Riverstone Energy Limited

 

The Company seeks to achieve superior risk-adjusted returns through investing in the energy sector.

 

The Company's Investment Manager is RIGL Holdings, LP, which is majority-owned and controlled by affiliates of 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 approximately $45 billion of capital and committed approximately $45 billion to 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 Amsterdam and Mexico City.

 

The registered office of the Company is PO Box 286, Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 4LY.

Financial and Operational Highlights⁽¹⁾⁽²⁾

 

Underlying investment fair value write-offs during the year ended 31 December 2024	(i)         $17.4 million from T-Rex (ii)         $10.0 million from DCFC Tritium Loan (iii)        $3.5 million from FreeWire (iv)       $3.1 million from Our Next Energy (v)        $2.7 million from Ionic I & II (Samsung Ventures) (vi)        $0.8 million from Enviva (vii)       $0.6 million from Tritium DCFC (Backstop) (viii)   $0.1 million from DCFC Tritium Sponsor fka DCRN Sponsor   Each of these investments were written down further to nil during the year.
Remaining potential unfunded commitments at 31 December 2024	(i)           $6.2 million(3) in Onyx Power
Realisations and distributions received during the year ended 31 December 2024	Realised and distributions received of $13.0 million(2), all of which was pursuant to the legacy conventional strategy: (i)         $7.2 million distributions from Permian Resources (ii)         $5.0 million realisation from Rock Oil (iii)        $0.8 million distributions from Veren Inc.

Key Financials

	2024	2023
NAV as at 31 December	$376 million / £299 million(4)	$674 million / £529 million(4)
NAV per Share as at 31 December	$14.83 / £11.81(4)	$15.96 / £12.53(4)
Per cent. change in NAV per Share (USD) for the year ended 31 December	(7.08) per cent.	9.92 per cent.
Market capitalisation at 31 December	$250 million / £199 million(4)	$430 million / £338 million (4)
Share price at 31 December	$9.87 / £7.86(4)	$10.20 / £8.01
Per cent. change in Share price in US Dollar and Sterling for the year ended 31 December	(3.2) per cent. (in $) / (1.9) per cent. (in £)	24.2 per cent (in $) / 18.1 per cent. (in £)
Share price discount to NAV	(33.4) per cent.	(36.1) per cent.
Cash and cash equivalents at 31 December	$78.5 million (5) / £62.5 million(4)	$291 million (5) / £228 million(4)
Marketable securities (unrestricted) at 31 December	$201 million (6) / £160 million(4)	$150 million (6) / £117 million(4)
Marketable securities (restricted) at 31 December	$nil million (7) / £nil million(4)	$58 million (7) / £45 million(4)
Total comprehensive (loss) for the year ended 31 December	$(79.7) million	$(2.3) million
Basic and diluted (loss) per Share for the year ended 31 December	(264.36) cents / (210.51) pence(4)	(4.86) cents / (3.82) pence(4)
Number of shares repurchased through buyback and tender offer/average price per Share for the year ended 31 December (8)	16,853,098 $12.85 / £10.23	8,695,869 $7.24 / £5.75
Number of Shares outstanding at 31 December	25,342,691	42,195,789

 

⁽¹⁾  Amounts shown reflect investment-related activity at the Investment Undertaking level, not the Company.

⁽²⁾ Amounts may vary due to rounding.

⁽³⁾ The expected funding of the remaining unfunded commitment to Onyx at 31 December 2024 is $nil in 2025 and $nil in 2026. The residual amounts are to be funded as needed in 2027 and later years.

⁽⁴⁾ Based on exchange rate of 1.2558 $/£ at 31 December 2024 (1.2736 $/£ at 31 December 2023).

⁽⁵⁾ At 31 December 2024 and 2023, respectively, amounts are comprised of $1.5 million and $5.8 million held at the Company, $62.6 million and $283 million held at the Partnership and $14.4 million and $2 million held at REL US Corp.

⁽⁶⁾ Unrestricted marketable securities held by the Partnership consist of publicly-traded shares of Permian Resources, Solid Power, Hyzon and Veren for which the aggregate fair value was $201 million at 31 December 2024, and $192 million as of 24 February 2025 (31 December 2023: $150 million).

⁽⁷⁾ At 31 December 2024 and 24 February 2025, the Partnership no longer held restricted marketable securities (31 December 2023: $58 million consisting of publicly traded shares of Veren Inc.).

⁽⁸⁾ Inception to date total number of shares repurchased was 59,137,373 at an average price per share of £6.60 ($8.29).

 

 

 

board Chair's Statement

 

 

Dear Shareholder,

 

M&A remains buoyant despite uncertainty in outlook

2024 was another very active year for the energy markets in both the conventional and the low carbon energy sectors as demand growth highlighted that the world will continue to need all forms of energy for many years to come. At the same time geopolitical uncertainty, notably the conflicts in Ukraine and the Middle East, continued to impact oil prices and kept energy security at the top of the agenda. Towards the end of the period the U.S. election results heralded a likely change in approach towards the country's energy and decarbonisation policies which could have potentially far-reaching consequences.

 

Nevertheless, there were signs of optimism in the sector in 2024. We saw further consolidation in upstream ventures particularly through merger and acquisition (M&A) activity as part of the global trend of increased M&A across the board. ConocoPhillips' acquisition of Marathon Oil and the completion of ExxonMobil's acquisition of Pioneer Natural Resources were emblematic of wider activity in the upstream sector. The drivers of much of this activity have largely been cost efficiencies, scaling portfolios and improving liquidity. REL also benefitted from this increase in activity, as evidenced by our portfolio company, Permian Resources' bolt-on acquisition of Barilla Draw during the year.

 

Whether M&A activity is sustained at this level into 2025 remains to be seen - the consultancy firm Wood Mackenzie expects to see lower levels of M&A spend in 2025 versus 2023 and 2024. Nonetheless we anticipate that consolidation activity is likely to continue with bolt-on acquisitions and mergers of equals the most probable routes for companies to create strong synergies, increase inventories and monetise investments.

 

 

Improved operational performance as commodity prices stay weak

Despite the uptick in M&A activity, oil price weakness and volatility continued to weigh on public market valuations in 2024. The volatility reflects how finely balanced price drivers are currently. The bullish outlook argues that conflict-related supply disruption combined with Chinese stimulus propping up demand will support prices in the medium term. However, the bear case is that weaker demand in the West plus strong US shale growth and OPEC+ oversupply will suppress prices. Both views have their merits and until a clearer picture on demand or supply emerges we expect the swings in sentiment and price to continue into 2025.

 

The polarising effect of geopolitics and macroeconomic factors has meant that despite volatility over the course of the year the oil price has stayed flat during 2024. The average annual WTI oil price was $76.79 in 2024, largely in line with the 2023 average of $77.58 per barrel. Henry Hub gas prices trended a little lower in 2024, averaging $2.21 per MMBtu compared with $2.57 per MMBtu in 2023. This was a result of mild weather holding back demand at the same time as a global supply glut.

 

Despite this challenging economic backdrop and continued commodity price weakness, operational performance has improved in the sector. Drilling costs have declined 15 per cent. this year and 50 per cent. over the last three years. Similarly, we have seen completion costs fall by a third over the last three years. These material improvements in productivity and cost efficiency support current and future free cash flow growth and improved returns over time.

 

Low carbon energy

There is also still much to be optimistic about in the low carbon energy sector despite another difficult year for the performance of renewable and decarbonisation assets. A recent KPMG survey stated that 72 per cent. of investors (including banks, asset managers, venture capital, private equity and infrastructure funds) are seeing a rapid increase in investment in energy transition assets. The survey also highlighted that investors are focusing on a wide range of asset types, with 56 per cent. investing in renewable and low-carbon energy; 54 per cent. in energy storage and grid infrastructure; and 51 per cent. in transportation and related infrastructure.

 

REL continues to take full advantage of this broad range of investment opportunities, for example our investment in Onyx Power - a power-generation company which, among other power plants, operates two of Europe's most recently constructed thermal plants. We are working hard to develop these opportunities into positive returns for our portfolio and our shareholders.

 

A mixed outlook for the Power sector

In the power sector there has been a clear divide in performance between Europe and the US. In Europe, power prices have remained stubbornly weak, continuing the trend of 2023. This was driven by excess supply of low-cost gas, as well as lower-than-expected power demand due to mild weather. Oversupply from strong renewable power generation, especially offshore wind and solar, has also continued to play a role.

 

By contrast, US power generation has had a breakout year. Traditionally considered an afterthought by the energy sector, the US power sector saw a step-change in interest in 2024. Booming power demand from data centres, driven by AI, has fundamentally shifted the outlook for the sector. Cash-rich technology companies have arrived, playing a role as large corporate off-takers with relatively limited sensitivity to price for non-intermittent renewable power. Increasingly these, and other companies, are willing to invest directly into energy infrastructure. These new actors in the market have also contributed to a shift in how nuclear is viewed - increasingly seen as "clean" insofar as it doesn't emit greenhouse gases. Gas fired power stations, particularly when combined with carbon capture, are also being seen in a more favourable light compared to just a few years ago.

 

Investment portfolio summary and performance

As of 31 December 2024, REL's portfolio comprised eight active investments, with five companies in the decarbonisation portfolio and three companies in the conventional assets. 

 

Both sectors of the portfolio saw drops in 2024. The conventional assets decreased in value by $31 million or 12 per cent., and the decarbonisation portfolio decreased in value by $50 million or 44 per cent. These downturns in portfolio NAV resulted in a reduction in NAV per share of 12 per cent., which was partially offset by an increase in NAV per share of 5 per cent. resulting from the Tender Offer and the Share Buyback Programme. In total, NAV per share decreased by 7 per cent. to $14.83 per share (or 6 per cent. to £11.81 per share) while the overall impact to total portfolio NAV of the investment declines and the Tender Offer saw a decrease of 44 per cent. to $375.8 million.

 

In September 2024, REL's portfolio company Permian Resources (PR) closed the previously announced Barilla Draw bolt-on acquisition of approximately 29,500 net acres, 9,900 net royalty acres and substantial midstream infrastructure located in the core of the Delaware Basin. Alongside this, PR delivered its first quarterly base dividend under its new capital returns policy, which represented a 150 per cent. increase compared to its prior base dividend and provided a strong base dividend yield compared to other U.S. independent E&Ps.

 

Our portfolio remains well diversified across the key industries that are critical to the world's decarbonisation and energy needs. Infinitum, for example, was among 14 companies selected by the U.S. Department of Energy's Office of Manufacturing and Energy Supply Chains (MESC) to negotiate funding for projects that accelerate domestic clean energy manufacturing in de-commissioned coal communities and address critical energy supply chain vulnerabilities.

 

Looking ahead, we are positioned for further gains and distributions in 2025 as our conventional portfolio assets continue to benefit from solid cash flow generation, low to no leverage, and supportive underlying commodity prices with potential support from a likely beneficial regulatory environment in the U.S.. In terms of our energy transition and decarbonisation investments, 2024 has been a challenging year and included write-offs of the following companies: T-Rex Group, DCRN/Tritium DCFC, Our Next Energy (ONE), FreeWire, Ionic I & II, and Enviva, totalling $38.1 million of value. For the remaining decarbonisation portfolio, we are optimistic over the medium term. Current investment trends in the sector remain positive, with the IEA reporting that two-thirds of total investment in new energy generation assets ($2 trillion out of $3 trillion) was made in clean energy in the full-year 2024. 

 

Changes to the Board

During the first half of 2024, we announced several changes to the Board, with John Roche succeeding Patrick Firth as Chair of the Audit Committee and Jeremy Thompson becoming the Board's Senior Independent Director. At the Company's AGM in May 2024, Patrick retired as a Non-Executive Independent Director of the Company and the Board. The Board would like to thank Patrick for his many years of service and contribution to the Company.

 

Update on tender offer and share buyback programme

As a Board, we remain strongly committed to delivering increased shareholder value over time, while improving our balance sheet strength, and reducing the valuation discount of the ordinary share price to NAV.

 

In February 2024, we announced an EGM and Tender Offer to shareholders, proposing the acquisition and cancellation of 15,047,619 of the Company's ordinary shares at a price of £10.50 per share, approximately 36 per cent. of all outstanding ordinary shares at the time. This price represented a premium of approximately 14 per cent. to the closing REL share price of £9.20 on 21 February 2024 and a discount of approximately 16 per cent. to the unaudited NAV per share of £12.53 as at 31 December 2023. Following shareholder approval in March of the full proposed amount, we returned £158 million ($199 million) to our shareholders.

 

Separately to the Tender Offer, and as part of our continued efforts to strengthen REL's capital management objectives, we have continued the share buyback programme originally announced in May 2023.

 

During the 2024 AGM, shareholders approved the Board's request to continue this strategy, and we embarked on the current programme of £22 million ($28 million). Over the course of 2024, in addition to the Tender Offer, the Company returned £14 million ($19 million) to shareholders through the purchase of 1,805,479 shares at an average price of £8.01 per ordinary share, and continues to maintain its buyback strategy moving forward in 2025. As of 31 December 2024, 25,342,691 ordinary shares remained in issue.

 

Phasing down, not phasing out

The tenth anniversary of the Paris Agreement will fall in 2025 and is likely to feature a period of reflection on the world's energy transition efforts and its continued energy needs. Doubtless this will include criticism and key learnings alongside an audit of the progress made to date and will be set against the backdrop of a new U.S. administration, with materially different priorities for energy policy when compared with the Biden administration, and other countries.

 

In our view it is apparent that reality has begun to set in on the likely timings and costs of the energy transition. While cleaner, economic and more diverse forms of energy are universally desired, there is a growing acceptance that the transition will take longer, and a significant portion of the world will continue to rely on conventional energy sources. This is particularly true in the developing world. This new reality is likely to see an "all of the above approach" to energy with traditional energy being "phased down" rather than "phased out" as cost, efficiency, timing, energy security and returns for investors remain front of mind for many.

 

Jeremy Thompson as Senior Independent Director and I have engaged frequently with a wide range of shareholders on both the Investment Management Agreement and the strategic direction of the Company over the last year. The Board remains open to discussions with shareholders and to communicate any concerns they have to the Investment Manager. The Board has engaged in frequent discussions with the Investment Manager on these matters and hopes to resolve them in the near term.

Thank you for your continued support of REL, its management and its strategy. I look forward to working with you all in the year ahead as we continue to execute our strategy.

 

Richard Horlick

Chair of the Board

27 February 2025

 

 

Environmental, Social and Governance REPORT

 

Riverstone's ESG Report

Since Riverstone's foundation in 2000, we have always been guided by a commitment to excellence, long-term value creation, and the integration of environmental, social, and governance (ESG) principles into our investment strategy. Our journey into ESG integration occurred long before the widespread integration we see today. 

Reflecting on how we have integrated ESG into our investment processes, we remain proud of how our ESG programme has developed thoughtfully-both informally and since 2019 in a systematic fashion. We are deeply grateful for the partnerships we have forged, the innovations we have championed, and the lives we believe we have had a positive impact on.

As we continue to exit our current investments, our commitment to ESG remains unwavering. The process of exiting investments is not only about financial returns, but also ensuring that the legacy of our efforts endures. Throughout the life of our investments, we have worked to integrate ESG into the DNA of our portfolio companies, fostering sustainable practices that will continue to drive value well beyond our ownership.

Going forward, we remain dedicated to responsible exits. Our focus is on ensuring that the companies and assets we transition to new owners are equipped with the personnel, tools, strategies and frameworks to maintain their sustainable commitments. This includes attempting to secure buyers who share our vision for sustainable growth and resilience.

We are deeply grateful to our investors, team members, and portfolio companies for their trust and collaboration over the years. Together, we have demonstrated that ESG is not just a framework-it is a driver of innovation, resilience, and meaningful change. We remain committed to transparency, accountability, and the positive legacy we leave behind. Thank you for your continued support.

Riverstone's ESG Policy

Riverstone's ESG policy, which was updated in 2024, outlines our commitment to robust ESG principles including: (i) adhering to the highest standards of conduct and business practices, in accordance with all applicable laws and regulations, our code of conduct and other firm policies; (ii) conducting our business dealings to the highest standard of honesty, integrity, fairness and respect; (iii) complying with all relevant regulations governing the protection of human rights, occupational health and safety standards, environmental compliance, and labour and business practices within the jurisdictions in which we conduct business, (iv) ensuring our partners are aware of our expectations regarding responsible business practices and consideration of ESG factors; and (v) distributing our ESG policy and related ESG information to our investment professionals and to our portfolio companies and ensure they understand the expectations set forth in our guidance.

Riverstone has continuously evolved its ESG policy in conjunction with third-party ESG experts to strive towards best practices across the board. A copy of Riverstone's updated ESG policy is available online: https://www.riverstonellc.com/media/1358/2024_riverstone_esg_policy-final-october-2024.pdf

RIGL Holdings, LP

27 February 2025

 

Investment Manager's Report

2024 was a year of contrast as market optimism, buoyed by an increase in mergers and acquisitions (M&A) activity and lower interest rates was set against a range of potentially destabilising geopolitical factors and concerns about global economic growth. Renewed instability in the Middle East added to uncertainties already created by the conflict in Ukraine and tensions between the U.S. and China. Economic growth remained sluggish in a range of major economies, including Europe, China and the UK with any stimulus efforts having a limited impact.

