Half-year Report & Unaudited Financial Statements
Riverstone Credit Opportunities Income Plc
Interim Report and Unaudited Interim Condensed Financial Statements
For the six months ended 30 June 2022
We lend to companies that build and operate the infrastructure used to generate, transport, store and distribute both renewable and conventional sources of energy, and companies that provide services to that infrastructure.
We also lend to companies seeking to facilitate the energy transition by decarbonising the energy, industrial and agricultural sectors, building sustainable infrastructure and reducing or sequestering carbon emissions.
We seek to ensure that our investments are having a positive impact on climate change by structuring each deal as either a Green Loan or a Sustainability-Linked Loan, documented using industry best practices.
Company number: 11874946
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All capitalised terms are defined in the list of defined terms in the list of defined terms below unless separately defined .
Riverstone Credit Opportunities Income Plc is an externally managed closed-ended investment company listed on the London Stock Exchange.
The Company's Ordinary Shares were admitted to the Specialist Fund Segment of the London Stock Exchange plc's Main Market and incorporated and registered on 11 March 2019 in England and Wales with an unlimited life.
INVESTMENT MANAGER
The Company's Investment Manager is Riverstone Investment Group LLC, which is controlled by affiliates of Riverstone Holdings LLC ("Riverstone").
Riverstone was founded in 2000 and is currently one of the world's largest and most experienced investment firms focused on energy, power, infrastructure and decarbonisation. The firm has raised over $43 billion of capital and committed approximately $44 billion to over 200+ investments in North America, South America, Europe, Africa, Asia and Australia. Headquartered in New York, Riverstone has built a global platform with additional offices located in Menlo Park, Houston, London, Amsterdam and Mexico City. Since its founding, the Firm has grown its presence significantly and currently employs over 90 professionals worldwide.
The registered office of the Company is 27-28 Eastcastle Street, London, W1W 8DH.
Key Financials
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NAV as at 30 June 2022 |
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$93.74m |
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NAV per Share as at 30 June 2022 |
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$1.02 |
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Market capitalisation as at 30 June 2022 |
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$76.90m |
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Share price at 30 June 2022 |
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$0.84 |
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Total comprehensive income for period ended 30 June 2022 |
$3.83m |
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EPS for the period ended 30 June 2022 |
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4.18 cents |
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Distribution per share with respect to the period ended 30 June 2022 |
4.0 cents |
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Highlights
· The NAV at 30 June 2022 was $ 1.02 per share.
· Distributions of 4.0 cents per share approved with respect to the period ended 30 June 2022.
· 3 full realisations, 1 new investment and 2 upsized investments executed in the period ended 30 June 2022.
INVESTMENT OBJECTIVE
The Company seeks to generate consistent Shareholder returns predominantly in the form of income
distributions, principally by making senior secured loans to energy-related companies.
The Company lends to companies working to drive change and deliver solutions across the energy sector, spanning renewable as well as conventional sources, with a primary focus on infrastructure assets. The Company's aim is to build a portfolio that generates an attractive and consistent risk adjusted return for investors.
INVESTMENT POLICY
The Company seeks to achieve its investment objective through investing primarily in a diversified portfolio of direct loans to companies that build and operate the infrastructure used to generate, transport, store and distribute both renewable and conventional sources of energy, and companies that provide services to that infrastructure. We also lend to companies seeking to facilitate the energy transition by decarbonising the energy, industrial and agricultural sectors, building sustainable infrastructure and reducing or sequestering carbon emissions. We seek to ensure that our investments are having a positive impact on climate change by structuring each deal as either a Green Loan or a Sustainability-Linked Loan, documented using industry best practices.
Further details on the Company's investment strategy, investment restrictions and distribution policy are outlined in the Company's Annual Report for the year ended 31 December 2021.
Chairman's Statement
Overview
On behalf of the Board, I am pleased to present this interim report for the six months ended 30 June 2022, which reflects strong performance by RCOI. During the period, RCOI has continued to pursue its strategy of originating, executing, and managing a diverse portfolio of senior secured well-collateralised loans to companies seeking to advance the energy transition by decarbonising energy infrastructure and infrastructure services. Furthermore, our growing record of attractive realisations has continued apace.
Our strategic re-balancing towards energy transition reflects not only the developed world's secular trend towards net zero, but also our belief that this focus presents a significant opportunity to provide a compelling total return through a combination of current yield and asset growth.
The investment manager's strategy focuses deliberately on asset-based lending, conservative LTVs and structurally protective features in senior secured, short duration, 100% floating rate loans, to mitigate risk as well as to optimise yield. This approach supports our ambition to deliver annual returns to shareholders of 8-10%. Since our IPO in May 2019 and pro forma for the second quarter dividend, we have delivered 25.5% NAV total return and 20.57 cents in dividends paid.
Our loan portfolio is diversified and of outstanding quality, including water infrastructure company Blackbuck Resources; plastic recycling firm Circulus Holdings; London listed maritime infrastructure operator Harland & Wolff; and chemical technology firm Streamline Innovations. We remain focused on steady yield and principal preservation and remain disciplined in our investment approach.
Shortly after the period end, RCOI re-initiated a share buyback programme, in recognition of the fact that the current share price does not, in our view, reflect the value of the portfolio and strategy. The buyback underlines the Board's confidence of the strategy's high performing and differentiated approach.
As we are faced with a strong energy market backdrop, we remain very optimistic about the investment opportunity set, given the market environment for energy investments is as strong as we have seen it since the IPO in May 2019.
On behalf of all the Board, I would like to thank our shareholders for their continuing support.
Key Developments
RCOI's NAV has remained robust during the period under review, with a current NAV per share of $1.02 (31 December 2021: $1.02).
In the first half of 2022, there was one new investment, Harland & Wolff, a London-listed infrastructure operator engaged in the development and operation of strategic maritime assets across the United Kingdom. This loan has been structured as a Green Loan following the Green Loan Principles and a Sustainability-Linked Loan with performance indicators focused on social responsibility. In addition, the loan to Streamline Innovations, a sponsor backed leader in environmentally advanced treatment solutions and equipment for hydrogen sulphide was successfully upsized bringing the total amount committed by RCOI to $13.8m. There were also three full realisations in the beginning of 2022. Signet Maritime Corporation was fully realised in April 2022 with a 14.5 per cent gross IRR and 1.33x gross MOIC; Roaring Fork Midstream was fully realised in June 2022 resulting in a 21.3 per cent gross IRR and a 1.16x gross MOIC respectively; in addition, Imperium3 NY, LLC was realised in April 2022 resulting in a 32.5 per cent gross IRR and 1.25x gross MOIC. For Imperium3 NY, LLC, RCOI will retain its share of non-dilutable equity warrants which provides meaningful upside to this investment. Our pipeline of investment opportunities continues to remain robust, focused on energy infrastructure, infrastructure services and energy transition opportunities.
Performance
The Company reported a profit of $3.8 million for the period ending 30 June 2022 as a result of income received from the investment portfolio and changes in the portfolio's valuations. The Net Asset Value ("NAV") of the Company remained solid and ended the period at $1.02 per share. The Company paid income of 3.70 cents per share to investors, achieving its stated dividend target. The Company has now delivered NAV total returns of 25.5% to investors since inception and 20.57 cents of income, including the dividend for the second quarter of 2022.
The current unrealised portfolio remains profitable at an average 1.13x Gross MOIC. Characteristics of RCOI's investment strategy, particularly the focus on a conservative LTV, a diversified sector and end-user base, as well as structured incentives for early repayment, have assisted the portfolio in its ability to limit the impact of broad market fluctuations on performance.
RCOI has executed 20 direct investments since inception and cumulatively invested $178 million of capital since the IPO in May 2019. The realised investments, now comprising 12, have delivered for the trust an average IRR of 18.8%. Our capital has facilitated corporate transitions, leading to earlier than expected refinancings on a number of transactions. This has left the trust modestly underinvested, despite a continually strong pipeline and favourable macro environment for our strategy.
The Board is extremely pleased with our highly diversified and dynamic portfolio of investments and the robust pipeline of new opportunities. Our focus on decarbonising energy infrastructure and infrastructure services will continue into the future, but the portfolio we have now is already making a big impact. Just as we had with more traditional energy companies, we are finding that businesses at the forefront of energy transition find our first lien, short-duration, floating rate product highly appealing and a good fit for their development plans.
As always, the Board and the manager remain vigilantly focused on managing the portfolio to ensure long-term value creation for our shareholders. We look to the future with confidence.
