TIDMGRP
RNS Number : 6026Q
Greencoat Renewables PLC
01 March 2021
Greencoat Renewables 2020 Full Year Results
Dublin, London | 1 March 2021: Greencoat Renewables PLC
("Greencoat Renewables" or the "Company"), the renewable
infrastructure company invested in euro-denominated assets, today
announces its results for the year ended 31 December 2020.
2020 Highlights
-- 2020 Generation increased by 22% to 1,404GWh, 3 per cent below budget. (2019: 1,154 GWh)
-- 2020 Net cash generation increased by 36% to EUR66.4(1) million (2019: EUR 48.7million )
-- Dividend cover for 2020 of 1.7x(2)
Delivering on expansion strategy
-- Increased the portfolio to 21 wind farm investments, net
generating capacity to 557MW and GAV to EUR1,177 million as at 31
December 2020.
-- Acquisition of 4 wind farms in Ireland in the period.
-- Completed the Group's first transaction in Continental Europe
with the acquisition of 3 wind farms in France.
-- Agreement to acquire the Cloghan and Taghart wind farms, the
Group's first RESS investments once they become operational in
2022.
-- Post year end, the Company announced its agreement to acquire
the Kokkoneva wind farm in Finland once it becomes operational in
2022 and its agreement to acquire the Cordal wind farm in Ireland
which is expected to close in April 2021.
Dividends and a robust capital structure to drive growth
-- The Company has declared total dividends of 6.06 cent per share with respect to the year.
-- Placement of a new 3 year EUR300 million revolving credit
facility and EUR200 million of 5 year term loans during the year
adding more stability to the capital structure.
-- Issuance of 111 million new shares raising EUR125 million.
-- EUR427.9 million Aggregate Group Debt as at 31 December 2020,
equivalent to 36 per cent of GAV.
A focussed ESG approach
-- The portfolio's generation in 2020 was sufficient to displace
thermal generation equivalent to 561,432 tonnes of CO(2) and power
330,355 homes.
-- EUR0.8 million of funds committed to local communities across 114 community projects.
-- Made our first submission to CDP as well developing our carbon strategy
Ronan Murphy, Non-Executive Chairman of Greencoat Renewables,
said:
"I am very pleased to announce another strong set of results for
the Company, both in terms of operational performance and continued
implementation of our growth strategy. While real challenges remain
in the wider economy as a consequence of COVID-19, fortunately the
Company continues to perform extremely well, demonstrating the
stability of our business model.
The Company has matured significantly in the 3 plus years since
listing. We are much larger and more diversified and are benefiting
from increasing economies of scale. We also have a considerable
opportunity ahead of us as we bring our expertise and experience to
the deep pool of renewable assets in Europe
Despite negative inflation in the short term, I am pleased to
confirm our target 2021 dividend will remain at 6.06 cent,
consistent with our strategy of having a progressive dividend
policy.
In addition to announcing our full year results today, we also
publish our third annual ESG report, detailing our activity
throughout 2020. The report demonstrates our commitment to
effective management of environmental, social and governance
matters and our recognition that these are of fundamental
importance to the long-term success of the business".
Key Metrics
As at 31 December 2020
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Market capitalisation EUR863.5 million
Share price 116.5 cent
Dividends with respect to the year EUR39.9 million
Dividends with respect to the year per share 6.06 cent
GAV EUR1,177 million
NAV EUR748.8 million
NAV per share 101.0 cent
TSR 33.3 per cent
Premium to NAV 15.3 per cent
CO(2) emissions reduced per annum 0.6 million tonnes
Homes powered per annum 0.4 million homes
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Details of the conference call for analysts and investors:
A conference call for analysts and investors will be held at
10.00 am GMT today, 1 March 2021. To register for the call please
contact FTI Consulting by email Greencoat@fticonsulting.com .
Presentation materials will be posted on the Company's website,
www.greencoat-renewables.com from 7.00 am.
2020 Annual Report
A copy of the 2020 Annual Report has been submitted to the
National Storage Mechanism and will shortly be available for
inspection at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
. The annual report will also shortly be available on the Company's
website at www.greencoat-renewables.com where further information
on the Company can also be found.
---S ---
For further information on the Announcement, please contact:
Greencoat Renewables PLC: +44 20 7832 9400
Bertrand Gautier
Paul O'Donnell
Tom Rayner
Davy (Joint Broker, Nomad and
Euronext Growth Adviser) +353 1 6796363
Fergal Meegan
Ronan Veale
Barry Murphy
RBC (Joint Broker) +44 20 7653 4000
Matthew Coakes
Duncan Smith
Elizabeth Evans
FTI Consulting (Media Enquiries) +353 1 765 0886
Jonathan Neilan
Melanie Farrell
About Greencoat Renewables PLC
Greencoat Renewables PLC is an investor in euro-denominated
renewable energy infrastructure assets. Initially focused solely on
the acquisition and management of operating wind farms in Ireland,
the Company is now also investing in wind and solar assets in
certain other Northern European countries with stable and robust
renewable energy frameworks. It is managed by Greencoat Capital
LLP, an experienced investment manager in the listed renewable
energy infrastructure sector.
At a Glance
Summary
Greencoat Renewables PLC is a sector-focused listed renewable
infrastructure company, investing in renewable electricity
generation assets, currently invested in wind farms in Ireland and
France. The Company's aim is to provide investors with an annual
dividend that increases progressively whilst growing the capital
value of its investment portfolio in the long term through
reinvestment of excess cash flow and the prudent use of portfolio
gearing.
Highlights
-- The Group's investments generated 1,404GWh (2019: 1,154GWh)of
electricity, 3 per cent below budget.
-- Net cash generation (Group and wind farm SPVs) was EUR66.4
million(1) (2019: EUR48.8 million) and dividend cover was 1.7x
(2019: 1.7x).
-- Acquisition of 4 wind farms in Ireland and 3 in France, the
Group's first investment outside of Ireland, increased the
portfolio to 21 wind farm investments, net generating capacity to
557MW and GAV to EUR1,177 million as at 31 December 2020.
-- Agreement to acquire the Cloghan and Taghart wind farms, the
Group's first RESS investments once they become operational in
2022.
-- Placement of a new 3 year EUR300m revolving credit facility
and EUR200 million of 5 year term loans during the year adding more
stability to the capital structure.
-- Issuance of 111 million new shares raising EUR125 million.
-- The Company has declared total dividends of 6.06 cent per share with respect to the year.
-- EUR427.9 million Aggregate Group Debt as at 31 December 2020,
equivalent to 36 per cent of GAV.
-- EUR0.8 million of funds committed to local communities across 114 community projects.
-- Portfolio generation reduced CO(2) emissions by 561,432 tonnes in 2020.
-- Portfolio generation powered 330,355 homes in 2020.
(1) Gross of SPV level debt repayment
Key Metrics
As at 31 December 2020 As at 31 December 2019
------------------------------------------------------- ----------------------- -----------------------
Market capitalisation EUR863.5 million EUR747.3 million
Share price 116.5 cent 118.5 cent
Dividends with respect to the year EUR39.9 million EUR33.0 million
Dividends with respect to the year per share 6.06 cent 6.03 cent
GAV EUR1,177 million EUR1,017 million
NAV EUR748.8 million EUR650.0 million
NAV per share 101.0 cent 103.1 cent
TSR 38.3 per cent 23.5 per cent
Premium to NAV 15.3 per cent 15.0 per cent
CO(2) emissions reduced per annum 0.6 million tonnes 0.5 million tonnes
Homes powered per annum 0.3 million homes 0.3 million homes
Funds invested in community funds and social projects EUR0.8 million EUR0.7 million
------------------------------------------------------- ----------------------- -----------------------
Defining Characteristics
Greencoat Renewables PLC was designed for investors from first
principles to be simple, transparent and low risk.
1. The Group initially focused on investing solely in operating
Irish wind assets. During 2020, the Group expanded to mainland
Europe with 3 investments in France.
2. Wind is the most mature and largest scale renewable technology.
3. Both Ireland and France have a long established regulatory
regime, high wind resource and in excess of EUR40 billion of wind
farms expected to be in operation in the short to medium term.
4. The Group is wholly independent and thus avoids conflicts of
interests in its investment decisions.
5. The independent Board governs the Group, actively monitors
the efficient operation of the assets and works in conjunction with
an experienced investment management team.
6. The Group generally invests in wind farms that have an
appropriate operational track record (or price adjustment
mechanism).
7. Low gearing is important to ensure a high level of cash flow
stability and higher tolerance to downside sensitivities.
8. The Group invests only in Euro assets and thus does not incur material currency risk.
Chairman's Statement
I am pleased to present the Company's full year results for 2020
and report another strong year of activity and growth. While none
of us would wish to repeat the past year and while real challenges
remain in the wider economy, as we recover together from the
COVID-19 pandemic, the Company is fortunate to be in a position to
maintain its strong performance extremely well, demonstrating the
value of our contracted business model.
Throughout 2020, the Group has continued to generate clean
electricity for our communities and deliver on its investment
objective, providing our investors with predictable returns and
robust dividend cover. This has been possible through the excellent
efforts of our management team and operating partners, in addition
to the benefit of operating in a sector relatively unaffected by
the pandemic.
Beyond this strong operational performance, I am also pleased
that we have progressed our long-term strategic growth ambitions.
We have continued our focus in Ireland while expanding into France
in June 2020, and into Finland at the beginning of 2021. This is an
important development, demonstrating Greencoat Renewables' ability
to find value in the attractive European market.
The Company has matured significantly in the 3 plus years since
listing. We are much larger and more diversified and are benefiting
from increasing economies of scale. We have considerable
opportunities ahead of us as we bring our expertise and experience
to the deep pool of renewable assets in Europe.
I am very optimistic about the Company's prospects and would
like to thank our investors for their continued support. We look
forward to continuing to deliver growth and stable returns to
shareholders.
COVID-19
From the outbreak of the pandemic, the Group took all possible
steps to support and protect our team, contractors and all affected
stakeholders. Given the nature of our assets, we were able to
continue generating electricity and operations have remained
largely unaffected. The Investment Manager enacted business
contingency plans, which proved smooth and effective. In addition,
some alterations were required to our maintenance and optimisation
programmes to abide by government safety guidance.
We would like to acknowledge the efforts of our operating
partners, who have adapted their working procedures to continue to
operate and maintain our portfolio to high standards, while
ensuring government guidelines are followed and health and safety
is preserved.
Due to the contracted nature of portfolio revenues under the
respective Irish and French subsidy schemes, there was no material
exposure to low power prices and dividend cover remained
robust.
Performance
Our wind farm portfolio generated 1,404GWh in the year, which
was 3 per cent below budget. This compares to 1,154GWh generated in
2019, which was 4 per cent below budget. The overall picture was of
high wind speeds offset by higher than expected grid constraint and
curtailment in Ireland, principally due to COVID-19 and the
enforced slowdown in the economy, which saw a decreased demand for
electricity, and delays to grid infrastructure development in 2020.
This impacted our Irish portfolio's ability to dispatch in some
regions.
In light of the ongoing effects of the pandemic, we have
conservatively increased our curtailment and constraint assumptions
for 2021 and will review these regularly.
There were no material unplanned outages during the year, and
asset availability was on budget. Net cash generation was EUR66.4
million(1) , providing dividend cover of 1.7x(1) .
(1) Net cash generation and dividend cover are gross of SPV
level debt repayment and were EUR52.4 million and 1.4x, net of SPV
level debt repayment.
Dividends and Returns
The Company declared dividends for the year of 6.06 cent per
share, with the final quarterly dividend of 1.515 cent per share
paid on 26 February 2021. Since listing in July 2017, the Company
has consistently delivered on its dividend policy, and at 31
December 2020 had delivered a TSR of 38.3 per cent.
Our dividend policy remains unchanged and aims to increase
annually between 0 and CPI. Despite CPI being negative in Ireland
for 2020, we are pleased to be able to hold our target dividend at
6.06 cent per share, supported by our continued strong cashflow and
robust dividend cover.
NAV per share decreased by 2.1 cent per share (ex-dividend)
during the year, primarily as a result of lower short-term
inflation assumptions in Ireland.
Acquisitions
The Company continued to execute on its growth strategy with
high level of investment activity in Ireland as well as
diversifying into new markets through the transactions in both
France and the Nordics.
In Ireland, we continued our strategy to consolidate the REFIT
market with four transactions closed in the year: the acquisitions
of Letteragh, An Cnoc and Beam Hill Extension wind farms and a 50
per cent investment in Carrickallen wind farm. All of these
acquisitions benefit from contracted cashflows until 2032.
Subsequent to the year end, we also announced the agreement to
acquire the 89.9MW Cordal wind farm for EUR190 million from Cubico
Investments. Cordal is located in County Kerry and has revenues
contracted under the REFIT 2 scheme. The Group expects to complete
the acquisition in April 2021.
In addition, I am pleased that we closed our first RESS
transaction, agreeing to acquire the Cloghan and Taghart wind farms
from Statkraft once fully operational in 2022. These wind farms are
supported by contracted cashflows until the end of 2037. The
forward-sale nature of this transaction was also noteworthy as we
expect this model to become increasingly common for the Group, both
in Ireland and continental Europe.
The Group also completed its first investment in France with the
acquisition of a portfolio of 3 wind farms in the Burgundy, Picardy
and Nouvelle-Aquitaine regions. We consider France as a highly
attractive growth market, with expectations of reaching 70GW by
2030, underpinned by long term contracted cashflows. We expect to
scale up the Group's position in France, building on this
acquisition.
In addition, the Group executed its first transaction in the
Nordic wind market in February 2021, agreeing to acquire the 43MW
Kokkoneva wind farm, once fully operational in 2022. The investment
also required placing of the first corporate PPA in the
portfolio.
As at 31 December 2020, the Company's portfolio comprised 21
wind farms, and an aggregate generating capacity of 557MW.
Gearing
The Group made substantial progress in developing its capital
structure through 2020. In April, the Group put in place a new
3-year EUR300m revolving credit facility. Then in October, the
Group placed EUR200 million of new 5-year term loans with CBA, NAB
and Natwest.
We are very pleased with the outcome of our debt structuring in
the year, having materially reduced our overall cost of debt, while
allowing the Group to maintain an appropriate level of gearing to
support growth. We expect to arrange further term loan facilities
in the future as we continue to maintain our long-term gearing
target.
As at 31 December 2020, the Group had EUR427.9 million of debt
outstanding (including SPV level debt), equating to 36 per cent of
GAV.
Equity Issuance
In addition to managing our gearing, raising equity allows the
Group to maintain agility for acquisitions and growth.
In December 2020, the Company issued EUR125m of new equity at an
issue price of EUR1.13 per share. The issuance was oversubscribed
and accretive to NAV. The Group has significant headroom to pursue
investment opportunities in the secondary market as they arise.
Environmental, Social and Governance
The Group's most substantial contribution to sustainability is
the clean electricity it generates, displacing the need for thermal
generation and associated emissions. With a larger portfolio, these
metrics continue to rise and in 2020, our 1,404GWh of renewably
generated power displaced thermal generation equivalent to 561,432
tonnes of carbon emissions. In perhaps more relatable statistics,
we are happy to report that the Group generated enough clean
electricity to power 330,355 households.
In aiming to be a sustainable business for the long term, our
ESG ambitions go much further than the reduction of carbon
emissions. This year, more than ever, we are proud of the support
we provided to the communities in which our wind farms are located,
rising together to meet the challenges of COVID-19. In addition, we
are proud to have been involved in the following activities during
the year:
-- actively participated in the Wind Energy Ireland COVID-19 taskforce;
-- commenced supporting a 4 year research project with Wind
Energy Ireland lead by Trinity College, Dublin that is
investigating the impact of wind farms on biodiversity;
-- continued to sponsor the BT Young Scientist and Technology exhibition.
Further details of these and other activities and initiatives
can be found in the latest ESG report on the Company's website
www.greencoat-renewables.com .
