.
Under the terms of the Limited Partnership Administration Agreement 5 July 2021, pursuant to which the Company Secretary and
Administrator has agreed to act as administrator to the Limited Partnership, the Company Secretary and Administrator receives an
annual fee from the Limited Partnership of £62,500 and of £15,000 in respect of the General Partner. Administration fees paid or
payable by the Limited Partnership are reflected through the NAV of the Limited Partnership. For so long as the Company is the sole
Limited Partner, the administration fee in respect of the General Partner shall be allocated settled by the Company rather than the
General Partner.
Custodian fee
The Company has entered into a Custodian Agreement between the Company and The Northern Trust Company (the “Custodian”)
dated 23 June 2021 (the “Custodian Agreement”), pursuant to which the Custodian has agreed to act as custodian to the Company.
The Custodian is entitled to a minimum annual fee of £50,000 (exclusive of VAT) per annum. The Custodian is also entitled to a fee
per transaction taken on behalf of the Company.
Registrar fee
The Company utilises the services of Computershare Investor Services plc (the “Registrar”) as registrar to the transfer and settlement
of Ordinary Shares. Under the terms of the Registrar Agreement dated 5 July 2021, the Registrar is entitled to a fee calculated based
on the number of shareholders, the number of transfers processed and any Common Reporting Standard on-boarding, filings or
changes. The annual minimum fee is £4,800 (exclusive of VAT). In addition, the Registrar is entitled to certain other fees for ad hoc
services rendered from time to time.
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Strategic Report
Governance
Financial statements Other information
Notes to the financial statements
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14. Financial instruments and capital disclosures
Risk Management Policies and Procedures
The Board of Directors has overall responsibility for the establishment and oversight of the Company and Group’s risk management
framework. The risk management policies are established to identify and analyse the risks faced by the Company and Group, to set
appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to
reflect changes in market conditions and the Company and Group’s activities.
The Investment Adviser, AIFM and the Administrator report to the Board on a quarterly basis and provide information to the Board
which allows it to monitor and manage financial risks relating to its operations. The Company and Group’s activities expose it to a
variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk, liquidity risk and operational
risk. These risks are monitored by the AIFM. Below is a non-exhaustive summary of the risks that the Company and Group are
exposed to as a result of its use of financial instruments:
The objectives, policies and processes for managing the risks, and the methods used to measure the risks, are set out below.
Market Risks
(i) Currency risk
Foreign currency risk is defined as the risk that the fair values of future cashflows will fluctuate because of changes in foreign
exchange rates. The financial assets and liabilities are predominantly denominated in Pounds Sterling and substantially all revenues
and expenses are in Pounds Sterling. As at the 31 December 2021, the Company and Group had the following currency exposures,
all of which are included in the Statement of Financial Position at fair value based on the exchanges rates at the period end.
Other assets
Investments Cash & liabilities Total
£’000 £’000 £’000 £’000
Currency
Danish Krone 444 – – 444
Euro 1,485 – – 1,485
Korean Won 957 – – 957
Norwegian Krone 1,515 – – 1,515
Swedish Krone 937 – – 937
US Dollar 1,541 – – 1,541
6,879 – – 6,879
The Company and Group mitigate the risk of loss due to exposure to a single currency by way of diversification of the portfolio.
At 31 December 2021, an exchange rate movement of +/-5% against Pounds Sterling, which is a reasonable approximation of possible
changes based on observed volatility during the period, would have increased or decreased net assets and total return by £344,000.
(ii) Interest rate risk
The Company and Group’s interest rate risk on interest bearing financial assets is limited to interest earned on cash balances. At the
period end, the Company had cash balances of £34,019,000. An increase in interest rates of 0.5% would impact the profit or loss
and net assets of the Company positively by £170,095, with a decrease of 0.5% having an equal and opposite effect.
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Governance
Financial statements Other information
The Company and Group’s interest and non-interest bearing assets and liabilities as at 31 December 2021 are summarised below:
Interest Non-interest
bearing bearing Total
£’000 £’000 £’000
Assets
Cash and cash equivalents 34,019 – 34,019
Trade and other receivables – 183 183
Investments held at fair value through profit or loss
– Listed Hydrogen Assets – 8,233 8,233
Investments held at fair value through profit or loss
– Limited Partnership – 60,597 60,597
Total assets 34,019 69,013 103,032
Liabilities
Trade and other payables – (246) (246)
Total liabilities – (246) (246)
(iii) Price risk
Listed Hydrogen Assets
Price risk is defined as the risk that the fair value of a financial instrument held by the Company or Group will fluctuate. Listed
Hydrogen Assets are measured at fair value through profit or loss. As of 31 December 2021, the Company and Group held Listed
Hydrogen Assets with an aggregate fair value of £8,233,000.