Reuben Jeffery, III
Chairman
10 August 2022
Investment Manager's Report
ABOUT THE INVESTMENT MANAGER
Appointed in May 2019, the Investment Manager, an affiliate of Riverstone, will seek to generate consistent shareholder returns predominantly in the form of income distributions principally by making green and sustainability-linked, senior secured loans to energy-related businesses. Loans are classified as Green Loans when they support environmentally sustainable economic activity and Sustainability Linked Loans when they contain sustainability performance targets or other equivalent metrics to be monitored. We lend to companies working to drive change and deliver solutions across the energy sector, spanning renewable as well as conventional sources, with a primary focus on infrastructure assets. Our aim is to build a portfolio that generates an attractive and consistent risk adjusted return for our investors.
The Company will seek to achieve its investment objective predominantly through investing in a diversified portfolio of direct and indirect investments in loans, notes, bonds, and other debt instruments, including convertible debt, issued by Borrowers operating in the energy sector. Riverstone's investment professionals have a combination of industry knowledge, financial expertise, and operating capabilities. The Company will also benefit from the guidance and input provided by non-Riverstone Credit Team members of Riverstone's credit investment committee who will be involved in the Company's investment process. The Company believes that Riverstone's global network of deep relationships with management teams, investment banks and other intermediaries in the energy sector will lead to enhanced sourcing and deal origination opportunities for the Company.
INVESTMENT STRATEGY
The Investment Manager will seek to leverage the wider Riverstone platform to enhance its investment strategy through the opportunities presented and the synergies gained from being part of one the largest dedicated energy focused private equity firms.
The key elements of the Investment Manager's investment strategy in relation to the Company and its SPVs are summarised below.
CORE STRATEGY - DIRECT LENDING
The Investment Manager will be primarily focused on originating opportunities from small to middle-sized energy companies in what the Riverstone team call the ''Wedge''; companies too small for the capital markets and without the conforming credit metrics that allow access to the commercial bank market.
All investments directly originated by the Company's SPVs are expected to involve providing primary capital to the Borrower, after having completed a thorough and comprehensive due diligence process. In each case the Riverstone team will be able to influence terms and conditions. In many cases, direct investments are expected to be held solely by the Company's SPVs, in some cases alongside Other Riverstone Funds. In others, the Company's SPVs (and Other Riverstone Funds) may be a member of a syndicate arranged by a third party.
The Investment Manager expects that lending investments made directly by the Company's SPVs will have a contractual duration of three to five years from inception and an expected duration of one to two years. The maximum term of any investment made by the Investment Manager will be 7 years. Many of the loans, however, are short term floating rate loans with floating rate coupons that are indexed to LIBOR or SOFR as well as contain rate floors. Despite the current inflationary environment with interest rates already rising and potential to continue in the next few years, this does not result in a decline in value in our loans.
ComplEmentary Strategies - Capital Relief and Market-Based Opportunities The Investment Manager may be presented with opportunities to acquire from banks' so-called ''non-conforming'' loans which can no longer be held on bank balance sheets. The Investment Manager expects that such ''capital relief'' transactions will be secondary in nature, will typically be based on public due diligence information and will typically not allow the Company to influence the underlying terms of the relevant Investment. The Investment Manager expects that, in capital relief transactions, the Company may participate as part of a broader syndicate of third-party lenders. The Investment Manager expects capital relief transactions made by the Company's SPVs to have a duration of one to three years from inception and an expected duration of less than 12 months.
Riverstone believes that the same trends which make it difficult for smaller Borrowers to access capital markets may create attractive opportunities for investors such as the Company to acquire syndicated loans and bonds in the open market at risk-adjusted returns that match or exceed the returns available from direct lending opportunities. In such circumstances, the Company's SPVs may make selected investments in the secondary market for syndicated loans and bonds where the Investment Manager believes that such instruments offer suitable risk adjusted returns.
The Investment Manager expects market-based opportunities generally to be secondary in nature, typically to be based on public due diligence information and may, typically, not allow the Company any influence on the underlying terms of the investment. The Investment Manager expects market-based opportunities will typically involve the Company's SPVs being part of a broader syndicate of lenders.
INVESTMENT PORTFOLIO SUMMARY
The Investment Manager has reviewed numerous opportunities within the Investment Guidelines since RCOI's admission. As of 30 June 2022, the Company holds eight direct investments across energy infrastructure & infrastructure services and energy transition assets as further discussed below. In addition, RCOI holds the warrants of one investment where the loan was fully realised. Three realisations occurred during the period ended 30 June 2022. The Investment Manager continues to maintain a strong pipeline of investment opportunities and expects to make a number of further commitments across the infrastructure, infrastructure services and energy transition sectors. RCOI, when making a new investment, will receive an allocation of the investment in accordance with the limitations illustrated in the Company's Investment Restrictions. The determination of what percentage they will receive will be pro rata to the available capital for all of the RCP funds that are eligible to participate in the investment.
In the descriptions that follow, yield to maturity is inclusive of all upfront fees, original issue discounts, drawn spreads and prepayment penalties through the stated maturity of the loan. Most loans have incentives to be called early. A portion of the loans have a "payment-in-kind" feature for drawn coupons for a limited time period. Similarly, some of the loans have a "delayed-draw" feature that allows the borrower to call capital over time, but always with a hard deadline. Loans that are committed are loans with signed definitive documentation where a structuring fee and/or original issue discount have been earned and the Company earns an undrawn spread. Loans that are invested are loans with signed definitive documentation where a structuring fee and/or original issue discount have been earned, the Company has funded the loan to the borrower and the Company is earning a drawn coupon.
Riverstone expects that every loan it makes will advance the cause of Energy Transition one way or another. For new green energy infrastructure, or conversion of older assets to a more sustainable use, we will make "Green Loans." For existing hydrocarbon related businesses, we will make "Sustainability-Linked Loans" that tie loan economics to meeting specific sustainability performance targets. Both structures will be based on LSTA guidelines and be subject to second party opinions from Sustainable Fitch.
Harland & Wolff - RCOI participated in a $70.0 million first lien Green Term Loan to a publicly listed infrastructure operator engaged in the development and operation of strategic maritime assets across the United Kingdom.
At closing on 9 March 2022, $11.8 million was committed by RCOI and $7.9 million was drawn of the $35 million committed facility tranche. The first lien term loan has a maturity of September 2023 and an estimated all-in yield to maturity of 13.2 percent for RCOI on a fully-drawn basis. Proceeds from the term loan will be utilised to fund working capital and capital expenditures associated with the fabrication of wind turbine generator jackets for the NnG offshore wind project, to repay existing indebtedness, to fund an interest reserve account, and to pay transaction fees & expenses. The Company will also grant Riverstone detachable warrants over new ordinary shares in the Company ("Warrants") as part of this transaction. A total of 8,665,380 Warrants will be issued, of which 2,970,987 warrants are for RCOI.
The term loan has been structured as a Green Loan following the Green Loan Principles published by the LMA, APLMA, and LSTA and a Sustainability-Linked Loan with performance indicators focused on social responsibility. Harland & Wolff is incentivised to upscale its group-wide apprenticeship programme aimed at the local communities in which it operates. Harland & Wolff plans to build on its success to-date and seeks further contracts within the renewables and "green maritime" sectors, such as fabrication contracts for offshore wind and hydrogen projects, new vessel builds, retrofits with sustainability credentials and other such contracts that would promote the UK Government's agenda to achieving Net Zero by 2050.
As of 30 June 2022, $10.1 million of the $11.8 million commitment has been invested.
Streamline Innovations - RCOI participated in a $20.0 million first lien delayed-draw Sustainability-Linked Term Loan to a sponsor-backed leader in environmentally-advanced treatment solutions and equipment for hydrogen sulphide (H2S) in energy, renewable fuels, wastewater, landfill gas, biogas, and industrial processes.
At closing on 23 November 2021, $6.9 million was committed by RCOI and $1.7 million was drawn at closing. The first lien term loan has a maturity of November 2024 and an estimated all-in yield to maturity of 11.1 percent for RCOI on a fully-drawn basis. The term loan is structured as a Sustainability-Linked Loan, whereby the loan pricing steps up unless a sustainability target is met that is tied to new construction of H2S treating plants, which eliminate poisonous H2S gas and reduce toxic sulphur dioxide (SO2) emissions by eliminating routine flaring.
In May 2022, RCOI participated in a $25.0 million upsize of the investment, which now qualifies as a Green Loan, bringing the total loan size to $45.0 million. As part of the upsize, Sustainable Fitch provided a Second Party Opinion ("SPO") on the Green Loan to Streamline. The SPO verifies the Term Loan's alignment to the LSTA Green Loan Principles with the transaction being compliant with the four pillars of the LSTA Green Loan Principles and aligned with the LSTA category of pollution and prevention.