From the outset of the pandemic, I am pleased to report that we
were able to accelerate the release of funds from our Community
Support Programme and have managed to prioritise initiatives that
are actively aiding the local communities that have been adversely
impacted by COVID-19.
This year, we also welcome the opportunity to make climate
related disclosures as recommended by the Task Force on
Climate-Related Financial Disclosures (TCFD) in our Annual Report.
Detailed disclosures can be read in the Directors' Report.
Outlook
The Company's outlook remains very strong and fortunately has
been largely unaffected by COVID-19. The highly contracted
cashflows of our portfolio means that we will continue to
experience negligible impact on low captured power prices. The
Group has demonstrated that it can continue to grow effectively
despite the pandemic, and we have a significant pipeline of
opportunities in Ireland and across Europe.
The Irish market remains very attractive to us, and the
acquisition of our first RESS assets shows the depth of the future
opportunity. Given the CFD structure of RESS, as well as regular
auctions planned until 2026, we still consider Ireland as a key
focus for further investment and we expect the Group to remain
active and maintain our strong market position.
Perhaps our most notable event of the year was the Group's
expansion into continental Europe with a portfolio acquisition in
France and an investment commitment in Finland after the end of the
year. Given the Investment Manager's deep relationships and strong
reputation with developers and utilities, and the Group's ability
to invest without currency risk and increasing scale, we continue
to believe that Europe represents a substantial opportunity for the
Group.
Board and Governance
The annual internal evaluation of the Board raised no
significant issues. The COVID-19 pandemic presented challenges to
the Board and the Investment Manager, preventing us to meet in
person to discuss matters of the Company and the investment
portfolio. However, as further described in the Corporate
Governance Report, the Board was able to meet 8 times during the
year, the majority over video conference, and was able to continue
to govern the Company well, despite these restrictions.
The Group's governance is further described in the Corporate
Governance Report.
Annual General Meeting
Our AGM will take place at 9.00 am on Thursday 29 April 2021. In
2020, following the advice of the government on social distancing,
travel and measures to prohibit public gathering in order to
minimise the spread of COVID-19, the Company decided to change the
location of its AGM from the offices of the NOMAD and hold it at
our offices with the minimum necessary quorum of two shareholders
present. A recording of the AGM was made and is available for
shareholders on the Company's website
(www.greencoat-renewables.com).
It appears likely that such an arrangement might also be
necessary for the AGM this year. The Board recognises the value of
shareholder interaction and will try to provide investors with the
opportunity to meet with the Directors and the Investment Manager,
if possible, later in the year.
Details of the formal business of the meeting are set out in a
separate circular which is sent to shareholders with the Annual
Report.
Conclusion
I would like to thank my fellow directors, Emer Gilvarry, Marco
Graziano, and Kevin McNamara, for their valuable stewardship, input
and counsel in a difficult year. I would also like to acknowledge
the considerable skill and endeavour of our Investment Manager,
Greencoat Capital, which ensured the Group continued to operate
efficiently and grow sustainably in a challenging year for all of
us.
Rónán Murphy
Chairman
28 February 2021
Investment Manager's Report
The Investment Manager
The Investment Manager's experience covers wind farm investment,
ownership, finance and operation. All the skills and experience
required to manage the Group's investments lie within a single
investment manager. The Investment Manager has over EUR6.5 billion
of assets under management with renewables infrastructure
portfolios in the UK, Ireland, France and the US and offices in
London, Dublin and Düsseldorf. The Investment Manager is authorised
and regulated by the FCA and is a full scope UK AIFM.
The team, focussed on management of the Group and its investment
portfolio, is led by Bertrand Gautier and Paul O'Donnell and
consists of investment professionals with significant experience
across the Irish and European renewables markets, technical asset
management and debt and equity capital markets.
Bertrand has over 28 years of operational, financial and
investment experience, of which the last 11 years focussed solely
on renewables. He has been a Partner of Greencoat Capital since
joining in 2010 and specialises in investments across the renewable
energy space. Prior to joining Greencoat Capital, his career
encompassed senior positions at Terra Firma Capital Partners,
Merrill Lynch's M&A Infrastructure team, and Procter &
Gamble.
Bertrand holds an MSc in General Engineering from ICAM (France)
and an MBA from Harvard Business School (USA).
Paul has over 18 years of renewables and investment experience,
of which the last 14 have been focussed solely on renewables. He
joined Greencoat Capital in 2009 and has specialised in managing
investments in the wind and solar generation sectors, working
across development, operations, technology, and financing.
Paul has been a Partner of Greencoat Capital since 2016 and
holds a BBS (Hons) in Finance from Trinity College Dublin.
Overview
The Investment Manager is very pleased with the Group's
achievements in 2020, with continued strong growth and operational
efficiency demonstrated across the business.
Throughout the year, the portfolio's characteristically strong,
contracted cashflows have continued to deliver robust dividend
cover, despite the challenges across the electricity industry and
the ongoing impact of the COVID-19 pandemic.
The Group has remained able to progress its longer-term
strategy, continuing to consolidate in the Irish renewables market,
whilst expanding and diversifying into Europe with the acquisition
of a French portfolio during the year and the recent agreement to
acquire a wind farm in Finland. We expect these investments to
provide a platform for further European expansion, accessing a very
large pool of assets on the continent that seek value, diversify
the portfolio and deliver stable returns to investors.
Investment Portfolio
The Group's investment portfolio as at 31 December 2020
consisted of interests in SPVs which held the following underlying
operating wind farms:
Wind Farm Country Turbines Operator PPA Total Ownership Net
MW Stake MW
Republic Supplier
An Cnoc of Ireland Enercon EnergyPro Lite 11.5 100% 11.5
Republic
Ballybane of Ireland Enercon EnergyPro Energia 48.3 100% 48.3
Beam Hill Republic
([1]) of Ireland Vestas/Enercon EnergyPro Erova/Naturgy 20.9 100% 20.9
Republic
Carrickallen of Ireland Senvion EnergyPro SSE 20.5 50% 10.3
Republic Siemens
Cloosh Valley of Ireland Gamesa SSE SSE 108.0 75% 81.0
Republic
Garranereagh of Ireland Enercon Statkraft Bord Gáis 9.2 100% 9.2
Republic Supplier
Glanaruddery of Ireland Vestas EnergyPro Lite 36.3 100% 36.3
Republic
Gortahile of Ireland Nordex Statkraft Energia 20.0 100% 20.0
Republic Siemens
Killala of Ireland Gamesa EnergyPro Electroroute 17.0 100% 17.0
Republic
Killhills of Ireland Enercon SSE Brookfield 36.8 100% 36.8
Republic
Knockacummer of Ireland Nordex SSE Brookfield 100.0 100% 100.0
Republic Naturgy
Knocknalour of Ireland Enercon Statkraft / Energia 9.2 100% 9.2
Republic
Letteragh of Ireland Enercon Statkraft SSE 14.1 100% 14.1
Republic
Lisdowney of Ireland Enercon EnergyPro Naturgy 9.2 100% 9.2
Republic
Monaincha of Ireland Nordex Statkraft Bord Gáis 36.0 100% 36.0
Siemens
Pasilly France Gamesa Greensolver Sorégies 20.0 100% 20.0
Republic Siemens
Raheenleagh of Ireland Gamesa ESB ESB 35.2 50% 17.6
Saint Martin France Senvion Greensolver Sorégies 10.3 100% 10.3
Republic Siemens Bord na Supplier
Sliabh Bawn of Ireland Gamesa Mona Lite 64.0 25% 16.0
Sommette France Nordex Greensolver Sorégies 21.6 100% 21.6
Tullynamoyle Republic
II of Ireland Enercon Statkraft Bord Gáis 11.5 100% 11.5
------
Total Operating
Portfolio 556.7
Contracted
to acquire
(2) 63.0
------
619.7
([1]) Includes Beam Hill (14MW, Vestas turbines) wind farm and
Beam Hill Extension wind farm (6.9MW, Enercon turbines)
([2]) Includes the commitment to acquire the 37.8MW Cloghan and
the 25.2MW Taghart wind farms once operational, expected in H2
2022
Portfolio Performance
Portfolio generation for the year was 1,404GWh, 3 per cent below
budget. Wind resource was above budget and availability was in line
with expectations, however significant levels of curtailment across
the Irish portfolio were experienced throughout the year. Removing
the impact of curtailment and constraint, portfolio generation
would have exceeded budget by c.7 per cent.
The portfolio benefits from stable cashflows contracted via both
the Irish REFIT and French FIT schemes. 99% of the portfolio's
cashflows are contracted until 2028. We believe 2020 demonstrated
the distinctive nature of the portfolio's contracted cashflows and
are pleased to continue to deliver stable returns in such unique
circumstances.
The following table shows a breakdown of 2020 generation by wind
farm:
Wind Farm Ownership Stake Period 2020 Budget (GWh) 2020 Actual (GWh)
----------------- ---------------- ---------- ------------------ ------------------
An Cnoc 100% Nov - Dec 6.5 6.1
Ballybane 100% Jan - Dec 117.5 114.7
Beam Hill (1) 100% Jan - Dec 37.9 31.7
Carrickallen 50% Aug - Dec 12.4 13.1
Cloosh Valley 75% Jan - Dec 262.9 268.0
Garranereagh 100% Jan - Dec 24.5 26.1
Glanaruddery 100% Jan - Dec 107.5 105.4
Gortahile 100% Jan - Dec 61.3 66.2
Killala 100% Jan - Dec 46.6 44.1
Killhills 100% Jan - Dec 89.1 87.9
Knockacummer 100% Jan - Dec 295.3 267.2
Knocknalour 100% Jan - Dec 21.2 21.1
Letteragh 100% Mar - Dec 36.9 37.2
Lisdowney 100% Jan - Dec 30.3 30.8
Monaincha 100% Jan - Dec 99.5 96.7
Pasilly 100% Jul - Dec 18.9 19.5
Raheenleagh 50% Jan - Dec 62.9 62.3
Saint Martin 100% Jul - Dec 10.0 10.4
Sliabh Bawn 25% Jan - Dec 45.0 44.6
Sommette 100% Jul - Dec 27.0 29.1
Tullynamoyle II 100% Jan - Dec 26.5 21.4
Total 1,439.7 1,403.6
----------------- ---------------- ---------- ------------------ ------------------
(1) Includes generation from Beam Hill wind farm (Jan - Dec
2020) and Beam Hill Extension wind farm (Dec 2020)
The Irish portfolio continued to experience high levels of
curtailment and constraint during the year through a combination of
high wind speeds, a decrease in electricity demand due to the
COVID-19 pandemic and delayed grid upgrades. These rescheduled grid
works are ongoing at present and are expected to cause further grid
disruptions until 2022, after which curtailment is expected to
revert to our long-term forecast. With this in mind, we have
adjusted the short-term constraint and curtailment forecast in our
valuation model.
We are pleased with Eirgrid's decision to increase System
Non-Synchronous Penetration (SNSP) to 70 per cent and to set a plan
to increase this further to 75 per cent in 2021. We expect this and
other measures to reduce future curtailment levels and their impact
on the portfolio. In addition, the Investment Manager has been
actively involved in the industry consultation on the EU Clean
Energy Package with a view to achieving compensation for curtailed
volumes for renewable generators in Ireland. A final consultation
is due to take place in early 2021.
As a result of COVID-19 pandemic restrictions, the Investment
Manager and outsourced O&M contractors have adapted portfolio
management procedures in line with government guidelines. However,
the portfolio was able to operate with negligible impact on
availability and production.
In particular, the Investment Manager has continued to
effectively manage the portfolio with some key achievements during
the year:
-- Realising revenue enhancement through:
o technology installation at relevant wind farms enabling them
to provide DS3 services to Eirgrid. This resulted in a c.EUR1
million increase in revenues across the portfolio. The increased
DS3 revenues offset the impact of curtailed generation on the
portfolio as they increase in periods of high renewables generation
on the system;
o increasing the energy yield at Glanaruddery by c.1 per cent
through upgraded turbine software;
o finalising agreements for targeted forestry felling of c.40
hectares across 2 locations to increase energy yield and reduce
turbine wear.
-- Reducing operating expenditure through reducing PPA balancing
fees achieving savings of c.75 per cent.
-- Overseeing the safe and timely construction of a sixth turbine at Killala.
-- Improving governance through:
o consolidating asset-level technical and commercial management
services to high quality, local providers in both Ireland and
France;
o maintaining active communication channels with senior
management of key turbine and electrical maintenance suppliers to
maximise service standards of maintenance contracts.
-- Successfully managing the safe and expedient return to
operation of a turbine at Lisdowney that was struck by lightning in
March. Repair costs and lost revenue were claimed through
maintenance contract warranties and insurance.
The integration of 3 new French assets was achieved seamlessly.
Despite travel restrictions from the COVID-19 pandemic, our team
safely carried out on-site audits of each wind farm and established
relationships with key local partners. Bringing our
industry-leading management approach of the Irish and UK
portfolios, we have worked closely with our external partners to
align business processes and build a platform to scale our business
in France. A particular focus has been to establish strong
environmental management practices, ensuring effective
implementation of new legislation.
Many Irish wind farms will go through a revaluation of business
rates in the next 24 months. With different local counties
implementing different approaches and a current dispute between the
Valuation Office and wind farm owners regarding their respective
rateable values, there is currently little clarity on the impact
this could have on the portfolio and the Group. The Investment
Manager is continuing to monitor the situation and will seek to
minimise any potential downside impacts.
During the year, An Bord Pleanála determined, through a Section
5 declaration, that the underground grid connections with respect
to Knockacummer and Raheenleagh wind farms did not constitute
exempted development. Such determinations have been made with
respect to a number of wind farms over the last few years. As was
common practice in the industry at the time the wind farms were
constructed, planning permission was not obtained for the grid
connection. Instead Section 5 declarations were obtained either
from the local County Council or An Bord Pleanála to confirm that
planning permission was not required. The recent An Bord Pleanála
determinations are therefore at odds with those pre-existing
declarations. In September 2020, the Investment Manager, with
assistance of legal advice, initiated judicial review proceedings
with the High Court for Knockacummer and Raheenleagh wind farms,
challenging An Bord Pleanála's determinations on various grounds.
The High Court granted both wind farms leave to initiate judicial
review proceedings and granted a stay on the An Bord Pleanála
decisions. The review is currently ongoing
and the Investment Manager will continue to actively monitor
these proceedings as well as other Section 5 declarations across
the Irish wind industry, while in parallel, continuing to explore
further options to regularise the planning status of the grid
connections.
Health and Safety
Health and safety is of paramount importance to both the Company
and the Investment Manager. The Investment Manager also has its own
health and safety forum where best practices are discussed and key
learnings from incidents from across the industry are shared.
There were no major incidents in the year. Independent health
and safety audits were conducted across 9 wind farms and
independent electrical safety audits were performed across 4 wind
farms in the year. 155 recommendations surfaced during these
audits, of which 137 have already been implemented. Separately, the
wind farm operators carried out 95 individual audits across the
portfolio.
Environmental, Social and Governance
The focus of the Board and the Investment Manager to recognise
the fundamental importance of adequate management of ESG matters
continued during the year. During the year the Group achieved the
following:
-- Environmental - significantly increased generation capacity,
supporting Ireland and France's transition towards a net zero
carbon emissions economy;
-- Social - active engagement with, and support provided to,
local communities surrounding the areas in which the wind farms are
located, with particular concern for how they have been impacted by
the COVID-19 pandemic. Specific response funds
-- were made available to some local communities. For example,
at Glanaruddery, these funds were used to purchase a van to make
food deliveries to locals, who were self-isolating and unable to
leave their homes;
-- Governance - adoption of an ESG Policy which sets out the
Group's ESG objectives and a plan to systematise the Investment
Manager's approach to ESG management.
Further details of the Group's ESG initiatives can be found in
the latest ESG report, available on the Company's website
www.greencoat-renewables.com .
Acquisitions
2020 was another active year in the secondary renewables market
and was, most notably, a year in which the Group made its first
investments outside of Ireland. This provides the Group with
significant opportunity to grow and diversify its portfolio through
further investments in continental Europe.
