Directors' Valuation reduced to £2.15 in response to increase in corporation tax
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Thrive Renewables enables ordinary people to invest directly in renewable energy projects. We are proud of our large and diverse investor base, dominated by retail investors. We therefore have a particular responsibility to provide all our shareholders with an indication of the value of the company – the Directors’ Valuation (DV). The Directors revisit the DV when material events occur.
In the Budget in March this year, the government announced that in 2023 the rate of corporation tax will rise to 25% from the current rate of 19%. Thrive Renewables is classified as a large business for tax purposes and will therefore not be able to take advantage of the small company rate.
There was also an announcement in the Budget of a temporary “super deduction” tax relief for capital expenditure incurred by companies investing in certain types of qualifying assets such as plant and machinery in the two years starting in April 2021. As we intend to continue to grow, we are currently investigating how best to take advantage of this. But the deduction will only apply to new investments which are not included in the DV until they are certain to go ahead. Therefore, this initiative has no direct impact on the current DV, as the associated tax saving will be achieved only once new investments are made.
The Directors’ Valuation is calculated by taking the discounted cash flows of all operating projects and projects under construction for 20 years from first operation. This negative movement reflects the increased corporation tax burden on those future discounted cash flows meaning less cash will be available to pay to shareholders. We have therefore revised the Director’s Valuation from £2.23 to £2.15 per share.
Thrive Renewables has shown significant resilience during the Covid-19 pandemic, ensuring that renewable electricity continues to flow from our turbines to help keep the country running and making a total of five new investments in 2020. The company has not accessed any Covid related support from government in the form of loans, grants or delayed payments for VAT or corporation tax. No staff were furloughed.