As of 30 June 2022, $6.8 million of the $13.8 million commitment has been invested.
Circulus Holdings - RCOI participated in a $100.0 million first lien Green Term Loan to a sponsor-backed recycler of low-density polyethylene ("LDPE") for use in food-grade packaging, injection moulding applications, bags, films and other high-end products.
At closing on 23 August 2021, $12.3 million was invested by RCOI. The term loan has a maturity of August 2024 and an expected all-in yield to maturity of 13.5%. Following the closing, a portion was sold to a third party in Q4 2021.
The term loan was RCP and RCOI's first investment documented as a "Green Loan" per LSTA guidelines, with use of proceeds tied to specific green initiatives and carefully tracked to ensure compliance. RCP and RCOI intend to use similar lending structures for qualifying companies going forward.
Use of proceeds was to build additional plants across the US.
As of 30 June 2022, the full remaining commitment of $9.2 million is invested.
Blackbuck Resources - RCOI participated in a $50.0 million first lien delayed-draw Sustainability-Linked Term Loan to a sponsor-backed water infrastructure company focused on providing E&P operators with a one-stop shop for all things related to water management, including treatment, gathering, recycling, storage and disposal. At closing on 30 June 2021, $9.9 million was committed by RCOI. The first lien term loan has a maturity of June 2024 and an estimated all-in yield to maturity of 11.9% for RCOI on a fully-drawn basis.
The term loan was RCP and RCOI's first investment documented as a "Sustainability-Linked Loan" per LSTA guidelines, with pricing step-ups tied to meeting specific sustainability performance targets ("SPTs") set by the Company's board. For Blackbuck, the SPTs were related to the number of truckloads of water (and the resulting emissions) that could be removed from the highways from their activities. RCP and RCOI intend to use similar lending structures for qualifying companies going forward. Use of proceeds was primarily to refinance existing indebtedness and growth capex.
In June 2022, the loan was upsized $7.0 bringing the total facility to $57.0 million. The proceeds, along with incremental equity, will be used to fund growth capex associated with new contracts.
Sustainable Fitch, a division of Fitch Group focused on ESG, provided a Second Party Opinion ("SPO") on the Sustainability-Linked Loan to Blackbuck. The SPO considers the loan to be aligned with the five pillars of the LSTA Sustainability-Linked Loan Principles.
As of 30 June 2022, $10.2 million of the $11.6 million commitment has been invested.
Imperium3 New York, Inc - RCOI participated in a $63.0 million first lien delayed-draw term loan to a lithium-ion battery company that will commercialise high performing lithium-ion batteries by developing a large-scale manufacturing facility in Endicott, NY. In addition to having a first lien on the manufacturing assets, the credit facility is supported by two parent guarantors: Charge CCCV ("C4V"), which is a research and development company based in Binghamton, New York with patented discoveries in battery composition, and Magnis Energy Technologies Limited ("Magnis") [ASX: MNS]. Once producing at scale, the company will be the first U.S. battery cell supplier not captive to an original equipment manufacturer and supply various underserved industrial end-markets.
At closing on 16 April 2021, $6.8 million was committed by RCOI and $5.4 million was drawn at closing. Following the close 20% of the funded investment was sold to a third party. The first lien term loan has a maturity of April 2025 and an estimated all-in yield to maturity of 22.1% for RCOI on a fully-drawn basis. The yield is made up of upfront fees, a drawn coupon and exit fees that are higher than the average in the rest of the portfolio.
Use of proceeds was primarily to construct the manufacturing facility.
In April 2022, the Company fully refinanced this loan with a new source of financing, resulting in a 32.5 percent realised IRR and 1.25x realised MOIC. Additionally, the Company will retain our non-dilutable equity warrants which provides meaningful upside to this investment.
Hoover Circular Solutions - RCOI originally participated in a recapitalisation of a sponsor-backed company that is the leading specialty rental provider of containers and mobile asset management solutions across the energy, industrial, refining, and petrochemical industries. The Borrower went through a rebranding and refocus on sustainability. The term loan closed October 2020.
At closing, $7.4 million was committed by RCOI. The first lien term loan has a maturity of October 2024 and an all-in expected yield to maturity of 10.4% on a fully drawn basis. Following the sale of the Company's offshore business, $3.2 million of RCOI's outstanding principal was repaid on 3 June 2020, with the residual $4.2 million investment remaining in a first lien senior-secured position with sub 3x leverage. A portion of the commitment was paid down, with interest and fees, in the first half of 2021.
As of 30 June 2022, the remaining $3.8 million commitment has been invested.
FS Crude, LLC - RCOI originally participated in a $75 million first lien delayed-draw term loan for a sponsor-backed midstream company that provides crude gathering, storage and blending services to a diversified footprint of producers in the core of the Delaware Basin. The term loan closed in March 2020.
At closing, $13.7 million was committed by RCOI. The first lien term loan originally had a maturity of March 2023 and an all-in expected yield to maturity of 11.7% on a fully drawn basis. As part of a fulsome amendment and in exchange for covenant relief, the Borrower paid down $40 million of principal as well as interest and fees on 28 December 2020. The remaining $35 million remains in a first lien senior-secured position, of which RCOI's commitment is $6.4 million. As part of the paydown, the maturity date was amended to March 2024.
Use of proceeds from the credit facility was to fund construction, operation, and maintenance costs of the crude system.
As of 30 June 2022, the remaining $6.4 million commitment has been invested.
EPIC Propane - RCOI participated in a $75.0 million first lien delayed-draw term loan to a sponsor-backed midstream company that will provide propane purity offtake transportation to the Houston, TX export market. The term loan closed in June 2019.
At closing, $14.8 million was committed by RCOI. The first lien term loan has a maturity of December 2022 and an all-in expected yield to maturity of 11.6% on a fully drawn basis.
Use of proceeds from the credit facility was for the construction of a new propane pipeline from Robstown and Corpus Christi, TX to Sweeney, TX.
As of 30 June 2022, the full $14.8 million commitment has been invested.
Caliber Midstream - RCOI participated in a $10.0 million upsize of RCP's commitment to a $65.0 million first lien Holdco term loan for a sponsor-backed Bakken focused midstream company that provides crude oil and natural gas gathering and processing, produced water transportation and disposal, and freshwater sourcing and transportation. RCP closed the initial $65.0 million financing in June 2018. The term loan upsize closed in August 2019.
At closing, $3.4 million was committed by RCOI. The first lien HoldCo term loan had a maturity of June 2022 and an all-in expected yield to maturity of 11.8% on a fully drawn basis.
Use of proceeds, combined with an Opco revolving credit facility draw, was to fund an acquisition.
In March 2021, Caliber Midstream Partners' (the "Company" or "OpCo") largest customer, Nine Point Energy, terminated their midstream contract with Caliber and subsequently filed for Chapter 11 bankruptcy. In April 2021, RCOI and other RCP affiliates purchased a small allocation of the OpCo revolving credit facility with a maturity in June 2023. In May 2021, RCP and other HoldCo Lenders completed a recapitalisation of Caliber resulting in HoldCo Term Loan Lenders receiving substantially all of the equity in HoldCo. In March 2022, the Company and OpCo lender closed the restructuring with the OpCo lenders receiving ~100% of the equity. Following the restructuring, new management was hired, a new contract was executed and there remains increased focus on cost cutting initiatives and new revenue opportunities.
As of 30 June 2022, the full $4.0 million commitment has been invested.
SUMMARY AND OUTLOOK
The backdrop for the broader energy sector remains strong, continuing the trend seen at the beginning of 2022. Given our focus on energy infrastructure, infrastructure services and energy transition assets, RCOI is well-diversified and poised to take advantage of the investment opportunity brought about by the convergence of two market phenomena, namely the consistent growing demand for sources of energy and the concurrent need to meet global "net-zero" targets.
The realisations made in the period have resulted in ample liquidity to deploy into the energy infrastructure and infrastructure pipeline of opportunities. As the commodity market overall remains strong and given the strong returns of the realisations, we are poised to continue to provide stable cashflows and an attractive yield. We will therefore continue to target similar investment opportunities through our Green Loans and Sustainability Linked Loans with sustainability performance targets. Additionally, despite the recent increase in inflation and rise in interest rates, our floating rate loans are all based in LIBOR or SOFR with floors and don't decline in value as interest rates are likely to rise.
Based on the current unfunded commitments, recent deal activity and potential new investment opportunities, the Investment Manager believes RCOI will remain close to fully committed throughout 2022.