We continued to see many opportunities for value accretive
acquisitions in our target jurisdictions, and during the year
priced and assessed 64 wind farms totalling 1,970MW. Of the wind
farms priced, 7 investments were made by the Group, 33 were
acquired by other buyers, 4 are no longer being pursued by the
Group and 20 are subject to continuing discussions.
The following table lists the investments in the year (including
acquisition costs, excluding acquired cash and including the
Group's proportionate share of acquired SPV level debt):
MW
(net) EURm
-------------- ------- ------
Pasilly
Sommette
Saint
Martin 51.9 91.1
-------------- ------- ------
Letteragh 14.1 34.5
-------------- ------- ------
An
Cnoc 11.5 22.6
-------------- ------- ------
Carrickallen
(50%
interest) 10.3 21.2
-------------- ------- ------
Beam
Hill
Extension 6.9 12.4
-------------- ------- ------
Total 94.7 181.8
-------------- ------- ------
Ireland
In December 2020, the Company announced its first investment
supported by the Irish government's RESS framework. The Group
agreed to acquire the 37.8MW Cloghan wind farm and the 25.2MW
Taghart wind farm, both of which benefit from 15-year fixed price
contracts secured under the 2020 RESS 1 auction. The transaction is
expected to complete in late 2022 after the wind farms become fully
operational. By committing to acquire assets at an earlier stage of
development, the Group has been able to access improved returns and
enhanced deal flow, while not taking construction risk. We see this
investment model being important for the Group's future growth.
In January 2021, the Group increased its investment in Killala
wind farm following successful construction and commissioning of
its sixth 3.4MW turbine. Killala now has a generating capacity of
20.4MW and the net generating capacity of the Group is 560MW.
In February 2021, the Company also announced its agreement to
acquire the 89.9MW Cordal wind farm for EUR190 million from Cubico
Investments. Cordal is located in County Kerry and has revenues
contracted under the REFIT 2 scheme. The Group expects to complete
the acquisition in April 2021.
France
In June 2020, the Group diversified its portfolio and made its
first investments in continental Europe, acquiring 3 wind farms in
France for a net enterprise value of EUR95 million. This portfolio
consisted of the 20.0MW Pasilly wind farm in the Burgundy region,
the 21.6MW Sommette wind farm in the Picardy region and the 10.3MW
Saint Martin wind farm in the Saint Martin-L'Ars region. The Group
retained EUR66.9 million of project level debt as part of the
transaction. This transaction has enabled the Group to gain
exposure to the French FIT subsidy scheme and increase its levels
of contracted cashflows.
The Nordics
In February 2021, the Company announced its first investment in
the Nordics. The Group agreed to acquire the 43.2MW Kokkoneva wind
farm in Finland for an estimated consideration of EUR60 million,
with the investment expected to complete in Q2 2022 when the wind
farm is expected to be fully operational. The project benefits from
a 10 year base load PPA with Gasum, the state-owned gas utility in
Finland, who have stated their intention to offer renewably-sourced
energy to their customer base. The overall market for corporate
PPAs is increasing substantially across Europe, but particularly in
the Nordics due to the ability to generate low cost renewable
electricity. This model of acquiring subsidy-free renewable energy
assets and using a corporate PPA to provide contracted cashflow is
very attractive to the Group and we look to execute further
transactions on this basis.
Gearing
In April 2020, the Group successfully placed a new EUR300
million revolving credit facility drawing funds from CIBC, RBC and
Santander to retire and refinance its existing facility. The new
facility has a refreshed 3-year tenor and lower margin and
commitment fee.
In October 2020, the Group successfully executed the next phase
of managing its capital structure, by successfully placing EUR200
million of 5-year term loans with CBA, NAB and Natwest (together
with associated interest rate swaps). The proceeds of these loans
were utilised to repay the Group's drawn revolving credit facility
and is anticipated to be the first of similar term debt tranches
placed by the Group in the future. These term facilities were
placed at very competitive margins and have enabled the Group to
establish and maintain a strong and supportive lending
syndicate.
As at 31 December 2020, the Group and wind farm SPVs had
EUR427.9 million outstanding debt, equating to 36 per cent of GAV
(limit 60 per cent). This comprised EUR15 million drawn under the
Group's revolving credit facility, EUR200 million of 5-year term
debt and EUR212.9 million of the Group's proportionate share of
long-term project finance debt (including the fair value of
associated interest rate swaps) at SPV level.
Average gearing during the year was 39 per cent of GAV (Group
and wind farm SPV level) and the weighted average cost of debt at
31 December 2020 was 0.74 per cent, significantly lower than last
year. Further detail on the Group's debt facilities can be found in
note 13 of the Financial Statements.
Equity Issuance
In December 2020, the Company issued 111 million new shares at
an issue price of 113 cent per share raising gross proceeds of
EUR125 million in an oversubscribed and NAV-accretive share
placing. This was the first tranche of the Company's programme to
issue 350 million new shares announced in November 2020.
Net proceeds from the equity raise were used to repay the
Group's drawn revolving credit facility, in line with the Company's
strategy.
Financial Performance
Despite below budget wind generation, dividend cover remained
robust. Net cash generated by the Group and wind farm SPVs was
EUR66.4 million (gross of SPV level debt repayment) or EUR52.4
million (net of SPV level debt repayment), providing dividend cover
of 1.7x (gross) or 1.4x (net).
Cash balances (Group and wind farm SPVs) increased by EUR4.5
million from EUR34.5 million to EUR39.0 million over the year.
For the year ended
Group and wind farm SPV cashflows 31 December 2020
------------------------------------------------- -----------------------
Net (1) Gross (1)
EUR'000 EUR'000
Net cash generation 52,415 66,424
Dividends paid (38,168) (38,168)
SPV level Capex & PSO cashflow (2) (19,594) (19,594)
SPV level debt repayment - (14,009)
Acquisitions (3) (114,438) (114,438)
Acquisition costs (1,518) (1,518)
Equity issuance 125,000 125,000
Equity issuance costs (2,071) (2,071)
Net drawdown under debt facilities 9,000 9,000
Upfront finance costs (6,149) (6,149)
Movement in cash (Group and wind farm SPVs) 4,477 4,477
Opening cash balance (Group and wind farm SPVs) 34,547 34,547
------------------------------------------------- ---------- -----------
Closing cash balance (Group and wind farm SPVs) 39,024 39,024
Net cash generation (2) 52,415 66,424
Dividends 38,168 38,168
Dividend cover 1.4x 1.7x
------------------------------------------------- ---------- -----------
(1) The dividend cover tables above are shown as 2 scenarios:
the first reflects cash generation net of the Group's share of SPV
level debt repayment (EUR14,009k), and the second shows net cash
generation gross of SPV level debt repayments.
(2) Cashflows reflect residual capital expenditure from acquired
SPVs (covered by the vendor of the SPVs) and REFIT working capital
movements with the PSO relating to wind farm SPVs.
(3) Acquisition consideration is net of the acquired SPV cash
(EUR8,551k).
The following 2 tables provide further detail in relation to net
cash generation figures of EUR66.4 million (gross) and EUR52.4
million (net):
For the year ended
Net Cash Generation - Breakdown 31 December 2020
----------------------------------- ---------------------
Net Gross
EUR'000 EUR'000
Revenue 118,648 118,648
Operating expenses (35,167) (35,167)
Tax / VAT 644 644
----------------------------------- ---------- ---------
Wind farm operating cashflow 84,125 84,125
SPV level debt interest (6,602) (6,602)
SPV level debt repayment (14,009) -
----------------------------------- ---------- ---------
Wind farm cashflow 63,514 77,523
Management fee (6,246) (6,246)
Operating expenses (1,642) (1,642)
Ongoing finance costs (2,822) (2,822)
VAT (352) (352)
Other (37) (37)
----------------------------------- ---------- ---------
Group cashflow (11,099) (11,099)
Net cash generation 52,415 66,424
----------------------------------- ---------- ---------
For the year ended
Net Cash Generation - Reconciliation to Net Cash Flows from Operating Activities 31 December 2020
---------------------------------------------------------------------------------- ---------------------
Net Gross
EUR'000 EUR'000
Net cash flows from operating activities (1) 18,424 18,424
Movement in cash balances of wind farm SPVs (2) (14,798) (14,798)
SPV capex & PSO cashflow (3) 19,169 19,169
Repayment of debt at SPV level (2) - 14,009
Repayment of shareholder loan investment (1) 32,442 32,442
Finance costs (1) (8,971) (8,971)
Upfront finance costs (cash) (4) 6,149 6,149
---------------------------------------------------------------------------------- ---------- ---------
Net cash generation 52,415 66,424
---------------------------------------------------------------------------------- ---------- ---------
(1) Consolidated Statement of Cash Flows.
(2) Note 9 to the Financial Statements (excludes acquired
cash).
(3) EUR19,953k c ashflows reflect residual capital expenditure
from acquired SPVs and REFIT working capital movements with the PSO
relating to wind farm SPVs less EUR424k SPV working capital.
(4) EUR2,897k capitalised arrangement fees for the Group's
revolving credit facility plus EUR2,120k capitalised arrangement
fees for the Group's term debt facilities plus EUR1,139k
professional fees (note 13 to the financial statements) less EUR7k
movement in other finance costs payable (note 12 to the Financial
Statements).
Investment Performance
NAV at 31 December 2020 was EUR748.8 million (101.0 cent per
share), which is a reduction from NAV at 31 December 2019, which
was EUR650.0 million (103.1 cent per share). During the year, the
2.1 cent NAV per share decrease is attributable to:
cent per share
---------------
NAV per share at 31 December 2019 103.1
Group and wind farm SPV net cash generated 10.5
Portfolio valuation depreciation (4.5)
Dividends paid to shareholders during the year (6.1)
NAV-accretive share issuance and equity raise 1.5
Changes to macroeconomic assumptions (4.0)
Reduction in discount rate for the Irish portfolio 2.0
Adjustments to short term curtailment and other assumptions (1.5)
NAV per share at 31 December 2020 101.0
------------------------------------------------------------- ---------------
Total dividends of EUR38.2 million were paid in 2020. Total
dividends of EUR39.9 million have been paid or declared with
respect to 2020 (6.06 cent per share). The target dividend for 2021
is expected to remain flat at 6.06 cent per share despite negative
CPI during 2020.
cent per share per cent
NAV at 31 December 2019 103.1
Less February 2020 dividend (1.5)
NAV at 31 December 2019 (ex-dividend) 101.6
NAV at 31 December 2020 101.0
Less February 2021 dividend (1.5)
NAV at 31 December 2020 (ex-dividend) 99.5
Movement in NAV (ex-dividend) (2.1) (2.1)
Dividends with respect to the year 6.1 6.0
--------------------------------------- --------------- ---------
Total return on NAV 4.0 3.9
--------------------------------------- --------------- ---------
The share price at 31 December 2020 was 116.5 cent per share,
representing a 15.3 per cent premium to NAV.
Reconciliation of Statutory Net Assets to Reported NAV
As at As at
31 December 2020 31 December 2019
------------------------------------------- ------------------ ------------------
EUR'000 EUR'000
DCF valuation 1,112,352 982,411
Other relevant assets (wind farm SPVs) 22,370 111
Cash (wind farm SPVs) 22,507 28,527
------------------------------------------- ------------------ ------------------
Fair value of investments (1) 1,157,229 1,011,049
Cash (Group) 16,517 6,020
Other relevant assets / (liabilities) (2) 2,944 (127)
------------------------------------------- ------------------ ------------------
GAV 1,176,690 1,016,942
Aggregate Group Debt (3) (427,877) (366,942)
------------------------------------------- ------------------ ------------------
NAV 748,813 650,000
Reconciling items - -
------------------------------------------- ------------------ ------------------
Statutory net assets 748,813 650,000
Shares in issue 741,238,938 630,619,469
NAV per share (cent) 101.0 103.1
------------------------------------------- ------------------ ------------------
(1) The fair value of investments are shown gross of EUR212.9
million debt and swap fair values held at wind farm SPV level that
are not included in the equivalent figure in the Consolidated
Statement of Financial Position.
(2) Other relevant net assets in 2020 are gross of EUR4.2
million of capitalised facility arrangement fees that are netted
off against loans and borrowings (consistent with Note 13 to the
financial statements).
(3) Aggregate Group debt reflects EUR215.0 million relating to
amounts drawn under the Group's revolving credit and term
facilities (gross of EUR4.2 million of capitalised facility
arrangement fees and consistent with Note 13 to the financial
statements), and EUR212.9 million of debt and swap fair values held
at wind farm SPV level.
NAV Sensitivities
NAV is equal to GAV less Aggregate Group Debt.
GAV is the sum of:
-- DCF valuations of the Group's investments;
-- cash (at Group and wind farm SPV level); and
-- other relevant assets/liabilities of the Group and wind farm SPVs.
The DCF valuation of the Group's investments represents the
largest component of GAV and the key sensitivities are considered
to be the discount rate used in the DCF valuation and long-term
assumptions in relation to energy yield, power prices, inflation,
and asset life.
The base case discount rate is a blend of a lower discount rate
for fixed cash flows and a higher discount rate for merchant cash
flows. The blended discount rate reduced by 0.2 per cent from 31
December 2019 reflecting market valuations for Irish assets
observed through 2020. The blended discount rate as at 31 December
2020 remains within 6 and 7 per cent, which is considered to be an
appropriate base case for sensitivity analysis. A variance of +/-
0.25 per cent is considered to be a reasonable range of alternative
assumptions for discount rate.
The base case long term CPI assumption is 2.0 per cent for both
Irish and French assets.
Base case energy yield assumptions are P50 (50 per cent
probability of exceedance) forecasts produced by expert consultants
based on long term wind data and operational history. The P90 (90
per cent probability of exceedance over a 10 year period) and P10
(10 per cent probability of exceedance over a 10 year period)
sensitivities reflect the future variability of wind and the
uncertainty associated with the long term data source being
representative of the long term mean.
Long term power price forecasts are provided by leading market
consultants, updated quarterly and adjusted by the Investment
Manager where more conservative assumptions are considered
appropriate. The independent forecasts are never adjusted upwards.
Base case real power prices increase from approximately EUR57/MWh
(2030) to approximately EUR62/MWh (2040) in Ireland and
approximately EUR50/MWh (2030) to approximately EUR55/MWh (2040) in
France. The sensitivity below assumes a 10 per cent increase or
decrease in power prices relative to the base case for every year
of the asset life.
The base case asset life is 30 years. The sensitivity below
assumes that asset life may be 5 years shorter or longer than the
base case, which is impacted by technical durability of the wind
farm components and commercial aspects of each investment,
including the renewals of site leases, planning permission and grid
connection agreements.
Outlook
The outlook for the Group continues to remain positive with a
growing secondary wind market in Ireland and France, a stable
policy backdrop for wind assets underpinned by the REFIT and RESS
frameworks in Ireland and the FIT framework and France. This
continues to provide a significant opportunity for continued growth
into attractive jurisdictions in Europe.
Irish Wind Market
The Irish wind market remains an attractive jurisdiction with
both a stable and supportive regulatory regime and broad public
support. The country has over 4.0GW of installed capacity either in
operation or construction under REFIT 1, REFIT 2 or RESS,
representing a c.EUR8bn market size.
The RESS framework successfully completed its first auction in
August 2020, further demonstrating the Irish government's
commitment to generating 70 per cent of electricity from renewable
sources by 2030.This year's auction saw c.400MW of wind and c.800MW
of solar PV awarded fixed price support contracts guaranteeing the
price of wholesale electricity until 2038. The successful
transaction that the Group executed with Statkraft on a forward
sale basis supports the strategy to continue to be able to grow in
the Irish market and to secure contracted cashflows up to 2038.
With further auctions expected to occur annually, this continues
to present a significant growth opportunity for the Group, with 8GW
of onshore wind, 3.5GW offshore wind and 1.5GW of solar PV
generating capacity expected to be in place by 2030.