 

Combined, these factors had an impact on public markets. The FTSE 100 was up only 5 per cent. in GBP during 2024 while the S&P 500 was up 25 per cent in USD. Without the exceptional performance of the "Magnificent 7" technology stocks, which include Alphabet, Apple and Microsoft, the S&P 500 would have been down and the returns these stocks have generated have masked that the S&P's performance has been largely flat over the last two years.

 

Despite the markets concerns, global GDP growth remained modest, but resilient, with the International Monetary Fund (IMF) predicting a rate of 3.2 per cent. for 2024.The rate of growth is expected to be similar in 2025, according to the Peterson Institute of International Economics, but it of course varies among advanced economies and emerging markets with a number of geopolitical factors posing risks: U.S. economic policy changes, the likelihood of trade tariffs being more widely implemented, and continued conflict in the Middle East and Ukraine.

 

Looking to the energy markets, the oil price remained flat on the year as a result of the macroeconomic factors and geopolitical impacts, as well as milder weather reducing demand. Over the year, the average annual WTI oil price was $76.79 consistent with 2023 prices, while Henry Hub traded at a lower rate of $2.21 per MMBtu on average, compared with 2023 figures of $2.57 per MMBtu.

 

In terms of our portfolio, although our conventional energy assets benefitted from a broadly positive year for the sector, supported by increased consolidation, solid cash flow generation and supportive underlying commodity prices, the assets experienced a fall in unrealised value. The conventional portfolio, which now consists of three active investments, saw a combined decrease in value of $31 million or (12) per cent. Overall, the conventional asset portfolio saw a Gross MOIC of 1.26x at 31 December 2024. The value of the conventional portfolio is now $234 million/£186 million, accounting now for 79 per cent. of the unrealised value in the portfolio overall.

 

By contrast, the decarbonisation portfolio, despite its well diversified investment base, declined in value as the sector continued to be affected by higher supply chain costs, increased interest rates, lower risk appetite from investors and administrative foundering. This equates to a reduction in value of $50 million or £40 million.

 

The combination of the Tender Offer, for an aggregate $199 million/£158 million, and the aforementioned performance downturns, resulted in the NAV of the Company decreasing over the year, ending the period 31 December 2024 at $376 million or £299 million, a decrease of 44 per cent. in USD or 43 per cent. in GBP vs 31 December 2023.

 

Elsewhere in the decarbonisation portfolio, Exicom Tele-systems Limited, India's largest EV manufacturer, announced that it would acquire the business and assets of REL portfolio company, Tritium DCFC. Based on the terms of the agreement, REL does not expect to receive any further proceeds from its loan investment in Tritium, and $10.6 million was further written down in 2024.

 

Within the conventional asset portfolio, REL continued to benefit from distributions from its portfolio companies. Permian Resources announced an increase to its quarterly base dividend from $0.06 per share to $0.15 per share, while Veren declared a CAD 0.115 per share quarterly base dividend.

 

In terms of shareholder returns, the Board took several steps to deliver further value to shareholders and return excess capital. In February, REL announced that it proposed to return £158 million ($198 million) to our shareholders via a Tender Offer. Following approval by shareholders in March, the full amount was returned to shareholders. Elsewhere, our share buyback programme, originally announced in May 2023, continued and the Board embarked on the current programme of £22 million ($28 million) following the Company's AGM in May 2024. Over the course of 2024, in addition to the Tender Offer, the Company returned £14 million ($19 million) to shareholders through the purchase of 1,805,479 shares at an average price of £8.01 per ordinary share.

 

Looking ahead, the Investment Manager maintains a diversified portfolio but one that is more heavily weighted towards conventional assets. REL's portfolio balance is a reflection of the current macro trends in global markets and our conventional energy assets will help lessen the impacts to our decarbonisation businesses.

 

Outlook

Macro-economic uncertainty is expected to continue in 2025, compounded by the arrival of a new U.S. administration with a radically different set of energy policy priorities. The new U.S administration's plans include prioritising expanded U.S. drilling, renewed focus around natural gas exports, and rolling back climate commitments and clean energy incentives, all of which have positive and negative downstream effects on the portfolio. Despite this, there are signs that the development of decarbonisation technologies and renewable energy assets will continue to be a priority for governments and investors as the world strives to achieve a sustainable power mix of conventional and renewable energy sources.

 

Current Portfolio - Conventional⁽¹²⁾

 

Investment   (Public/Private)	Gross Committed Capital ($mm)	Invested Capital ($mm)	Gross Realised Capital ($mm)(1)	Gross Unrealised Value ($mm)(2)	Gross Realised Capital & Unrealised Value ($mm)	31 Dec 2024 Gross MOIC(2)	31 Dec 2023 Gross MOIC(2)
Permian Resources (4) (Public)	268	268	232	145	377	1.41x	1.35x
Onyx                (Private)	66	60	121	46	167	2.80x	3.20x
Veren (Crescent Point Energy) (10) (Public)	296	296	199	43	242	0.82x	0.87x
Total Current Portfolio - Conventional - Public(3)	$564	$564	$431	$188	$619	1.10x	1.10x
Total Current Portfolio - Conventional - Private(3)	$66	$60	$121	$46	$167	2.80x	3.20x
Total Current Portfolio - Conventional - Public & Private(3)	$630	$624	$552	$234	$786	1.26x	1.30x

 

 

Current Portfolio - Decarbonisation⁽¹²⁾

 

Investment   (Public/Private)	Gross Committed Capital ($mm)	Invested Capital ($mm)	Gross Realised Capital ($mm)(1)	Gross Unrealised Value ($mm)(2)	Gross Realised Capital & Unrealised Value ($mm)	31 Dec 2024 Gross MOIC(2)	31 Dec 2023 Gross MOIC(2)
GoodLeap          (Private)	25	25	2	23	25	1.00x	1.25x
Infinitum (Private)	27	27	-	23	23	0.85x	1.10x
Solid Power(4)  (Public)	48	48	-	14	14	0.29x	0.22x
Group14 (Private)	4	4	-	3	3	0.75x	1.00x
Hyzon Motors             (Public)	10	10	-		-	0.00x	0.09x
Total Current Portfolio - Decarbonisation - Public(3)	$58	$58	-	$14	$14	0.24x	0.23x
Total Current Portfolio - Decarbonisation - Private(3)	$56	$56	$2	$49	$51	0.93x	0.73x
Total Current Portfolio - Decarbonisation - Public & Private(3)	$114	$114	$2	$63	$65	0.58x	0.50x
Total Current Portfolio - Conventional & Decarbonisation - Public & Private(3)	$744	$738	$554	$297	$851	1.16x	1.08x
Cash and Cash Equivalents(9)			$79
Total Liquidity(11)			$281
Total Market Capitalisation			$250

 

 

Realisations

 

Investment    (Initial Investment Date)	Gross Committed Capital ($mm)	Invested Capital ($mm)	Gross Realised Capital ($mm)(1)	Gross Unrealised Value ($mm)(2)	Gross Realised Capital & Unrealised Value ($mm)	31 Dec 2024 Gross MOIC(2)	31 Dec 2023 Gross MOIC(2)
Rock Oil(5) (12 Mar 2014)	114	114	239	-	239	2.09x	2.08x
Three Rivers III (7 Apr 2015)	94	94	204	-	204	2.17x	2.17x
ILX III (8 Oct 2015)	179	179	172	-	172	0.96x	0.96x
Meritage III(6) (17 Apr 2015)	40	40	88	-	88	2.20x	2.20x
RCO(7) (2 Feb 2015)	80	80	80	-	80	0.99x	0.99x
Carrier II (22 May 2015)	110	110	67	-	67	0.61x	0.61x
Pipestone Energy (formerly CNOR)	90	90	58	-	58	0.64x	0.64x
Sierra (24 Sept 2014)	18	18	38	-	38	2.06x	2.06x
Aleph Midstream (9 Jul 2019)	23	23	23	-	23	1.00x	1.00x
Ridgebury H3 (19 Feb 2019)	18	18	22	-	22	1.22x	1.22x
Castex 2014 (3 Sep 2014)	52	52	14	-	14	0.27x	0.27x
Total Realisations(3)	$818	$818	$1,005	$0	$1,005	1.23x	1.23x
Withdrawn Commitments and Investment Write-Offs(8)	467	467	10	-	10	0.02x	0.02x
Total Investments(3)	$2,029	$2,023	$1,569	$297	$1,866	0.92x	0.96x
Total Investments & Cash and Cash Equivalents(3), (9)				$376

 

⁽¹⁾ Gross realised capital is total gross proceeds realised on invested capital. Of the $1,569 million of capital realised to date, $1,201 million is the return of the cost basis, and the remainder is profit.

⁽²⁾ Gross Unrealised Value and Gross MOIC (Gross Multiple of Invested Capital) are before transaction costs, taxes (approximately 21 to 27.5 per cent. of U.S. sourced taxable income) and 20 per cent. carried interest on applicable gross profits in accordance with the revised terms announced on 3 January 2020, but effective 30 June 2019. Since there was no netting of losses against gains before the aforementioned revised terms, the effective carried interest rate on the portfolio as a whole will be greater than 20 per cent. No further carried interest will be payable until the $156.7 million of realised and unrealised losses to date at 31 December 2024 are made whole with future gains. Since REL has not yet met the appropriate Cost Benchmark at 31 December 2024, $29 million in Performance Allocation fees that would have been due under the prior agreement were not accrued. In addition, there is a management fee of 1.5 per cent. of net assets (including cash) per annum and other expenses. Given these costs, fees and expenses are in aggregate expected to be considerable, Total Net Value and Net MOIC will be materially less than Gross Unrealised Value and Gross MOIC. Local taxes, primarily on U.S. assets, may apply at the jurisdictional level on profits arising in operating entity investments. Further withholding taxes may apply on distributions from such operating entity investments. In the normal course of business, REL may form wholly-owned subsidiaries, to be treated as C Corporations for US tax purposes. The C Corporations serve to protect REL's public investors from incurring U.S. effectively connected income. The C Corporations file U.S. corporate tax returns with the U.S. Internal Revenue Service and pay U.S. corporate taxes on its taxable income.

⁽³⁾ Amounts may vary due to rounding.

⁽⁴⁾ Represents closing price per share in USD for publicly traded shares Permian Resources Corporation (NASDAQ:PR - 31-12-2024: $14.14 per share); Enviva, Inc. (NYSE:EVA - 31-12-2024: $nil per share); Solid Power, Inc. (NASDAQ:SLDP - 31-12-2024: $1.89 per share); Hyzon Motors, Inc. (NASDAQ:HYZN - 31-12-2024: $1.07 per share); and Veren (NASDAQ: VRN - 31-12-2024: CAD 7.39 per share).

⁽⁵⁾  The unrealised value of Rock Oil investment is made up of funds held in escrow from the sale of rights to mineral acres

⁽⁶⁾ Midstream investment.

⁽⁷⁾ Credit investment

⁽⁸⁾ Withdrawn commitments and investment write-offs consist of Origo ($9 million),CanEra III ($1 million), Liberty II ($142 million), Fieldwood ($80 million), Eagle II ($62 million), Castex 2005 ($48 million), Tritium ($25 million), T-Rex ($21 million), Enviva ($21 million) Anuvia Plant Nutrients ($20 million), FreeWire ($14 million), Our Next Energy ($12 million) and Ionic I & II ($3 million).

⁽⁹⁾ This figure is comprised of $1.5 million held at the Company, $62.6 million held at the Partnership and $14.4 million held at REL US Corp.

⁽¹⁰⁾ Veren shares were acquired via realisation of Crescent Point Energy.

⁽¹¹⁾ Total liquidity comprises remaining fair value of all public investments and all cash held at REL and within RELIP structure.

⁽¹²⁾ The investments in the tables are held within the Partnership.

 

Investment Portfolio Summary    

As of 31 December 2024, REL's portfolio comprised eight active investments including two E&P investments, five decarbonisation investments and one power investment.

 

Permian Resources

As of 31 December 2024, REL, through the Partnership, has invested in full its $268 million commitment to Permian Resources. Headquartered in Midland, Texas, Permian Resources is a large pure-play E&P company in the Delaware Basin.

 

During Q4 2024, Permian Resources increased its quarterly base dividend from $0.06/share to $0.15/share and announced the sale of its natural gas and oil gathering systems primarily located in Reeves County, Texas to Kinetik Holdings Inc. (NYSE: KNTK) for a total cash consideration of $180 million. The Company also increased mid-point of full year oil and total production guidance by over 4 per cent. to 158.5 MBbls/d and 341.0 MBoe/d. The pro-forma company has hedged approximately 29 per cent. of forecasted 2024 crude oil production at a weighted average price of $75.08 per barrel and 20 per cent. of forecasted 2024 natural gas production at a weighted average price of $3.86 per Mcf.

 

As of 31 December 2024, REL's interest in Permian Resources, through the Partnership, was valued at 1.41x Gross MOIC or $377 million (Realised: $232 million, Unrealised: $145 million). The Gross MOIC, which reflects the mark-to-market value of REL's shareholding, increased over the period.

 

Onyx

As of 31 December 2024, REL, through the Partnership, has invested $60 million of its $66 million commitment to Onyx. Onyx is a European-based independent power producer that was created through the successful acquisition of 2,350MW of gross installed capacity (1,941MW of net installed capacity, which reduced to 1,641MW following the decommissioning of Farge) of coal-, gas-, and biomass-fired power plants in Germany and the Netherlands from Engie SA. Two of the facilities in the current portfolio are among Europe's most recently constructed thermal plants, which benefit from high efficiencies, substantial environmental controls, low emissions profiles and the potential use of sustainable biomass.

 

CDS margins have reduced materially since the highs of 2022 due to high gas storage levels, warm winter weather and high wind generation. The effect is partially offset by hedging activities at the company. Onyx received a withholding tax exemption certificate for OSIM II from BZSt (German federal tax office). The management team is working on organic growth initiatives, including the implementation of operational performance improvements and the development of projects related to the energy transition.

 

As of 31 December 2024, REL's interest in Onyx, through the Partnership, was valued at 2.80x Gross MOIC⁽¹⁾ or $167 million (Realised: $121 million, Unrealised: $46 million). The Gross MOIC⁽¹⁾ decreased from 3.20x to 2.80x during 2024.

 

Veren

As of 31 December 2024, REL, through the Partnership, has invested its $296 million original commitment to Hammerhead Energy which was subsequently acquired by Veren, a company focused on liquids-rich unconventional resources in the Montney and Duvernay resource play in Western Canada. REL provided an initial equity commitment to Hammerhead Energy in 1Q14; since the initial commitment, REL has made several additional investments into Hammerhead Energy. Prior to the acquisition, Hammerhead Energy had aggregated a position of ~190,000 net acres in the Montney and ~100,000 net acres in the Duvernay formations and operated 100 per cent. of its asset base.

 

Over 2024, Veren's shares have traded down 19.6 per cent. compared to a 15.0 per cent. increase in its peer group, and a 0.8 per cent. rally in WTI over the same period. In October 2024, Veren announced its Q3 2024 results, which were below expectations. Veren also announced its 2025 budget which expects C$775 million of excess cash flow at current commodity prices. Excess cash will be spent on debt reduction and shareholder returns. Veren's 2029 plan targets 7 per cent. production CAGR and corporate production of 250 Mboe/d. In Q4 2024, Veren delivered its quarterly dividend of C$0.115/share, implying an annualised dividend yield of 6.2 per cent.

 

As of 31 December 2024, REL's interest in Veren, was valued at 0.82x Gross MOIC⁽¹⁾ or $242 million (Realised: $199 million, Unrealised: $43 million). The Gross MOIC⁽¹⁾ decreased over the period.

 

GoodLeap

As of 31 December 2024, REL, through the Partnership, has invested in full its $25 million commitment to GoodLeap. The company is a technology-enabled solar power and home improvement loan originator, providing a point-of-sale lending platform used by key residential contractors. GoodLeap does not take funding risk. The company pre-sells its originated loans via forward purchase agreements to large asset managers. The company's attractive unit economics and asset-light business model allow for rapid growth. Additionally, this enables GoodLeap to scale faster than its competitors while generating free cash flow by capitalising on upfront net cash payments on the flow of loan originations and avoiding costly SG&A and capital expenditures incurred by other portions of the value chain.

 

The company closed a $1.5 billion financing for Lease/PPA business with two strategic partners (TIP and ATLAS SP), extending funding pipeline well into 2025. In H2 2024, the company also launched GoodLeap Payments and homeowner mobile app in a strong debut. That said, political uncertainty is creating challenges at the business. The management team is assessing potential changes to the Solar Investment Tax Credit, which provides a 30 per cent. tax credit for qualifying solar installations, tariffs, and interest rates. GoodLeap's rapid transition to home improvement sales is expected to cushion these impacts.

 

The valuation multiple for GoodLeap fell from 1.25x to 1.00x Gross MOIC during the year.

 

Infinitum

As of 31 December 2024, REL, through the Partnership, has fully invested its $27.4 million commitment to Infinitum. Infinitum's patented air-core motors offer superior performance in half the weight and size, at a fraction of the carbon footprint of traditional motors, making them pound for pound one of the most efficient in the world. Infinitum motors open up sustainable design possibilities for the machines we rely on to be smaller, lighter and quieter, improving our quality of life while also saving energy.

 

Infinitum is experiencing longer-than-expected sales cycles with its customers; in response to these headwinds, the company is taking steps to limit cash burn and extend its operating runway after its Series E extension close in July 2024.