BUSINESS REVIEW
GOING CONCERN
As at 30 June 2022, the Company's cash balance was $4.5 million, in addition to cash balances held at the SPVs of $8.8 million. The Directors and Investment Manager expect that this is sufficient to cover existing liabilities of $0.8 million, total unfunded commitments of $10.1m, the distribution of $1.8 million with respect to the quarter ended 30 June 2022 and any foreseeable expenses for the period to 31 December 2023, being a period of at least 12 months from approval of the financial statements.
The Directors and Investment Manager expect that proceeds from loan interest repayments and realisation of investments will enable the Company to continue to pay quarterly distributions for the foreseeable future.
The Covid-19 pandemic has caused severe disruptions in the global economies and capital markets. The pandemic may also continue to materially and adversely impact the performance of the global economy, the Company's operations and investments in the future. The conflict between Ukraine and Russia has also had, and is expected to continue for some time to have, substantial additional impacts on the global economy, particularly in respect of inflation rates. Given the on-going nature of both the Covid-19 pandemic and the conflict between Ukraine and Russia, it is currently not possible to determine the potential scale and scope of the ultimate effects on the global economy, capital markets, and the Company's operations and investments. As the situation around both continues to evolve, these will remain risks to the Company.
The Directors and Investment Manager are actively monitoring these situations and their potential effect on the Company and its underlying investments. In particular, they have considered the following specific key potential impacts:
· unavailability of key personnel at the Investment Manager or Administrator;
· increased volatility in the fair value of investments;
· disruptions to business activities of the underlying investments; and
· recoverability of income and principal and allowance for expected credit losses.
In considering the above key potential impacts of COVID-19 and the conflict between Ukraine and Russia on the Company and its underlying investments, the Investment Manager has assessed these with reference to the mitigation measures in place.
As further detailed in note 4 to the financial statements, the Investment Manager uses a third-party valuation provider to perform a full independent valuation of the underlying investments. The Investment Manager has also assessed the recoverability of income due from the underlying investee companies and has no material concerns. Additionally, the Investment Manager and Directors have considered the cash flow forecast and a reverse stress test to determine the term over which the Company can remain viable given its current resources.
Based on the assessment outlined above, including the various risk mitigation measures in place, the Directors do not consider that the effects of COVID-19 and the conflict between Ukraine and Russia to have created a material uncertainty over the assessment of the Company as a going concern.
On the basis of this review, and after making due enquiries to the Investment Manager, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the period to 31 December 2023, being a period of assessment covered by the Directors and at least 12 months from approval of the financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
The Company's assets consist of investments, through SPVs, within the global energy industry, with a particular focus on opportunities in the global E&P and midstream energy sub-sectors. The Company also focuses on energy transition, infrastructure and infrastructure services by structuring deals as either a Green Loan or a Sustainability-Linked Loan. Its principal risks are therefore related to market conditions in the energy sector in general, but also the particular circumstances of the businesses in which it is invested. The Investment Manager seeks to mitigate these risks through active asset management initiatives and by carrying out due diligence work on potential targets before entering into any investments.
The Board thoroughly considers the process for identifying, evaluating and managing any significant and emerging risks faced by the Company on an ongoing basis and has performed a robust assessment of those risks, which are reported and discussed at Board meetings. The Board ensures that effective controls are in place to mitigate these risks and that a satisfactory compliance regime exists to ensure all applicable local and international laws and regulations are upheld. The principal risks are consistent with those set out in the 2021 Annual Report.
For each material risk, the likelihood and consequences are identified, management controls and frequency of monitoring are confirmed and results reported and discussed at the quarterly Board meetings.
The key areas of risk faced by the Company and mitigating factors are summarised below:
1. The Ordinary Shares may trade at a discount to NAV per Share for reasons including but not limited to market conditions, liquidity concerns and actual or expected Company performance. As such, there can be no guarantee that attempts to mitigate such discount will be successful or that the use of discount control mechanisms will be possible, advisable or adopted by the Company. To mitigate this risk, the Investment Manager closely monitors and identifies the reasons for significant fluctuations, and considers the Company's share buyback programme when applicable and in the interests of Shareholders.
2. The ability of the Company to meet the target distribution will depend on the Investment Manager's ability to find investments that generate sufficient and consistent yield to support the Target Distribution. The Investment Manager will identify and manage suitable investments in accordance with the Investment Policy, market conditions and the economic environment. To mitigate this risk, the Company's Investment Policy and investment restrictions enable the Company to build a diversified energy portfolio that should deliver returns that are in line with the Target Distribution range.
3. The ability of the Company to achieve its investment objectives is dependent on the Investment Manager sourcing and making appropriate investments for the Company. Investment returns will depend upon the Investment Manager's ability to source and make successful investments on behalf of the Company. To mitigate this risk, the Investment Manager believes sourcing investments is one of its competitive advantages. The Investment Manager is well resourced and has access to the wider skills and expertise at Riverstone whose personnel have years of experience in the global energy sector.
4. Environmental exposures and existing and proposed environmental legislation and regulation may adversely affect the operations of Borrowers. Delay or failure to satisfy any regulatory conditions or other applicable requirements could prevent the Company from acquiring certain investments or could hinder the operations of certain Borrowers. To mitigate this risk, The Investment Manager implements monitoring and quality control procedures to mitigate the occurrence of any violation of safety/health and environmental laws. The Investment Manager has a clear ESG policy which is implemented and reviewed by the Board.
5. The Company's investment objective requires it to invest in loans that are likely to be both illiquid and scarce. If there is an adverse change in the underlying credit, then the ability of RCOI to recover value may be impaired. To mitigate this risk, the Company primarily originates shorter duration senior secured loans with protective provisions. In some instances the loans incentivise early repayment.
6. The valuations used to calculate the NAV on a quarterly basis will be based on the Investment Manager's unaudited estimated fair market values of the Company's investments and may be based on estimates which could be inaccurate. To mitigate this risk, the Investment Manager has an extensive valuation policy and also has engaged the independent valuation services of Houlihan Lokey on a quarterly basis.
7. In today's global technological environment, the Company, its investments and its engaged service providers are subject to risks associated with cyber security. The effective operation of the Investment Manager and the businesses of Borrowers are likely to be highly dependent on the availability and operation of complex information and technological systems. To mitigate this risk, The Audit Committee Chairman monitors cyber security risk and best practices and cyber security due diligence is performed on each potential borrower.
8. The Company may be exposed to fluctuations and volatility in commodity prices through investments it makes, and adverse changes in global supply and demand and prices for such commodities may adversely affect the business, results of operations, and financial condition of the Company. To mitigate this risk, the Investment Manager intends to create a diversified portfolio across various energy subsectors, commodity exposures, technologies and end-markets to provide natural synergies that aim to enhance the overall stability of the portfolio.
9. The Company will only lend to Borrowers in the global energy sector and such single industry concentration could affect the Company's ability to generate returns. Adverse market conditions in the energy sector may delay or prevent the Company from making appropriate investments. The ongoing coronavirus pandemic has led to a decline in global commerce and travel, thereby causing reductions in the near-term demand for energy especially within oil and gas, and long-term impacts remain unknown for the Company's Borrowers. To mitigate this risk, the Investment Manager intends to create a diversified portfolio across various energy subsectors, commodity exposures, technologies and end-markets to provide natural synergies that aim to enhance the overall stability of the portfolio.
10. The performance of the Company may be affected by changes to interest rates and credit spreads. To mitigate this risk, the Investment Manager assesses credit risk and interest rate risk on an ongoing basis and closely monitors each investment with the assistance of each respective management team and the engaged service providers.
The principal risks outlined above remain the most likely to affect the Company in the second half of the year.
Directors' Responsibilities Statement
The Directors are responsible for preparing this Interim Report in accordance with applicable law and regulations.
The Directors confirm that to the best of their knowledge:
· The unaudited interim condensed financial statements have been prepared in accordance with UK-adopted IAS 34 Interim Financial Reporting; and
· The Chairman's Statement, Investment Manager's Report and the notes to the condensed financial statements include a fair review of the information required by:
i. DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the period and their impact on the unaudited interim condensed financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
ii. DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the period and that have materially affected the financial position and performance of the Company during that period.