All other things being equal, the effect of a 10% increase or decrease in the value of the investments held at the period end would
have been an increase or decrease of £823,300 in the Company and Group’s loss after taxation for the period ended 31 December
2021 and the Company and Group’s net assets at 31 December 2021.
At 31 December 2021, the sensitivity rate of 10% is regarded as reasonable due to the actual market price volatility experienced
as a result of the economic impact on the Listed Hydrogen Assets.
Private Hydrogen Assets
The Limited Partnership’s portfolio of Private Hydrogen Assets is not necessarily affected by market performance, however the
valuations may be affected by the performance of the underlying investments in line with the valuation criteria in note 3.
The Private Hydrogen Assets sensitivity analysis recognises that the valuation methodologies employed involve different levels of
subjectivity in their inputs primarily driven by recent transactions and expenses accrued.
Key variable inputs of Private Hydrogen Assets
The variable inputs applicable to each broad category of valuation basis will vary depending on the particular circumstances of each
Private Hydrogen Asset valuation. An explanation of each of the key variable inputs is provided below and includes an indication of
the range in value for each input, where relevant.
Selection of appropriate discount rates
The selection of an appropriate discount rate is assessed individually for each Private Hydrogen Asset. Publicly disclosed discount
rates in the relevant sector, comparable asset classes, which may be procured from public sources or independent third-party
expert advisers or for comparable market transactions of similar assets are used where available.
Notes to the financial statements
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Selection of appropriate benchmarks
The selection of appropriate benchmarks is assessed individually for each Private Hydrogen Asset. The industry and geography of
each Private Hydrogen Asset are key inputs to the benchmark selection, with either one or two key indices or benchmarks being
used for comparison.
Selection of comparable companies
The selection of comparable companies is assessed individually for each Private Hydrogen Asset at the point of investment, and
the relevance of the comparable companies is continually evaluated at each valuation point. The key criteria used in selecting
appropriate comparable companies are the industry sector in which they operate and the geography of the Private Hydrogen
Asset’s operations.
Application of valuation basis
Each Private Hydrogen Asset is assessed, and the valuation basis applied will vary depending on the circumstances of each Private
Hydrogen Asset. For those Private Hydrogen Assets where a trading multiples approach can be taken, the methodology will factor
in revenue, earnings or net assets as appropriate for the Private Hydrogen Asset. Discounted cash flows will be considered where
appropriate forecasts are available. The valuation will also consider any recent transactions, where appropriate.
Estimated sustainable earnings and cash flows
The selection of sustainable revenue or earnings and cash flows will depend on whether the Private Hydrogen Asset is sustainably
profitable or not, and where it is not then sustainable revenues will be used in the valuation. The valuation approach will typically
assess Private Hydrogen Assets based on the last twelve months of revenue or earnings, as they are the most recent available and
therefore viewed as the most reliable. Where a Private Hydrogen Asset has reliably forecasted earnings previously or there is a
change in circumstance at the business which will impact earnings going forward, then forward estimated revenue or earnings
may be used instead.
Application of liquidity discount
A liquidity discount may be applied either through the calibration of a valuation against the most recent transaction, or by application
of a specific discount.
Credit risk
The Company and Group are exposed to credit risk in respect of Listed Hydrogen Assets, Private Hydrogen Assets, trade and other
receivables and cash at bank. For risk management reporting purposes, the Company and Group considers and aggregates all
elements of credit risk exposure (such as individual obligation default risk, country risk and sector risk).
As at
31 December
2021
£’000
Investments at fair value through profit or loss – Listed Hydrogen Assets 8,233
Investments at fair value through profit or loss – Limited Partnership 60,597
Trade and other receivables 183
Cash and cash equivalents 34,019
Total 103,032
At 31 December 2021 the Listed Hydrogen Assets of the Company and Group, excluding their investment into the Limited
Partnership, are held by Northern Trust Bank (the “Custodian”). Bankruptcy or insolvency of the Custodian may cause the Company
and Group’s rights with respect to securities held by the Custodian to be delayed or limited. This risk is managed by monitoring the
credit quality and financial positions of the Custodian.