Continental Europe
Following the Group's first investment outside of Ireland,
acquiring 3 wind farms in France in June 2020, and the recent
announcement of the Group's agreement to acquire a wind farm in
Finland in 2022, we continue to see the significant investment
opportunities in continental Europe. We have an active pipeline in
Belgium, France, Germany, the Netherlands and the Nordics through
strong relationships with asset owners, developers and advisors. We
are also conducting preliminary investigations of investments in
Iberian markets, which have seen positive developments over the
last few years. We see the European market providing the Group with
access to a wide range of opportunities, mostly from sellers well
known to the Investment manager, including European utilities and
developers with whom we have transacted with previously.
We see the European market allowing the Group to continue to
diversify the business, in terms of weather patterns, power markets
and regulatory frameworks, while not taking any currency risk.
We continue to consider a range of revenue contracts, including
government support regimes and corporate PPAs. We find particular
value in the Nordics markets where subsidy-free renewable
infrastructure development continues to see significant growth.
Despite this investment opportunity, we continue to expect the
portfolio to have a significant proportion of fixed price revenue
underpinning its cashflows.
Board of Directors
The Directors are of the opinion that the Board, as a whole,
comprises an appropriate balance of skills, experience and
diversity. The Board is comprised of individuals from relevant and
complementary backgrounds offering experience in investment,
financial, and business skills, as well as in the energy sector,
from both an investment and a commercial perspective.
Rónán Murphy, Chairman
Rónán Murphy, aged 63, was previously Senior Partner of PwC
Ireland, a position he was elected to in 2007 and was re-elected to
for a further 4 year term in July 2011. Rónán joined PwC in 1980,
qualifying in 1982, and was admitted to the partnership in 1992.
Rónán was a member of the PwC EMEA Leadership Board from 2010 to
2015. Rónán is also a non-executive director of Icon PLC and
Davy.
Rónán holds a Bachelor of Commerce degree and Masters in
Business Studies from University College Dublin and is a Fellow of
the Institute of Chartered Accountants.
Kevin McNamara, Chairman of the Audit Committee
Kevin McNamara, aged 66, has more than 25 years' experience in
the energy sector. Kevin enjoyed a long career with ESB
International, including leading the investment division of ESB
International Investments. More recently Kevin was CFO of Amarenco
Solar, a solar business focused on the Irish and French markets and
prior to this CEO of Airvolution Energy, a UK wind development
business.
Kevin holds a Bachelor of Commerce degree from University
College Dublin and is a Fellow of the Institute of Chartered
Accountants.
Emer Gilvarry, Senior Independent Director
Emer Gilvarry, aged 63, was recently a consultant and prior to
this, the Managing Partner of Mason Hayes & Curran for two
consecutive terms from 2008 to 2014. From 2014 until 2018, Emer
took over the role of Chair of the firm. She is also a former Head
of the firm's Litigation Group (2001 to 2008). Emer is a former
Board member of Aer Lingus Effective 1 November 2020, she was named
as a non-executive director of Kerry Group PLC.
Emer holds a Bachelor of Law degree from University College
Dublin (BCL).
Marco Graziano
Marco Graziano, aged 63, has more than 35 years of worldwide
experience in the energy sector, with a demonstrated track record
of driving growth and profitability managing large organisations.
He served as both executive and non-executive director in a number
of companies in Europe, Africa, Middle East and Latin America.
After many years with the French multinationals Alstom and Areva,
more recently he was President of South Europe, MENA and LATAM for
Vestas Wind Systems. He has been a member of the Board since 30
January 2020.
Marco holds a doctorate degree in mechanical engineering from
Genoa University.
Other Irish Public Company Directorships
In addition to their directorships of the Company, the below
Directors currently hold the following Irish public company
directorships:
Rónán Murphy Icon PLC
Emer Gilvarry Kerry Group PLC
The Directors have all offered themselves for re-election and
resolutions concerning this will be proposed at the AGM.
Conflicts of Interest
The Directors have declared any conflicts or potential conflicts
of interest to the Board of Directors which has the authority to
approve such situations. The Company Secretary maintains the
Register of Directors' Conflicts of Interests which is reviewed
quarterly by the Board and when changes are notified. The Directors
advise the Company Secretary and the Board as soon as they become
aware of any conflicts of interest. Directors who have conflicts of
interest do not take part in discussions which relate to any of
their conflicts.
Directors' Report
The Directors present their Annual Report, together with the
consolidated financial statements of Greencoat Renewables PLC for
the year ended 31 December 2020.
Principal Activity and Business Review
A detailed discussion of the individual project performance and
a review of the business in the period are covered in the
Investment Manager's Report.
Results for the Year
The consolidated financial statements for the financial year
ended 31 December 2020 are set out in detail including the results
for the year which are set out in the Consolidated Statement of
Comprehensive Income.
Future Developments
The Group's outlook is discussed in the Investment Manager's
Report.
Investment Objective
The Company's aim is to provide attractive risk-adjusted returns
to shareholders through an annual dividend (6.06 cent per share for
2020) that increases progressively whilst growing the capital value
of its investment portfolio. The Company is targeting an IRR of 7
to 8 per cent (net of expenses and fees) on the issue price of the
ordinary shares to be achieved over the longer term via active
management of the investment portfolio, reinvestment of excess cash
flows and the prudent use of gearing. The Company intends to hold
assets in its investment portfolio for the long term.
Investment Policy
The Group intends to increase its portfolio of renewable energy
generation assets within the Eurozone with a focus on Ireland. Key
investment criteria include:
-- During the first 24 months from listing, the Group invested
in operational wind energy assets in Ireland.
-- Thereafter, Ireland will remain a key country of focus for
the Group as no less than 60 per cent of GAV will be invested in
Ireland.
-- The Group can also invest, in aggregate, up to 40 per cent of
GAV in operational wind energy or solar assets in other relevant
countries (being Belgium, France, Germany, the Netherlands, and the
Nordics).
The Group has used debt facilities to make additional
investments in the year. This has enhanced the Group's
attractiveness to sellers since execution risk is greatly
diminished, with the Group effectively being a cash buyer. The
Group will continue to use debt facilities to make further
investments.
The Group will look to repay its drawn debt facilities by
refinancing them in the equity markets at appropriate times in
order to refresh its debt capacity. While debt facilities are
drawn, the Group benefits from an increase in investor returns
because borrowing costs are below the underlying return on
investments.
Group Structure and Share Capital
The Company is incorporated in the Republic of Ireland. The
Group is wholly independent and is not tied to any particular
utility or developer. All of the ordinary shares in the Company are
quoted on the Euronext Growth Market of Euronext Dublin and on AIM
of the London Stock Exchange. The Group comprises of the Company,
Holdco, Holdco 1 and Holdco 2. Holdco invests in the underlying
portfolio companies and Holdco 2 is the borrowing entity of all
debt facilities at Group level.
The Company has one class of ordinary shares which carry no
rights to fixed income. 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.
All shareholders have the same voting rights in respect of the
share capital of the Company. Shareholders are entitled to attend
and vote at general meetings of the Company and, on a poll, to one
vote for each ordinary share held.
The rights and obligations to the ordinary shares are set out in
the Company's articles of association which are available on the
Company's website: www.greencoat-renewables.com .
Authority to Purchase Own Shares
The current authority of the Company to make market purchases of
up to 14.99 per cent of its issued share capital expires at the
conclusion of every AGM. A special resolution will be proposed at
the forthcoming AGM seeking renewal of such authority until the
next AGM (or 30 June 2022, whichever is earlier). The purchases
will only be made for cash at prices below the estimated prevailing
NAV per share and where the Board believes such purchases will
result in an increase of the NAV per share. Any shares repurchased
under this authority will either be cancelled or held in treasury
at the discretion of the Board for future resale in appropriate
market conditions.
The Directors believe that the renewal of the Company's
authority to purchase shares, as detailed above, is in the best
interests of shareholders as a whole and therefore recommend
shareholders to vote in favour of the special resolution.
Discount Control
As part of the Company's discount control policies, the Board
intends to propose a continuation vote by shareholders if the share
price trades at a significant discount to NAV. If in any financial
year, the shares have traded on average, at a discount in excess of
10 per cent or more to the NAV per share in any financial year, the
Board will propose a special resolution at the Company's next
annual general meeting that the Company cease to continue in its
present form. Notwithstanding this, the Board could consider buying
back its own shares in the market if the share price is trading at
a material discount to NAV, providing it is in the interests of the
shareholders to do so.
Major Interests in Shares
Significant shareholdings as at 31 December 2020 are detailed
below.
Shareholder Ordinary shares held %
----------------------------------
31 December 2020
---------------------------------- -----------------------
Brewin Dolphin Wealth Management 7.70
Newton Investment Management 7.21
M&G Investment Management 6.22
FIL Investment International 4.90
Foresight Group 4.49
Baillie Gifford & Co. 4.46
Cantor Fitzgerald 4.23
Davy Stockbroker 4.11
Irish Life Investment Managers 3.56
Aberdeen Standard Capital 3.49
Companies Act 2014 Disclosures
The Directors disclose the following information:
-- the Company's capital structure is detailed in note 15 of the
consolidated financial statements and all shareholders have the
same voting rights in respect of the share capital of the Company.
There are no restrictions on voting rights that the Company is
aware of, nor any agreement between holders of securities that
result in restrictions on the transfer of securities or on voting
rights;
-- there exist no securities carrying special rights with regard to the control of the Company;
-- the Company does not have an employees' share scheme;
-- the rules concerning the appointment and replacement of
Directors are contained in the Company's Articles of Association
and the Companies Act 2014;
-- there exist no agreements to which the Company is party that
may affect its control following a takeover bid; and
-- there exist no agreements between the Company and its
Directors providing for compensation for loss of office that may
occur because of a takeover bid.
Key Performance Indicators
The Board believes that the key metrics detailed within the
summary, which are typical for renewables infrastructure investment
funds, will provide shareholders with sufficient information to
assess how effectively the Group is meeting its objectives.
Ongoing Charges
31 December 2020 31 December 2019
---------------------- -------------------- -------------------
EUR000 % EUR 000 %
Management fee 6,522 1.00% 5,221 1.00%
Directors' fees 254 0.04% 200 0.04%
Ongoing expenses (1) 1,382 0.21% 1,176 0.21%
---------------------- -------- ---------- ---------- -------
Total 8,158 1.24% 6,597 1.25%
---------------------- -------- ---------- ---------- -------
Weighted Average NAV 651,082 524,558
(1) Ongoing expenses do not include EUR341k of broken deal
costs, EUR266k pf SPV administration fees and EUR29k of other
non-ongoing costs.
Based on the 31 December 2020 NAV of EUR749 million, the ongoing
total management fee is 1.00 per cent. of NAV. Assuming no change
in NAV, the 2021 ongoing charges ratio is expected to be 1.22 per
cent.
The Investment Manager is not paid any performance or
acquisition fees.
Directors' Indemnity
Directors' and Officers' liability insurance cover is in place
in respect of the Directors. The Company's Articles of Association
provide, subject to the provisions of Ireland and UK legislation,
an indemnity for Directors in respect of costs which they may incur
relating to the defence of any proceedings brought against them
arising out of their positions as Directors, in which they are
acquitted or judgement is given in their favour by the Court.
Except for such indemnity provisions in the Company's Articles
of Association and in the Directors' letters of appointment, there
are no qualifying third party indemnity provisions in force.
Corporate and Social Responsibility
Environmental, Social and Governance Matters
The Group currently invests in wind farms and the environmental
benefits of renewable energy are widely known.
Although the non-executive Board has overall responsibility for
the activities of the Company and its investments, the day-to-day
management of the business is delegated to the Investment Manager.
This includes responsibility for ESG matters. In collaboration, the
Board and the Investment Manager assess how ESG should be managed
and the Company has developed its ESG policy in accordance with the
Investment Manager's ESG Framework, and the approach has two
streams: pre-investment and ongoing management.
The Group relies on the Investment Manager to apply appropriate
policies to the investments the Group makes. The policies in place
at the Investment Manager outline the Group's approach to
responsible investing, as well as the environmental standards which
it aims to meet. Responsible investing principles have been applied
to each of the investments made. The Investment Manager monitors
compliance at the investment phase and reports on an ongoing basis
to the Board.
These policies require the Group to make reasonable endeavours
to procure the ongoing compliance of its portfolio companies with
its policies on responsible investment.
The full ESG policy of the Company and its ESG report are
available on the Company's website: www.greencoat-renewables.com
.
Climate Change
The Task Force on Climate-Related Financial Disclosures (TCFD)
was established in 2015, with the goal of developing consistent
disclosure standards for companies, in order to enable investors
and other stakeholders to assess the climate-related financial
risks.
The premise of such climate-related financial disclosures is
that financial markets need clear, comprehensive, and high-quality
information on the impacts of climate change. This includes the
risks and opportunities presented by rising temperatures,
climate-related policy, and emerging technologies in our changing
world.
The Company supports these recommendations and in this year's
Annual Report, have committed to and commenced implementing these
disclosures in a structured manner.
The core elements of these disclosures as recommended by the
TCFD, comprise of 4 thematic areas.
Governance
As discussed in the Corporate Governance Report, the Company's
approach to governance is to manage risk through robust processes
and controls, and to ensure best practices are in place to support
the growing business. It does this through regular meetings between
the Board and the Investment manager where risk management of the
Company and its investments is considered and discussed, including
ESG and climate-related risks and opportunities. A formal risk
matrix is maintained by the Investment Manager and reviewed and
approved by the Board on an annual basis. The Board and Investment
Manager also regularly discuss developments in European energy
policy, weather patterns, and how the Company's strategy can
further support the energy transition.
In addition, the Investment Manager has its own ESG committee
that meets regularly to discuss ESG and climate related risks
relating to the Group and other funds it manages. This committee
has implemented an ESG Framework Policy that looks to establish
best practice in climate related risk management, reporting and
transparency. Representatives from the Investment Manager also sit
on the Boards of the SPV companies, which meet quarterly and
discuss ESG and climate related risk management.
Strategy
The Company is a significant renewables infrastructure fund
invested in wind farms in Ireland and France. Its growth is
achieved through the acquisition and operation of renewable energy
generation assets with stable revenues backed by government support
mechanisms.
The Company's strategy and investment policy of acquiring
operating capacity in the secondary market, enables developers and
utilities to recycle capital, facilitating further renewable
build-out and thus plays a significant role in increasing operating
wind generating capacity.
The Company considers that the decarbonisation of the economy
will present significant investment opportunities and the size of
the Company's growth will be related to the success of the sector
and the engagement of its stakeholders.
The Company's strategy is well aligned for the transition to a
low carbon economy. The financial impact of climate-related risk
and opportunities on the Company's strategy will continue to be
refined in the coming years.
Risk Management
The Board and the Investment Manager monitor climate related
risks and appreciate their impact on the Group. More extreme
weather patterns arising from global warming have the capacity to
damage infrastructure in general, including above ground grid
infrastructure, but it is considered unlikely that damage will be
caused to generating equipment that is designed to take advantage
of weather systems. Appropriate insurance against property damage
and business interruption is held for any such eventuality,
nonetheless.
As a full scope UK AIFM, the Investment Manager has established
a Risk Management Committee that meets on a quarterly basis to
discuss, amongst other matters, the risk framework of the Group and
investee companies including processes for identifying, assessing
and managing climate related risks.
The Investment Manager's Investment Committee comprises
experienced members of the Investment Manager. Whilst making
investment decisions, due consideration is given to climate-related
risks and opportunities identified during due diligence. The formal
ESG checklist used is also considered by the Investment Committee
in the approval process of any new investment.
Ongoing risks for the portfolio are monitored, managed, and
reported on by the Investment Manager to the Board.