 

In November, Infinitum announced it has been selected by the U.S. Department of Energy to negotiate funding for a manufacturing facility to produce high-powered printed circuit board (HP-PCB) stators, the key component of Infinitum's high-efficiency, axial-flux motors. This facility is expected to be located in Rockdale, Texas and could create up to 170 operating jobs and 125 construction jobs in the community. At the time of the announcement, Infinitum's award from the DOE Office of Manufacturing and Energy Supply Chains (MESC) is under negotiation but projected to be $34 million.

 

The valuation multiple for Infinitum was lowered from 1.10x to 0.85x Gross MOIC during the year.

 

Solid Power

As of 31 December 2024, REL, through the Partnership, has fully invested its $47.8 million commitment to Solid Power. Riverstone sponsored DCRC's $350 million IPO on 23 March 2021. REL made a $0.6 million investment in DCRC at the time of the IPO, as the blank check company began to pursue merger candidates. On 15 June 2021, DCRC announced its business combination agreement with Solid Power, a Louisville, Colorado based producer of all solid-state batteries for electric vehicles, to which REL, through the Partnership, committed an additional $20 million to the $165 million PIPE that was raised. On 17 August 2021, REL announced the purchase of an interest in one of Samsung Ventures' battery technology focused venture capital portfolios (the "Samsung Portfolio") for $30.0 million, of which $27.2 million related to the purchase of 1.66 million shares of Solid Power.

 

The business combination between DCRC and Solid Power closed on 8 December 2021, with Solid Power beginning to trade on NASDAQ under the ticker "SLDP".

 

As of 31 December 2024, REL's interest in Solid Power, through the Partnership, consisted of the $0.6 million sponsor investment, which was valued at 1.71x Gross MOIC⁽¹⁾ or $1.0 million (Realised: nil, Unrealised: $1.0 million), the $20 million PIPE investment, which was valued at 0.19x Gross MOIC⁽¹⁾ or $3.8 million (Realised: nil, Unrealised: $3.8 million), and the $27.2 million secondary purchase from Samsung Ventures, which was valued at 0.33x Gross MOIC⁽¹⁾ or $9.1 million (Realised: nil, Unrealised: $9.1 million).

 

Group14

In April 2022, REL, through the Partnership, invested $4 million into Group14 Technologies, Inc.'s $400 million Series C funding round. The Series C round was led by Porsche AG, with participation from OMERS Capital Markets, Decarbonisation Partners, Vsquared Ventures, and others. Group14 is a battery materials technology company founded in 2015.  The company has developed a proprietary silicon-based anode battery material to replace graphite in conventional lithium-ion batteries.

 

Group14's challenges stem mostly from delays in revenue recognition. These delays arose from setbacks in the company's spending schedule-mainly related to factory site issues-that have postponed the EV related start of production at the Washington plant. Separately in September of this year, Group14 announced it had been selected for an award of up to $200 million by the U.S. DOE's Office of Manufacturing and Energy Supply Chains as part of the second set of projects funded by the Bipartisan Infrastructure Law to expand domestic battery manufacturing for electric vehicles and the electrical grid. The DOE award would allow Group14 to build a silane factory using its proprietary technology, which produces silane at a significantly reduced capital and energy requirement from the conventional process.

 

The valuation multiple for Group14 decreased from 1.00x Gross MOIC to 0.75x Gross MOIC during the year.

 

Hyzon

In connection with the closing of the previously announced merger between DCRB and Hyzon Motors Inc. (NASDAQ: HYZN), REL purchased $10 million of DCRB common stock in a private placement transaction at $10 per share in July 2021. Hyzon is a global supplier of zero-emissions hydrogen fuel cell powered commercial vehicles.

 

During 2024, REL's interest in Hyzon decreased from 0.09x Gross MOIC to 0.00x Gross MOIC as a result of the dramatic stock drop-off starting in April 2024.  On 20 February 2025, Hyzon announced its intention to delist from the NASDAQ and deregister from the SEC.

 

Investment Write-Offs

The following companies were written down to 0.00x Gross MOIC during the year resulting in an aggregate loss of $38.1 million due to a range of negative developments:

 

T-Rex Group

The valuation multiple for T-REX was written down to 0.00x Gross MOIC during 2024. In September 2023, an investment bank was hired to run a sales process for the company. After over 6-months no LOIs were submitted and in April 2024, the company initiated an orderly wind-down due to limited cash runway (to mid May 2024). During the year ended 31 December 2024, $17.4 million has been written-off as a result of T-Rex's valuation decrease.

 

DCRN/Tritium DCFC

At 31 December 2024, REL's debt investment was written down to 0.00x Gross MOIC.  On 8 August 2024, Exicom Tele-systems Limited (NSE: EXICOM) (along with its subsidiaries together referred to as, "Exicom"), India's largest EV charger manufacturer, announced that it had entered into a definitive agreement under which it will acquire the business and assets of Tritium. Based on the terms of the definitive agreement, the Company does not expect to receive any further proceeds regarding its loan investment in Tritium. During the year ended 31 December 2024, $10.7 million was written-off as a result of DCRN/Tritium DCFC's valuation decrease.

 

Our Next Energy (ONE)

The valuation multiple for ONE was written down to 0.00x Gross MOIC⁽¹⁾ during 2024. In Q1 2024, the company raised capital by way of its insider-led convertible note, a financing in which Riverstone elected not to participate. As a result of not participating, REL's ownership stake was significantly diluted and subordinated. During the year ended 31 December 2024, $3.1 million has been written-off as a result of ONE's valuation decrease.

 

 

FreeWire

The valuation multiple for FreeWire decreased to 0.00x Gross MOIC during 2024. On 3 February 2024, a potential acquiror of FreeWire, who had been under exclusivity, withdrew from the company's sale process. Given the accelerating cash constraints and a limited runway in combination with the sale process withdrawal, FreeWire evaluated all alternatives, which culminated in a sale on 20 February 2024 to a private investor. The consideration with respect to the sale was 100% assumption of all company assets and liabilities. During the year ended 31 December 2024, $3.5 million has been written-off as a result of FreeWire's valuation decrease.

 

 

Ionic I & II

During 2024, the valuation multiple for Ionic Materials decreased to 0.00x Gross MOIC. Ionic was in the midst of demonstrating within-spec, roll-to-roll LCP manufacturing capabilities with the hopes that it would be acquired by a Korean corporation/manufacturing partner looking to vertically integrate. Together with Goldman Sachs, Ionic Materials worked hard to monetise the LCP, and had the parameters of deal worked out pending proof of manufacturing capabilities. However, Ionic Materials lacked the cash runway to achieve that goal. During the year ended 31 December 2024, $2.7 million has been written-off as a result of Ionic I & II's valuation decrease.

 

 

Enviva

The valuation multiple for Enviva decreased to 0.00x Gross MOIC during 2024. On 4 October 2024, following the filing of Enviva's Form 8-K related to the Amended Joint Chapter 11 Plan of Reorganisation of Enviva Inc. ("Amended Plan"), the New York Stock Exchange (NYSE) Regulation reached its decision that Enviva is no longer suitable for listing pursuant to NYSE Listed Company Manual and delisted the company.  In reaching its delisting determination, NYSE Regulation notes that pursuant to the Amended Plan, existing equity interests of the company, including REL's equity interests, will be cancelled and holders thereof will receive no recovery. In December 2024, Enviva emerged from Chapter 11 bankruptcy. During the year ended 31 December 2024, $0.8 million has been written-off as a result of Enviva's valuation decrease.

 

 

Valuation

The Investment Manager is charged with proposing the valuation of the assets held by REL through the Partnership. The Partnership values its securities and instruments at fair value. REL's valuation policy is compliant with IFRS and IPEV Valuation Guidelines and has been applied consistently from period to period since inception. As the Company's investments, through the Partnership, have tended to be generally not publicly quoted, valuations require meaningful judgement 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.

 

The Investment Manager values each underlying investment in accordance with the Riverstone valuation policy, the IFRS accounting standards and IPEV Valuation Guidelines. The value of REL's portion of that investment is derived by multiplying its ownership percentage by the value of the underlying investment. If there is any divergence between the Riverstone valuation policy and REL's valuation policy, the Partnership's proportion of the total holding will follow REL's valuation policy. Valuations of REL's investments through the Partnership are determined by the Investment Manager and disclosed quarterly to investors, subject to Board approval.

 

Riverstone values its investments using common industry valuation techniques, including comparable public market valuation, comparable merger and acquisition transaction valuation, and discounted cash flow valuation.

 

For development-type investments, Riverstone also considers the recognition of appreciation or depreciation of subsequent financing rounds, if any. For early-stage private investments, Riverstone's investment due diligence process includes assumptions about short-term financial results in determining the appropriate purchase price for the investment.

 

Riverstone reviews the valuations on a quarterly basis with the assistance of the Riverstone Performance Review Team ("PRT") as part of the valuation process. The PRT was formed to serve as a single structure overseeing the existing Riverstone portfolio with the goal of improving operational and financial performance.

 

The Audit Committee reviews the valuations of the Company's investments held through the Partnership and makes a recommendation to the Board for formal consideration and acceptance.

 

Uninvested Cash

As of 31 December 2024, REL had a cash balance of $1.5 million and the Partnership, including its wholly-owned subsidiaries, REL Cayman Holdings, LP, REL US Corp and REL US Centennial Holdings, LLC, had uninvested funds of over $77 million held as cash, United States Treasury Bills and short-term money market fixed deposits, gross of the accrued management fee of $1.04 million. After the accrued management fee, REL's aggregate cash balance is $77.4 million. As in prior years, in accordance with the Partnership Agreement, if the Company requires additional funds for working capital, it is entitled to receive further distributions from the Partnership. The Partnership maintains deposit accounts with several leading international banks. In addition, the Partnership invests a portion of its cash deposits in short-term money market fixed deposits. REL's treasury policy seeks to protect the principal value of cash deposits utilising low risk investments with top-tier counterparts. Uninvested cash earned approximately 460 basis points during the year ended 31 December 2024. All cash deposits referred to in this paragraph are denominated in U.S. dollars.

 

 

Post-Year End Update

As of the date of this report, there are no matters to report.

 

Outlook

On the campaign trail the Trump Administration made no secret of its intention to use tariffs as a tool to improve the US balance of payments, protect US jobs and build up the country's industrial base. Since the inauguration, a range of tariffs has been proposed or implemented, hitting neighbours and competitors alike across many products and industries. These have been largely met with reciprocal tariffs from US trade partners. It is still early to judge the likely long-term impact of these policies and indeed the extent to which announced tariffs will be fully implemented.

 

When it comes to the energy sector, it appears the Administration is taking a differentiated approach. For instance, the initial round of tariffs placed a 25% tariff on Mexican energy imports, while Canadian imports faced a 10% tariff - likely in recognition of the far greater dependence of US refineries on Canada's oil. What is not in doubt is that the combination of these tariffs, including those on steel and, in particular, aluminium, will impact costs in the supply chain for US companies including those in the energy sector.

 

Looking ahead, the potential for a peaceful resolution to the Ukraine conflict and reduced tensions in the Middle East could significantly impact the energy sector over the next twelve months. While a return to pre-conflict gas volumes from Russia to Europe seems unlikely in the near to medium term, a stabilisation of the situation in Ukraine and improved geopolitical stability in the Middle East could open new supply channels for global markets. Concurrently, rising geopolitical competition between the West and China may introduce further friction in global supply chains, potentially restricting access to critical components needed for renewable infrastructure growth in North America and Europe. These developments, coupled with a more active trade agenda in the US and EU, create a mixed outlook, with lower-cost conventional energy supplies becoming more competitive with renewable power sources. Given these factors, driving operational efficiencies within our portfolio companies - both on the conventional side and the decarbonisation side - will be crucial to maintaining and growing shareholder returns.

 

RIGL Holdings, LP

27 February 2025

 

Investment POLICY

 

The Company's investment objective is to generate long term capital growth by making investments in the global energy sector.

 

For so long as the Investment Manager (or any of its affiliates) remains the investment manager of the Company, the Company shall have the option to participate in all Qualifying Investments in which the Private Riverstone Funds invest.

 

Asset Allocation

The Company shall acquire its interests in each Qualifying Investment at the same time (or as near as practicable thereto) as, and on substantially the same economic and financial terms as, the relevant Private Riverstone Fund which may involve the Private Riverstone Fund acquiring all or some of such Qualifying Investment and selling it on to the Company on the same terms on which the Private Riverstone Fund acquired the transferred interest in the Qualifying Investment.

 

The Company and either Fund V or Fund VI has participated in each applicable Qualifying Investment in which Fund V or Fund VI, respectively, invests in a ratio of one-third to two-thirds. This investment ratio was subject to adjustment on a case-by-case basis (a) to take account of the liquid assets available to each of the Company and Fund V or Fund VI for investment at the relevant time and any other investment limitations applicable to either of them or otherwise if (b) both (i) a majority of the Company's independent Directors and (ii) the Investment Manager agree that the investment ratio should be adjusted for specific Qualifying Investments.

 

For each Private Riverstone Fund subsequent to Fund V which is of a similar target equity size as Fund V (i.e. US$7.7 billion) and has a similar investment policy to the Company, Riverstone shall seek to ensure that, subject to the investment capacity of the Company at the time, the Company and the Private Riverstone Fund invest in applicable Qualifying Investments in an investment ratio of one-third to two-thirds or in such other ratio as the Company's independent Directors and the Investment Manager agree at or prior to the first closing of such Private Riverstone Fund.

 

Such investment ratio may be adjusted by agreement between the Company's independent Directors and the Investment Manager on subsequent closings of a Private Riverstone Fund having regard to the total capital commitments raised by that Private Riverstone Fund during its commitment period, the liquid assets available to the Company at that time and any other investment limitations applicable to either of them.

 

The Investment Manager will typically seek to ensure that the Company and the Private Riverstone Funds dispose of their interests in Qualifying Investments at the same time and on substantially the same terms, and in the case of partial disposals, in the same ratio as the relevant Qualifying Investment was acquired, but this may not always be the case.

 

In addition, the Company may at any time make investments consistent with its investment policy independent from Private Riverstone Funds, which may include investments alongside Riverstone employee co-investment vehicles or other Riverstone-managed co-investment arrangements.

 

The Company may hold controlling or non-controlling positions in its investments and may make investments in the form of equity, equity-related instruments, derivatives or indebtedness (to the extent that such indebtedness is a precursor to an ultimate equity investment). The Company may invest in public or private securities. The Company will not permit any investments to be the subject of stock lending or sale and repurchase.

 

In selecting investments, the Investment Manager will target investments that are expected to generate long term capital growth and, in particular, investments that are expected to generate a Gross IRR of between 20 and 30 per cent.

 

 

Diversification

No one investment made by the Company may (at the time of the relevant investment) represent more than 25 per cent. of the Company's gross assets, including cash holdings, measured at the time the investment is made. The Company shall utilise the Partnership and its Investment Undertakings or other similar investment holding structures to make investments and this limitation shall not apply to its ownership interest in the Partnership or any such Investment Undertaking.

 

Gearing

The Company may, but shall not be required to, incur indebtedness for investment purposes, working capital requirements and to fund own-share purchases or redemptions up to a maximum of 30 per cent. of the last published NAV as at the time of the borrowing, or such greater amount as may be approved by the Shareholders passing an ordinary resolution. The consent of a majority of the Company's Directors shall be required for the Company or the Partnership to enter into any credit or other borrowing facility. This limitation will not apply to portfolio level entities in respect of which the Company is invested or is proposing to invest. The Company currently has not had any indebtedness during the period of this Annual Report.

 

 

Investment Restrictions

 

The Company is subject to the following investment restrictions:

·      for so long as required by the UK Listing Rules, it will at all times seek to ensure that the Investment Manager invests and manages the Company's and the Partnership's assets in a way which is consistent with the Company's objective of spreading risk and in accordance with the Company's investment policy;

·      for so long as required by the UK Listing Rules, it must not conduct a trading activity which is significant in the context of the Company and its Investment Undertakings;

·      for so long as required by the UK Listing Rules, not more than 10 per cent. of the value of its total assets will be invested in other UK-listed closed-ended investment funds, except for those which themselves have published investment policies to invest not more than 15 per cent. of their total assets in other UK-listed closed-ended investment funds; in addition, the Company will not invest more than 15 per cent. of the value of its total assets in other UK-listed closed-ended       investment funds; and

·      any investment restrictions that may be imposed by Guernsey law (although no such restrictions currently exist).

 

Currency and interest rate hedging transactions will only be undertaken for the purpose of efficient portfolio management and these transactions will not be undertaken for speculative purposes.

 

 

Board of Directors

 

Richard Horlick (65), Chair of the Board and Non-Executive Independent Director

 

Appointment: Appointed to the Board in October 2022 and appointed as Chair of the Board in February 2023.

 

Experience: Richard Horlick serves as a Non-Executive Director and chair of BH Macro Limited and a Non-Executive Director of VH Global Energy Infrastructure PLC, each of which is admitted to trading on the Main Market of the London Stock Exchange. In addition to his listed positions, he is currently the Non-Executive Chairman of CCLA Investment Management Limited, which manages assets for over 38,000 charities and church and local authority funds, as well as a Director for Global Asset Tracking Limited. Richard Horlick is a UK resident and has served on a number of closed end fund boards and was previously head of investment and main board Director of Schroders Plc and President, Institutional, of Fidelity International and subsequently chairman of the Trust Bank for the Fidelity Mutual funds in the US. He has had a long and distinguished career in investment management since graduating from Cambridge University in 1980 with an MA in Modern History.