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Strategic Report
Governance
Financial statements Other information
Credit risk of the Private Hydrogen Assets held by the Limited Partnership is assessed from time to time by the Investment Adviser
on a look-through basis. The Company and Group’s policy on credit risk mirrors that of the Limited Partnership, which is to minimise
its exposure to counterparties with perceived higher risk of default by dealing only with counterparties that meet the credit
standards set out in the Company’s prospectus. The Investment Adviser seeks to manage this risk by providing diversification in
terms of underlying investments, issuer section, geography and maturity profile.
As of the 31 December 2021, three Private Hydrogen Assets are held by the Limited Partnership as shown in note 15.
The cash and cash equivalents are held with Northern Trust Bank, EFG International Bank, Royal Bank of Scotland and through the
Goldman Sachs- Liquid reserve fund. The Fitch Rating credit rating of Northern Trust Bank is AA, EFG international Bank is A, Royal
Bank of Scotland A+ and the Goldman Sachs Liquid reserve fund is AAA.
At the period end there were no trade and receivables past due. The credit risk exposure is minimised by dealing with financial
institutions with investment grade credit ratings.
Liquidity risks
Liquidity risk is the risk that the Company or Group may not be able to meet a demand for cash or fund an obligation when due.
The Investment Adviser, AIFM and the Board continuously monitor forecast and actual cashflows from operating, financing and
investing activities to consider payment of dividends, or further investing activities.
Financial assets and liabilities by maturity at the period end are shown below:
Less than 1 year 1-5 years Total
£’000 £’000 £’000
Assets
Investments at fair value through profit or loss – Listed Hydrogen Assets 8,233 – 8,233
Investments at fair value through profit or loss – Limited Partnership – 60,597 60,597
Trade and other receivables 183 – 183
Cash and cash equivalents 34,019 – 34,019
Total assets 42,435 60,597 103,032
Liabilities
Trade and other payables (246) – (246)
Total liabilities (246) – (246)
Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes, technology
and infrastructure supporting the activities relating to financial instruments, either internally or on the part of service providers, and
from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and
generally accepted standards of investment management behaviour.
Operational risk is managed so as to balance the limiting of financial losses and reputational damage with achieving the investment
objective of generating returns to investors. The AIFM works with the Board to identify the risks facing the Company and the Limited
Partnership. The key risks are documented and updated in the Risk Matrix by the AIFM. The primary responsibility for the
development and implementation of controls over operational risk rests with the Board.
Notes to the financial statements
This responsibility is supported by the development of overall standards for the management of operational risk, which
encompasses the controls and processes at the service providers and the establishment of service levels with the service
providers. The Directors’ assessment of the adequacy of the controls and processes in place at service providers with respect to
operational risk is carried out through having discussions with and reviewing reports, including those on their internal controls,
from the service providers.
Capital Management Policies and Procedures
The Company and Group’s capital management objectives are to ensure that the Company and Group will be able to continue as a
going concern while maximising the return to equity shareholders.
In accordance with the investment objective, the principal use of cash (including the proceeds of the IPO and placings) is investing
in hydrogen focussed assets, as well as expenses related to the share issue when they occur, ongoing operational expenses and
payment of dividends and other distributions to shareholders in accordance with the Company’s dividend policy.
The Company and Group considers their capital to comprise share capital, distributable reserves and retained earnings. The
Company and Group are not subject to any externally imposed capital requirements. The Company and Group’s share capital,
distributable reserves and retained earnings are shown in the Statement of Financial Position at a total £102,786,000.
15. Subsidiary and related entities
Subsidiary
The Company owns 100% HydrogenOne Capital Growth (GP) Limited.
Effective Country of Issued share Registered
Subsidiary name ownership ownership Principal activity capital address
HydrogenOne Capital Growth 100% United General partner £1 6th Floor,
(GP) Limited Kingdom of HydrogenOne 125 London Wall,
Capital Growth London, EC2Y 5AS
Investments (1) LP
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 Assets held through the Limited Partnership.
Total
Effective assets as at
ownership 31 December
by the Value of 2021
Limited Purpose of Country of Investment (unaudited) Registered
Name Partnership the entity Incorporation £’000 £’000 address
Sunfire GmbH 4.92% Electrolyser producer Germany 20,180 141,674 Gasanstaltstraße 2
01237 Dresden,
Germany
HiiROC Limited 5.91% Supplier of clean United Kingdom 10,001 27,137 22 Mount Ephraim,
hydrogen production Tunbridge Wells,
technology Kent, TN4 8AS
NanoSUN Limited 22.91% Supplier of mobile United Kingdom 9,050 14,454 Abraham Heights Farm,
hydrogen storage and Westbourne Road,
refuelling systems Lancaster, LA1 5EF
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.