On behalf of the Board
Reuben Jeffery, III
Chairman
10 August 2022
Independent Review Report
to Riverstone Credit Opportunities Income Plc
Conclusion
We have been engaged by Riverstone Credit Opportunities Income Plc ('the Company') to review the condensed set of financial statements in the Interim Report for the six months ended 30 June 2022 which comprises the Condensed Statement of Financial Position, the Condensed Statement of Comprehensive Income, the Condensed Statement of Changes in Equity, the Condensed Statement of Cash Flows and related notes 1 to 15. We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Interim Report for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with UK-adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with UK-adopted international accounting standards. The condensed set of financial statements included in this Interim Report has been prepared in accordance with UK-adopted International Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the Interim Report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
In preparing the Interim Report, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the Interim Report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
Mike Gaylor
Ernst & Young LLP
London
10 August 2022
Condensed Statement of Financial Position
As at 30 June 2022
|
|
|
30 June 2022 |
31 December 2021 |
|
|
Note |
$'000 |
$'000 |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
Investments at fair value through profit or loss |
4 |
87,292 |
87,125 |
|
|
|
87,292 |
87,125 |
|
Current assets |
|
|
|
|
Loan interest receivable |
4 |
1,407 |
1,418 |
|
Dividends receivable |
4 |
1,199 |
674 |
|
Trade and other receivables |
6 |
208 |
97 |
|
Cash and cash equivalents |
|
4,482 |
4,884 |
|
|
|
7,296 |
7,073 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
7 |
(846) |
(898) |
|
|
|
|
|
|
Net current assets |
|
6,450 |
6,175 |
|
|
|
|
|
|
Net assets |
|
93,742 |
93,300 |
|
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
8 |
915 |
915 |
|
Capital redemption reserve |
8 |
85 |
85 |
|
Other distributable reserves |
8 |
91,179 |
91,179 |
|
Retained earnings |
|
1,563 |
1,121 |
|
Total Shareholders' funds |
|
93,742 |
93,300 |
|
|
|
|
|
|
Number of Shares in issue at period/year end |
|
91,545,383 |
91,545,383 |
|
|
|
|
|
|
Net assets per share (cents) |
12 |
102.40 |
101.92 |
The interim condensed financial statements were approved and authorised for issue by the Board of Directors on 10 August 2022 and signed on its behalf by:
Reuben Jeffery, III Emma Davies
Chairman Director
The accompanying notes below form an integral part of these interim condensed financial statements.
Condensed Statement of Comprehensive Income
For the six months ended 30 June 2022 (Unaudited)
|
|
|
For the six months ended |
For the six months ended |
|||||
|
|
Note |
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
Investment gain / (loss) |
|
|
|
|
|
|
|
|
|
Change in fair value of investments at fair value through profit or loss |
4 |
- |
167 |
167 |
- |
(898) |
(898) |
|
|
|
|
- |
167 |
167 |
- |
(898) |
(898) |
|
|
Income |
|
|
|
|
|
|
|
|
|
Investment income |
4 |
4,837 |
- |
4,837 |
4,516 |
- |
4,516 |
|
|
|
|
4,837 |
- |
4,837 |
4,516 |
- |
4,516 |
|
|
Expenses |
|
|
|
|
|
|
|
|
|
Directors' fees and expenses |
14 |
(94) |
- |
(94) |
(83) |
- |
(83) |
|
|
Other operating expenses |
|
(530) |
- |
(530) |
(498) |
- |
(498) |
|
|
Profit share |
10 |
(559) |
- |
(559) |
(444) |
- |
(444) |
|
|
Total expenses |
|
(1,183) |
- |
(1,183) |
(1,025) |
- |
(1,025) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit / (loss) for the period |
|
3,654 |
167 |
3,821 |
3,491 |
(898) |
2,593 |
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
|
|
|
|
|
|
|
|
Interest income |
|
7 |
- |
7 |
1 |
- |
1 |
|
|
Total finance income |
|
7 |
- |
7 |
1 |
- |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
Profit / (loss) for the period before tax |
|
3,661 |
167 |
3,828 |
3,492 |
(898) |
2,594 |
|
|
|
|
|
|
|
|
|
|
|
|
Tax |
11 |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Profit / (loss) for the period after tax |
|
3,661 |
167 |
3,828 |
3,492 |
(898) |
2,594 |
|
|
|
|
|
|
|
|
|
|
|
|
Profit / (loss) and total comprehensive income for the period |
|
3,661 |
167 |
3,828 |
3,492 |
(898) |
2,594 |
|
|
Profit / (loss) and total comprehensive income attributable to: |
|
- |
- |
- |
|
|
|
|
|
Equity holders of the Company |
|
3,661 |
167 |
3,828 |
3,492 |
(898) |
2,594 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per Share (cents) |
12 |
4.00 |
0.18 |
4.18 |
3.81 |
0.98 |
2.83 |
|
All 'Revenue' and 'Capital' items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period.
The 'Total' column of this statement is the profit and loss account of the Company and the 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies. Profit / (loss) for the period after tax also represents Total Comprehensive Income.
The accompanying notes below an integral part of these interim condensed financial statements.
All capitalised terms are defined in the list of defined terms below unless separately defined.
Condensed Statement of Changes in Equity
For the six months ended 30 June 2022 (Unaudited)
|
For the six months ended |
|
Share capital |
Capital redemption reserve |
Other distributable reserves |
Retained earnings |
Total |
|
|
Note |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
Opening net assets attributable to Shareholders |
|
915 |
85 |
91,179 |
1,121 |
93,300 |
|
Total comprehensive income for the period |
|
- |
- |
- |
3,828 |
3,828 |
|
Interim distributions paid in the period |
13 |
- |
- |
- |
(3,386) |
(3,386) |
|
|
|
|
|
|
|
|
|
Closing net assets attributable to Shareholders |
|
915 |
85 |
91,179 |
1,563 |
93,742 |
After taking account of cumulative unrealised losses of $308k and other distributable reserves and distributions made, the total distributable reserves as at 30 June 2022 were $ 93,050k .
|
For the six months ended |
|
Share capital |
Capital redemption reserve |
Other distributable reserves |
Retained earnings |
Total |
|
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
Opening net assets attributable to shareholders |
|
915 |
85 |
91,179 |
3,351 |
95,530 |
|
Total comprehensive income for the period |
|
- |
- |
- |
2,594 |
2,594 |
|
Interim distributions paid in the period |
13 |
- |
- |
- |
(3,387) |
(3,387) |
|
|
|
|
|
|
|
|
|
Closing net assets attributable to shareholders |
|
915 |
85 |
91,179 |
2,558 |
94,737 |
After taking account of cumulative unrealised gains of $621k and other distributable reserves and distributions made, the total reserves distributable by way of a distribution as at 30 June 2021 were $93,116k.
The accompanying notes below form an integral part of these interim condensed financial statements.
Condensed Statement of Cash Flows
For the six months ended 30 June 2022 (Unaudited)
|
|
Note |
For the six months ended |
For the six months ended |
|
|
|
$'000 |
$'000 |
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
Operating profit for the financial period |
|
3,821 |
2,593 |
|
|
|
|
|
|
Adjustments for: |
|
|
|
|
Movement in fair value of investments |
4 |
(167) |
898 |
|
Investment income |
4 |
(4,837) |
(4,516) |
|
Movement in payables |
|
(52) |
(242) |
|
Movement in receivables |
|
(111) |
(108) |
|
Loan interest received |
4 |
2,778 |
2,672 |
|
Dividends received |
|
1,550 |
1,797 |
|
Bank interest received |
|
3 |
1 |
|
Net cash generated from operating activities |
|
2,985 |
3,095 |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Investment additions |
4 |
- |
(563) |
|
Net cash (used in) / generated from investing activities |
|
- |
(563) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Distributions paid |
13 |
(3,386) |
(3,387) |
|
Net cash used in financing activities |
|
(3,386) |
(3,387) |
|
|
|
|
|
|
Net movement in cash and cash equivalents during the period |
|
(401) |
(855) |
|
Cash and cash equivalents at the beginning of the period |
|
4,883 |
5,374 |
|
Cash and cash equivalents at the end of the period |
|
4,482 |
4,519 |
The accompanying notes below form an integral part of these interim condensed financial statements.
Notes to the Unaudited Interim Condensed Financial Statements
For the six months ended 30 June 2022
1. General Information
The Company was incorporated and registered in England and Wales on 11 March 2019 with registered number 11874946 as a public company limited by shares under the Companies Act 2006
(the ''Act''). The principal legislation under which the Company operates is the Act. The Directors intend, at all times, to conduct the affairs of the Company so as to enable it to qualify as an investment trust for the purposes of section 1158 of the Corporation Tax Act 2010, as amended.
2. Basis of preparation
The condensed financial statements have been prepared in accordance with UK-adopted IAS 34 Interim Financial Statements. Where presentational guidance set out in the AIC SORP, 2021 edition, is consistent with the requirements of UK-adopted IAS, the Directors have sought to prepare the condensed financial statements on a basis compliant with the recommendations of the AIC SORP. In particular, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the total Statement of Comprehensive Income.
The same accounting policies, presentation and methods of computation are followed in these condensed financial statements as were applied in the preparation of the Company's annual financial statements for the year ended 31 December 2021. These accounting policies will be applied in the Company's financial statements for the year ended 31 December 2022.