 

Committee Memberships: Audit Committee Member; Nomination and Remuneration Committee Member; Management Engagement Committee Member.

 

Karen McClellan (64), Non-Executive Independent Director

 

Appointment: Appointed to the Board in May 2023.

 

Experience:

Karen McClellan is a Director of Green Epoch Limited and was until recently an advisory board member of TT International's Environmental Solutions Fund. As a banker, asset manager and university lecturer, Karen McClellan has spent most of her career in carbon policy, clean infrastructure finance and zero-carbon technologies, having raised and deployed more than £700 million in renewable energy and carbon funds and transactions. During two decades as an investment banker at Lehman Brothers, Robert Fleming and the EBRD, and as Head of Asset Management at Carbon Capital Markets, Karen McClellan raised innovative investment funds backed by emission reductions, energy savings and methane capture, and served on their investment committees. Karen is a Lecturer in Management at the Stanford Graduate School of Business and holds degrees from Stanford University (MBA) and Yale University (BA Economics). She serves as an appointed expert for the UK Accelerated Climate Transitions programme and on the Climate Tech Council (London). Karen McClellan is a UK resident.

 

Committee Memberships: Audit Committee Member; Nomination and Remuneration Committee Member, Management Engagement Committee Member.

 

John Roche (59), Non-Executive Independent Director

Appointment: Appointed to the Board in December 2022.

 

Experience:

John Roche qualified as an Irish Chartered Accountant in 1988 and moved immediately to Guernsey to join the PwC predecessor firm, Coopers & Lybrand.  He seconded to the investment management practices at PwC Ireland (1996-1998) and PwC UK (2003-2008) returning on a full-time basis in 2009 to PwC Channel Islands, Guernsey office.  Promoted to partner in 2006, he is now recently retired with a strong background in auditing as well as IPO and capital markets transactions for investment companies on the various London markets.  He focussed on delivering audit services to alternative investment managers, specialising in private equity, secondaries, private debt, infrastructure and real estate in the listed and private sectors. John Roche has been the PwC Channel Islands firm's Risk Management Partner (2008-2015), Partner Responsible for Independence/Ethics & Business Conduct (2008-2015 & 2018-2022), as well as the Guernsey Office Managing Partner (2013-2020). He was also President of the Guernsey Society of Chartered and Certified Accountants (2013-2015).  John Roche was appointed to the board of Syncona Limited, a London listed life sciences investment company on 1 October 2024 and he is a Guernsey resident.

 

Committee Memberships: Audit Committee Chair; Nomination and Remuneration Committee Member; Management Engagement Committee Member.

 

 

Jeremy Thompson (69), Non-Executive Senior Independent Director

 

Appointment: Appointed to the Board in May 2016 and became Senior Independent Director following Patrick Firth's retirement on 21 May 2024.

 

Experience: Jeremy Thompson has sector experience in Finance, Telecoms, Engineering and Oil & Gas. He acts as an independent Non-Executive Director for both listed, including DP Aircraft 1 Limited, and PE funds. Prior to that, he has worked in private equity and was CEO of four autonomous global businesses within Cable & Wireless Plc and earlier held CEO roles within the Dowty Group. He currently serves as chairman of the States of Guernsey Renewable Energy Team and is a commissioner of the Alderney Gambling Control Commission. He is also an independent member of the Guernsey Tax Tribunal panel. He is a graduate of Brunel (B.Sc), Cranfield (MBA) and Bournemouth (M.Sc) Universities and attended the Royal College of Defence Studies (RCDS) as an industry member. He is a member of the IoD and holds the IoD's Certificate and Diploma in Company Direction, is an associate of the Chartered Institute of Arbitration and a chartered Company Secretary. Jeremy Thompson is a resident of Guernsey.

 

Committee Memberships: Audit Committee Member; Nomination and Remuneration Committee Chair; Management Engagement Committee Member.

 

 

Claire Whittet (69), Non-Executive Independent Director

 

Appointment: Appointed to the Board in May 2015.

 

Experience:

Claire Whittet has over 45 years of experience in the financial services industry. After obtaining a MA (Hons) in Geography from the University of Edinburgh, she joined the Bank of Scotland for 19 years and undertook a wide variety of roles. She moved to Guernsey in 1996 and was Global Head of Private Client Credit for Bank of Bermuda before joining the Board of Rothschild & Co Bank International Limited in 2003, initially as Director of Lending and latterly as Managing Director and Co-Head until May 2016 when she became a Non-Executive Director until her retirement in July 2023. Claire Whittet is an ACIB member of the Chartered Institute of Bankers in Scotland, a Chartered Banker, a member of the Chartered Insurance Institute and holds an IoD Diploma in Company Direction. She is an experienced Non-Executive Director and currently sits on the boards of two other listed funds (Eurocastle Investment Limited and Third Point Offshore Investors Limited) and various PE funds. Claire Whittet is a Guernsey resident.

 

Committee Memberships: Audit Committee Member; Nomination and Remuneration Committee Member; Management Engagement Committee Chair.

 

 

Report of the Directors

 

The Directors hereby submit the Annual Report and Audited Financial Statements for the Company for the year ended 31 December 2024. This Report of the Directors should be read together with the Corporate Governance Report.

 

General Information

REL is a company limited by shares, which was incorporated on 23 May 2013 in Guernsey with an unlimited life and registered with the Commission as a Registered Closed-ended Collective Investment Scheme pursuant to the POI Law. It has been listed on the London Stock Exchange since 24 October 2013. The registered office of the Company is PO Box 286, Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 4LY.

 

Principal Activities

The principal activity of the Company is to act as an investment entity through the Partnership and make investments in the energy sector.

 

The Company's investment objective is to generate long-term capital growth by investing in the global energy sector.

 

Business Review

A review of the Company's business and its likely future development is provided in the Board Chair's Statement and in the Investment Manager's Report.

 

Listing Requirements

Since being admitted on 24 October 2013 to the Official List of the UK Listing Authority, maintained by the FCA, the Company has complied with the applicable UK Listing Rules.

 

Results and Dividend

The results of the Company for the year are shown in the audited Statement of Comprehensive Income.

 

The Net Asset Value of the Company as at 31 December 2024 was $376 million (31 December 2023: $674 million).

 

The Directors do not recommend the payment of a dividend in respect of the year ended 31 December 2024 (31 December 2023: $nil).

 

Share Capital

At incorporation on 23 May 2013, the Company issued one founder Ordinary Share of no par value. On 29 October 2013, the Company issued 71,032,057 Ordinary Shares of no par value at £10 per Ordinary Share in an initial public offering raising a total of $1,138 million.

 

KFI, one of the Cornerstone Investors in the Company, paid for and acquired 10 million Ordinary Shares in two equal tranches of £50 million. The first tranche was paid on Admission and the second tranche of 5,000,000 Ordinary Shares was paid on 26 September 2014.

 

On 11 December 2015, the Company raised £67.6 million ($102.3 million) ⁽¹⁾ through the issuance of 8,448,006 new Ordinary Shares at £8.00 per Ordinary Share.

 

On 15 October 2018, the Company announced a Tender Offer for £55.0 million ($71 million) in value of the Company's Ordinary Shares. The Company acquired 4,583,333 Ordinary Shares at £12.00 ($15.48) per share, which were cancelled on 23 November 2018.

 

On 1 May 2020, the Company announced a buyback programme with the intention of returning £50 million to Shareholders via on market buybacks; which was completed on 9 March 2021. Since the announcement, the Company has purchased 17,214,197 shares, in aggregate, for £50 million ($63 million) at an average share price of £2.90 ($3.67).

 

On 11 May 2021, the Company announced a buyback programme with the intention of returning £20 million to Shareholders via on market buybacks, which subsequently, on 4 October 2021, was increased to £40 million. Since the announcement, the Company has purchased 7,744,935 shares, in aggregate, for £36 million ($50 million) at an average share price of £4.65 ($6.40).

 

On 14 February 2022, the Company announced that the Board and Investment Manager agreed to allocate an additional £46.0 million ($62.4 million) to the programme, which subsequently on 15 May 2023, was increased by a further £30 million ($37.4 million).

 

In addition to the buyback programme, the Company acquired 3,182,196 ordinary shares pursuant to a Tender Offer announced on 17 August 2023 at a total cost of approximately £18.4 million ($23.4 million).

 

On 8 February 2024, the Company announced that it proposed to return £158 million ($199 million) of its excess capital to shareholders by means of a tender offer at a price of £10.50 per ordinary share. The Company launched the Tender Offer on 23 February 2024 which closed on 25 March 2024. On 2 April 2024 REL announced that it had acquired, as of 28 March 2024, 15,047,619 of the Company's ordinary shares at a price of £10.50, equating to approximately 36 per cent. of all outstanding ordinary shares, and that all shares repurchased by the Company had been cancelled.

 

At the 2024 AGM, the shareholders renewed the authorisation for the Board to continue with share buybacks and the Board duly commenced the current programme, allocating an amount of approximately £22 million ($28 million). On 4 July 2024, the Company announced that it has entered into an irrevocable agreement with Deutsche Numis to continue this share buyback programme.

 

Since the announcement in May 2024, in addition to the Tender Offer, 1,805,479 ordinary shares have been bought back at a total cost of approximately £14 million ($19 million) at an average share price of approximately £8.01 ($10.06). The Company continues to maintain its buyback strategy moving forward in 2025.

 

As at 31 December 2024, the share capital of the Company is 25,342,691 Ordinary Shares in aggregate.

 

The Company has one class of Ordinary Shares. The issued value of the Ordinary Shares represents 100 per cent. of the total issued value of all share capital. Under the Company's Articles of Incorporation, on a show of hands, each Shareholder present in person or by proxy has the right to one vote at general meetings. On a poll, each Shareholder is entitled to one vote for every share held.

 

Shareholders are entitled to all dividends paid by the Company and, on a winding up, provided the Company has satisfied all of its liabilities, the Shareholders are entitled to all of the surplus assets of the Company. The Company has not declared or paid dividends from inception to 31 December 2024, and has no intention to do so.

 

The Ordinary Shares have no right to fixed income.

 

⁽¹⁾ Gross of share issuance costs of $3.6 million.

 

Shareholdings of the Directors

The Directors with beneficial interests in the shares of the Company as at 31 December 2024 and 2023 are detailed below:

 

Director	Ordinary Shares held 31 December 2024	Per cent. Holding at 31 December 2024	Ordinary Shares held 31 December 2023	Per cent. Holding at 31 December 2023
Richard Horlick(1)	10,000	0.039	10,000	0.024
Jeremy Thompson(2)	3,751	0.015	3,751	0.009
Claire Whittet(1)(3)	2,250	0.010	2,250	0.005
John Roche(1)	2,201	0.010	2,201	0.005
Karen McClellan(1)	-	-	-	-

 

⁽¹⁾        Non-Executive Independent Director.

⁽²⁾        Senior Independent Director (from 21 May 2024)

⁽³⁾     Ordinary Shares held indirectly with spouse.

 

In addition, the Company also provides the same information as at 24 February 2025, being the most current information available.

 

 

Director	Ordinary Shares held 24 February 2025	Per cent. Holding at 24 February 2025
Richard Horlick(1)	10,000	0.039
Jeremy Thompson(2)	3,751	0.015
Claire Whittet(1)(3)	2,250	0.010
John Roche(1)	2,201	0.010
Karen McClellan(1)	-	-

 

⁽¹⁾     Non-Executive Independent Director

⁽²⁾     Senior Independent Director (from 21 May 2024)

⁽³⁾     Ordinary Shares held indirectly with spouse

 

Directors' Authority to Buyback Shares

At the AGM on 21 May 2024 in St Peter Port, Guernsey, the Company renewed the authority to make market purchases of up to a maximum of 14.99 per cent. of the issued share capital of the Company. Any buyback of the Company's Ordinary Shares will be made subject to Companies Law (''Companies (Guernsey) Law, 2008, (as amended)'') and within any guidelines established from time to time by the Board. The making and timing of any buybacks will be at the absolute discretion of the Board, with consent of the Investment Manager, and not at the option of the Shareholders. Purchases of the Company's Ordinary Shares will only be made through the market for cash at prices below the prevailing Net Asset Value of the Company's Ordinary Shares (as last calculated) where the Directors believe such purchases will enhance Shareholder value. Such purchases will also only be made in accordance with the UK Listing Rules.

 

In accordance with the Company's Articles of Incorporation and Companies Law, up to 100 per cent. of the Company's Ordinary Shares may be held as treasury shares.

 

Directors' and Officers' Liability Insurance

The Company maintains insurance in respect of Directors' and Officers' liability in relation to their acts on behalf of the Company.

 

Substantial Shareholdings

As at 31 December 2024, the Company had been notified, in accordance with Chapter 5 of the Disclosure Guidance and Transparency Rules, of the following substantial voting rights as Shareholders of the Company.

 

Shareholder	Shareholding	Per cent. Holding	Nature of Holding
Moore Capital Mgt	5,348,912	21.03	Indirect
Quilter Investors	3,018,483	11.87	Indirect
Riverstone Related Holdings	2,053,339	8.10	Direct
Helvetische Bank	1,274,059	5.01	Direct
Metage Capital Mgt	1,100,495	4.33	Direct

 

 

In addition, the Company also provides the same information as at 24 February 2025, being the most current information available.

 

Shareholder	Shareholding	Per cent. Holding	Nature of Holding
Moore Capital Mgt	5,348,912	21.19	Indirect
Quilter Investors	3,018,483	11.96	Indirect
Riverstone Related Holdings	2,053,339	8.14	Direct
Helvetische Bank	1,284,059	5.09	Direct
Metage Capital Mgt	1,100,495	4.36	Direct

 

The Directors confirm that there are no securities in issue that carry special rights with regards to the control of the Company.

 

Independent External Auditor

Ernst & Young LLP has been the Company's external auditor since incorporation in 2013. The Audit Committee reviews the appointment of the external auditor, its effectiveness and its relationship with the Company, which includes monitoring the use of the external auditor for non-audit services and the balance of audit and non-audit fees paid.

 

Following a review of the independence and effectiveness of the external auditor, a resolution will be proposed at the 2025 Annual General Meeting to reappoint Ernst & Young LLP. Each Director believes that there is no relevant information of which the external auditor is unaware. Each has taken all steps necessary, as a Director, to be aware of any relevant audit information and to establish that Ernst & Young LLP is made aware of any pertinent information. This confirmation is given and should be interpreted in accordance with the provisions of Section 249 of the Companies Law. Further information on the work of the external auditor is set out in the Report of the Audit Committee.

 

Articles of Incorporation

The Company's Articles of Incorporation may only be amended by special resolution of the Shareholders. At the AGM on 25 May 2021, the Company adopted Amended and Restated Articles.

 

AIFMD

REL is regarded as an externally managed non-EEA AIF under the AIFM Directive. RIGL is the Investment Manager of the Company as its non-EEA AIFM. The AIFMD outlines the required information which has to be made available to investors in an AIF and directs that material changes to this information be disclosed in the Annual Report of the AIF. All information required to be disclosed under the AIFMD is either disclosed in this Annual Report or is detailed in the Appendix entitled AIFMD Disclosures on page 178 in REL's latest Prospectus which can be obtained through the Company's website: www.riverstonerel.com/investors/reports-and-presentations/ The AIFM has no remuneration within the current or prior year that falls within the scope of Article 22 of the Directive.

 

RIGL provides AIFMD compliant management services to REL. The AIFM acting on behalf of the AIF, has appointed Ocorian Depositary Company (UK) Limited to provide depositary services to the AIF. The appointment of the Depositary is intended to adhere to, and meet the conditions placed on the Depositary and the AIFM under Article 21 and other related articles of the AIFMD. The Depositary shall only provide depositary services to the AIF should it admit one or more German and/or Danish investors following marketing activity towards them. At that time, the Depositary shall observe and comply with the Danish and German regulations applying to the provision of depositary services to a non-EEA AIF marketed in Denmark or Germany, as the case may be, by a non-EEA AIFM.

 

UCITS Eligibility

The Investment Manager is a relying adviser of Riverstone Investment Group LLC. Riverstone Investment Group LLC is registered as an investment adviser with the SEC under the U.S. Investment Advisers Act. As such, the Investment Manager is subject to Riverstone Investment Group LLC's supervision and control, the advisory activities of the Investment Manager are subject to the U.S. Investment Advisers Act and the rules thereunder and the Investment Manager is subject to examination by the SEC. Accordingly the Company has been advised that its Ordinary Shares should be "transferable securities" and, therefore, should be eligible for investment by authorised funds in accordance with the UCITS Directive or NURS on the basis that:

 

·      the Company is a closed end investment company;

·      the Ordinary Shares are admitted to trading on the Main Market of the London Stock Exchange; and

·      the Ordinary Shares have equal voting rights.

 

However, the manager of the relevant UCITS or NURS should satisfy itself that the Ordinary Shares are eligible for investment by the relevant UCITS or NURS.

 

AEOI Rules

Under AEOI Rules the Company continues to comply with both FATCA and CRS requirements to the extent applicable to the Company.