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16. Post balance sheet events
On 20 December 2021, investment of £10,015,000 was made through the Limited Partnership in respect of Bramble Energy Limited,
an unlisted fuel cell innovation company. This was purchased by the Limited partnership for £10,000,000 on 14 February 2022.
On 2 March 2022, the Limited Partnership signed definitive agreements for an investment of NOK 40,000,000 (£3,500,000) in
Gen2 Energy AS, a Norwegian green hydrogen development company.
On 21 March 2022, a commitment of £7,000,000 was made through the Limited Partnership in respect of Cranfield Aerospace
Solutions Ltd (“CAeS”), an unlisted fuel cell innovation company. UK-based CAeS is an aerospace market leader in the design and
manufacture of new aircraft design concepts. The first £4.2 million was invested by the Limited Partnership in March 2022.
Abigail Rotheroe was appointed as a Non-Executive Director on 8 February 2022 and Caroline Cook will retire as a Non-Executive
Director effective 7 April 2022.
Since the period end date, the Russian invasion of Ukraine has resulted in market volatility. The Board and the Investment Adviser
have reviewed the investment portfolio and have identified limited direct impact on the portfolio but continue to monitor any impact
to the Company and Group and its investee companies and the valuation.
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Strategic Report
Governance
Financial statements Other information
Other
information
83 Alternative Performance Measures
84 Glossary
86 Directors and advisers
87 Report of the Alternative Investment Fund Manager
88 Notice of Annual General Meeting
90 Notes to the notice of Annual General Meeting
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Alternative Performance Measures (“APM”)
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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.
Premium
The amount, expressed as a percentage, by which the share price is more than the Net Asset Value per Ordinary Share.
As at 31 December 2021 Page
NAV per Ordinary Share (pence) a 3 95.75
Share price (pence) b 3 119.50
Premium (b÷a)-1 24.8%
There is no calculation of discount shown as the shares were trading at a premium of 24.8% at the period end.
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.
Period ended 31 December 2021 Page
Average NAV a n/a 104,565,796
Annualised expenses b n/a 2,155,500
Ongoing charges (b÷a) 2.06%
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 charged in the period from the Company’s IPO on 30 July 2021 to 31 December 2021 and of the
Limited Partnership charged in the period from its date of registration to 31 December 2021 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.
Period ended 31 December 2021 Page Share price
1
NAV
2
Opening at 30 July 2021 (p) a n/a 100.00 98.00
Closing at 31 December 2021 (p) b 3 119.50 95.75
Total return (b÷a)-1 19.5% (2.3)%
1 Share price total return is based on an opening share price of 100p.
2 NAV total return is based on an opening NAV after launch expenses of 98.0p per Ordinary Share.
n/a = not applicable.
Strategic Report
Governance
Financial statements Other information
Glossary
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Admission First admission of the Company’s Ordinary Shares to the London Stock Exchange
on 30 July 2021.
AIC Association of Investment Companies.
Alternative Investment Fund An investment vehicle under AIFMD. Under AIFMD (see below) HydrogenOne Capital
or “AIF” Growth plc is classified as an AIF.
Alternative Investment Fund A European Union directive which came into force on 22 July 2013 and has been
Managers Directive or “AIFMD” implemented in the UK.
Annual General Meeting or “AGM” A meeting held once a year which shareholders can attend and where they can vote on
resolutions to be put forward at the meeting and ask the Directors questions about the
company in which they are invested.
the Company HydrogenOne Capital Growth plc (“HGEN”).
Custodian An entity that is appointed to safeguard a company’s assets.
Discount/premium The amount, expressed as a percentage, by which the share price is less/more than
the net asset value per share.
Dividend Income receivable from an investment in shares.
Ex-dividend date The date from which you are not entitled to receive a dividend which has been declared
and is due to be paid to shareholders.
ESG Environmental, Social and Governance (“ESG”) criteria are a set of standards for a
company’s operations that socially conscious investors use to screen potential investments.
Environmental criteria consider how a company performs as a steward of nature. Social
criteria examine how it manages relationships with employees, suppliers, customers, and
the communities where it operates. Governance deals with a company’s leadership,
executive pay, audits, internal controls, and shareholder rights.