The Company's annual financial statements were prepared on the historic cost basis, as modified for the measurement of certain financial instruments at fair value through profit or loss and in accordance with UK-adopted international accounting standards ('IAS') and with those parts of the Companies Act 2006 applicable to companies under UK-adopted IAS.
These condensed financial statements do not constitute statutory accounts as defined in section 434 of the Companies act and do not include all information and disclosures required in an Annual Report. They should be read in conjunction with the Company's Annual Report for the year ended 31 December 2021.
The Company's Annual Report for the year ended 31 December 2021 included an unqualified audit report that did not reference any matters by way of emphasis and did not contain any statements under sections 498 (2) and (3) of the Companies Act 2006. A copy of this annual report has been delivered to the Registrar of Companies.
Going concern
As at 30 June 2022, the Company's cash balance was $4.5 million, in addition to cash balances held at the SPVs of $8.8 million. The Directors and Investment Manager expect that this is sufficient to cover existing liabilities of $0.8 million, total unfunded commitments of $10.1m, the distribution of $1.8 million with respect to the quarter ended 30 June 2022 and any foreseeable expenses for the period to 31 December 2023, being a period of at least 12 months from approval of the financial statements.
The Directors and Investment Manager expect that proceeds from loan interest repayments and realisation of investments will enable the Company to continue to pay quarterly distributions for the foreseeable future.
After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence to at least 31 December 2023, being a period of assessment covered by the Directors and at least 12 months from the approval of the condensed financial statements. In making this assessment, they have considered the effects of COVID-19 and the conflict between Ukraine and Russia as outlined in the Business Review, including the various risk mitigation measures in place and do not consider these to have had a material impact on the assessment of the Company as a going concern. Accordingly, the Company continues to adopt the going concern basis of accounting in preparing the interim financial statements.
Segmental Reporting
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors, as a whole. The key measure of performance used by the Board to assess the Company's performance and to allocate resources is the Company's Net Asset Value, as calculated under UK-adopted IAS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the Interim Report.
The Company invests in corporate entities as a single segment and therefore, for management purposes, the Company is organised into one main operating segment. All of the Company's current income is derived from within the United States. All of the Company's non-current assets are located in the United States. Due to the Company's nature, it has no customers.
Seasonal and Cyclical Variations
The Company's results do not vary as a result of seasonal activity.
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Judgements, estimates and assumptions are continually evaluated and are based on management experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Judgements include the assessment of the Company as an Investment Entity as defined in IFRS 10 'Consolidated Financial Statements' and the assessment of the SPVs as structured entities.
Estimates and assumptions that are significant to the financial statements include the valuation of the investments as detailed in note 4 and the potential impact of climate change.
Further details of these judgements, estimates and assumptions made by the Directors are given in the annual financial statements for the year ended 31 December 2021.
4. Investments at fair value through profit or loss
|
|
|
For the six months ended |
For the year ended 31 December 2021 |
||||
|
|
|
Loans |
Equity |
Total |
Loans |
Equity |
Total |
|
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
Opening balance |
|
60,049 |
27,076 |
87,125 |
60,049 |
28,499 |
88,548 |
|
Restructuring |
|
213 |
(213) |
- |
- |
- |
- |
|
Investment addition / (proceeds) |
|
- |
- |
- |
- |
563 |
563 |
|
Unrealised movement in fair value of investments |
|
- |
167 |
167 |
- |
(1,986) |
(1,986) |
|
|
|
60,262 |
27,030 |
87,292 |
60,049 |
27,076 |
87,125 |
The Company's investment in its SPVs comprises a loan investment and an equity investment, as set out above. The SPVs subsequently invest in a diversified portfolio of direct and indirect investments in loans, notes, bonds and other debt instruments.
Interest receivable on the loan investment at 30 June 2022 was $ 1.4 m (31 December 2021: $1.4m and the dividend receivable on the equity investment at 30 June 2022 was $ 1.2m (31 December 2021: $0.7m). The total unfunded commitments of the Company as at 30 June 2022 is $ 10.1m (31 December 2021: $8.4m)
Reconciliation of investment income recognised in the period
|
|
|
For the six months ended |
For the six months ended |
|
|
|
$'000 |
$'000 |
|
Movement in loan interest receivable |
|
(11) |
88 |
|
Loan interest received as cash |
|
2,778 |
2,672 |
|
Total loan interest recognised in the period |
|
2,767 |
2,760 |
|
Dividend income |
|
2,070 |
1,756 |
|
Total investment income recognised in the period |
|
4,837 |
4,516 |
Fair value measurements
As disclosed on pages 67 and 68 of the Company's Annual Report for the year ended 31 December 2021, IFRS 13 "Fair Value Measurement" requires disclosure of fair value measurement by level. The level of fair value hierarchy within the financial assets or financial liabilities ranges from level 1 to level 3 and is determined on the basis of the lowest level input that is significant to the fair value measurement.
The fair value of the Company's investments are ultimately determined by the fair values of the underlying investments. Due to the nature of the investments, they are always expected to be classified as level 3 as the investments are not traded and contain unobservable inputs. There have been no transfers between levels during the six months ended 30 June 2022 (31 December 2021: none).
Valuation methodology and process
The Directors base the fair value of investment in the SPVs on the fair value of their assets and liabilities, adjusted if necessary, to reflect liquidity, future commitments, and other specific factors of the SPVs and Investment Manager. This is based on the components within the SPVs, principally the value of the SPVs' investments, in addition to cash and short-term money market fixed deposits. Any fluctuation in the value of the SPVs' investments held will directly impact on the value of the Company's investment in the SPVs.
The Investment Manager's assessment of fair value of investments held by the SPVs is determined in accordance with IPEV Valuation Guidelines. When valuing the SPVs' investments, the Investment Manager reviews information provided by the underlying investee companies and other business partners and applies IPEV methodologies, to estimate a fair value as at the date of the Statement of Financial Position.
Initially, acquisitions are valued at the price of recent investment. Subsequently, and as appropriate, the Investment Manager values the investments on a quarterly basis using common industry valuation techniques, including comparable public market valuation, comparable merger and acquisition transaction valuation and discounted cash flow valuation. The techniques used in determining the fair value of the Company's investments through its SPVs are selected on an investment by investment basis so as to maximise the use of market based observable inputs. Due to the illiquid and subjective nature of the Company's underlying investments, the Investment Manager uses a third-party valuation provider to perform a full independent valuation of the underlying investments.
Quantitative information of significant unobservable inputs - Level 3 - SPV
|
|
30 June 2022 |
Valuation |
Unobservable |
Range / weighted |
|
Description |
$'000 |
technique |
input |
average |
|
|
|
|
|
|
|
|
|
|
|
|
|
SPV |
87,292 |
Adjusted net asset value |
NAV |
87,292 |
|
|
|
|
Discount for lack of liquidity |
0% |
The Directors believe that it is appropriate to measure the SPVs at their adjusted net asset value, incorporating a valuation of the underlying investments which has taken into account risks to fair value, inclusive of liquidity discounts, through appropriate discount rates.
Sensitivity analysis to significant changes in unobservable inputs within Level 3 hierarchy
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis as at 30 June 2022 are as shown below:
|
|
|
Sensitivity |
Effect on |
|
Description |
Input |
used |
fair value |
|
|
|
|
$'000 |
|
|
|
|
|
|
SPV |
Discount for lack of liquidity |
+/- 3% |
-/+ 2,619 |
The Company's valuation policy is compliant with both UK-adopted IAS and IPEV Valuation Guidelines and is applied consistently. As the Company's investments are generally not publicly quoted, valuations require meaningful judgment to establish a range of values, and the ultimate value at which an investment is realised may differ from its most recent valuation and the difference may be significant.
For the period ended 30 June 2022, the valuations of the Company's investments, through its SPVs, are detailed in the Investment Manager's Report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments at Fair Value as of June 30, 2022 |
|
|
Range |
Fair Value Sensitivity to a 100 bps Increase In the Discount Rate |
|
|
Industry |
(In Thousands) |
Valuation technique(s) |
Unobservable input(s) |
Low |
High |
(In Thousands) |
|
|
|
|
|
|
|
|
|
Infrastructure |
41,585 |
Discounted cash flow |
Discount rate |
6% |
13% |
(461) |
|
|
|
Recovery Approach |
EBITDA multiple |
7.0x |
7.0x |
|
|
Infrastructure |
20,694 |
Discounted cash flow |
Discount rate |
8% |
13% |
(430) |
|
Services |
|
Waterfall Approach |
NA |
NA |
NA |
|
|
|
|
Black Scholes Option |
Discount rate |
3% |
3% |
|
|
Energy |
1,241 |
Public comparables |
EBITDA multiple |
30.0x |
35.0x |
(43) |
|
Transition |
|
Public comparables |
Revenue multiple |
6.0x |
6.5x |
|
|
|
$ 63,520 (a) |
|
|
|
|
$ (934) |
(a) The difference between the fair value of the SPVs of $ 65.3 and the fair value of the underlying investments at 30 June 2022 is due to cash and cash equivalent balances of $25.7m and residual liabilities of $2.0m, held within the SPVs.