Metrics
In order to monitor, assess and benchmark the Group's
performance across the portfolio, the following ESG-related KPIs
are used:
-- Renewables energy generation
-- CO2 savings
-- Equivalent no. of homes powered
-- Number of environmental habitat management plans
-- Number of internal and external health and safety audit visits
-- Amount invested in community funds or social projects in the reporting year
-- Appropriate internal controls / audit system/ board level
oversight at Company and SPV level
-- Policies in place at SPV level
Given the size of the Group's investment portfolio at 31
December 2020, the Group's CO(2) emission reductions are
approximately 0.6 million tonnes per annum. The portfolio is also
generating sufficient electricity to power 0.4 million homes per
annum.
These ESG and climate-related metrics can be found in the
Company's ESG report available on the Company's website:
www.greencoat-renewables.com .
Global Greenhouse Gas Emissions
As the Group has outsourced operations to third parties, there
are no significant greenhouse gas emissions to report from the
operations of the Group.
In relation to the Group's investee companies, the level of
greenhouse gas emissions arising from the low volume of electricity
imports and from operation and maintenance activity is not
considered material for disclosure purposes. Further, as the assets
are renewable energy generators, they reduce carbon dioxide
emissions on a net basis (at a rate of approximately 0.4tn CO(2)
per MWh).
Employees and Officers of the Company
The Company does not have any employees but instead engages
experienced third parties to operate the assets that it owns,
therefore employee policies are not required. The Directors of the
Company are listed in the Board of Directors section.
Diversity
The Group's policy on diversity is detailed in the Corporate
Governance Report.
Principal Risks and Risk Management
In the normal course of business, each investee company has a
rigorous risk management framework with a comprehensive risk
register that is reviewed and updated regularly and approved by its
board.
The Board maintains a risk matrix considering the risks
affecting both the Group and the investee companies. This risk
matrix is reviewed and updated annually to ensure that procedures
are in place to identify, mitigate and minimise the impact of risks
should they crystallise. The risk matrix is also reviewed and
updated to identify emerging risks, such as climate-related risks,
and to determine whether any actions are required. This enables the
Board to carry out a robust assessment of the risks facing the
Group, including those principal risks that would threaten its
business model, future performance, solvency or liquidity.
The risk appetite of the Group is considered in light of the
principal risks and their alignment with the Company's Investment
Objective. The Board considers the risk appetite of the Group and
the Company's adherence to the Investment Policy in the context of
the regulatory environment taking into account, inter alia, gearing
and financing risk, wind resource risk, the level of exposure to
power prices as well as environmental and health and safety
risks.
As it is not possible to eliminate risks completely, the purpose
of the Group's risk management policies and procedures is not to
eliminate risks, but to reduce them to ensure that the Group is
adequately prepared to respond to such risks and to minimise any
impact if the risk develops.
The geographical spread of assets within the portfolios in
Ireland and France ensure that there are benefits from a
diversified wind resource and spreads the exposure to a number of
potential technical risks associated with grid connections and with
local distribution and national transmission networks. In addition,
the portfolio includes 5 different turbine manufacturers, which
diversifies technology and maintenance risks. Finally, each site
contains a number of individual turbines, the performance of which
is largely independent of other turbines.
The key risks to the performance of the Group, identified by the
Board, are detailed below.
Risks Affecting the Group
Investment Manager
The ability of the Group to achieve its investment objective
depends heavily on the experience of the management team within the
Investment Manager and more generally on the Investment Manager's
ability to attract and retain suitable staff. The sustained growth
of the Group depends upon the ability of the Investment Manager to
identify, select and execute further investments which offer the
potential for satisfactory returns.
The Investment Management Agreement includes key man provisions
which would require the Investment Manager to employ alternative
staff with similar experience relating to investment, ownership,
financing and management of renewable energy projects should, for
any reason, any key man cease to be employed by the Investment
Manager. The Investment Management Agreement ensures that no
investments are made following the loss of key men until suitable
replacements are found and there are provisions for a reduction in
the investment management fee during the loss period. It also
outlines the process for their replacement with the Board's
approval. The key men are also shareholders in the Company.
Regulatory and Brexit Risk
The Investment Manager is the UK authorised AIFM of the Company,
an Irish unauthorised AIF. As a non-EU AIFM post Brexit, the
Investment Manager can continue to manage the AIF, however it can
no longer avail of the marketing passport under AIFMD and will need
to rely on the national private placement regimes / marketing
requirements in place in the relevant jurisdictions. On the 7th
January 2021, the Central Bank of Ireland confirmed that the
Investment Manager can continue to market the Company to Irish
professional investors with effect from the 1st January 2021. The
Investment Manager can also continue to market the Company to UK
professional investors under the jurisdiction of the FCA in the
UK.
The Board regularly discusses regulatory risks and the
Investment Manager reports to it on AIFMD compliance matters. The
Investment Manager also consults with its own, and the Company's
legal adviser as well as the Company's NOMAD in relation to its
plans to ensure that the Company can continue to be AIFMD
compliant.
If at any point the international community, or the EU, were to
withdraw, reduce or change its support for the increased use of
energy from renewable sources, including generation of electricity
from wind, for whatever reason, this may have a material adverse
effect on the legislative basis for the supports for the promotion
of the use of energy from renewable sources. If this reduces the
value of the subsidy support that wind energy generators are
entitled to, it would have a material adverse effect on the
Group.
Financing Risk
The Group will finance further investments either by borrowing
or by issuing further shares. The ability of the Group to deliver
enhanced returns and consequently to realise expected NAV growth is
dependent on access to debt facilities and equity capital markets.
There can be no assurance that the Group will be able to borrow
additional amounts or refinance on reasonable terms or that there
will be a market for further shares.
Investment Returns Become Unattractive
A significantly strengthening economy may lead to higher future
interest rates which could make the listed infrastructure asset
class relatively less attractive to investors. A rise in real
interest rates could have a material impact on the share price. As
most of the revenues and costs of the investee companies are either
indexed or correlated to CPI inflation, the Investment Manager
believes this provides a degree of mitigation against a rise in
interest rates due to inflation.
Risks Affecting Investee Companies
Regulation
As the renewable energy market has matured and costs of new
capacity have reduced, member states have generally revised their
supports for the sector to reduce the benefits available to new
renewable power generation projects. However, in order to maintain
investor confidence, Ireland (and other relevant countries) have to
date largely ensured that benefits already granted to operating
renewable energy generation projects (which the Group is invested
in) are exempt from future regulatory change adversely affecting
those benefits.
If these policies were to change, such that subsidy supports
presently available to the renewable energy sector were to be
reduced or discontinued, it could have a material adverse effect on
the business, financial position, results of operations and future
growth prospects of the Group, as well as returns to investors.
Electricity Prices
A number of factors could cause a decline in the market price of
electricity which could adversely affect the portfolio companies'
revenue and financial condition. Similarly, a decline in the costs
of other sources of electricity generation, such as fossil fuels or
nuclear power, could reduce the wholesale price of electricity and
thus the price achieved for electricity generated by wind farms. At
present, the Group does not hedge its sales of electricity
generated.
Since 1995, Ireland has provided operating wind farms with a
supportive regulatory framework (REFIT 1 and REFIT 2) offering an
inflation-linked floor price up to 15 years, while allowing wind
farms to capture prices above the floor. Under REFIT, wind farms
are provided with pricing certainty and no downside exposure to
electricity price as the REFIT price is c.EUR80/MWh whereas the
2020 wholesale electricity price was c.EUR30/MWh.
Under the French subsidy tariff mechanism established in 2000, a
producer can sell its whole production state companies at a
regulated price under a FIT framework. The FIT offers a fixed price
up to 20 years partially linked to inflation. The level of
inflation linkage, the duration of the FIT contract as well as the
initial reference price are subject to the vintage of the FIT
contract. The average FIT tariff of the French Group's assets is
c.EUR86/MWh in 2020.
When operating outside of the respective contracted subsidy
periods, the Group may trade in the relevant electricity market on
a merchant basis and its financial performance would be therefore
subject to the wholesale power price prevalent at the time.
In general, independent forecasters expect Irish and French
wholesale power prices to rise in real terms from current levels,
driven by higher gas and carbon prices. A difference in the
achieved wholesale price of electricity to that which is expected
could have a material adverse effect on the business, financial
position, results of operation and future growth prospects of the
Group, as well as returns to investors.
Wind Resource
The investee companies' revenues are dependent upon wind
conditions, which will vary across seasons and years within
statistical parameters. The standard deviation of energy production
is 10 per cent over a 12 month period (2 per cent over 25 years).
Since long term variability is low, there is no significant
diversification benefit to be gained from geographical
diversification across weather systems.
The Group does not have any control over the wind resource and
has designed its dividend policy such that it can withstand
significant short-term variability in production relating to wind.
Before investment, the Group carries out extensive due diligence
and relevant historical wind data is available over a period of
time. The other component of wind energy generation, a wind farm's
ability to turn wind into energy, is mitigated by generally
purchasing wind farms with a proven operating track record.
When acquiring wind farms that have only recently entered into
operation, only limited operational data is available. In these
instances, the acquisition agreements with the vendors of these
wind farms may include a "wind energy true-up" which would apply
once at least one year's operational data has become available or
the acquisition price would be adjusted to reflect wind
uncertainty. Under this true-up, the net load factor will be
reforecast based on all available data and the purchase price will
be adjusted, subject to de minimis thresholds and caps.
Asset Life
In the event that the wind turbines do not operate for the
period of time assumed by the Group in its business model or
require higher than expected maintenance expenditure to do so, it
could have a material adverse effect on investment returns. Many of
the wind farm SPVs have a granted planning permission shorter than
the expected life of the asset and while it is expected that an
extension to planning will be available, failure to achieve such
extension could have a material adverse effect on investment
returns.
The Group performs regular reviews and ensures that maintenance
is performed on all turbines across the wind farm portfolio.
Regular maintenance ensures the wind turbines are in good working
order, consistent with their expected lifespans.
Market Structure Change (I-SEM)
The island of Ireland previously had a wholesale electricity
market, the SEM, which was a gross mandatory pool market, centrally
dispatched, where the licensed transmission system operators were
responsible for forecasting wind and demand. As a consequence, wind
generators were not "balance responsible". The regulatory
authorities in Ireland and Northern Ireland have developed an
integrated single electricity market, I-SEM, which aligns SEM with
electricity markets across Europe. This market went live in October
2018 with one of the material changes that it introduces "balance
responsibility" for wind generators.
The implication of being balanced responsible is that it
introduces a potential cost to the wind operators. The Group has
contracted third-party service providers with relevant experience
to manage this risk to the wind farm portfolio. Brexit is not
expected to have a material impact on the operation of I-SEM.
Health and Safety and the Environment
The physical location, operation and maintenance of wind farms
may, if inappropriately assessed and managed, pose health and
safety risks to those involved. Wind farm operation and maintenance
may result in physical injury or industrial accidents, particularly
if an individual were to fall from height or be electrocuted. If an
accident were to occur in relation to one or more of the Group's
investments and if the Group were deemed to be at fault, the Group
could be liable for damages or compensation to the extent such loss
is not covered by insurance policies. In addition, adverse
publicity or reputational damage could ensue.
The Board reviews health and safety at each of its scheduled
Board meetings and Kevin McNamara serves as the appointed Health
and Safety Director. The Group engages an independent health and
safety consultant to ensure the ongoing appropriateness of its
health and safety policies.
Wind farms have the potential to cause environmental hazards or
nuisances to their local human populations, flora and fauna and the
surrounding natural environment. Wind farms can receive complaints
relating to specific environmental issues, or compliance with
planning consents and other relevant permits. Separately, the
planning regulations in Ireland historically included a planning
exemption for underground grid connections. There have been
challenges to the basis on which this exemption has been determined
and there is currently uncertainty around how the industry will
resolve this challenge. The Group continues to monitor any
development, taking legal advice where necessary, and addresses
these as and when required.
Going Concern and Financial Risk
As further detailed in note 1 to the financial statements, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for at least 12 months from the date of approval of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
Disclosure of Information to Independent Auditor
The Directors believe that they have taken all steps necessary
to make themselves aware of any relevant audit information and have
established that the Group's statutory Auditors are aware of that
information. In so far as they are aware at the time that this
report was approved, there is no relevant audit information of
which the Group's statutory Auditors are unaware.
Independent Auditor
BDO, Statutory Audit Firm, have expressed their willingness to
continue in office in accordance with Section 383 (2) of the
Companies Act, 2014.
The Directors will propose the reappointment of BDO as the
Company's Auditor and resolutions concerning this and the
remuneration of the Company's Auditor will be proposed at the
AGM.
Audit Committee
Pursuant to the Company's Articles of Association the Board had
established an Audit Committee that in all material respects meets
the requirements of Section 167 of the Companies Act 2014. The
Audit Committee was fully constituted and active during the year
ended 31 December 2020. For more information, see the Audit
Committee Report.
Annual Accounts
The Board is of the opinion that the Annual Report, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the performance,
strategy and business model of the Company.
The Directors recommend that the Annual Report, the Directors'
Report and the Independent Auditor's Report for the year ended 31
December 2020 are received and adopted by the shareholders and a
resolution concerning this will be proposed at the AGM.
Accounting Records
The Directors believe they have complied with the requirements
of Section 281 to Section 285 of the Companies Act, 2014 with
regard to accounting records by employing accounting personnel with
the appropriate expertise and by providing adequate resources to
the financial function. The accounting records of the Company are
maintained by Northern Trust International Fund Administration
Services (Ireland) Limited at Georges Court, 54-62 Townsend Street,
Dublin 2, Ireland.
Subsequent Events
Significant subsequent events have been disclosed in note 21 to
the consolidated financial statements.
Corporate Governance
The Corporate Governance Report form part of this report.
Directors and Company Secretary
The following Directors held office as at 31 December 2020:
Directors
Rónán Murphy (non-executive Chairman)
Emer Gilvarry (non-executive Director)
Kevin McNamara (non-executive Director)
Marco Graziano (non-executive Director)
Company Secretary
Ocorian Administration (UK) Limited (formerly Estera
Administration (UK) Limited)
The biographical details of the Directors are set out in the
Board of Directors section .
Changes in Directors during the year
Effective 30 January 2020, Marco Graziano was appointed to the
Board.
Directors' Interests in Shares in the Company
Directors' interests in Company shares as at 31 December 2020
are detailed below.
Shareholder Ordinary shares of EUR0.01 each held as at Ordinary shares of EUR0.01 each held as at
------------------------
31 December 2020 31 December 2019
------------------------ ------------------------------------------- -------------------------------------------
Rónán Murphy 192,694 170,571
Kevin McNamara 68,327 68,327
Emer Gilvarry 67,832 67,832
Marco Graziano 65,000 -
------------------------ ------------------------------------------- -------------------------------------------
The Company does not have any share option schemes in place.
Dividend
The Board recommended an interim dividend of EUR11.3 million,
equivalent to 1.515 cent per share with respect to the 3 month
period ended 31 December 2020, bringing total dividends with
respect to the year to EUR39.9 million, equivalent to 6.06 cent per
share as disclosed in note 8 of the financial statements.
Political Donations
No political donations were made during the year ended 31
December 2020.
Longer Term Viability
As further disclosed in the Corporate Governance Report, the
Company is a member of the AIC and complies with the AIC Code. In
accordance with the AIC Code, the Directors are required to assess
the prospects of the Group over a period longer than the 12 months
associated with going concern. The Directors conducted this review
for a period of 10 years, which it deemed appropriate, given the
long-term nature of the Group's investments, which are modelled
over 30 years, coupled with its long-term strategic planning
horizon.
In considering the prospects of the Group, the Directors looked
at the key risks facing both the Group and the investee companies,
focusing on the likelihood and impact of each risk as well as any
key contracts, future events or timescales that may be assigned to
each key risk.
As a sector-focused infrastructure fund, the Group aims to
produce stable and progressive dividends while preserving the
capital value of its investment portfolio on a real basis. The
Directors believe that the Group is well placed to manage its
business risks successfully over both the short and long term and
accordingly, the Board has a reasonable expectation that the Group
will be able to continue in operation and to meet its liabilities
as they fall due for a period of at least 10 years.