 

General Partner's Performance Allocation and Management Fees

The General Partner's Performance Allocation is equal to 20 per cent. of all applicable realised pre-tax profits, in accordance with the revised terms announced on 3 January 2020, but effective 30 June 2019 (see Note 9 for further detail). In particular, taxes on realised gains from ECI investments, as shown in the Investment Manager's Report, in excess of existing net operating losses, can be substantial at rates up to 27.5 per cent. The Company is not an umbrella collective investment undertaking and therefore has no gross liability. In the normal course of business, REL may form wholly-owned subsidiaries, to be treated as C Corporations for U.S. tax purposes. The C Corporations serve to protect REL's public investors from incurring U.S. ECI. The C Corporations file U.S. corporate tax returns with the U.S. IRS and pay U.S. corporate taxes on its taxable income.

 

The General Partner's Performance Allocation is calculated under the aforementioned revised terms of the Partnership Agreement announced on 3 January 2020, but effective 30 June 2019, and as described in the Prospectuses.

 

The accrued Performance Allocation is calculated on a quarterly basis, with a decision being taken as to whether or not to provide for it when calculating the fair value of the Company's investment in the Partnership, as described in Note 10. In view of the substantial deficit of $156.7 million noted in the Company's Portfolio Cost Benchmark Test, the Company continues to not accrue any calculated Performance Allocation as at 31 December 2024 ($Nil: 31 December 2023).  The fair value of the Company's investment in the Partnership is after the calculation of management fees, as described in Note 9.

 

The financial effect of the General Partner's Performance Allocation, management fees and any taxes on ECI investments is shown in Note 6. The Investment Management Agreement continues into perpetuity post the seventh year anniversary as the Discontinuation Resolution was not passed in 2020, subject to the termination for cause provisions described in Note 9.

 

However, either the Board or a 10 per cent. Shareholder or group can request an EGM to vote on a wind-up of the Company at any time. If passed, such actions would trigger an exit fee equal to 20 times the most recent quarterly management fee totalling $28.2 million.

 

Going Concern

The Audit Committee has reviewed the appropriateness of the Company's Financial Statements prepared in accordance with Companies Law and IFRS and presented on a going concern basis, which it has recommended to the Board. As further disclosed in the Corporate Governance Report, the Company is a member of the AIC and complies with the AIC Code. The Financial Statements have been prepared on a going concern basis for the reasons set out below and as the Directors, with the recommendation from the Audit Committee, have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, which is defined as the period from the date of approval of Financial Statements up until 31 March 2026. In reaching this conclusion, the Directors, with the recommendation from the Audit Committee, have considered the risks that could impact the Company's liquidity over the period from the date of approval of the Financial Statements up until 31 March 2026.

 

In reaching the conclusion that the audited Financial Statements are prepared on a going concern basis, the Directors have considered the principal risks faced by the Company; the substantial level of cash/cash equivalent balances held by the Company and the Partnership as at 31 December 2024; the liquidity of  the material listed investments held, the cash flow forecasts for the Company outlining the requirements to settle current and expected liabilities (including the funding of the Company's share buyback programme); and the potential unfunded commitments of the Partnership.

 

Viability Statement

 

The Directors, with recommendation from the Audit Committee, have assessed the prospects of the Company and relevant stresses (i.e. additional funding requirements to existing portfolio companies, share buyback programme, management fees and expenses) over a longer period than required by the going concern provision. With recommendation from the Audit Committee, the Board chose to conduct a review for a period of three years to 31 December 2027 as it was determined to be an appropriate timeframe based on the historical investment cycle of the Company's investments, through the Partnership, and its financial planning processes. On a rolling basis the Directors evaluate the outcome of the investments and the Company's financial position as a whole. While an unprecedented and long-term decline in global oil and gas consumption could threaten the Company's performance, it would not necessarily threaten its viability, not least as a result of the ample cash/cash equivalents available at the Company and the Partnership and other liquid assets.

 

In support of this statement, the Audit Committee recommended to the Directors to take into account all of the principal risks and their mitigation as identified in the Principal Risk and Uncertainties section of the Corporate Governance Report, the nature of the Company's business; including the cash reserves, money market deposits and other liquid investments held at the Partnership, the potential of its portfolio of investments to generate future income and capital proceeds, and the ability of the Directors to minimise the level of cash outflows, if necessary. The most relevant potential impacts of the identified Principal Risks and Uncertainties on viability were determined to be:

 

·      An investment's capital requirements may exceed the Company's ability to provide capital; and

·      The Company may not have sufficient capital available to participate in all investment opportunities presented.

 

Each quarter, the Directors, through the Audit Committee, review threats to the Company's viability utilising the Company's risk matrix, which it updates as required due to recent developments and/or changes in the global market. The Board also relies on periodic reports provided by the Investment Manager and the Administrator regarding risks faced by the Company. When required, experts are utilised to gather relevant and necessary information, regarding tax, legal, and other factors.

 

The Investment Manager considers the future cash requirements of the Company before follow-on funding for current portfolio companies. Furthermore, the Board receives regular updates from the Investment Manager on the Company's cash position, which allows the Board to maintain their fiduciary responsibility to the Shareholders and, if required, limit funding for existing commitments.

 

Based on the aforementioned procedures and the existing internal controls of the Company and Investment Manager, the Board, with recommendation from the Audit Committee, has concluded there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three-year period of the assessment.

 

Directors' Responsibilities

Although the Company is domiciled in Guernsey, in accordance with the guidance set out in the AIC Code, the Directors describe in this Annual Report how the matters set out in Section 172 of the UK Companies Act 2006 have been considered in their board discussions and decision-making.  Section 172 of the Companies Act requires that the directors of a company act in the way that they consider, in good faith, is most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to the likely consequences of any decision in the long term and the interests of all the company's stakeholders. 

The Board seeks to encourage engagement between the Company's Shareholders and the Chair of the Board, the Chairs of the Audit and Management Engagement Committees and the Senior Independent Director, which has been facilitated throughout the year. Up to date quarterly reporting also provides the Board with accurate, timely information on shareholder sentiment and direct feedback from service providers, impacted by the Company's operations, and is canvassed at least annually by the Chair of the Management Engagement Committee. It is against this backdrop that key decisions which are either material to the Company or are significant to any of the Company's key stakeholders are taken. The below key decisions were made or approved by the Directors during the year, with the overall aim of promoting the success of the Company, having regard to the long term, while considering the impact on its members, stakeholders and the wider society as outlined in the ESG section.

 

Engagement with Shareholders

The Company reports to Shareholders in a number of formal ways, including its Annual Report, Interim Report and regulatory news releases, all of which are approved by the Board. In addition, the Company's website contains comprehensive information for Shareholders. The Chair and the SID have met with a number of investors over the period.

 

On 8 February 2024, the Company announced a Tender Offer for £158 million ($199 million) in the value of the Company's Ordinary Shares. During 2024, the Company acquired 15,047,619 Ordinary Shares which were subsequently cancelled on 2 April 2024.

 

At the 2024 AGM, the shareholders renewed the authorisation for the Board to continue with share buybacks and the Board duly commenced the current programme, allocating an amount of approximately £22 million ($28 million). During 2024, in addition to the Tender Offer, the Company acquired 1,805,479 Ordinary Shares which were subsequently cancelled.

 

Following the cancellation of Ordinary Shares from the Tender Offer and share buyback programme, the share capital of the Company is 25,342,691 Ordinary Shares in aggregate.

 

Financial Risk Management Objectives

Financial Risk Management Objectives are disclosed in Note 10.

 

Principal Risk and Uncertainties

Principal Risk and Uncertainties are discussed in the Corporate Governance Report.

 

Annual General Meetings

 

The AGM of the Company will be held at 11:00 BST on 20 May 2025 at the offices of Ocorian Administration (Guernsey) Limited, Trafalgar Court, Les Banques, St Peter Port, Guernsey, Channel Islands. Details of the resolutions to be proposed at the AGM, together with explanations, will appear in the notices of meetings to be distributed to Shareholders listed on the register as at 31 December 2024 together with this Annual Report. As a matter of good practice, all resolutions will be conducted on a poll and the results will be announced to the market as soon as possible after the meeting.

 

Members of the Board, including the Chair of the Board and the Chair of each Committee, intend to be in attendance at the AGM, and will be available to answer Shareholder questions. Additionally, Shareholders can submit questions in advance to LPRelations@RiverstoneLLC.com addressed for the attention of the Board.

 

By order of the Board

 

 

Richard Horlick

Chair of the Board

27 February 2025

 

 

Directors' Responsibilities Statement

 

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations.

 

The Companies Law requires the Directors to prepare Financial Statements for each financial year. Under the Companies Law, the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these Financial Statements, the Directors are required to:

·      select suitable accounting policies and apply them consistently;

·      make judgements and estimates that are reasonable and prudent;

·      present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

·      provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company's financial position and financial performance;

·      state that the Company has complied with IFRS, subject to any material departures disclosed and explained in the Financial Statements; and

·      prepare the Financial Statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

 

The Directors confirm that they have complied with the above requirements in preparing the Financial Statements.

 

The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time, the financial position of the Company and enable them to ensure that the Financial Statements comply with Companies Law. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law and regulations.

 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website (www.RiverstoneREL.com). The work carried out by the external auditor does not involve considerations of these matters and, accordingly, the external auditor accepts no responsibility for any changes that may have occurred to the Financial Statements since they were initially presented on the website.

 

Legislation in Guernsey governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions.

 

Responsibility Statement of the Directors in Respect of the Annual Report under the Disclosure GUIDANCE and Transparency Rules

 

Each of the Directors confirms to the best of their knowledge and belief that:

·      the Financial Statements, prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

·      the Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties faced; and

·      the Annual Report and Financial Statements include information required by the UK Financial Conduct Authority so that the Company complies with the provisions of the UK Listing Rules, Disclosure Guidance and Transparency Rules of the UK Listing Authority. With regard to corporate governance, the Company is required to disclose how it has applied the principles and complied with the provisions of the corporate governance code applicable to the Company.

 

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations. As part of the preparation of the Annual Report and Financial Statements, the Directors have received reports and information from the Company's Administrator and Investment Manager. The Directors have considered, reviewed and commented upon the Annual Report and Financial Statements throughout the drafting process in order to satisfy itself in respect of the content. In the opinion of the Directors, the Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for Shareholders to assess the Company's performance, business model and strategy.

 

 

By order of the Board

 

 

Richard Horlick	John Roche
Chair of the Board	Director
27 February 2025	27 February 2025

 

Corporate Governance Report

 

As a UK listed Company, REL's governance policies and procedures are based on the principles of the UK Code as required under the UK Listing Rules. The UK Code is available on the Financial Reporting Council's website, www.frc.org.uk.

 

The Company is subject to the GFSC Code, which applies to all companies registered as collective investment schemes in Guernsey. The GFSC has also confirmed that companies that report against the UK Code or the AIC Code are deemed to meet the GFSC Code.

 

The Board monitors developments in corporate governance to ensure the Board remains aligned with best practice especially with respect to the increased desired focus on greater gender and ethnic diversity on the boards of listed companies. The Board recognises and supports the Hampton Alexander Review and the Parker Review and acknowledges the importance of having a variety of backgrounds and experiences represented in the boardroom for the effective functioning of the Board. It is the ongoing aspiration of the Board to have a well-diversified representation. The Board also values diversity of business skills and experience because Directors with diverse skills sets, capabilities and experience gained from different geographical backgrounds enhance the Board by bringing a wide range of perspectives to the Company. The Board is satisfied with the current composition and functioning of its members and notes a 40 per cent. female representation, meeting the Hampton Alexander target. The Board is cognisant that it does not currently have an ethic minority representation, contrary to the FCA diversity guidelines. The Board's view has been and, continues to be, that all appointments to the Board should be merit based, assessed against objective selection criteria. The Board has a Diversity Policy which is actively implemented as part of the board succession process and whilst the Board has not become more ethnically diverse as a result of recruitment in 2023, this continues to be a key focus during future succession planning. To avoid precluding any deserving candidate from consideration, executive search consultants will be asked to provide candidates from a diverse range of backgrounds.

 

The AIC Code addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to investment companies such as the Company. The Board considers that reporting against the principles and recommendations of the AIC Code provides better information to Shareholders.

 

The Company has complied with the recommendations of 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;

·      executive directors' remuneration; and

·      the need for an internal audit function.

 

As explained in the UK Code, the Board considers that the above provisions are not currently relevant to the position of the Company, being an externally managed investment company, which delegates most day-to-day functions to third parties.

 

The Company does not have a Chief Executive or any Executive Directors.

 

The Company has no employees or internal operations and has therefore not reported further in respect of these provisions. The need for an internal audit function is discussed in the Audit Committee report.

 

The Board

The Company is led and controlled by a Board of Directors, which is collectively responsible for the long-term sustainable success of the Company. It does so by creating and preserving value and has as its foremost principle acting in the interests of Shareholders as a whole and the Company's stakeholders.

 

The Company believes that the composition of the Board is a fundamental driver of its success as the Board must provide strong and effective leadership of the Company. The current Board was selected, as their biographies illustrate, to bring a breadth of knowledge, skills and business experience to the Company. The Non-Executive Directors provide independent challenge and review, bringing wide experience, specific expertise and a fresh objective perspective.

 

The Board presently consists of five Non-Executive Directors all of whom, including the Chair of the Board, are independent of the Company's Investment Manager; Richard Horlick, Claire Whittet, John Roche, Jeremy Thompson and Karen McClellan. All Directors served during the year. John Roche succeeded Patrick Firth as Chair of the Audit Committee with effect from 1 January 2024 and Jeremy Thompson was appointed Senior Independent Director on 21 May 2024, on the retirement of Patrick Firth.

 

The Chair of the Board is independent and is appointed in accordance with the Company's Articles of Incorporation. Richard Horlick is considered to be independent because he:

·      has no current nor historical employment with the Investment Manager;

·      has no current directorships nor partnerships in any other investment funds managed by the Investment Manager; and

·      is not an executive of a self-managed company nor an ex-employee who has left the executive team of a self-managed company within the last five years.

 

The Board is of the view that no individual nor group of individuals dominates decision making.

 

New Directors receive an induction from the Investment Manager and all Directors receive other relevant training as necessary.

 

At each subsequent Annual General Meeting of the Company, each of the Directors at the date of the notice convening the Annual General Meeting shall retire from office and may offer themselves for election or re-election by the Shareholders.

 

The Board meets at least four times a year for regular, scheduled meetings and should the nature of the activity of the Company require it, additional meetings may be held, some at short notice. At each meeting the Board follows a formal agenda that covers the business to be discussed. The primary focus at Board meetings is a review of investment performance and associated matters such as asset allocation, share price discount/premium management, investor relations, peer group information, gearing, industry issues and principal risks and uncertainties, in particular those identified at the end of this report. Additionally, since the Company's modified investment strategy was implemented in 2020, the Board is required to regularly hold meetings to consent to all new investments when brought forward by the Investment Manager.

 

Between meetings the Board or selected Directors visit the Investment Manager at least annually, and there is regular contact with the Administrator. The Board requires to be supplied in a timely manner with information by the Investment Manager, the Administrator, the Company Secretary and other advisers in a form and of a sufficient quality to enable it to discharge its duties.

 

The Company has adopted a share dealing code for the Board and will seek to ensure compliance by the Board and relevant personnel of the Investment Manager and other third-party service providers with the terms of the share dealing code.

 

Board Tenure and Re-election

In accordance with the AIC Code, when and if any Director shall have been in office (or on re-election would at the end of that term of office) for more than nine years, the Company will consider further whether there is a risk that such a Director might reasonably be deemed to have lost independence through such long service. Patrick Firth had served for more than nine years when he retired on 21 May 2024 with his longer tenure being deemed necessary for succession planning purposes. As at the date of the Company's 2024 AGM and during this reporting period, Claire Whittet had served for more than nine years with the Board considering her to be independent throughout this period. Claire Whittet has advised that she will not seek re-election to the Board at the forthcoming 2025 AGM. Additionally as at the date of the Company's 2025 AGM, Jeremy Thompson will have just reached his nine year tenure on the Board and it has been agreed that he will offer himself for re-election for one further year.  The Board continues to consider him to be independent.  The re-election of Jeremy Thompson for one further year as the Senior Independent Director will support the Company during 2025 with expected increased shareholder and Investment Manager engagement arising from the narrative at the conclusion of the Chair's Statement. The Board considers its composition and succession planning on an ongoing basis. Unless otherwise advised, all Directors stand for annual re-election at the AGM.

 

A Director who retires at an Annual General Meeting may, if willing to continue to act, be elected or re-elected at that meeting. If, at a general meeting at which a Director retires, the Company neither re-elects that Director nor appoints another person to the Board in the place of that Director, the retiring Director shall, if willing to act, be deemed to have been re-elected unless at the general meeting it is resolved not to fill the vacancy or unless a resolution for the re-election of the Director is put to the meeting and not passed.

 

Directors are appointed under letters of appointment, copies of which are available at the registered office of the Company.

 

Directors' Remuneration

The level of remuneration of the Directors reflects the time commitment and responsibilities of their roles. The remuneration of the Directors does not include any share options or other performance related elements and there are no plans to seek any Shareholder waivers to deviate from this.

 

With effect from 1 July 2023, a 10 per cent. increase was applied to the Directors remuneration.

 

The Chair of the Board is entitled to annual remuneration of £145,200 (31 December 2023: £145,200). The Chair of the Audit Committee is entitled to annual remuneration of £90,750 (31 December 2023: £90,750) and the Chair of the Management Engagement Committee is entitled to annual remuneration of £78,650 (31 December 2023: £78,650). The Chair of the Nomination and Remuneration Committee is entitled to remuneration of £78,650 (31 December 2023: £78,650). The other independent Directors are entitled to annual remuneration of £72,600 (31 December 2023: £72,600).