5. Unconsolidated subsidiaries
The following table shows subsidiaries of the Company. As the Company is regarded as an Investment Entity, these subsidiaries have not been consolidated in the preparation of the financial statements:
|
Investment |
|
Place of business |
Ownership interest as at 30 June 2022 |
|
|
|
|
|
|
Held directly |
|
|
|
|
Riverstone International Credit Corp. |
|
USA |
100% |
|
Riverstone International Credit L.P. |
|
USA |
100% |
|
Held indirectly |
|
|
|
|
Riverstone International Credit - Direct L.P. |
|
USA |
100% |
The registered office of the above subsidiaries is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.
The amounts invested in the Company's unconsolidated subsidiaries during the period and their carrying value at 30 June 2022 are as outlined in note 4. This comprised $ 86,726,056 (31 December 2021: $86,805,000) invested in Riverstone International Credit Corp., which was subsequently invested in Riverstone International Credit - Direct L.P. and $ 339 invested in Riverstone International Credit L.P. to enable these vehicles to fund underlying investments. The Company intends to fund further underlying investments through its unconsolidated subsidiaries.
There are no restrictions on the ability of the Company's unconsolidated subsidiaries to transfer funds in the form of cash dividends or repayment of loans.
6. Trade and other receivables
|
|
|
30 June 2022 |
31 December 2021 |
|
|
|
$'000 |
$'000 |
|
Prepayments |
|
178 |
76 |
|
VAT receivable |
|
26 |
21 |
|
Bank interest receivable |
|
4 |
- |
|
|
|
208 |
97 |
7. Trade and other payables
|
|
|
30 June 2022 |
31 December 2021 |
|
|
|
$'000 |
$'000 |
|
Profit share payable |
|
565 |
668 |
|
Other payables |
|
281 |
230 |
|
|
|
846 |
898 |
8. Share capital and reserves
|
Date |
Issued and fully paid |
Number of shares issued |
Share capital |
Capital redemption reserve |
Other distributable reserves |
Total |
|
|
|
|
|
|
|
|
|
GBP |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
1 January 2022 |
1 |
- |
- |
- |
- |
|
|
30 June 2022 |
|
1 |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
USD |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
1 January 2022 |
91,545,383 |
915 |
85 |
91,179 |
92,179 |
|
|
30 June 2022 |
|
91,545,383 |
915 |
85 |
91,179 |
92,179 |
9. Audit fees
|
|
|
For the six months ended |
For the six months ended |
|
|
|
$'000 |
$'000 |
|
Fees to the Company's Auditor |
|
|
|
|
for audit of the statutory financial statements |
|
103 |
108 |
|
for other audit related services |
|
24 |
28 |
|
|
|
127 |
136 |
Other operating expenses include fees payable to the Company's Auditor of $ 127k (June 2021: $136k).
The fees payable to the Company's Auditor include estimated accruals proportioned across the year for the audit of the statutory financial statements and the fees for other audit related services were in relation to a review of the Interim Report.
10. Profit Share
Under the Investment Management Agreement, the Investment Manager will not charge any base or other ongoing management fees, but will be entitled to reimbursement of reasonable expenses incurred by it in the performance of its duties. The Investment Manager will receive from the Company, a Profit Share based on the Company's income, as calculated for UK tax purposes and the Company's Capital Account.
The Profit Share will be payable quarterly at the same time as the Company pays its distributions, subject to an annual reconciliation in the last quarter of each year, as disclosed on page 74 of the Company's Annual Report for the year ended 31 December 2021.
Amounts charged as Profit Share during the period were $ 559k (30 June 2021: $444k).
11. Tax
As an investment trust, the Company is exempt from UK corporation tax on capital gains arising on the disposal of shares. Capital profits from its loan relationships are exempt from UK tax where the profits are accounted for through the Capital column of the Statement of Comprehensive Income, in accordance with the AIC SORP.
The Company has made a streaming election to HMRC in respect of distributions and is entitled to deduct interest distributions paid out of income profits arising from its loan relationships in computing its UK corporation tax liability.
Therefore, no tax liability has been recognised in the financial statements.
|
|
For the six months ended |
For the six months ended |
||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
UK Corporation tax charge on profits for the period at 19% (2021: 19%) |
- |
- |
- |
- |
- |
- |
|
|
For the six months ended |
For the six months ended |
||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
Return on ordinary activities before taxation |
3,661 |
167 |
3,828 |
3,492 |
(898) |
2,594 |
|
|
|
|
|
|
|
|
|
Profit / (loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021: 19%) |
696 |
32 |
728 |
664 |
(171) |
493 |
|
|
|
|
|
|
|
|
|
Effects of: |
|
|
|
|
|
|
|
Non-taxable investment (losses) / |
- |
(32) |
(32) |
- |
171 |
171 |
|
Non-taxable dividend income |
(394) |
- |
(394) |
(334) |
- |
(334) |
|
Tax deductible interest distributions |
(302) |
- |
(302) |
(330) |
- |
(330) |
|
Total tax charge |
- |
- |
- |
- |
- |
- |
As at 30 June 2022 the Company had no unprovided deferred tax assets or liabilities. At that date, based on current estimates and including the accumulation of net allowable losses, the Company had no unrelieved losses.
Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Company meets (and intends to continue to meet for the foreseeable future) the conditions for approval as an Investment Trust company.
The UK corporation tax rate is currently 19%. The UK Chancellor announced in the March 2021 Budget that the rate will increase to 25% from April 2023. The rate increase was substantively enacted in May 2021.
12. Earnings per share and Net assets per share
Earnings per share
|
|
For the six months ended |
For the six months ended |
|||||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|||
|
Profit/(loss) attributable to equity holders of the Company - $'000 |
3,661 |
167 |
3,828 |
3,492 |
(898) |
2,594 |
|||
|
Weighted average number of Ordinary Shares in issue |
|
|
91,545,383 |
|
|
91,545,383 |
|||
|
Basic and diluted earnings and loss per Share from continuing operations in the period (cents) |
4.00 |
0.18 |
4.18 |
3.81 |
(0.98) |
2.83 |
|||
There are no dilutive shares in issue.
Net assets per share
|
|
|
30 June 2022 |
31 December 2021 |
|
Net assets - $'000 |
|
93,742 |
93,300 |
|
Number of Ordinary Shares issued |
|
91,545,383 |
91,545,383 |
|
Net assets per Share (cents) |
|
102.40 |
101.92 |
|
|
|
|
|
13. Distributions declared with respect to the period
On 10 August 2022 , the Board approved a distribution of 2.0 cents per share with respect to the quarter ended 30 June 2022. The record date for the distribution is 19 August 2022 and the payment date is 23 September 2022.
|
|
|
Distribution per share |
Total distribution |
|
Distributions paid during the period ended 30 June 2022 |
|
cents |
$'000 |
|
|
|
|
|
|
With respect to the quarter ended 31 December 2021 |
|
1.70 |
1,556 |
|
With respect to the quarter ended 31 March 2022 |
|
2.00 |
1,830 |
|
|
|
|
|
|
|
|
3.70 |
3,386 |
|
|
|
|
|
|
|
|
Distribution per share |
Total distribution |
|
Interim distributions declared after 30 June 2022 and not accrued in the period |
|
cents |
$'000 |
|
With respect to the quarter ended 30 June 2022 |
|
2.00 |
1,830 |
|
|
|
2.00 |
1,830 |
14. Related party transactions
Directors
The Company has three non-executive Directors. Directors' fees for the period ended 30 June 2022 amounted to $ 76k (30 June 2021: $83k), of which $ nil (31 December 2021: $nil) was outstanding at period end. Amounts paid to Directors as reimbursement of travel and other incidental expenses during the period amounted to $3.4k (30 June 2021 $nil), of which $nil (31 December 2021: $nil) was outstanding at period end.
Unconsolidated subsidiaries
In 2019, the Company provided a loan to the US Corp. which accrues interest at 9.27 percent. Any interest that is unable to be repaid at each quarter end is capitalised and added to the loan balance. Total interest in relation to the period was $ 2.8m (30 June 2021: $2.8m) of which $2.8m (30 June 2021: $2.8m) was received in cash and $ 1.4m remained outstanding at the period end (31 December 2021: $1.4m outstanding, received on 11 January 2022 ). The balance on the loan investment at 30 June 2022 was $ 60.3m (31 December 2022: $60.1m).