While the Directors have no reason to believe that the Group
will not be viable over a longer period, they are conscious that it
would be difficult to foresee the economic viability of any company
with any degree of certainty for a period of time greater than 10
years.
Directors' Compliance Statement
The Directors, in accordance with Section 225(2)(a) of the
Companies Act 2014, acknowledge that they are responsible for
securing the Company's compliance with its "relevant obligations".
"Relevant obligations" in the context for the Company, are the
Company's obligations under:
-- The Companies Act 2014, where a breach of the obligations
would be a category 1 or category 2 offence.
-- The Companies Act 2014, where a breach of the obligations
would be a serious Market Abuse or Prospectus offence.
-- Tax law.
Pursuant to Section 225(2)(b) of the Companies Act 2014, the
Directors confirm that:
-- a compliance policy statement has been drawn up by the
Company in accordance with Section 225(3)(a) of the Companies Act
2014 setting out the Company's policies (that, in the directors'
opinion, are appropriate to the Company) regarding compliance by
the Company with its relevant obligations.
-- appropriate arrangements and structures that in their
opinion, are designed to secure material compliance with the
Company's relevant obligations, have been put in place; and
-- a review has been conducted, during the financial year, of
the arrangements and structures referred to above.
By order of the Board
Rónán Murphy Kevin McNamara
Director Director
28 February 2021 28 February 2021
Directors' Remuneration Report
This report has been prepared by the Directors in accordance
with the requirements of the Companies Act 2014. A resolution to
consider the Directors' Remuneration Report will be proposed at the
AGM.
The Company's Auditor is required to give their opinion on the
information provided on Directors' remuneration and this is
explained further in its report to shareholders within the
Independent Auditor's Report . The remainder of this report is
outside the scope of the external audit.
Annual Statement from the Chairman of the Board
The Board, which is profiled on the Board of Directors section,
consists solely of non-executive Directors and is considered to be
entirely independent. The Board considers at least annually the
level of the Board's fees, in accordance with the AIC Code. During
the year, the level of fees for Directors had been benchmarked by
an independent consultant and a number of recommendations had been
made to the Remuneration Committee. The subsequent changes to
non-executive Director fees, effective from 1 January 2021, are
detailed later in this report. This has been the first fee increase
in non-executive director fees since the Company's listing in
2017.
Remuneration Policy
As at the date of this report, the Board comprised 4 Directors,
all of whom are non-executive. The Company has established a
Remuneration Committee which comprises all of the Directors and the
Chair is Emer Gilvarry.
Each of the Directors was appointed to the Remuneration
Committee with effect to the date of their appointment. The
Committee shall meet at such times as the Committee Chairman shall
require.
Each Director receives a fixed fee per annum based on their
roles and responsibility within the Company and the time commitment
required. It is not considered appropriate that Directors'
remuneration should be performance related and none of the
Directors are eligible for pension benefits, share options,
long-term incentive schemes or other benefits in respect of their
services as non-executive Directors of the Company. The total
remuneration of non-executive Directors has not exceeded the limit
set out in the Articles of Association of the Company.
The Company's Articles of Association empower the Board to award
a discretionary bonus where any Director has been engaged in
exceptional work on a time spent basis to compensate for the
additional time spent over their expected time commitment.
The Articles of Association provide that Directors retire and
offer themselves for re-election at the first AGM after their
appointment and at least every 3 years thereafter. In accordance
with corporate governance best practice, all of the Directors have
opted to offer themselves for re-election on an annual basis. All
of the Directors have been provided with letters of appointment
which stipulate that their initial term shall be for 3 years,
subject to re-election.
A Director's appointment may at any time be terminated by and at
the discretion of either party upon 6 months' written notice. A
Director's appointment will automatically end without any right to
compensation whatsoever if they are not re-elected by the
Shareholders. A Director's appointment may also be terminated with
immediate effect and without compensation in certain other
circumstances.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company's
registered office.
The Directors do not envisage any changes to the remuneration
policy in the next accounting period.
Annual Report on Remuneration
Independent compensation consultants were engaged by the
Remuneration Committee to provide views on appropriate levels of
fees for the non-executive Directors of the Company, as well as
benchmark existing fee levels against peer companies. Following
this review, the basic fee of non-executive Directors was increased
to EUR55,000 per annum and the chairs of the sub-committees of the
Board were compensated an additional EUR10,000 per annum to reflect
the increased responsibilities in these roles. The basic fee of
Chairman was increased to EUR130,000 per annum. These changes to
non-executive Director remuneration became effective from 1 January
2021.
The Company is now a very significant generator of renewable
electricity in Ireland and expanded its investment portfolio into
France during the year. It's GAV has grown to EUR1.2 billion
through acquisitions and equity raisings, and since listing, the
Board and its committees have held 86 meetings.
The table below (audited information) shows all remuneration
earned by each individual Director during the year:
Date of Appointment Directors' fees per Paid in year ended Paid in year ended
annum 31 December 31 December
2020 2019
-------------------------- --------------------- ------------------------- ------------------- -------------------
Rónán Murphy
(chairman) 16 June 2017 EUR100,000 EUR100,000 EUR100,000
Kevin McNamara 16 June 2017 EUR50,000 EUR50,000 EUR50,000
Emer Gilvarry 16 June 2017 EUR50,000 EUR50,000 EUR50,000
Marco Graziano(1) 30 January 2020 EUR54,167 EUR54,167 EURNil
-------------------------- --------------------- ------------------------- ------------------- -------------------
Total EUR254,167 EUR200,000
------------------------------------------------- ------------------------- ------------------- -------------------
(1) Salary effective from 1 December 2019
None of the Directors received any other remuneration or
additional discretionary payments during the year from the
Company.
Relative Importance of Spend on Pay
The remuneration of the Directors with respect to the year
totalled EUR254,467 (2019: EUR200,000) in comparison to dividends
paid or declared to shareholders with respect to the year of
EUR39,891,425 (2019: EUR33,023,588).
On behalf of the Board,
Emer Gilvarry
Chair of the Remuneration Committee
28 February 2021
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the consolidated financial statements in accordance with
applicable law and regulations.
Irish company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements and have
elected to prepare the Company financial statements in accordance
with IFRS as adopted by the EU. Under company law the Directors
must not approve the consolidated financial statements unless they
are satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss of the
Group for that period.
In preparing these consolidated financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with IFRS
as adopted by the EU, subject to any material departures disclosed
and explained in the consolidated financial statements;
-- prepare the consolidated financial statements on the going
concern basis unless it is inappropriate to presume that the
Company and the Group will continue in business;
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the consolidated financial statements comply with the Companies Act
2014 and, as regards the Group financial statements, Article 4 of
the IAS Regulation. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities. The
Directors are responsible for ensuring that the Annual Report,
taken as a whole, is fair, balanced, and understandable and
provides the information necessary for shareholders to assess the
Group's performance, business model and strategy.
Website Publication
The Directors are responsible for ensuring the Annual Report and
the consolidated financial statements are made available on a
website. Financial statements are published on the Company's
website in accordance with legislation in Ireland and the UK
governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Company's website is the
responsibility of the Directors. The Directors' responsibilities
also extend to the ongoing integrity of the consolidated financial
statements contained therein.
On behalf of the Board,
Rónán Murphy Kevin McNamara
Director Director
28 February 2021 28 February 2021
Corporate Governance Report
This Corporate Governance Report forms part of the Report of the
Directors as disclosed in the Directors' Report.
Corporate Governance Framework
The Company is committed to high standards of corporate
governance and the Board is responsible for ensuring those high
standards are achieved. Companies admitted to trading on AIM or
Euronext Growth Market are not required to comply with the UK Code
or Irish Annex, however they are required to disclose the corporate
governance code which they have decided to apply.
For the year ended 31 December 2020, the Company was a member of
the AIC and adopted the AIC Code. The AIC Code provides boards with
a framework of best practice in respect of the governance of
investment companies. While the Company is not an "investment
company" under the Companies Act, the Company shares key important
characteristics with such companies e.g. it has no employees and
the tasks of portfolio management and risk management are delegated
to the Investment Manager. The FRC has confirmed that investment
companies who report against the AIC Code and follow its
requirements will also be meeting their obligations under the UK
Code and the Irish Annex. The Board considers that reporting
against the principles and recommendations of the AIC Code, by
reference to the AIC Guide, provides better information to
Shareholders. A summary of the Company's compliance with the AIC
code is provided on the Company's website.
The text of the AIC Code and the AIC Guide are available on the
AIC's website, www.theaic.co.uk. The UK Code is available on the
FRC's website, www.frc.org.uk .
Statement of Compliance
The Board confirms that the Company has complied with the AIC
Code during the year ended 31 December 2020.
Purpose, Culture and Values
The Company's purpose remains clear; to provide investors with
the opportunity to participate directly in the ownership of a
portfolio of renewable energy-generating assets, thus promoting the
reduction of greenhouse gas emissions and the global future target
of a carbon-zero economy. The Company also intends to provide
shareholders with an annual dividend that increases between zero
and CPI whilst growing the capital value of its investment
portfolio in the long term on a real basis through reinvestment of
excess cash flow and the prudent use of gearing.
The Company provides investors with the opportunity to
participate directly in the ownership of wind farms in Ireland and
France, so increasing the resources and capital dedicated to the
deployment of renewable energy and the reduction of greenhouse gas
emissions.
During the year, the Board continued to discuss the Company's
culture and values. As an investment trust with no employees, it
was agreed that the culture and values of the Board should be
aligned with those of the Investment Manager and centred on long
term relationships with the Company's key stakeholders and
sustainable investment as follows.
-- Integrity is at the heart of every activity, with the
importance of being transparent, trustworthy and dependable being
well understood.
-- The trust of stakeholders is key to maintaining the Company's
high reputation, in particular with regard to execution certainty
for asset sellers and delivery of investment promises to
investors.
-- Respect for differing opinions is to be shown across all conversation and communication.
-- Individual empowerment is sought with growth in
responsibility and autonomy being actively encouraged.
-- Collaboration and effectively utilising the collective skills
of all participants is important to ensure ideas and information
are best shared.
The Board
As at the date of this report, the Board comprises of 4
non-executive Directors, all of whom, are considered to be
independent of the Investment Manager and free from any business or
other relationship that could materially interfere with the
exercise of their independent judgement. During the year, Marco
Graziano was appointed to the Board with effect from 30 January
2020.
Directors' details are detailed in the Board of Directors
section, which sets out the range of investment, financial and
business skills and experience represented.
Director Re-election and Appointment
The Articles of Association provide that Directors shall retire
and offer themselves for re-election at the first AGM after their
appointment and at least every 3 years thereafter. Any Director,
who has held office with the Company for three consecutive 3 year
terms shall retire from office. This will allow for phased Board
appointments and retirements and enable the Board to consider
whether there is any risk that such Director might reasonably be
deemed to have lost independence through such long service.
However, all of the Directors, in accordance with best practice,
have opted to offer themselves for re-election on an annual basis.
Having considered their effectiveness, demonstration of commitment
to the role, attendance at meetings and contribution to the Board's
deliberations, the Board approves the nomination for re-election of
all Directors.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company's
registered office.
The Chairman
The Chairman's primary responsibility is to lead the Board and
to ensure its effectiveness both collectively and individually. The
Chairman of the Board is Rónán Murphy. In considering the
independence of the Chairman, the Board took note of the provisions
of the AIC Code relating to independence and has determined that
Mr. Murphy is an Independent Director. The Company has no employees
and therefore there is no requirement for a chief executive.
Senior Independent Director
The Senior Independent Director works closely with the Chairman
and provides support where required, holding annual meetings with
the other non-executive directors to appraise the performance of
the Chairman and be available to shareholders if they have any
reason for concern. The Senior Independent Director is Emer
Gilvarry.
Diversity Policy and Independence
The Board has a policy to base appointments on merit and against
objective criteria, with due regard for the benefits of diversity,
including gender diversity. Its objective is to attract and
maintain a Board that, as a whole, comprises an appropriate balance
of skills and experience.
The Board consists of individuals from relevant and
complementary backgrounds offering experience on boards of listed
companies, in financial and legal services as well as in the energy
sector. As at the date of this report, the Board comprised 3 men
and 1 woman, all non-executive Directors who are considered to be
independent of the Investment Manager and free from any business or
other relationship that could materially interfere with the
exercise of their independent judgement.
The Investment Manager operates an equal opportunities policy
and its partners and employees comprised 40 men and 17 women.
Board Responsibilities
The Board will meet, on average, 5 times in each calendar year
for scheduled quarterly Board meetings and on an ad hoc basis where
necessary. At each meeting, the Board follows a formal agenda that
will cover the business to be discussed including, but not limited
to, strategy, performance and the framework of internal controls,
as well as review of its own performance and composition. Between
meetings there is regular contact with the Investment Manager. 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 quality appropriate to enable
it to discharge its duties.
The Board is responsible for the determination of the Company's
Investment Objective and Policy and has overall responsibility for
the Company's activities. The Company has entered into the
Investment Management Agreement with the Investment Manager
pursuant to which the Investment Manager is responsible for the
day-to-day management of the Company.
The Board also has responsibility for ensuring that the Company
keeps proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Company and
which enable it to ensure that the financial statements comply with
applicable regulation. It is the Board's responsibility to present
a fair, balanced and understandable Annual Report, which provides
the information necessary for shareholders to assess the
performance, strategy and business model of the Company. This
responsibility extends to the interim and other price-sensitive
public reports.
The Board has established procedures which provide a reasonable
basis for the Directors to make proper judgement on an ongoing
basis as to the financial position and prospects of the
Company.
The Board has the ability to specify from time to time specific
matters that require prior Board approval ("Reserved Matters") or
specific matters that it believes ought to be brought to the
Board's attention as part of the general reporting process between
the Investment Manager and the Board. The initial list of Reserved
Matters specified by the Board includes entry into markets other
than those located in the Republic of Ireland, entry into
transactions other than those involving operational onshore wind
assets, entry into any acquisitions increasing GAV by more than 50%
and entry into material new financing facilities.
The Investment Manager shall, once every calendar quarter,
submit to the Board a report of activities, investments and
performance of the Company, including progress of all investments,
details of the pipeline of acquisitions and any disposals and, in
addition, shall promptly report to the Board any other information
which could reasonably be considered to be material.
Committees of the Board
The Company's Audit Committee is chaired by Kevin McNamara and
consists of a minimum of 2 members. Emer Gilvarry and Marco
Graziano are the other members of the Audit Committee as the date
of this report. In accordance with best practice, the Company's
Chairman is not a member of the Audit Committee, however he does
attend Audit Committee meetings as and when deemed appropriate. The
Audit Committee Report, included in the Audit Committee Report,
describes the work of the Audit Committee.
The Company has established a Management Engagement Committee,
which comprises all the Directors and the Chair is Rónán Murphy.
The Management Engagement Committee's main function is to keep
under review the performance of the Investment Manager and review
and make recommendations on any proposed amendment to the
Investment Management Agreement. The Management Engagement
Committee will also perform a review of the performance of other
key service providers to the Group. The Management Engagement
Committee will meet at least once a year.
In accordance with the AIC Code, the Company has also set up
Remuneration and Nomination Committees. The Remuneration Committee
comprises of all the Directors and the Chair is Emer Gilvarry. The
Remuneration Committee's main functions are to determine and agree
the Board policy for the remuneration of the Directors and review
and consider any additional ad hoc payments in relation to duties
undertaken over and above normal business. The Remuneration
Committee will meet at least once a year.
The Nomination Committee comprises all of the Directors and the
Chair is Marco Graziano, who was appointed during the year
replacing Ron á n Murphy. The Nomination Committee's main function
is to review the structure, size and composition of the Board
regularly and to consider succession planning for Directors. The
Nomination Committee will meet at least once a year.
Terms of reference for the Management Engagement, Nominations
and Remuneration Committees have been approved by the Board and are
available on the Company's website.