 

During the year ended 31 December 2024 and 31 December 2023, the Directors' remuneration was as follows:

 

Director	2024 ($'000)	2023 ($'000)
Richard Horlick(1)	182	159
Jeremy Thompson(2)(5)	99	93
Claire Whittet(1)(4)	99	93
John Roche(1)(3)	114	86
Karen McClellan(1)	91	54

⁽¹⁾     Non-Executive Independent Director

⁽²⁾     Chair of the Nominations and Remuneration Committee

⁽³⁾     Chair of the Audit Committee

⁽⁴⁾     Chair of the Management Engagement Committee

⁽⁵⁾     Senior Independent Director

 

The above fees due to the Directors are for the year ended 31 December 2024 and 31 December 2023, and none were outstanding at 31 December 2024 (31 December 2023: $nil).

 

Duties and Responsibilities

The Board is responsible to Shareholders for the overall management of the Company. The duties and powers reserved for the Board include decisions relating to the determination of investment policy and approval of investments in certain instances, strategy, capital raising, statutory obligations and public disclosure, financial reporting and entering into any material contracts by the Company.

 

The Board retains direct responsibility for certain matters, including (but not limited to):

·      approving the Company's long-term objective and any decisions of a strategic nature including any change in investment objective, policy and restrictions, including those which may need to be submitted to Shareholders for approval;

·      reviewing the performance of the Company in light of the Company's strategy objectives and budgets ensuring that any necessary corrective action is taken;

·      the appointment, overall supervision and removal of key service providers and any material amendments to the agreements or contractual arrangements with any key delegates or service providers;

·      approving any transactions with ''related parties'' for the purposes of the Company's voluntary compliance with the applicable sections of the UK Listing Rules;

·      the review of the Company's valuation policy;

·      the review of the Company's corporate governance arrangements; and

·      approving any actual or potential conflicts of interest.

 

The Directors have access to the advice and services of the Administrator, who is responsible to the Board for ensuring that Board procedures are followed and that it complies with Companies Law and applicable rules and regulations of the GFSC and the LSE. Where necessary, in carrying out their duties, the Directors may seek independent professional advice services at the expense of the Company. The Company maintains Directors' and Officers' liability insurance in respect of legal action against its Directors on an ongoing basis.

 

The Board's responsibilities for the Annual Report are set out in the Directors' Responsibility Statement. The Board is also responsible for issuing appropriate half-yearly financial reports, quarterly portfolio valuations and other price-sensitive public reports.

 

Directors' attendance at Board and Committee Meetings:

 

One of the key criteria the Company uses when selecting Directors is their confirmation prior to their appointment that they will be able to allocate sufficient time to the Company to discharge their responsibilities in a timely and effective manner.

 

The Board formally met four times during the year. The Board has held a number of ad hoc meetings, and the sub committees of the Board have met frequently, during the course of 2024. Directors are encouraged when they are unable to attend a meeting to give the Chair of the Board their views and comments on matters to be discussed, in advance. In addition to their meeting commitments, the Non-Executive Directors also liaise with the Investment Manager whenever required and there is regular contact outside the Board meeting schedule. In addition to the Board members, members of the Investment Manager attend relevant sections of the Board meetings by invitation.

 

Attendance is further set out below:

 

	Board Meetings	Audit Committee Meetings	Nomination and Remuneration Committee Meetings	Management Engagement Committee Meetings	Tenure as at 31 December 2024
Director
Richard Horlick(1)	4	4	4	2	2 years and 2 months
Jeremy Thompson(2)	4	4	4	2	8 years and 8 months
Karen McClellan(1)	4	4	4	2	1 year and 8 months
John Roche(1)	4	4	4	2	2 years and 1 month
Claire Whittet(1)	4	4	4	2	9 years and 8 months

_{(1)    Non-Executive Independent Director}

_{(2)    Senior Independent Director}

  

A quorum is comprised of any two or more members of the Board from time to time, to perform administrative and other routine functions on behalf of the Board, subject to such limitations as the Board may expressly impose on this committee from time to time.

 

Board members who are not ordinarily resident in Guernsey were sometimes unable to travel and attend certain Board and committee meetings in person during 2024. In those cases, the relevant Board members attended those meetings by telephone or video link and are shown as being in attendance at the relevant meeting in the table above.

 

Conflicts of interest

A Director has a duty to avoid a situation in which he or she has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Company. The Board requires Directors to declare all appointments and other situations that could result in a possible conflict of interest and has adopted appropriate procedures to manage and, if appropriate, approve any such conflicts. The Board is satisfied that there is no compromise to the independence of those Directors who have appointments on the boards of, or relationships with, companies outside the Company.

 

Committees of the Board

The Board believes that it and its committees have an appropriate composition and blend of skills, experience, independence and diversity of backgrounds to discharge their duties and responsibilities effectively. The Board keeps its membership, and that of its committees, under review to ensure that an acceptable balance is maintained, and that the collective skills and experience of its members continue to be refreshed. It is satisfied that all Directors have sufficient time to devote to their roles and that undue reliance is not placed on any individual.

 

Each committee of the Board has written terms of reference, approved by the Board, summarising its objectives, remit and powers, which are available on the Company's website (www.RiverstoneREL.com) and reviewed on an annual basis. All committee members are provided with appropriate induction on joining their respective committees, as well as on-going access to training. Minutes of all meetings of the committees (save for the private sessions of committee members at the end of meetings) are made available to all Directors and feedback from each of the committees is provided to the Board by the respective committee Chairs at the next Board meeting. The Chair of each committee attends the AGM to answer any questions on their committee's activities.

 

The Board and its committees are supplied with regular, comprehensive and timely information in a form and of a quality that enables them to discharge their duties effectively. All Directors are able to make further enquiries of management whenever necessary and have access to the services of the Company Secretary.

 

Audit Committee

The Audit Committee has been chaired by John Roche since 1 January 2024. It comprises Richard Horlick, Karen McClellan, Jeremy Thompson, and Claire Whittet, all of whom held office throughout the year. The Chair of the Audit Committee, the Investment Manager and the external auditor, Ernst & Young LLP, have held discussions regarding the audit approach and identified risks. The external auditors attend Audit Committee meetings in addition to a number of meetings between the Audit Committee Chair and the audit partner, and a private meeting is routinely held by the Audit Committee with the external auditors to afford them the opportunity of discussions without the presence of management. Despite Richard Horlick being the Chair of the Company, the Board and the Audit Committee Chair remain satisfied that he should continue to be a member of the Audit Committee as his contribution is valued and for a company of this size, this is a relatively straightforward decision.  The Audit Committee activities are contained in the Report of the Audit Committee.

 

Nomination and Remuneration Committee

The Nomination and Remuneration Committee is chaired by Jeremy Thompson and comprises, Richard Horlick, Karen McClellan, John Roche and Claire Whittet, all of whom held office throughout the year.

 

The Nomination and Remuneration Committee is convened for the purpose of considering the appointment of additional Directors as and when considered appropriate. The Nomination and Remuneration Committee recognises the continuing importance of planning for the future and ensuring that succession plans are in place. In considering appointments to the Board, the Nomination and Remuneration Committee takes into account the ongoing requirements of the Company and evaluates the balance of skills, experience, independence, and knowledge of each candidate. Appointments are therefore made on personal merit and against objective criteria with the aim of bringing new skills and different perspectives to the Board whilst taking into account the existing balance of knowledge, experience and diversity.

 

In the case of candidates for Directorships, care is taken to ascertain that they have sufficient time to fulfil their Board and, where relevant, committee responsibilities. The Board believes that the terms of reference of the Nomination and Remuneration Committee ensure that it operates in a rigorous and transparent manner. The Board also believes that diversity of experience and approach, including gender diversity, amongst Board members is of great importance and it is the Company's policy to give careful consideration to issues of Board balance and diversity when making new appointments. The Board remains focussed on the guidelines outlined by the Hampton Alexander Review and The Parker Review.

 

In May 2023, the Nomination Committee changed its name to the Nomination and Remuneration Committee and incorporated additional duties in the terms of reference to determine and make recommendations to the Board regarding the remuneration of the Directors. The appended Remuneration Committee utilised the work of a local specialist before recommending a 10 per cent. increase, which reflected no remuneration increase since 2016 and the relatively high workload.

 

In accordance with both UK Listing Rules and AIC Guidelines the Board composition is tabulated below. The Board will continue to take diversity into account as part of its continuing succession planning and recruitment process.

 

Board Gender Identity at 31 December 2024

	Number of Board Members	Percentage of the Board	Number of Senior Positions on the Board
Men	3	60.00%	2
Women	2	40.00%	-

 

Board Ethnic Background at 31 December 2024

	Number of Board Members	Percentage of the Board	Number of Senior Positions on the Board
White British or other white (including minority-white groups)	5	100%	2
Other ethnic group	-	-	-

 

The Nomination and Remuneration Committee has reviewed the composition, structure and diversity of the Board, succession planning, the independence of the Directors and whether each of the Directors has sufficient time available to discharge their duties effectively. The Nomination and Remuneration Committee and the Board confirm that they believe that the Board has an appropriate mix of skills and backgrounds, that all Directors can be considered as Independent in accordance with the provisions of the AIC Code and that all Directors have the time available to discharge their duties effectively.

 

Management Engagement Committee

The Management Engagement Committee is chaired by Claire Whittet and comprises Richard Horlick, Karen McClellan, Jeremy Thompson, and John Roche, all of whom held office throughout the year. The Management Engagement Committee meets at least once a year pursuant to its terms of reference.

 

The Management Engagement Committee provides a formal mechanism for the review of the performance of the Investment Manager and the Company's other advisors and service providers. It carries out this review through consideration of a number of objective and subjective criteria and through a review of the terms and conditions of the advisors' appointments with the aim of evaluating performance, identifying any weaknesses and ensuring value for money for the Shareholders.

 

The Company (as with all companies) continues to be exposed to external cyber-security threats. The Company recognises the increased incidence of cyber-security threats and through the Management Engagement Committee regularly reviews its policies, procedures and defences to help mitigate associated risks, as well as receiving confirmation of the policies, procedures and defences of the Investment Manager, Administrator and key service providers, and engages market-leading specialists where appropriate.

 

Board Performance and Evaluation

In accordance with Provision 26 of the AIC Code which requires a formal and rigorous annual performance review, the Board formally reviews its performance annually through an internal process. Internal evaluation of the Board, the Audit Committee, the Nomination and Remuneration Committee, the Management Engagement Committee and individual Directors has taken the form of self-appraisal questionnaires and discussions to determine effectiveness and performance in various areas as well as the Directors' continued independence. In line with the provisions of the Code the Board has concluded that all members of the Board are independent Non-Executive Directors and that all members contribute effectively together to achieve the Company's objectives. All Directors are subject to annual re-election.

 

The Nomination and Remuneration Committee is responsible for the timely implementation of internal evaluations and the evaluation of third parties to conduct independent externally facilitated Board reviews. The Board feels that internal evaluations are value added and complementary to external reviews. Both are conducted annually.

 

Whilst the Board is not a FTSE 350 company, in 2024, an externally facilitated review of the Board, its committees and individual Directors (including the Chair) was undertaken following a review of six potential providers. The Board evaluation was again facilitated by Lintstock Ltd. The 2023 Board effectiveness review took the form of a structured questionnaire which covered a range of key topics including composition, skills, knowledge and experience of the Board, the respective roles and responsibilities of the Directors, quality of strategic and risk debate, the effectiveness of decision making and interactions with management together, including the Chair. The 2024 review built on the results and format of the 2023 results focussing on priority areas. All Directors participated in the evaluation, and the findings were collectively considered by the Board.

 

No significant areas of weaknesses were highlighted during the evaluation. The Lintstock evaluation concluded that the priorities for the Board were identified as continued emphasis on shareholder returns, shareholder interactions, clarity on investment strategy and the future of the Company. Lintstock reported that the REL Board engaged very well with the Board Review process and the overall findings of the Review were positive, with areas including the Board's dynamics and composition, the management of meetings and the performance of the Board's Committees recognised as particular strengths.

 

The Board concluded that overall, it had operated effectively throughout 2024 and is confident in its ability to continue effectively to lead the Company and oversee its affairs. The Board believes that the current mix of skills, experience, knowledge and age of the Directors is appropriate to the requirements of the Company.

 

New Directors receive an induction on joining the Board and regularly meet with the senior management employed by the Investment Manager both formally and informally to ensure that the Board remains regularly updated on all issues. All members of the Board are members of professional bodies and serve on other Boards, which ensures they are kept abreast of the latest technical developments in their areas of expertise.

 

The Board arranges for presentations from the Investment Manager, the Company's brokers and other advisors on matters relevant to the Company's business. The Board assesses the training needs of Directors on an annual basis. Members of the Board are responsible for their own continuous professional development.

 

Internal Control and Financial Reporting

The Directors acknowledge that they are responsible for establishing and maintaining the Company's system of internal control and reviewing its effectiveness. Internal control systems are designed to manage rather than eliminate the failure to achieve business objectives and can only provide reasonable but not absolute assurance against material misstatements or loss. However, the Board's objective is to ensure that REL has appropriate systems in place for the identification and management of risks. The Directors carry out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The key procedures which have been established to provide internal control are that:

·      the Board has delegated the day-to-day operations of the Company to the Administrator and Investment Manager; however, it retains accountability for all functions it delegates;

·      the Board clearly defines the duties and responsibilities of the Company's agents and advisors and appointments are made by the Board after due and careful consideration. The Board monitors the ongoing performance of such agents and advisors and will continue to do so through the Management Engagement Committee;

·      the Board monitors the actions of the Investment Manager at regular Board meetings and is given frequent updates on developments arising from the operations and strategic direction of the underlying investee companies;

·      the Administrator provides administration and company secretarial services to the Company.
The Administrator maintains a system of internal control on which they report to the Board; and

·      the Board has reviewed the need for an internal audit function and has decided that the systems and procedures employed by the Administrator and Investment Manager, including their own internal controls and procedures, provide sufficient assurance that an appropriate level of risk management and internal control, which safeguards Shareholders' investment and the Company's assets, is maintained. An internal audit function specific to the Company is therefore considered unnecessary.

 

Internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Financial Statements for external reporting purposes. The Administrator and Investment Manager both operate risk-controlled frameworks on a continual ongoing basis within a regulated environment. During 2024 the Administrator continued to report to the Board on a quarterly basis with respect to their performance in respect of financial accounting and financial reporting matters together with other related matters through a compliance report. The Administrator has undertaken an ISAE 3402: Assurance Reports on Controls at a Service Organisation engagement and formally reports to the Board quarterly through a compliance report, with the latest report being for the year ended 31 October 2024. The Investment Manager formally reports to the Board quarterly including updates within Riverstone and also engages with the Board on an ad-hoc basis as required. No weaknesses or failings within the relevant operations of the Administrator or Investment Manager have been identified.

 

The systems of control referred to above are designed to ensure the effectiveness and efficient operation of the relevant internal controls over financial reporting and compliance with laws and regulations. In establishing the systems of internal control which the Company relies upon, regard is paid to the materiality of relevant risks, the likelihood of costs being incurred and costs of control. It follows therefore that the systems of internal control can only provide reasonable but not absolute assurance against the risk of material misstatement in financial reporting or loss. These processes at the Administrator and the Investment Manager have been in place for the year under review and up to the date of approval of this Annual Report and Financial Statements. These processes are reviewed by the Board, operating largely via the Audit Committee and are in accordance with the FRC's internal control publication: Guidance on Risk Management, Internal Control and Related Financial and Business Reporting.

 

 

Investment Management Agreement

The Investment Manager is the sole Investment Manager of the Company and the Partnership. Pursuant to the Investment Management Agreement, the Investment Manager has responsibility for and discretion over investing and managing the Company's and the Partnership's direct and indirect assets, subject to and in accordance with the Company's investment policy. The Investment Manager is entitled to delegate all or part of its functions under the Investment Management Agreement to one or more of its affiliates.

 

The Company has delegated the provision of all services to external service providers whose work is overseen by the Management Engagement Committee at its regular scheduled meetings. Each year, a detailed review of performance pursuant to their terms of engagement is undertaken by the Management Engagement Committee. The Management Engagement Committee and the Investment Manager continue to discuss fees, termination provisions, capital structure management, the performance of the Company, and the basis of the Company's and the Investment Manager's relationship and alignment of interests at length, including the significant equity commitment of Riverstone to the Company as one of its major Shareholders.

 

In accordance with UK Listing Rule 11.7.2R and having formally appraised the performance and resources of the Investment Manager, in the opinion of the Directors the continuing appointment of the Investment Manager on the terms agreed is in the interests of the Shareholders as a whole.

 

On 3 January 2020, the Company announced amendments to the Performance Allocation arrangements under the Investment Management Agreement that were effective from 30 June 2019. The amended terms on which the Company is required to pay a Performance Allocation in respect of its investment are as follows:

 

·      Portfolio level cost benchmark: A Performance Allocation will only be distributed in respect of a realised investment if, at the time of the realisation of the relevant investment, the aggregate of the fair market value of all of the Company's then unrealised investments and the proceeds of all of its realised investments since inception exceeds the aggregate acquisition price of all of the Company's unrealised and realised investments. If this portfolio level cost benchmark is not met at the time of realisation of the relevant investment, distribution of the Performance Allocation is subject to deferment as described further below. As of 31 December 2024, the portfolio level cost benchmark was in deficit by $156.7 million. 