Financial Conduct Authority The independent body that regulates the financial services industry in the UK.
or “FCA”
GCC The Cooperation Council for the Arab States of the Gulf, also known as the Gulf
Cooperation Council.
Gross Asset Value or GAV The aggregate value of the total assets of the Company, including the gross asset value
of any investments held in the HydrogenOne Partnership attributable to the Company’s
interest in the HydrogenOne Partnership on a look-through basis from time-to-time,
calculated in accordance with the Company’s valuation policy.
Index A basket of stocks which is considered to replicate a particular stock market or sector.
Investment company A company formed to invest in a diversified portfolio of assets.
Investment Trust An investment company which is based in the UK and which meets certain tax conditions
which enables it to be exempt from UK corporation tax on its capital gains. The Company
is an investment trust.
Liquidity The extent to which investments can be sold at short notice.
Listed Hydrogen Assets Investments in quoted or traded Hydrogen Assets, which will predominantly be equity
securities but may also be corporate debt and/or other financial instruments.
Net assets or net asset value (“NAV”) An investment company’s assets less its liabilities.
NAV per Ordinary Share Net assets divided by the number of Ordinary Shares in issue (excluding any shares held
in treasury).
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Offtaker A purchaser of electricity and/or renewable obligation
Ordinary Shares The Company’s ordinary shares in issue.
Portfolio A collection of different investments held in order to deliver returns to shareholders
and to spread risk.
Private Hydrogen Assets Investments in unquoted Hydrogen Assets, which may be operational companies or
hydrogen projects (completed or under construction).
Relative performance Measurement of returns relative to an index.
Share buyback A purchase of a company’s own shares. Shares can either be bought back for
cancellation or held in treasury.
Share price The price of a share as determined by a relevant stock market.
Treasury shares A company’s own shares which are available to be sold by a company to raise funds.
Volatility A measure of how much a share moves up and down in price over a period of time.
Strategic Report
Governance
Financial statements Other information
Directors and advisers
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Directors (all Non-Executive)
Simon Hogan (Chairman)
Caroline Cook (to retire 7 April 2022)
Afkenel Schipstra
Roger Bell
Abigail Rotheroe
Administrator and Company Secretary
Sanne Fund Services (UK) Limited
6th Floor
125 London Wall
London
EC2Y 5AS
Alternative Investment Fund Manager (AIFM)
Sanne Fund Management
(Guernsey) Limited
Sarnia House
Le Truchot
St Peter Port
Guernsey
GY1 1GR
Broker
Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
Solicitors to the Company
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Registered office*
6th Floor
125 London Wall
London
EC2Y 5AS
*Registered in England and Wales –
No 13340859
Investment Adviser
HydrogenOne Capital LLP
5 Margaret Street
London
W1W 8RG
Custodian
The Northern Trust Company
50 Bank Street
Canary Wharf
London
E14 5NT
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Independent Auditor
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
Guernsey
GY1 1WR
Report of the Alternative Investment
Fund Manager
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Material change
Sanne Fund Management (Guernsey) Limited as AIFM must disclose in the Annual Report, details of material changes to the
information set out under AIFMD. For these purposes, there are no material changes effective during the period to be noted to the
information set out in the Prospectus.
Remuneration disclosures
The Company is categorised as an EU Alternative Investment Fund (“AIF”). The AIFMD seeks to regulate managers of AIFs, such as
the Company. It imposes obligations on AIFMs who manage AIFs in a member state of the European Economic Area (“EEA state”),
or who market shares in AIFs to investors who are domiciled, or with a registered office, in an EEA state. Under the AIFMD, an AIFM
must be appointed and must comply with various organisational, operational and transparency requirements.
On 5 July 2021, the Company appointed Sanne Fund Management (Guernsey) Limited to act as AIFM to the Company. Sanne Fund
Management (Guernsey) Limited is responsible for fulfilling the role of the AIFM and ensuring the Company complies with the
AIFMD requirements. Details of the total amount of remuneration for the financial year, split into fixed and variable remuneration,
paid by the AIFM to its staff, and the number of beneficiaries, are made available to Shareholders on request.
Strategic Report
Governance
Financial statements Other information
Notice of Annual General Meeting
Annual General Meeting
In line with the requirements of the Companies Act 2006, the Company will hold an Annual General Meeting of shareholders
to consider the resolutions laid out in the Notice of Meeting below.