Board Meetings, Committee Meetings and Directors' Attendance
A schedule of Board and Audit Committee meetings is circulated
to the Board one year ahead including the key agenda items for each
meeting. Other Committees meetings are arranged as and when
required. The number of meetings of the full Board of the Company
attended in the year to 31 December 2020 by each Director is set
out below:
2020 Scheduled Board Meetings (Total of 8) Additional Board Meetings (Total of 14)
------------------------ -------------------------------------- ----------------------------------------
Rónán Murphy 8 14
Emer Gilvarry 8 14
Kevin McNamara 8 14
Marco Graziano (1) 8 14
------------------------ -------------------------------------- ----------------------------------------
(1) Appointed with effect from 30 January 2020.
Board Meetings, Committee Meetings and Directors' Attendance
During the year, there were also 10 meetings of sub-committees
of the Board. The number of meetings of the Committees attended in
the year by each Committee member is set out below.
2020 Audit Committee Management Nomination Committee Remuneration
Meetings (Total of 4) Engagement Committee Meetings (Total of 2) Committee Meetings
Meetings (Total of (Total of 2)
2)
----------------------- ---------------------- --------------------- ---------------------- ----------------------
Rónán Murphy - 2 2 2
Emer Gilvarry 4 2 2 2
Kevin McNamara 4 2 2 2
Marco Graziano (1) 3 2 2 2
----------------------- ---------------------- --------------------- ---------------------- ----------------------
(1) Appointed with effect from 30 January 2020.
Board Performance and Evaluation
Regarding performance and evaluation pursuant to Provision 26 of
the AIC Code, the Board undertakes a formal and rigorous evaluation
of its performance each financial year.
Each individual Directors' training and development needs are
reviewed annually. All new Directors receive an induction,
including being provided with information about the Company and
their responsibilities and meetings with the Investment Manager. In
addition, each Director will visit operational sites and specific
Board training days are arranged involving presentations on
relevant topics.
Directors' Indemnity
Directors' and Officers' liability insurance cover is in place
in respect of the Directors. The Company's articles of association
provide, subject to the provisions of Ireland and UK legislation,
an indemnity for Directors in respect of costs which they may incur
relating to the defence of any proceedings brought against them
arising out of their positions as Directors, in which they are
acquitted or judgement is given in their favour by the Court.
Except for such indemnity provisions in the Company's articles
of association and in the Directors' letters of appointment, there
are no qualifying third party indemnity provisions in force.
The Investment Manager
The Board has entered into the Investment Management Agreement
with the Investment Manager under which the Investment Manager is
responsible for developing strategy and the day-to-day management
of the Group's investment portfolio, in accordance with the Group's
investment objective and policy, subject to the overall supervision
of the Board. A summary of the fees paid to the Investment Manager
are given in note 3 to the financial statements.
The Investment Manager's appointment is for an initial term of 5
years from the admission date (25 July 2017). The Investment
Management Agreement may be terminated by either party on the
conclusion of the initial term provided the party purporting to
terminate provides not less than 12 months prior written notice of
its intention to terminate the agreement. The Investment Management
Agreement may be terminated with immediate effect and without
compensation, by either the Investment Manager or the Company if
the other party has gone into liquidation, administration or
receivership or has committed a material breach of the Investment
Management Agreement.
The Investment Manager will, at all times, act within the
parameters set out in the Investment Policy. The Investment Manager
reports to the Board and keeps the Board appraised of material
developments on an ongoing basis.
The Investment Manager is responsible for, among other
things:
-- management of the Portfolio and further investments;
-- identifying, evaluating and executing possible further investments;
-- risk management;
-- reporting to the Board;
-- calculating and publishing NAV, with the assistance of the Administrator;
-- assisting the Company in complying with its ongoing
obligations as a company whose shares are admitted to trading on
AIM and Euronext Growth Market; and
-- directing, managing, supervising and co-ordinating the
Company's third-party service providers, including the Depositary
and the Administrator, in accordance with industry best
practice.
Risk Management and Internal Control
The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness. The Board confirms
that it has an ongoing process for identifying, evaluating and
managing the significant risks faced by the Company. This process
has been in place throughout the year and has continued since the
year end.
The Company's principal risks and uncertainties are detailed
below. As further explained in the Audit Committee Report, the
risks of the Company are outlined in a risk matrix which was
reviewed and updated during the year. The Board continually reviews
its policy setting and updates the risk matrix annually to ensure
that procedures are in place with the intention of identifying,
mitigating and minimising the impact of risks should they
crystallise. The Board relies on reports periodically provided by
the Investment Manager, the Depositary and the Administrator
regarding risks that the Company faces. When required, experts are
employed to gather information, including tax and legal advisers.
The Board also regularly monitors the investment environment and
the management of the Company's portfolio, and applies the
principles detailed in the internal control guidance issued by the
FRC. The principal features of the internal control systems which
the Investment Manager and the Administrator have in place in
respect of the Group's financial reporting include:
-- internal reviews of all financial reports;
-- review by the Board of financial information prior to its publication; and
-- authorisation limits over expenditure incurred by the Group.
Information and Support
The Board can seek independent professional advice on a matter,
at the Company's expense, where they judge it necessary to
discharge their responsibilities as Directors. The Committees of
the Board are provided with sufficient resources to undertake their
duties. The Directors have access to the services of the Company
Secretary who is responsible for ensuring that Board procedures are
followed.
Whistleblowing
The Board has considered the 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.
Amendment of Articles of Association
The Company's Articles of Association may be amended by the
members of the Company by special resolution (requiring a majority
of at least 75 per cent of the persons voting on the relevant
resolution).
General Meetings
The Company shall hold in each year a general meeting as its
annual general meeting in addition to any other meeting in that
year and shall specify the meeting as such in the notice calling
it. All general meetings other than annual general meetings shall
be called extraordinary general meetings. The Directors may convene
general meetings. Extraordinary general meetings may also be
convened on such requisition, or in default, may be convened by
such requisitionists as provided by the Companies Act 2014.
All business shall be deemed special that is transacted at an
extraordinary general meeting. All business that is transacted at
an annual general meeting shall also be deemed special, with the
exception of the consideration of the Company's statutory financial
statements and reports of the Directors and Auditors, the review by
the members of the Company's affairs, the appointment of Directors
in the place of those retiring (whether by rotation or otherwise),
the appointment and re-appointment of the Auditors and the fixing
of the remuneration of the Auditors.
Every member entitled to attend and vote at a general meeting
may appoint a proxy to attend, speak and vote on his or her behalf
provided, however, that a member may appoint more than one proxy
provided that each proxy is appointed to exercise the rights
attached to shares held in different securities accounts. The
holders of ordinary shares have the right to receive notice of and
attend and vote at all general meetings of the Company and they are
entitled, on a poll or a show of hands, to one vote for every
ordinary share they hold.
Votes may be given either personally or by proxy. Subject to any
rights or restrictions for the time being attached to any class or
classes of shares and subject to any suspension or abrogation of
rights pursuant to the Articles, on a show of hands every member
present in person and every proxy shall have one vote, so, however,
that no individual shall have more than one vote, and on a poll
every member shall have one vote for every share carrying rights of
which he is the holder. On a poll a member entitled to more than
one vote need not cast all his votes or cast all the votes he uses
in the same way.
Engagement with Stakeholders
The Directors are responsible for acting in a way that they
consider, in good faith, is the most likely to promote the success
of the Company for the benefit of its members. In doing so, they
should have regard for the needs of stakeholders and the wider
society. The Company's objective is to provide investors with an
annual dividend that increases progressively while preserving the
capital value of its investment portfolio in the long term through
reinvestment of excess cashflow and the prudent use of portfolio
gearing.
Key decisions are those that are either material to the Company
or are significant to any of the Company's key stakeholders. The
below key decisions were made during the year, with the overall aim
of promoting the success of the Company while considering the
impact on its members and wider stakeholders.
Dividends
The Board has approved total dividends of 6.06 cent per share
with the respect to the year. The Board are confident that with the
Company's continuing strong cashflow and robust dividend cover, the
Company can maintain a target dividend of 6.06 cent per share for
2021 (despite negative CPI), which the Board expects to contribute
to the Company's target return to investors of an IRR in excess of
7 per cent, net of fees and expenses.
A cquisitions
During the year, the Company acquired 7 new wind farms in
Ireland and France. The Board and the Investment Manager considered
each investment in the context of the Company's Investment Policy,
availability of financing and the potential returns to
investors.
Share Issues
During the year, the Company issued 111 million further shares,
raising EUR125 million, through an oversubscribed share placing.
The Investment Manager engaged with analysts and investors
throughout the share issuance process.
The Company is committed to maintaining good communications and
building positive relationships with all stakeholders, including
shareholders, debt providers, analysts, potential investors,
suppliers and the wider communities in which the Group and its
investee companies operate. This includes regular engagement with
the Company's shareholders and other stakeholders by the Board, the
Investment Manager and the Administrator. Regular feedback is
provided to the Board to ensure they understand the views of
stakeholders.
Relations with Shareholders
The Company welcomes the views of shareholders and places great
importance on communication with its shareholders. The Investment
Manager is available at all reasonable times to meet with principal
shareholders and key sector analysts. The Chairman, the Senior
Independent Director and other Directors are also available to meet
with shareholders if required.
All shareholders have the opportunity to put questions to the
Company at the registered address. The AGM of the Company will
provide a forum for shareholders to meet and discuss issues with
the Directors and Investment Manager.
The Board receives comprehensive shareholder reports at all
quarterly Board meetings and regularly monitors the views of
shareholders and the shareholder profile of the Company. The Board
is also kept fully informed of all relevant market commentary on
the Company by the Investment Manager.
Relations with Other Stakeholders
The Company values its relationships with its debt providers.
The Investment Manager ensures the Group continues to meet its debt
covenants and reporting requirements. During the year, the Group
placed a new revolving credit facility with CIBC, RBC and
Santander, and placed new term facilities with CBA, NAB and Natwest
as disclosed in note 13 of the financial statements.
The Investment Manager conducts presentations with analysts and
investors to coincide with the announcement of the Company's annual
and interim results, providing an opportunity for discussions and
queries on the Company's activities, performance and key metrics.
In addition to these semi-annual presentations, 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 Euronext Growth Advisor, NOMAD and 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.
The Company recognises that relationships with suppliers are
enhanced by prompt payment and the Company's Administrator ensures
all payments are processed within the contractual terms agreed with
the individual suppliers.
The Company, via its Investment Manager, has long-term important
relationships with its operational site managers and turbine
operations and maintenance managers and reviews performance,
including health and safety, on a monthly basis. Representatives of
the site manager and SPV Board directors, from the Investment
Manager, visit all operational sites on a regular basis and carry
out safety walks at least once a year on each site.
Similarly, environmental protection issues are reported on every
month by the site managers and annual habitat management plans are
agreed by each SPV board for all sites to ensure that the
environment in and surrounding each wind farm is carefully
protected.
The Directors recognise that the long-term success of the
Company is linked to the success of the communities in which the
Group, and its investee companies, operate. During the year, a
number of community projects were supported by the Company's
investment portfolio companies, further details of which can be
found in the latest ESG report, available on the Company's website:
www.greencoat-renewables.com .
Shareholders may also find Company information or contact the Company through its website
On behalf of the Board
Rónán Murphy
Chairman of the Board
28 February 2021
Audit Committee Report
At the date of this report, the Audit Committee comprised of
Kevin McNamara (Chairman), Emer Gilvarry, and Marco Graziano (with
effect from 30 January 2020). The AIC Code has a requirement that
at least one member of the Audit Committee should have recent and
relevant financial experience and the Audit Committee as a whole
shall have competence relevant to the sector. The Board is
satisfied that the Audit Committee is properly constituted in these
respects. The qualifications and experience of all Audit Committee
members are disclosed in the Board of Directors section.
The Audit Committee operates within clearly defined terms of
reference which were reviewed during the financial year. The
revised terms have been approved by the Board, and include all
matters indicated by the AIC Code and are available for inspection
on the Company's website: www.greencoat-renewables.com .
Audit Committee meetings are scheduled at appropriate times in
the reporting and auditing cycle. The Chairman, other Directors and
third parties may be invited to attend meetings as and when deemed
appropriate.
Meetings
The Audit Committee met 4 times up to 31 December 2020. A
breakdown of Director attendance is set out in the Corporate
Governance Report. BDO attended 2 of the 4 formal Audit Committee
meetings held during the year.
Summary of the Role and Responsibilities of the Audit
Committee
The duties of the Audit Committee include reviewing the Interim
Report, Annual Report and financial statements and any formal
announcements relating to the Company's financial performance.
The Audit Committee is the forum through which the external
Auditor reports to the Board and is responsible for reviewing the
terms of appointment of the Auditor, together with their
remuneration. On an ongoing basis, the Audit Committee is
responsible for reviewing the objectivity of the Auditor along with
the effectiveness of the audit and the terms under which the
Auditor is engaged to perform non-audit services (restricted to the
limited scope review of the Interim Report). The Audit Committee is
also responsible for reviewing the Company's corporate governance
framework, system of internal controls and risk management,
ensuring they are suitable for an investment company.
The Audit Committee reports 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.
Overview
During the year, the Audit Committee's discussions have been
broad ranging. In addition to the 4 formally convened Audit
Committee meetings, during the year, the Audit Committee has had
regular contact and meetings with the Investment Manager, and the
Administrator. These meetings and discussions focused on, but were
not limited to:
-- reviewing the updated risk matrix of the Company;
-- reviewing the Company's corporate governance framework;
-- reviewing the internal controls framework for the Company,
the Administrator and the Investment Manager, considering the need
for a separate internal audit function;
-- considering potential incidents of fraud and the Company's response thereto;
-- considering the ongoing assessment of the Company as a going concern;
-- considering the principal risks and period of assessment for
the longer term viability of the Company;
-- monitoring the ongoing appropriateness of the Company's
status as an investment entity under IFRS 10, in particular
following an acquisition;
-- monitoring compliance with AIFMD, the AIC code and other
regulatory and governance frameworks;
-- reviewing and approving the audit plan in relation to the
audit of the Company's Annual Report and financial statements;
-- monitoring compliance with the Company's policy on the
provision of non-audit services by the Auditor; and
-- reviewing the effectiveness, resources, qualifications and independence of the Auditor.
Financial Reporting
The primary role of the Audit Committee in relation to financial
reporting is to review, with the Investment Manager, the
Administrator and the Auditor, the appropriateness of the Interim
Report and Annual Report and financial statements, 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;
-- amendments to legislation and corporate governance reporting
requirements and accounting treatment of new transactions in the
period;
-- the impact of new and amended accounting standards on the Company's financial statements;
-- whether the Audit Committee believes that proper and
appropriate processes and procedures have been followed in the
preparation of the Interim and Annual Report and financial
statements;
-- consideration and recommending to the Board for approval of
the contents of the annual financial statements and reviewing the
Auditors' report thereon including consideration of whether the
consolidated financial statements are overall fair, balanced and
understandable;
-- material areas in which significant judgements have been
applied or there has been discussion with the Auditor; and
-- any correspondence from regulators in relation to the Company's financial reporting.
BDO attended 2 of the 4 formal Audit Committee meetings held
during the year and have presented their audit findings to the
Audit Committee. Matters typically discussed include the Auditor's
assessment of the transparency and openness of interactions with
the Investment Manager and the Administrator, confirmation that
there has been no restriction in scope placed on them, the
independence of their audit and how they have exercised
professional scepticism.
Significant Issues
The Audit Committee discussed the planning, conduct and
conclusions of the external audit as it proceeded. At the Audit
Committee meeting in advance of the year end, the Audit Committee
discussed and approved the Auditor's audit plan. The Audit
Committee identified the fair value of investments as a key area of
risk of misstatement in the Company's financial statements.
Assessment of the Fair Value of Investments
The Group's accounting policy is to designate investments at
fair value through profit or loss. Therefore, the most significant
risk in the Group's accounts is whether its investments are fairly
valued due to the uncertainty involved in determining the
investment valuations. There is also an inherent risk of management
override as the Investment Manager's fee is calculated based on NAV
as disclosed in note 3 to the consolidated financial statements.