The Company's other investments in its SPVs are made via equity shareholdings as disclosed in note 4.
Investment Manager
The Investment Manager is an affiliate of Riverstone and provides advice to the Company on the origination and completion of new investments, the management of the portfolio and on realisations, as well as on funding requirements, subject to Board approval. For the provision of services under the Investment Management Agreement, the Investment Manager earns a Profit Share, as disclosed in note 10 and on page 74 of the Company's Annual Report for the year ended 31 December 2021. The Investment Manager is entitled to reimbursement of any reasonable expenses incurred in relation to management of the Company and amounts reimbursed during the period were $16k (31 December 2021: $31k).
15. Subsequent events
The Company re-initiated a share buyback programme in June 2022. Between the period end and approval of these financial Statements the Company has announced the following share buybacks.
On July 6, 2022, the Company purchased 283,452 Ordinary Shares of US$0.01 each.
On July 7, 2022, the Company purchased 143,415 Ordinary Shares of US$0.01 each.
On July 8, 2022, the Company purchased 151,978 Ordinary Shares of US$0.01 each.
With the exception of distributions declared and disclosed in note 13, there are no other material subsequent events.
Glossary of Capitalised Defined Terms
Administrator means Ocorian Administration (UK) Limited
AGM means Annual General Meeting
AIC means the Association of Investment Companies
AIC Code means the AIC Code of Corporate Governance
AIC SORP means the Statement of Recommended Practice issued by the AIC in November 2014 and updated in January 2017 for the Financial Statements of Investment Trust Companies and Venture Capital Trusts
Annual Report means the Company's yearly report and financial statements for the year ending 31 December 2021
Auditor means Ernst & Young LLP or EY
Board means the Directors of the Company
Borrower means entities operating in the energy sector that issue loans, notes, bonds, and other debt instruments including convertible debt.
CA means the Companies Act 2006 which forms the primary source of UK company law
Capital Amount means the amount of gross proceeds of the IPO, plus the net proceeds of any future issues of Ordinary Shares, less any amounts expended by the Company on share repurchases and redemptions or, following a Realisation Election, attributable to Realisation Shares
Company or RCOI means Riverstone Credit Opportunities Income Plc
D&C means drilling and completion
Directors means the Directors of the Company
Distributable Income means the Company's income, as calculated for UK tax purposes
DTR means the Disclosure Guidance and Transparency Rules sourcebook issued by the Financial Conduct Authority
ESG means environmental, social and governance
E&P means exploration and production
FCA means the UK Financial Conduct Authority (or its successor bodies)
IAS means the international accounting standards
IFRS means the International Financial Reporting Standards, being the principles-based accounting standards, interpretations and the framework by that name issued by the International Accounting Standards Board, to the extent they have been adopted by the UK
Investment Management Agreement means the Investment Management Agreement entered between the Investment Manager and the Company
Investment Manager means Riverstone Investment Group LLC
IPEV Valuation Guidelines means the International Private Equity and Venture Capital Valuation Guidelines
IPO means the initial public offering of shares by a private company to the public
Listing Rules means the listing rules made by the UK Listing Authority under Section 73A of the Financial Services and Markets Act 2000
London Stock Exchange or LSE means London Stock Exchange plc
LTV means loan to value ratio
Main Market means the main market of the London Stock Exchange
MOIC means multiple on invested capital
NAV or Net Asset Value means the value of the assets of the Company less its liabilities as calculated in accordance with the Company's valuation policy and expressed in US dollars
Ordinary Shares means ordinary shares of $0.01 in the capital of the Company issued and designated as "Ordinary Shares" and having the rights, restrictions and entitlements set out in the Company's articles of incorporation
Other Riverstone Funds means other Riverstone-sponsored, controlled or managed entities, which are or may in the future be managed or advised by the Investment Manager or one or more of its affiliates, excluding the SPV
Profit Share means the payments to which the Investment Manager is entitled in the circumstances and as described in the notes to the financial statements
Realisation Shares means realisation shares of US$0.01 in the capital of the Company, as defined in the prospectus
SPV means any intermediate holding or investing entities that the Company may establish from time to time for the purposes of efficient portfolio management and to assist with tax planning generally and any subsidiary undertaking of the Company from time to time
Specialist Fund Segment means the Specialist Fund Segment of the London Stock Exchange's Main Market
UK or United Kingdom means the United Kingdom of Great Britain and Northern Ireland
UK Code means the UK Corporate Governance Code issued by the FRC
US or United States means the United States of America, its territories and possessions, any state of the United States and the District of Columbia
US Corp. means Riverstone International Credit Corp.
Directors and General Information
|
Directors |
|
|
Reuben Jeffery, III (Chairman) (appointed 2 April 2019) |
|
|
Emma Davies (Audit and Risk Committee Chair) (appointed 2 April 2019) |
|
|
Edward Cumming-Bruce (Nomination Committee Chair) (appointed 2 April 2019) |
|
|
all independent and of the registered office below |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registered Office |
Website: www.riverstonecoi.com |
|
27-28 Eastcastle Street |
ISIN GB00BJHPS390 |
|
London |
Ticker RCOI |
|
W1W 8DH |
Sedol BJHPS39 |
|
|
Registered Company Number 11874946 |
|
|
|
|
Investment Manager |
Registrar |
|
Riverstone Investment Group LLC |
Link Asset Services |
|
c/o The Corporation Trust Company |
The Registry |
|
Corporation Trust Center |
34 Beckenham Road |
|
1209 Orange Street |
Beckenham |
|
Wilmington |
Kent |
|
Delaware 19801 |
BR3 4TU |
|
|
|
|
Company Secretary and Administrator |
Sole Bookrunner |
|
Ocorian Administration (UK) Limited |
J.P. Morgan Securities plc |
|
27-28 Eastcastle Street |
25 Bank Street |
|
London |
Canary Wharf |
|
W1W 8DH |
London |
|
|
E14 5JP |
|
|
|
|
Independent Auditor |
Receiving Agent |
|
Ernst & Young LLP |
Link Asset Services |
|
25 Churchill Place |
Corporate Actions |
|
London |
The Registry |
|
E14 5EY |
34 Beckenham Road |
|
|
Beckenham |
|
|
Kent |
|
Legal Adviser to the Company |
BR3 4TU |
|
Hogan Lovells LLP |
|
|
Atlantic House |
|
|
50 Holborn Viaduct |
|
|
London |
|
|
EC1A 2FG |
|
|
|
|
|
Principal Banker and Custodian |
|
|
J.P. Morgan Chase Bank, N.A. |
|
|
270 Park Avenue |
|
|
New York |
|
|
NY 10017-2014
|
|
|
|
|
Swiss supplement
ADDITIONAL INFORMATION FOR INVESTORS IN SWITZERLAND
This Swiss Supplement is supplemental to, forms part of and should be read in conjunction with the interim report for the half year ended June 30, 2022 for Riverstone Credit Opportunities Income Plc (the "Fund").
The Fund has appointed Société Générale as Swiss Representative and Paying Agent. The Confidential Memorandum, the Articles of Association as well as the annual report of the Fund can be obtained free of charge from the representative in Switzerland, Société Générale, Paris, Zurich Branch, Talacker 50, P.O. Box 5070, CH-8021 Zurich. The paying agent of the Fund in Switzerland is Société Générale, Paris, Zurich Branch, Talacker 50, P.O. Box 5070, CH-8021 Zurich. The Company may offer Shares only to qualified investors in Switzerland. In respect of the Shares distributed in and from Switzerland, the place of performance and jurisdiction is the registered office of the Swiss Representative.
Cautionary Statement
The Chairman's Statement and Investment Manager's Report have been prepared solely to provide additional information for Shareholders to assess the Company's strategies and the potential for those strategies to succeed. These should not be relied on by any other party or for any other purpose.
The Chairman's Statement and Investment Manager's Report may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology.
These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs or current expectations of the Directors and the Investment Manager, concerning, amongst other things, the investment objectives and investment policy, financing strategies, investment performance, results of operations, financial condition, liquidity, prospects, and distribution policy of the Company and the markets in which it invests.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance.
The Company's actual investment performance, results of operations, financial condition, liquidity, distribution policy and the development of its financing strategies may differ materially from the impression created by the forward-looking statements contained in this document.
Subject to their legal and regulatory obligations, the Directors and the Investment Manager expressly disclaim any obligations to update or revise any forward-looking statement contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.
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