Notice of Meeting
Notice is hereby given that the Annual General Meeting of HydrogenOne Capital Growth plc will be held at 6th Floor, 125 London
Wall, London EC2Y 5AS on 24 May 2022 at 12:30pm for the following purposes:
To consider and if thought fit pass the following resolutions of which resolutions 1 to 10 will be proposed as ordinary resolutions and
resolutions 11 to 13 will be proposed as special resolutions.
1. To receive the Company’s annual accounts for the period ended 31 December 2021.
2. To approve the Directors’ Remuneration Policy included in the Annual Report for the period ended 31 December 2021.
3. To approve the Directors’ Remuneration Report included in the Annual Report for the period ended 31 December 2021.
4. To elect Simon Hogan as a Director of the Company.
5. To elect Afkenel Schipstra as a Director of the Company.
6. To elect Roger Bell as a Director of the Company.
7. To elect Abigail Rotheroe as a Director of the Company.
8. To appoint KPMG Channel Islands Limited as auditor to the Company.
9. To authorise the Directors to fix the remuneration of the auditor until the conclusion of the next Annual General Meeting of
the Company.
10. That
(a) the Directors be generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (the “Act”) to
allot shares in the Company, or to grant rights to subscribe for or convert any security into shares in the Company, up to a
maximum nominal amount of £10,735,000 or, if less, the amount that represents 10% of the nominal value of the Company’s
issued share capital (excluding treasury shares) on the date on which this resolution is passed; and
(b) the authority given by this resolution:
(i) shall be in addition to all pre-existing authorities under section 551 of the Act; and
(ii) unless renewed, revoked or varied in accordance with the Act, shall expire at the conclusion of the Annual General
Meeting of the Company to be held in 2023 or, if earlier, on the expiry of 15 months from the date of passing of this
resolution save that the Company may, before such expiry, make any offer or enter into an agreement which would or
might require the allotment of shares in the Company, or the grant of rights to subscribe for or to convert any security
into shares in the Company, after such expiry and the Directors may allot shares in the Company or grant rights to
subscribe for or to convert any security into shares in the Company in pursuance of such an offer or agreement as if
such authority had not expired.
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11. That, subject to the passing of resolution 10 set out in this Notice of Annual General Meeting (the “Allotment Authority”), the
Directors be given power pursuant to sections 570 and 573 of the Companies Act 2006 (the “Act”) to allot equity securities
(within the meaning of section 560(1) of the Act) for cash pursuant to the Allotment Authority, and to sell treasury shares for cash,
as if section 561(1) of the Act did not apply to such allotment or sale, provided that such power:
(a) shall be limited to the allotment of equity securities or the sale of treasury shares up to an aggregate nominal amount of
£10,735,000 or, if less, the amount that represents 10% of the nominal value of the Company’s issued share capital
(excluding treasury shares) on the date on which this resolution is passed;
(b) shall be in addition to all pre-existing powers under sections 570 and 573 of the Act; and
(c) shall expire at the same time as the Allotment Authority, save that the Company may, before expiry of the power conferred
on the Directors by this resolution, make an offer or agreement which would or might require equity securities to be allotted
or treasury shares to be sold after such expiry and the Directors may allot equity securities or sell treasury shares in
pursuance of such an offer or agreement as if such power had not expired.
12. That the Company be and is hereby generally and unconditionally authorised in accordance with section 701 of the Companies
Act 2006 (the “Act”) to make market purchases (within the meaning of section 693(4) of the Act) of its Ordinary Shares of 1p each,
provided that:
(a) the maximum number of Ordinary Shares hereby authorised to be purchased shall be 16,091,765 (representing 14.99% of the
Company’s issued Ordinary Share capital (excluding shares held in treasury) at the date of the notice of this meeting);
(b) the minimum price (exclusive of any expenses) which may be paid for an Ordinary Share is 1p;
(c) the maximum price (excluding expenses) which may be paid for an Ordinary Share is not more than the higher of (i) 5%
above the average of the middle market quotations for the Ordinary Shares for the five business days immediately before
the day on which it purchases that share and (ii) the higher of the price of the last independent trade and the highest current
independent bid for the Ordinary Shares;
(d) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company in 2023 or, if
earlier, on the expiry of 15 months from the passing of this resolution, unless such authority is renewed prior to such time; and
(e) the Company may make a contract to purchase Ordinary Shares under the authority hereby conferred prior to the expiry of
such authority, which will or may be executed wholly or partly after the expiration of such authority and may make a
purchase of Ordinary Shares pursuant to any such contract.