 

·      8 per cent. Hurdle rate: A Performance Allocation will only be accrued for payment upon the realisation of an investment if the proceeds from that investment exceed an amount equal to its acquisition cost plus an 8 per cent. annual cumulative hurdle rate calculated from the date of investment to the date of realisation. If the hurdle is met, the Performance Allocation will be 20 per cent of all Net Profits in respect of each such investment. As of 31 December 2024, four investments exceeded the hurdle rate with $29 million not being accrued in light of the portfolio level cost benchmark being in material deficit and additionally, the total portfolio's Gross IRR is approximately (2) per cent.

 

 

·      Full realisation: A Performance Allocation will only be calculated and accrued on the full realisation of the entire interest in an investment, unless a partial realisation results in the full return of all capital invested in such investment. Otherwise, no Performance Allocation will be payable on partial disposals and the ability for the Investment Manager to elect to receive a Performance Allocation on an investment that has been held by the Company for at least seven years (but not sold) has been removed.

 

 

·      Deferral: If the portfolio level cost benchmark is not met at the time of full realisation of the relevant investment, it will be retested on a quarterly basis for the following three years. If, at any time during those three years, the benchmark is satisfied for four continuous quarters, the relevant Performance Allocation will then become distributable without interest. Any accrued but undistributed Performance Allocation that has been deferred due to the portfolio level cost benchmark test will expire after 36 months.

 

The Investment Manager will continue to be required to apply each Performance Allocation (net of taxes) to acquire ordinary shares of the Company. 

 

During 2021, in compliance with the laws of the Cayman Islands, the Company and its existing Investment Manager, Riverstone International Limited, a Cayman Islands exempted company, assigned its investment advisory rights and obligations under the Company's Investment Management Agreement to RIL's immediate parent entity, RIGL Holdings, LP, a Cayman Islands exempted limited partnership.

 

Furthermore, on 9 December 2020, the Company's Investment Management Agreement was amended to remove the Investment Manager's ability to nominate directors of the Company and to replace it with the ability to request that its representatives attend Board meetings as observers instead, except in circumstances where matters specifically regarding the Investment Manager and its affiliates are being considered.

 

Distribution of Investment Proceeds

In addition, the Company and the Investment Manager have agreed that, going forward, 20 per cent. of the Net Profits attributable to each fully realised investment, net of taxes, withholdings or reserves for taxes will, at the discretion of the Company, be available for distribution to the Company's Shareholders, whether by dividend or share repurchases.

 

Our Culture

The Board has determined that the Company's culture is built around that of the Investment Manager, with a focus on long lasting relationships with a diverse investor base; sustainable investment excellence; and a world class team demonstrating extensive industry knowledge. The Board monitors the Company's culture on at least an annual basis through continued engagement with Shareholders and the Investment Manager.

 

Relations with Shareholders

The Board welcomes Shareholders' views and places great importance on communication with its Shareholders. In addition, Jeremy Thompson, as the Senior Independent Director from May 2024, is available to Shareholders if they have concerns which contact through the normal channels has failed to resolve or for which such contact would be inappropriate. Claire Whittet, Management Engagement Committee Chair, is available to discuss matters regarding the service providers of REL. The Chair of the Board, Senior Independent Director and other Directors are also available to meet with Shareholders at other times, if required. At the request of several Shareholders, the Chair of the Board, Senior Independent Director and other Directors arranged meetings and addressed direct correspondence raised at the quarterly Board meetings during the year.

 

The Company reports formally to Shareholders in a number of ways, including regulatory news releases through the London Stock Exchange's Regulatory News Service and announcements issued in response to events or routine reporting obligations. Also, an Interim Report will be published each year outlining performance to 30 June and the Annual Report will be published each year for the year ended 31 December, both of which will be made available on the Company's website. In addition, the Company's website contains comprehensive information, including company notifications, share information, financial reports, investment objectives and policy, investor contacts and information on the Board and corporate governance. Shareholders and other interested parties can subscribe to email news updates by registering online on the website.

 

The Investment Manager is available for regular contact with Shareholders, including the Cornerstone Investors, and any views that they may have are communicated to the Board and vice versa. No sensitive information is provided to the Cornerstone Investors that is not provided to the Shareholders as a whole and at the same time. The Board is also kept fully informed of all relevant market commentary on the Company by the Investment Manager and the Corporate Broker. The Directors and Investment Manager receive informal feedback from analysts and investors, which is presented to the Board by the Company's Broker. The Company Secretary also receives informal feedback via queries submitted through the Company's website and these are addressed by the Board, the Investment Manager or the Company Secretary, where applicable.

 

Financial results, events, corporate reports, webcasts and fact books are all stored in the Investor Relations section of our website: www.riverstonerel.com/investors/.

 

2025 Key Shareholder Engagements

 

February

Quarterly Portfolio Valuations

Full Year Results Approved

 

April

Notice of Annual General Meeting

Quarterly Portfolio Valuations

 

May

Annual General Meeting

 

July

Quarterly Portfolio Valuations

 

August

Half Year Results

 

October

Quarterly Portfolio Valuations

 

 

Engagement with Stakeholders

 

The wider stakeholders of the Company comprise its service providers, investee companies and suppliers and the Board recognises and values these stakeholders.

 

The Company's relationship with its service providers, including the Investment Manager, is of particular importance. Service providers have been selected and engaged based on due diligence and references including consideration of their internal controls and expertise. The Company has a Management Engagement Committee, who will review the performance of each service provider annually and provide feedback as appropriate, to maintain good working relationships.

 

Responsible investing principles have been applied to each of the investments made, which ensures that appropriate due diligence has been conducted and that the terms of the investments are clearly set out and agreed with investee companies in advance.

 

The Board recognises that relationships with suppliers are enhanced by prompt payment and the Company's Administrator, in conjunction with the Investment Manager, ensures all payments are processed within the contractual terms agreed with the individual suppliers.

 

Relations with Other Stakeholders

The Investment Manager meets regularly with analysts and investors to provide further updates with how the Company and the investment portfolio are performing.

 

The Directors and Investment Manager receive informal feedback from analysts and investors, which is presented to the Board by the Company's Brokers. The Company Secretary also receives informal feedback via queries submitted through the Company's website and these are addressed by the Board, the Investment Manager or the Company Secretary, where applicable.

 

The Directors recognise that the long-term success of the Company is linked to the success of the communities in which Riverstone, and its investee companies, operate.

 

Whistleblowing

The Board has considered arrangements by which staff of the Investment Manager or Administrator may, in confidence, raise concerns within their respective organisations about possible improprieties in matters of financial reporting or other matters. It has concluded that adequate arrangements are in place for the proportionate and independent investigation of such matters and, where necessary, for appropriate follow-up action to be taken within their organisation.

 

Principal Risks and Uncertainties

The Company's assets consist of listed and private equity investments, held through the Partnership, in the conventional and decarbonisation portfolios. Initially, there was a particular focus on opportunities in the global E&P and midstream energy sub-sectors, but since 2020 REL has been exclusively focussed on pursuing a global strategy across decarbonisation sectors presented by Riverstone's investment platform. Its principal risks are therefore related to market conditions in the energy and energy transition sectors in general, but also to the particular circumstances of the businesses in which it is invested through the Partnership. The Investment Manager, through the Partnership, seeks to mitigate these risks through active asset management initiatives and carrying out due diligence work on potential targets before entering into any investments.

 

Each Director is fully aware of the risks inherent in the Company's business and understands the importance of identifying, evaluating and monitoring these risks. The Board has adopted procedures and controls that enable it to carry out a robust assessment of the risks facing the Company, manage these risks within acceptable limits and meet all of its legal and regulatory obligations. The Board is committed to upholding and maintaining zero tolerance towards the criminal facilitation of tax evasion.

 

The Board thoroughly considers the process for identifying, evaluating and managing any significant risks faced by the Company on an ongoing basis and these risks are reported and discussed at Audit Committee and Board meetings. The Board ensures that effective controls are in place to properly mitigate these risks to the greatest extent possible and that a satisfactory compliance regime exists to ensure all applicable local and international laws and regulations are upheld.

 

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 Company's principal risk factors are fully discussed in the Prospectuses, available on the Company's website (www.RiverstoneREL.com) and should be reviewed by Shareholders. Please note that not all principal risks are disclosed on the Company's website, only those established at the time of the Prospectuses.

 

The Company's current principal areas of risk and mitigating actions being taken are summarised below:

1.   The Company initially intended to only invest in the global energy sector, with a particular focus on oil and gas exploration and production, and midstream investments, which exposed it to industry and sector concentration risk.

Under the modified investment strategy, since 2020, the Company has pivoted to focus on energy transition and decarbonisation and this provides an element of diversification for the portfolio, albeit with the additional investment risks noted below. While this pivot has not entirely de-risked the overall investment portfolio, there is some reduced valuation risk with an increased percentage held in listed investments in both strategies. Whilst the Company still has a portfolio that is de-risked by sector, it is now more concentrated by number of investments, as it relies on fewer core and decarbonisation investments.  This risk has increased during the year.

 

2.   The Company's shares have, for a considerable period of time, been trading at a discount to NAV per share for reasons, including, but not limited to, general market conditions in the energy sector, liquidity concerns, perceived issues with the terms of the Investment Management Agreement and actual or expected Company performance as the Company transitions to maximise value from the conventional portfolio allowing investment into its decarbonisation strategy. This persistent discount to NAV has the potential to lead to material shareholder dissatisfaction where any shareholder or shareholder group which in aggregate totals 10 per cent or more of the shares outstanding can call an EGM for a shareholder vote.

The Company has seen a marked improvement in the performance of its share price since 2020, and over this time it has also been very active in attempting to narrow this persistent discount with the introduction of a well-funded and material series of successive buybacks, tender offers as well as enhanced shareholder engagement. There is no guarantee that the continued attempts to mitigate this discount will be successful or that the continued use of discount control mechanisms will remain possible over time. There is a risk that through successive buybacks to try and manage the share price discount to NAV, that the Company may become too small to be viable or to be able to make new or follow-on investments.  This risk has remained unchanged during the year.

2.   Existing or future shareholders could use or obtain a material ownership in the Company and exert influence through voting rights. During 2022, 2023 and into the early part of 2024 there has been notified shareholder disquiet with the substantial discount to NAV of the ordinary shares in the market and concern over the pivot of the investment strategy to decarbonisation investments and performance to date of that strategy/use of available cash versus the level of the share buyback programmes.  This disquiet tempered somewhat over this period with share price improvements and the material return of surplus capital to shareholders via the Tender Offer in April 2024. However, the future strategy of the Company and the return of surplus capital remains a key concern for shareholders.  This risk has remained unchanged during the year.

 

4.   The investment portfolio held by the Company in both the conventional and decarbonisation strategies exposes the Company to a number of specific investment and valuation risks, the most notable ones being:

·     The risks and judgements associated with the fair valuation of the private equity investments could result in the NAV of the Company being materially misstated.  These private equity investments expose the Company's valuation models to changes over time in a number of variables including the price of oil, interest rates, certain public market trading comparables, transaction comparables, discounted cash flow rates, taxation etc.  Ultimately the success or otherwise of a private equity investment will only be determined on eventual realisation.

 

·     The Investment Manager has an extensive and consistent valuation policy which is applied each quarter and fair values all private equity investments held.  All quarterly valuations firstly go through the valuation processes adopted by the Investment Manager and when approved by the Investment Manager are released to the Board for review and challenge. Quarterly meetings are held by the Board with the Investment Manager to review the draft valuations ahead of confirmation and release to the market.

·     Potential changes to domestic policy, banking, regulatory and/or the tax environment of target and existing investments in the Company's chosen geographies may adversely affect the fair value/market value or liquidity of those investments, their ability to borrow and transact business plans or impact the Company's ability to properly realise those investments at previously intended valuations or timescales.

The Investment Manager closely monitors the sectors and industries in which the Company invests or intends to target investment.  All investment opportunities proposed only proceed after thorough due diligence processes prior to acquisition and ongoing monitoring processes are employed while investments are held in the portfolio.

·     The specific investments in the decarbonisation portfolio can expose the Company to additional investment and operational risks arising from investment in the build-up and early/development stages where a company may have little or no operating history, be more vulnerable to financial failure than more established companies, have requirements to invest in further funding rounds or suffer dilution/decrease in value, operating in emerging industries with technologies that are as yet unproven and investments where the Company is a minority investor with limited access.

·     Significant global/regional conflict or the imposition of sanctions or adverse publicity and/or poor ethical practices of the Company or, more particularly, our portfolio companies, operating in hazardous industries which are highly regulated by health and safety laws and where their supply chains could lead to a significant increase in the risk of disruption to the supply chains that are key for the Company and our portfolio companies and have an adverse impact on the reputation of the Company and on the valuations/realisation prospects of our portfolio companies.

The Investment Manager maintains dialogue with the portfolio companies to make sure that they have appropriate plans and resources in place to prioritise the health and safety of their employees, as well as to assess their wider operational and macro environments to include supply chain disruptions and ensure the normal operations of their businesses and to protect our valuations.  All investments are initially screened and then monitored against the Investment Manager's ESG policy.

This risk has decreased during the year with less investments being subjected to judgemental valuation processes.  Although this risk is reducing over time, there may be differences in the investment time horizons and fee provisions between the Company and the private funds managed by Riverstone where the Company has coinvested and these may create conflicts regarding the allocation of investment opportunities and holding periods between the Company and those funds, in particular as a result of step-downs in fees payable by a private fund part way through its duration.

 

5.   The Company is heavily reliant on the services provided by the Investment Manager under the Investment Management Agreement, including ongoing investment opportunities for REL.  The Investment Management Agreement requires the Investment Manager to provide competent, attentive, and efficient services and personnel to the Company. If the Investment Manager was not able to do this or if there was an unacceptable reduction in the service received or investment competence levels of the personnel employed by the Investment Manager, then the Company would not be able to terminate the Investment Management Agreement as it does not expressly provide for termination on notice without specific cause, and poor investment performance, the departure of key Riverstone executives or a change of control of Riverstone do not constitute cause for these purposes.

 

Furthermore, it will be costly for the Company to terminate the Investment Management Agreement as the Company would be required to make a significant termination payment presently in the region of $28.3 million, including if a Discontinuation Resolution were to be proposed and passed by Shareholders or if the Company was otherwise wound up.

The Board has been engaged over time with the Investment Manager to effect some changes to the Investment Management Agreement most notably in the area of performance fees. The Board continues to monitor the performance of the Investment Manager and to discuss potential changes in light of the overall financial performance of the Company.  This risk has increased during the year.

6.   Affiliates of the Investment Manager and the Company's Cornerstone Investors would be entitled to vote on any Discontinuation Resolution that may be proposed. As the Investment Manager and its affiliates (and, indirectly, the Cornerstone Investors) receive fees from the Company, they will most probably be incentivised to vote against such resolution. As at 31 December 2024 and 24 February 2025, respectively, Riverstone and the Company's Cornerstone Investors, in aggregate, own ~30 per cent. of outstanding Ordinary Shares, with the largest Cornerstone Investor owning ~21 per cent. at both period-ends. This risk has remained unchanged during the year.

7.   The effects of climate change and the transition to a low carbon economy could possibly reduce demand for some of the Company's existing investments, as well as impact their valuations, and may limit future growth opportunities. General sentiment may affect investor appetite and hence may lead to a depression of the Company's share price. There is a risk that the change to ESG investment focus is wrongly perceived by the market as being without genuine foundation ("greenwashing"). Furthermore, there may be a perceived over reliance on the Investment Manager's ESG credentials.  Riverstone has adopted what it believes are currently best practices for ESG investing having adopted the UN Principles for Responsible Investment and Sustainable Development Goals.  This risk has remained unchanged during the year.

 

The above risks are mitigated and managed by the Board through continual review, policy setting and updating of the Company's Risk Matrix at each Audit Committee Meeting to ensure that procedures are in place with the intention of minimising the impact of the above-mentioned risks. The Board relies on periodic reports provided by the Investment Manager and Administrator regarding risks that the Company faces. When required, experts will be employed to gather information, including tax advisers, legal advisers, and environmental advisers. As it is not possible to eliminate risks completely, the purpose of the Company's risk management policies and procedures is not to eliminate risks, but to reduce them and to ensure that the Company is adequately prepared to respond to such risks and to minimise any impact if the risk develops.

 

As part of its risk management framework, the Company continuously monitors and assesses emerging risks that could have a material impact on the Company's business, financial performance or long term strategy.  Emerging risks are defined as potential threats or opportunities that are uncertain in nature, evolving, or not yet fully understood but may have significant implications over time.

 

The approach to emerging risk identification involves horizon scanning where the Company will assess macroeconomic, geopolitical, regulatory and other developments; engagement with stakeholders to gain insights on emerging trends; and evaluating, when deemed necessary, those potential impacts of emerging risks through stress testing and strategic planning exercises.

 

The Company discloses key emerging risks where it believes they could materially impact the business and none have been identified for disclosure as at 31 December 2024.