13. That a general meeting of the Company other than an Annual General Meeting may be called on not less than 14 clear days’
notice, provided that this authority shall expire at the conclusion of the Company’s next Annual General Meeting after the date of
the passing of this resolution.
By order of the Board Registered office:
Brian Smith 6th Floor
For and on behalf of Sanne Fund Services (UK) Limited 125 London Wall
Company Secretary London
EC2Y 5AS
31 March 2022
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HydrogenOne Capital Growth plc Annual Report 2021
Strategic Report
Governance
Financial statements Other information
Notes to the notice of
Annual General Meeting
Website address
1. Information regarding the meeting, including the information required by section 311A of the Companies Act 2006, is available
from www. hydrogenonecapitalgrowthplc.com.
Entitlement to attend and vote
2. Only those holders of Ordinary Shares registered on the Company’s register of members at 12.30pm on 22 May 2022 or, if this
meeting is adjourned, at 12.30pm on the day two days prior to the adjourned meeting, shall be entitled to vote at the meeting.
Shareholders will not be permitted to attend the meeting in person and therefore should vote by proxy.
Appointment of Proxies
3. Members entitled to vote at the meeting (in accordance with Note 2 above) are entitled to appoint a proxy to vote in their place.
However, in view of the format of the meeting, shareholders should appoint the ‘Chairman of the Meeting’ as their proxy rather
than another person who will not be permitted to attend. If you wish to appoint a proxy, please follow the instructions at note 6
below if you wish to appoint a proxy through the CREST electronic proxy appointment service. In the case of joint members, only
one need sign the Form of Proxy. The vote of the senior joint member will be accepted to the exclusion of the votes of the other
joint members. For this purpose, seniority will be determined by the order in which the names of the members appear in the
register of members in respect of the joint shareholding.
4. You can appoint the Chairman of the Meeting as your proxy using the voting methods in notes 6 and 7.
5. You can instruct your proxy how to vote on each resolution by marking the resolutions For and Against using the voting methods
stated in notes 6 and 7. If you wish to abstain from voting on any resolution, please mark these resolutions withheld. It should be
noted that a vote withheld is not a vote in law and will not be counted in the calculation of the proportion of votes ‘For’ and
‘Against’ a resolution. If you do not indicate how your proxy should vote, he/she can exercise his/her discretion as to whether,
and if how so how, he/she votes on each resolution, as he/she will do in respect of any other business (including amendments
to resolutions) which may properly be conducted at the meeting.
Appointment of proxy
6. You can vote either:
• by logging on to www.investorcentre.co.uk/eproxy and following the instructions;
• by completing a hard copy form of proxy that accompanies this annual report; or
• in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the
procedures set out below.
In order for a proxy appointment to be valid a form of proxy must be completed. In each case the form of proxy must be
received by Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY by no later than 12.30pm
on 12 May 2022.
Appointment of Proxy through CREST
7. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for
the meeting to be held on the above date and any adjournment(s) thereof by using the procedures described in the CREST
Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a
voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a
“CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications
and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of
whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy,
must, in order to be valid, be transmitted so as to be received by the Company’s agent (ID: 3RA50) by the latest time(s) for
receipt of proxy appointments specified in the Notice of Meeting. For this purpose, the time of receipt will be taken to be the
time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company’s
agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of
instructions to a proxy’s appointee through CREST should be communicated to the appointee through other means.
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CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK &
Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST Proxy Instructions.
It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or
sponsored member or has appointed a voting service provider(s), to procure that this CREST sponsor or voting service provider(s)
take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
All messages relating to the appointment of a proxy or an instruction to a previously appointed proxy, which are to be
transmitted through CREST, must be lodged by 12.30pm on 12 May 2022 in respect of the meeting. Any such messages
received before such time will be deemed to have been received at such time. In the case of an adjournment, all messages
must be lodged with Link Group no later than 48 hours before the rescheduled meeting.
Appointment of a proxy through Proxymity
8. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which
has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to
www.proxymity.io. Your proxy must be lodged no later than 48 hours before the time of the Annual General Meeting, in order to
be considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated
terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the
electronic appointment of your proxy. Proxymity will then contract with your underlying institutional account holder directly to
accept their vote instructions through the platform.
Termination of proxy appointments
9. In order to revoke a proxy instruction, you will need to inform the Company. Please send a signed hard copy notice clearly
stating your intention to revoke your proxy appointment to by Computershare Investor Services PLC, The Pavilions, Bridgwater
Road, Bristol BS99 6ZY. In the case of a member which is a company, the revocation notice must be executed under its
common seal or otherwise in accordance with section 44 of the Companies Act 2006 or by signature on its behalf by an officer
or attorney whose power of attorney or other authority should be included with the revocation notice.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified in note 2 above then,
subject to the paragraph directly below, your proxy will remain valid.
If you submit more than one valid proxy appointment in respect of the same Ordinary Shares, the appointment received last
before the latest time for receipt of proxies will take precedence.
Nominated persons
10. If you are a person who has been nominated under section 146 of the Companies Act 2006 to enjoy information rights:
• You may have a right under an agreement between you and the member of the Company who has nominated you to have
information rights (Relevant Member) to be appointed or to have someone else appointed as a proxy for the meeting.
• If you either do not have such a right or if you have such a right but do not wish to exercise it, you may have a right under
an agreement between you and the Relevant Member to give instructions to the Relevant Member as to the exercise of
voting rights.
• Your main point of contact in terms of your investment in the Company remains the Relevant Member (or, perhaps, your
custodian or broker) and you should continue to contact them (and not the Company) regarding any changes or queries
relating to your personal details and your interest in the Company (including any administrative matters). The only exception
to this is where the Company expressly requests a response from you.
If you are not a member of the Company but you have been nominated by a member of the Company to enjoy information
rights, you do not have a right to appoint any proxies under the procedures set out in the notes to the form of proxy.
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HydrogenOne Capital Growth plc Annual Report 2021
Strategic Report
Governance
Financial statements Other information
Notes to the notice of
Annual General Meeting
Questions at the meeting
11. Under section 319A of the Companies Act 2006, the Company must answer any question you ask relating to the business
being dealt with at the meeting unless:
• answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of
confidential information;
• the answer has already been given on a website in the form of an answer to a question; or
• it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
Issued Shares and total voting rights
12. The total number of shares in issue in the Company is 107,350,000 Ordinary Shares of 1p each. Therefore, the total number of
Ordinary Shares with voting rights is 107,350,000. On a vote by a show of hands, every holder of Ordinary Shares who (being an
individual) is present by a person, by proxy or (being a corporation) is present by a duly authorised representative, not being
himself a member, shall have one vote. On a poll every holder of Ordinary Shares who is present in person or by proxy shall have
one vote for every Ordinary Share held by him.
Communication
13. Except as provided above, members who have general queries about the meeting should use the following means of
communication (no other methods of communication will be accepted):
• Computershare’s helpline on 0370 707 1346 (or +44 370 707 1346 from outside the UK). Lines are open 8.30am to 5.30pm
Monday to Friday (excluding public holidays in England and Wales. Charges for ‘03’ numbers are determined by the caller’s
service provider. Calls may be recorded and monitored randomly for security and training purposes);
• in writing to Computershare.
You may not use any electronic address provided either in this Notice of Meeting or in any related documents (including the
Form of Proxy for this meeting) to communicate with the Company for any purposes other than those expressly stated.
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Contents
hydrogenonecapitalgrowthplc.com
Strategic report
01 Investment objective, highlights and financial information
02 At a glance
04 About Clean Hydrogen
06 Chairman’s Statement
08 Company Objectives
10 Investment Adviser’s Report
22 Environmental, Social and Governance
25 Section 172 Statement
27 Other Information
Governance
34 Board of Directors
35 Directors’ Report
39 Corporate Governance
43 Directors’ Remuneration Policy
44 Directors’ Remuneration Implementation Peport
46 Report of the Audit and Risk Committee
48 Statement of Directors’ Responsibilities
Financials
50 Independent auditor’s report
56 Parent and consolidated statement of comprehensive income
57 Parent and consolidated statement of financial position
58 Parent and consolidated statement of changes in equity
59 Parent and consolidated statement of cash flows
60 Notes to the parent and consolidated financial statements
Other information
83 Alternative Performance Measures (“APMs”)
84 Glossary
86 Directors and Advisers
87 Report of the Alternative Investment Fund Manager
88 Notice of Annual General Meeting
90 Notes to Notice of Annual General Meeting
HydrogenOne Capital Growth plc
Annual Report & Accounts 2021
hydrogenonecapitalgrowthplc.com