 

By order of the Board

 

Richard Horlick

Chair of the Board

27 February 2025

 

Report of the Audit Committee

 

The Audit Committee operates within clearly defined terms of reference, which are available from the Company's website www.RiverstoneREL.com, and include all matters indicated by Disclosure Guidance and Transparency Rule 7.1, the AIC Code and the UK Code. John Roche replaced Patrick Firth as Chair of the Audit Committee with effect from 1 January 2024. Its other members are Richard Horlick, Jeremy Thompson, Karen McClellan and Claire Whittet. Members of the Audit Committee must be independent of the Company's external auditor and Investment Manager. The Audit Committee will meet no less than three times in a year, and at such other times as the Audit Committee Chair shall require and will meet the external auditor at least once a year.

 

The Committee members have considerable financial and business experience and the Board has determined that the membership, as a whole, has sufficient recent and relevant sector and financial experience to discharge its responsibilities and that at least one member has competence in accounting or auditing having a background as a chartered accountant.

 

Responsibilities

The main duties of the Audit Committee are:

·      to monitor the integrity of the Company's Financial Statements and regulatory announcements relating to its financial performance and review significant financial reporting judgements;

·      to report to the Board on the appropriateness of the Company's accounting policies and practices;

·      to review the valuations of the Company's investments prepared by the Investment Manager, and provide a recommendation to the Board on the valuation of the Company's investments;

·      to oversee the relationship with the external auditors, including agreeing their remuneration and terms of engagement, monitoring their independence, objectivity and effectiveness, ensuring that policy surrounding their engagement to provide non-audit services is appropriately applied, and making recommendations to the Board on their appointment, reappointment or removal, for it to put to the Shareholders in general meeting;

·      to monitor and consider annually whether there is a need for the Company to have its own internal audit function;

·      to keep under review the effectiveness of the Company's internal controls, including financial controls and risk management systems;

·      to review and consider the UK Code, the AIC Code, the GFSC Code, the AIC Guidance on Audit Committees and the Stewardship Code; and

·      to report to the Board on how it has discharged its responsibilities.

 

The Audit Committee is aware that the Annual Report is not subject to formal statutory audit, including the Board Chair's Statement and the Investment Manager's Report. Financial information in these sections is reviewed by the Audit Committee.

 

The Audit Committee is required to report its findings to the Board, identifying any matters on which it considers that action or improvement is needed, and make recommendations on the steps to be taken.

 

The external auditor is invited to attend the Audit Committee meetings where audit planning and approach discussions take place as well as the meetings at which the Annual Report and Interim Financial Report are considered.  These meetings will at least annually facilitate an opportunity for the external auditor to meet with the Audit Committee without representatives of the Investment Manager or Administrator being present.

 

Financial Reporting

The primary role of the Audit Committee in relation to financial reporting is to review with the Administrator, Investment Manager and the external auditor and report to the Board on the appropriateness of the Annual Report and Financial Statements and Interim Financial Report, concentrating on, amongst other matters:

·      the quality and acceptability of accounting policies and practices;

·      the clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements;

·      material areas in which significant judgements have been applied or there has been discussion with the external auditor including the going concern status of the Company and the viability statement;

·      whether the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's performance, business model and strategy; and

·      any correspondence from regulators in relation to financial reporting.

 

To aid its review, the Audit Committee considers reports from the Administrator and Investment Manager and also reports from the external auditor on the outcomes of their half-year review and annual audit. The Audit Committee supports Ernst & Young LLP in displaying the necessary professional scepticism their role requires.

 

Meetings

During the year ended 31 December 2024, the Audit Committee met formally four times and maintained ongoing liaison and discussion between the external auditor and the Chair of the Audit Committee and other members of the Audit Committee with regards to the audit approach and the identified risks. Additional ad hoc meetings or informal discussions have been convened at other times during the year as the Audit Committee determined appropriate. The Audit Committee, chaired by John Roche, has met on one occasion since the year-end through to the date of this report on 24 February 2025. The matters discussed at that and the other meetings include:

·      review of the terms of reference of the audit committee for approval by the Board;

·      review of the accounting policies and format of the Financial Statements;

·      review and approval of the audit plan of the external auditor including the scope of work for the interim review;

·      discussion and approval of the fees for the external audit and the interim review;

·      detailed review of the quarterly and year end valuations of the Company's investment portfolio held by the Partnership and recommendation for approval by the Board;

·      detailed review of the Annual Report and Financial Statements, Interim Financial Report and the relevant quarterly portfolio valuations, and recommendation for approval by the Board;

·      assessment of the independence of the external auditor;

·      assessment of the effectiveness of the external audit process as described below;

·      review of the Company's key risks and internal controls being relied upon;

·      consideration of going concern applicability;

·      focus on ESG; and

·      application of any IFRS changes.

 

Significant Areas of Judgement Considered by the Audit Committee

The Audit Committee has determined that a key risk of misstatement of the Company's Financial Statements relates to the valuation of the investment in the Partnership at fair value through profit or loss, in the context of the judgements necessary to evaluate the individual fair values of the underlying investments held through the Partnership.

 

The Directors have considered whether any discount or premium should be applied to the net asset value of the Partnership, which is based on the fair value of its underlying investments. In view of the Company's investment in the Partnership and the nature of the Partnership's assets, no adjustment to the net asset value of the Partnership has been made, as this is deemed equivalent to fair value.

 

The Audit Committee reviews, considers and, if thought appropriate, recommends for the purposes of the Company's Financial Statements, valuations prepared by the Investment Manager in respect of the investments held through the Partnership. As outlined in Note 6 to the Financial Statements, the total carrying value of the investment in the Partnership at fair value through profit or loss at 31 December 2024 was $373 million (31 December 2023: $666 million). Market quotations are not available for this financial asset such that the value of the Company's investment is based on the fair value of the Company's limited partner capital account with the Partnership, which itself is based on the fair value of the Partnership's investments as determined by the Investment Manager, along with the cash, fixed deposits and other short term fixed interest securities held. The valuation for each individual portfolio company investment held by the Partnership is determined by reference to common industry valuation techniques, including reliance on listed public market prices, comparable public market valuations, comparable merger and acquisition transaction valuations, and discounted cash flow valuations, as detailed in the Investment Manager's Report and Note 5 to the Financial Statements.

 

The valuation process, methodology adopted and conclusions were variously discussed with the Investment Manager and with the external auditor at the Audit Committee meetings held on 28 October 2024 and 24 February 2025. The Chair of the Audit Committee and one other Director are also actively involved in discussions with the Investment Manager challenging and reviewing the individual investment fair values proposed and finally concluding on the fair values determined for investments as at 31 December 2024.

 

During the audit planning and completion phases, members of the Audit Committee also sat in on various of the valuation meetings between the Investment Manager and external auditor. During 2024, the Investment Manager continued to carry out on an investment-by-investment basis, an inhouse quarterly valuation, providing the overall summary and detailed valuation papers and models to the Audit Committee and the Company at each quarter end, including as at 31 December 2024 with all relevant changes in the valuation processes explained. The Audit Committee has therefore also been active in reviewing the quarter on quarter and particularly the year end investment valuations throughout 2024.

 

The Audit Committee reviewed the Investment Manager's Report.

 

The external auditor explained the results of their audit work on individual investment valuations within the scope of the year-end audit.

 

The Audit Committee considers, and if thought appropriate, recommends that the Board adopts the going concern basis for preparing the Company's Financial Statements. As outlined in the Report of the Directors, the Audit Committee has considered the risks that could impact the Company's liquidity and therefore its ability to meet its obligations as they fall due over the next period from the date of approval of the Financial Statements up until March 2026.

 

The Audit Committee, based on the reasons set out in the Report of the Directors, is satisfied, as of today's date, that it is appropriate to adopt the going concern basis in preparing these Financial Statements and has recommended this approach is adopted by the Board.

 

The Audit Committee considers, and if thought appropriate, recommends that the Board considers the Company's viability over a period of three years to 31 December 2027. The Audit Committee has determined that the period of three years continues to be deemed to be an appropriate timeframe and that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over this period of assessment, as further outlined in the Report of the Directors. Accordingly, the Audit Committee has recommended the three-year period of assessment for the Company's longer-term viability is adopted by the Board.

 

Risk Management

The Board is accountable for carrying out a robust assessment of the principal risks facing the Company, including those threatening its business model, future performance, solvency and liquidity. On behalf of the Board, the Audit Committee reviews the effectiveness of the Company's risk management processes, such processes being largely reliant on the effective functioning of the key parties where the Company has outsourced functions, particularly the outsourced functions provided by the Investment Manager and the Administrator.

 

The Company's risk assessment process and the way in which significant business risks are managed is a key area of focus for the Audit Committee.

 

The work of the Audit Committee was driven primarily by the Company's assessment of its principal risks and uncertainties as set out in the Corporate Governance Report. The Audit Committee receives reports from the Investment Manager and Administrator on the Company's risk evaluation process and reviews changes to significant risks identified.

 

Internal Audit

The Audit Committee shall consider at least once a year whether or not there is a need for an internal audit function. Currently, the Audit Committee does not consider there to be a need for an internal audit function, given that there are no employees in the Company and all outsourced functions are with parties who have their own internal controls and procedures.

 

External Audit

Ernst & Young LLP has been the Company's external auditor since the Company's incorporation. This is the twelfth year of audit.

 

The external auditor is required to rotate the audit partner every five years. The current Ernst & Young LLP lead audit partner, Richard Le Tissier, started his tenure in 2023 and his current rotation will end with the audit of the 2027 Annual Report and Financial Statements. There are no contractual obligations restricting the choice of external auditor and the Company may put the audit services contract out to tender periodically. It continues to be decided that the audit services contract will not be put out to tender for the next reporting period due to mutual benefits and efficiencies of Ernst & Young's external audit contract for the Company with the audits of other Riverstone private funds.  Under Companies Law, the reappointment of the external auditor is subject to Shareholder approval at the Annual General Meeting.

 

The Audit Committee assessed the qualifications, expertise and resources, and independence of the external auditor as well as the effectiveness of the audit process. This review covered all aspects of the audit service provided by Ernst & Young LLP, including obtaining a report on the audit firm's own internal quality control procedures and consideration of the audit firm's annual transparency reports. The Audit Committee also approved the external audit terms of engagement and remuneration. During 2024 and into 2025, the Audit Committee and/or the Audit Committee Chair held formal and ad hoc private meetings with the external auditor. The Audit Committee Chair also maintained regular contact with the audit partner throughout the year. These meetings provide an opportunity for open dialogue with the external auditor without management being present. Matters discussed included the auditor's assessment of significant financial risks and the performance of management in addressing these risks, the auditor's opinion of management's role in fulfilling obligations for the maintenance of internal controls, the transparency and responsiveness of interactions with management, confirmation that no restrictions have been placed on them by management, maintaining the independence of the audit, and how they have exercised professional challenge and scepticism in dealing with material judgemental areas. The Audit Committee will continue to monitor the performance of the external auditor on an annual basis and will consider their independence and objectivity, taking account of appropriate guidelines. In addition, the Audit Committee Chair will continue to maintain regular contact with the lead audit partner outside the formal Committee meeting schedule, not only to discuss formal agenda items for upcoming meetings, but also to review any other significant matters. Members of the Audit Committee also sat in on the valuation meetings between the Investment Manager and external auditor.

 

The Audit Committee reviews the scope and results of the audit, its cost effectiveness and the independence and objectivity of the external auditor, with particular regard to the level of non-audit fees. The Audit Committee is also monitoring developments, in this regard, with respect to the Crown Dependencies' Audit Rules and Guidance. Notwithstanding such services the Audit Committee considers Ernst & Young LLP to be independent of the Company and that the provision of such non-audit services is not a threat to the objectivity and independence of the conduct of the audit.

 

To further safeguard the objectivity and independence of the external auditor from becoming compromised, the Audit Committee has a formal policy governing the engagement of the external auditor to provide non-audit services. This precludes Ernst & Young LLP from providing certain services such as valuation work or the provision of accounting services and also sets a presumption that Ernst & Young LLP should only be engaged for non-audit services where Ernst & Young LLP are best placed to provide the non-audit service for example, the interim review. Note 13 details services provided by Ernst & Young LLP. In addition to processes put in place to ensure segregation of audit and non-audit roles, Ernst & Young LLP is required, as part of the assurance process in relation to the audit, to confirm to the Audit Committee that it has both the appropriate independence and the objectivity to allow it to continue to serve the members of the Company. This confirmation is received every six months and no matters of concern were identified by the Audit Committee.

 

To fulfil its responsibility regarding the independence of the external auditor, the Audit Committee considers:

·      discussions with or reports from the external auditor describing its arrangements to identify, report and manage any conflicts of interest; and

·      the extent of non-audit services provided by the external auditor.

 

To assess the effectiveness of the external auditor, the committee reviews:

·      the external auditor's fulfilment of the agreed audit plan and variations from it;

·      discussions or reports highlighting the major issues that arose during the course of the audit; and

·      feedback from other service providers evaluating the performance of the audit team.

 

The Audit Committee is satisfied with Ernst & Young LLP's effectiveness and independence as external auditor having considered the degree of diligence and professional scepticism demonstrated by them. Having carried out the review described above and having satisfied itself that the external auditor remains independent and effective, the Audit Committee has recommended to the Board that Ernst & Young LLP be reappointed as external auditor for the year ending 31 December 2025.

 

The Audit Committee has provided the Board with its recommendation to the Shareholders on the re-appointment of Ernst & Young LLP as external auditor for the year ending 31 December 2025. Accordingly, a resolution proposing the reappointment of Ernst & Young LLP as our external auditor will be put to Shareholders at the Annual General Meeting.

 

On behalf of the Audit Committee

 

John Roche

Chair of the Audit Committee

27 February 2025

Statement of Financial Position

As at 31 December 2024

 

	Note	31 December 2024 $'000	31 December 2023 $'000
Assets
Non-current assets
Investment at fair value through profit or loss	6	372,564	666,024
Total non-current assets		372,564	666,024
Current assets
Trade and other receivables		2,447	2,276
Cash and cash equivalents	7	1,459	5,781
Total current assets		3,906	8,057
Total assets		376,470	674,081
Current liabilities
Trade and other payables		626	512
Total current liabilities		626	512
Total liabilities		626	512
Net assets		375,844	673,569
Equity
Share capital	8	820,665	1,038,721
Retained deficit		(444,821)	(365,152)
Total equity		375,844	673,569
Number of Shares in issue at year end	8	25,342,691	42,195,789
Net Asset Value per Share ($)	12	14.83	15.96

 

The Financial Statements of the Company were approved and authorised for issue by the Board of Directors on 27 February 2025 and signed on its behalf by:

 

Richard Horlick	John Roche
Chair of the Board	Director

 

The accompanying notes below form an integral part of the Company's Financial Statements.

 

Statement of Comprehensive Income

For the year ended 31 December 2024

 

	Note	1 January 2024 to 31 December 2024 $'000	1 January 2023 to 31 December 2023 $'000
Investment profit
Change in fair value of investment at fair value through profit or loss	6	(75,778)	2,722
Expenses
Directors' fees and expenses	9	(706)	(902)
Legal and professional fees		(415)	(608)
Other operating expenses	13	(2,862)	(3,654)
Total expenses		(3,983)	(5,164)
Operating loss for the financial year		(79,761)	(2,442)
Foreign exchange gain		92	174
Loss for the year		(79,669)	(2,268)
Total comprehensive loss for the year		(79,669)	(2,268)
Basic and Diluted Loss per Share (cents)	12	(264,36)	(4.86)

All activities derive from continuing operations.

 

The accompanying notes below form an integral part of the Company's Financial Statements.

 

Statement of Changes in Equity

For the year ended 31 December 2024

 

		Share capital $'000	Retained deficit $'000	Total equity $'000
As at 1 January 2024		1,038,721	(365,152)	673,569
Loss for the financial year		-	(79,669)	(79,669)
Total comprehensive loss for the year		-	(79,669)	(79,669)
Tender offer/Buyback and cancellation of shares	8	(218,056)	-	(218,056)
As at 31 December 2024		820,665	(444,821)	375,844

 

 

		Share capital $'000	Retained deficit $'000	Total equity $'000
As at 1 January 2023		1,101,674	(362,884)	738,790
Loss for the financial year		-	(2,268)	(2,268)
Total comprehensive loss for the year		-	(2,268)	(2,268)
Buyback and cancellation of shares	8	(62,953)	-	(62,953)
As at 31 December 2023		1,038,721	(365,152)	673,569

 

The accompanying notes below form an integral part of the Company's Financial Statements.

Statement of Cash Flows

For the year ended 31 December 2024

 

	Note	1 January 2024 to 31 December 2024 $'000	1 January 2023 to 31 December 2023 $'000
Cash flow used in operating activities
Loss for the financial year		(79,669)	(2,268)
Adjustments for:
Decrease/(Increase) in fair value of investment at fair value through profit or loss	6	75,778	(2,722)
Foreign exchange gain		(92)	(174)
(Increase) in trade and other receivables		(171)	(1,678)
Increase/(Decrease) in trade and other payables		114	(153)
Net cash used in operating activities		(4,040)	(6,995)
Cash flow generated from investing activities
Distribution from the Partnership	6	217,682	59,800
Net cash generated from investing activities		217,682	59,800
Cash flow used in financing activities
Tender offer/Buyback of shares	8	(218,056)	(62,953)
Net cash used in financing activities		(218,056)	(62,953)
Net movement in cash and cash equivalents during the year		(4,414)	(10,148)
Cash and cash equivalents at the beginning of the year		5,781	15,755
Effect of foreign exchange rate changes		92	174
Cash and cash equivalents at the end of the year		1,459	5,781

 

The accompanying notes below form an integral part of the Company's Financial Statements