The Investment Manager is responsible for calculating the NAV with
the assistance of the Administrator, in accordance with its
valuation policy and is subject to the approval of its independent
valuation committee.
On a quarterly basis, the Investment Manager provides a detailed
analysis of the NAV highlighting any movements and assumption
changes from the previous quarter's NAV. The Audit Committee
considers and challenges this analysis and the rationale of any
changes made. The Committee has satisfied itself that the key
estimates and assumptions used in the valuation model, which are
disclosed in note 2 to the consolidated financial statements, are
appropriate and that the investments have been fairly valued.
The key estimates and assumptions include the useful life of the
assets, the discount rates, the level of wind resource, the rate of
inflation, the price at which the power and associated benefits can
be sold and the amount of electricity the assets are expected to
produce.
Internal Control
The Audit Committee has established a set of ongoing processes
designed to meet the particular needs of the Company in managing
the risks to which it is exposed.
The process is one whereby the Investment Manager has identified
the key risks to which the Company is exposed, and recorded them on
a risk matrix together with the controls employed to mitigate these
risks. The Audit Committee also has a process in place to identify
emerging risks, such as climate-related risks, and to determine
whether any actions are required. A residual risk rating has been
applied to each risk. The Audit Committee is responsible for
reviewing the risk matrix and associated controls before
recommending to the Board for consideration and approval,
challenging the Investment Manager's assumptions to ensure a robust
internal risk management process.
The Audit Committee considers risk and strategy regularly, and
formally reviewed the updated risk matrix in Q1 2020 and will
continue to do so at least annually. By their nature, these
procedures provide a reasonable, but not absolute, assurance
against material misstatement or loss. Regular reports will be
provided to the Audit Committee highlighting material changes to
risk ratings.
The Audit Committee reviewed the Group's principal risks and
uncertainties as at 30 June 2020, to determine that these were
unchanged from those disclosed in the Company's 2019 Annual Report
and remained the most likely to affect the Group in the second half
of the year.
During the year, the Audit Committee also discussed and reviewed
the internal controls framework in place at the Investment Manager
and the Administrator in depth. Discussions focused on 3 lines of
defence: assurances at operational level; internal oversight; and
independent objective assurance.
The Audit Committee concluded that these frameworks were
appropriate for the identification, assessment, management and
monitoring of financial and regulatory risks, with particular
regard to the protection of the interests of the Company's
shareholders.
Internal Audit
The Audit Committee continues to review the need for an internal
audit function and has decided that the systems, processes and
procedures employed by the Company, Investment Manager and
Administrator, including their own internal controls and
procedures, provide sufficient assurance that an appropriate level
of risk management and internal control is maintained. In addition
to this, the Company's external Depositary provides cash
monitoring, asset verification and oversight services to the
Company. The Investment Manager is a full scope AIFM, regulated by
the FCA in the UK and has a robust framework of internal controls
and an independent compliance function.
The Audit Committee has therefore concluded that Shareholders'
investments and the Company's assets are adequately safeguarded and
an internal audit function specific to the Company is considered
unnecessary.
The Audit Committee is available on request to meet investors in
relation to the Company's financial reporting and internal
controls, should it be deemed appropriate.
External Auditor
Effectiveness of the Audit Process
The Audit Committee assessed the effectiveness of the audit
process by considering BDO's fulfilment of the agreed audit plan
through the reporting presented to the Audit Committee by BDO and
the discussions at the Audit Committee meeting, which highlighted
the major issues that arose during the course of the audit. In
addition, the Audit Committee also sought feedback from the
Investment Manager and the Administrator on the effectiveness of
the audit process. For this financial year, the Audit Committee was
satisfied that there had been appropriate focus and challenge on
the primary areas of audit risk and assessed the quality of the
audit process to be good.
Non-Audit Services
Details of fees paid to BDO during the year are disclosed in
note 5 of the consolidated financial statements. The Audit
Committee approved these fees after a review of the level and
nature of work to be performed and are satisfied that they are
appropriate for the scope of the work required. The Audit Committee
seeks to ensure that any non-audit services provided by the
external Auditor do not conflict with their statutory and
regulatory responsibilities, as well as their independence, before
giving written approval prior to their engagement. The Audit
Committee was satisfied that BDO had adequate safeguards in place
and that provision of these non-audit services did not provide
threats to the Auditor's independence.
The Audit Committee monitors the Group's expenditure on
non-audit services provided by the Company's Auditor who should
only be engaged for non-audit services where they are deemed to be
the most commercially viable supplier and prior approval of the
Audit Committee has been sought.
Independence
The Audit Committee is required to consider the independence of
the external Auditor. In fulfilling this requirement, the Audit
Committee has considered a report from BDO describing its
arrangements to identify, report and manage any conflict of
interest and the extent of non-audit services provided by them.
The Audit Committee has concluded that it considers BDO to be
independent of the Company and that the provision of the non-audit
services described above is not a threat to the objectivity and
independence of the conduct of the audit.
Re-appointment
BDO has been the Company's Auditor from its incorporation on 15
February 2017. The Auditor proposes to rotate the audit partner
responsible for the Group audit every 5 years. The audit partner
will rotate after the conclusion of the 2021 year end audit.
The external audit contract is intended to be put to tender at
least every 10 years. The Audit Committee shall give advance notice
of any retendering plans within the Annual Report. The Audit
Committee has considered the re-appointment of the Auditor and
decided not to put the provision of the external audit out to
tender at this time. As described above, the Audit Committee
reviewed the effectiveness and independence of the Auditor and
remain satisfied that the Auditor provides effective independent
challenge to the Board, the Investment Manager and the
Administrator. The Audit Committee will continue to monitor the
performance of the Auditor on an annual basis and will consider
their independence and objectivity, taking account of appropriate
guidelines.
The Audit Committee has therefore recommended to the Board that
BDO be proposed for re-appointment as the Company's Auditor at the
2021 AGM of the Company.
Annual General Meeting
The Chairman of the Audit Committee will be present at the
Company's AGM to answer questions on the Audit Committee's activity
and matters within the scope of the Audit Committee's
responsibilities.
Kevin McNamara
Chairman of the Audit Committee
28 February 2021
Independent Auditor's Report
To the members of Greencoat Renewables PLC
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Greencoat Renewables
PLC ("Company") and its subsidiaries ("Group") for the financial
year ended 31 December 2020, which comprise the Consolidated
Statement of Comprehensive Income, Consolidated and Company
Statement of Financial Position, Consolidated and Company Statement
of Changes in Equity, Consolidated and Company Statement of Cash
Flows, and the related notes including the summary of significant
accounting policies set out in note 1. The financial reporting
framework that has been applied in their preparation is Irish Law
and International Financial Reporting Standards ("IFRS") as adopted
by the European Union and, as regards the Company financial
statements, as applied in accordance with the provisions of the
Companies Act 2014.
In our opinion:
-- the Group financial statements give a true and fair view of
the assets, liabilities and financial position of the Group as at
31 December 2020 and of its profit for the financial year then
ended;
-- the Company Statement of Financial Position gives a true and
fair view of the assets, liabilities and financial position of the
Company as at 31 December 2020;
-- the Group financial statements have been properly prepared in
accordance with IFRS as adopted by the European Union;
-- the Company financial statements have been properly prepared
in accordance with IFRS as adopted by the European Union as applied
in accordance with the provisions of the Companies Act 2014;
and
-- the Group financial statements and Company financial
statements have been properly prepared in accordance with the
requirements of the Companies Act 2014 and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (Ireland) ("ISAs (Ireland)") and applicable
law. Our responsibilities under those standards are further
described in the Auditor's Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of
the Group and Company in accordance with ethical requirements that
are relevant to our audit of financial statements in Ireland,
including the Ethical Standard as applied to public interest
entities issued by the Irish Auditing and Accounting Supervisory
Authority ("IAASA"), and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current financial year and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Key Audit Matter
The valuation of investments is a subjective accounting estimate
where there is an inherent risk of management override arising
from the investment valuations being prepared by the Investment
Manager, who is remunerated based on the Net Asset Value ("NAV")
of the Company.
The entire investment portfolio is represented by unquoted equity
and loan investments and all investments are individually material
to the financial statements.
Related Disclosures
Refer to:
* Note 1 - Significant accounting policies;
* Note 2 - critical accounting judgments, estimates and
assumptions;
* Note 4 - return on investments; and
* Note 9 - investments at fair value through profit or
loss;
of the accompanying financial statements.
Audit Response
For investments valued using a discounted cash flow model we performed
the following procedures:
* Challenged the appropriateness of the selection and
application of key assumptions in the discounted cash
flow model including discount rate, energy yield,
power price, inflation rate and asset life by
benchmarking to available industry data and
consulting with our internal valuation specialists.
* Agreed energy yield, power price, inflation rate and
asset life used in the model to independent reports.
* For new investments we obtained and reviewed all key
agreements and contracts and considered if they were
accurately reflected in the valuation model;
* For existing investments, we analysed changes in
significant assumptions compared with assumptions
audited in previous periods and vouched these to
independent evidence including available industry
data;
* Used spreadsheet analysis tools to assess the
integrity of the valuation models and track changes
to inputs or structure.
* Agreed cash and other net assets to bank statements
and investee company management accounts, including
interrogating the valuation of the interest rate
swaps to a 3rd party pricing source;
* Considered the accuracy of forecasting by comparing
previous forecasts to actual results.
* We critically evaluated and challenged management's
assessment as to the recoverability of the loan
investments;
* We vouched to loan agreements and verified the terms
of the loan; and
* We have reviewed the performance of the loan
investments during the financial year under review.
Our application of materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our
audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
-- For the purpose of our audit we used overall materiality of
EUR15m, which represents approximately 2% of the Group and
Company's NAV.
-- We applied this threshold, together with qualitative
considerations, to determine the scope of our audit and the nature,
timing and extent of our audit procedures and to evaluate the
effect of misstatements on the Financial Statements as a whole.
-- We chose NAV as the benchmark because of the Group and
Company's asset-based structure. We selected 2% based on our
professional judgment, noting that it is also within the range of
commonly accepted asset-related benchmarks.
-- In addition, we used a specific materiality for the purpose
of testing transactions and balances which impact on the Group's
realised return. Specific materiality of EUR1.4m represents
approximately 10% of the profit for the year.
-- We agreed with the Audit Committee that we would report to
the Audit Committee all audit differences in excess of EUR0.75m, as
well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group's ability to continue as a going concern for a period of at
least twelve months from the date when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
We have nothing to report in respect of the following
information in the annual report, in relation to which the ISAs
(Ireland) require us to report to you whether we have anything
material to add or draw attention to:
-- the disclosures in the annual report that describe the
principal risks and explain how they are being managed or
mitigated;
-- the directors' confirmation in the annual report that they
have carried out a robust assessment of the principal risks facing
the Group and the Company, including those that would threaten its
business model, future performance, solvency or liquidity;
-- the directors' statement in the financial statements about
whether the directors considered it appropriate to adopt the going
concern basis of accounting in preparing the financial statements
and the directors' identification of any material uncertainties
-- to the Group's and the Company's ability to continue to do so
over a period of at least twelve months from the date of approval
of the financial statements;
-- the directors' explanation in the annual report as to how
they have assessed the prospects of the Group and the Company, over
what period they have done so and why they consider that period to
be appropriate, and their statement as to whether they have a
reasonable expectation that the Group and the Company will be able
to continue in operation and meet its liabilities as they fall due
over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or
assumptions.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report other than the financial statements and our auditor's report
thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2014
Based solely on the work undertaken in the course of the audit,
we report that:
-- in our opinion, the information given in the Directors'
report is consistent with the financial statements; and
-- in our opinion, the Directors' report has been prepared in
accordance with the Companies Act 2014.
We have obtained all the information and explanations which we
consider necessary for the purposes of our audit. In our opinion,
the accounting records of the Company were sufficient to permit the
financial statements to be readily and properly audited and the
Company Statement of Financial Position is in agreement with the
accounting records.
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and the
Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the Directors'
report.
We are also required to review:
-- the Directors' statement in relation to going concern and
longer-term viability;
-- the part of the Corporate Governance Statement relating to
the Company's compliance with the
provisions of the AIC Code specified for our review; and
-- certain elements of disclosures in the report to shareholders
by the Board of Directors' remuneration committee.
Also, the Companies Act 2014 requires us to report to you if, in
our opinion, the disclosures of directors' remuneration and
transactions required by sections 305 to 312 of the Act are not
made.
We have nothing to report in this regard.
Respective responsibilities
Responsibilities of directors for the financial statements
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as they determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are
responsible for assessing the Group and Company's ability to
continue as going concerns, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Group
or the Company or to cease operations, or has no realistic
alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (Ireland) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the IAASA's website at:
http://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Desc
ription_of_auditors_responsiblities_for_audit.pdf
This description forms part of our Auditor's report.
The purpose of our audit work and to whom we owe our
responsibilities
Our report is made solely to the Company's members, as a body,
in accordance with section 391 of the Companies Act 2014. Our audit
work has been undertaken so that we might state to the Company's
members those matters we are required to state to them in an
auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members, as a body,
for our audit work, for this report, or for the opinions we have
formed.
Brian Hughes
For and on behalf of BDO
Dublin
Statutory Audit Firm
AI223876
28 February 2021
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
For the year For the year
ended ended
31 December 31 December
2020 2019
Note EUR'000 EUR'000
------------------------------------ ----- ------------- -------------
Return on investments 4 26,466 29,475
Other income 19 3,779 3,015
------------------------------------ ----- ------------- -------------
Total income and gains 30,245 32,490
Operating expenses 5 (8,794) (6,734)
Investment acquisition costs (1,940) (1,397)
------------------------------------ ----- ------------- -------------
Operating profit 19,511 24,359
Finance expense 13 (5,443) (6,025)
------------------------------------ ----- ------------- -------------
Profit for the year before tax 14,068 18,334
Taxation 6 - (1,237)
------------------------------------ ----- ------------- -------------
Profit for the year after tax 14,068 17,097
Profit and total comprehensive
income attributable to:
Equity holders of the Company 14,068 17,097
Earnings per share
------------------------------------ ----- ------------- -------------
Basic and diluted earnings from
continuing operations in the year
(cent) 7 2.21 3.46
------------------------------------ ----- ------------- -------------
The accompanying notes form an integral part of the consolidated
financial statements.
Consolidated Statement of Financial Position
As at 31 December 2020
31 December 2020 31 December 2019
Note EUR'000 EUR'000
----------------------------------- ----- ----------------- -----------------
Non current assets
Investments at fair value through
profit or loss 9 944,352 850,107
----------------------------------- ----- ----------------- -----------------
944,352 850,107
Current assets
Receivables 11 4,095 3,343
Cash and cash equivalents 16,517 6,020
----------------------------------- ----- ----------------- -----------------
20,612 9,363
Current liabilities
Loans and borrowings 13 - (206,000)
Payables 12 (5,343) (3,470)
----------------------------------- ----- ----------------- -----------------
Net current assets /(liabilities) 15,269 (200,107)
Non current liabilities
Loans and borrowings 13 (210,808) -
----------------------------------- ----- ----------------- -----------------
Net assets 748,813 650,000
----------------------------------- ----- ----------------- -----------------
Capital and reserves
Called up share capital 15 7,412 6,306
Share premium account 15 507,476 385,669
Other distributable reserves 161,768 199,936
Retained earnings 72,157 58,089
----------------------------------- ----- ----------------- -----------------
Total shareholders' funds 748,813 650,000
----------------------------------- ----- ----------------- -----------------
Net assets per share (cent) 16 101.0 103.1
----------------------------------- ----- ----------------- -----------------
Authorised for issue by the Board on 28 February 2021 and signed
on its behalf by:
Rónán Murphy Kevin McNamara
Chairman Director
The accompanying notes form an integral part of the consolidated
financial statements.
Company Statement of Financial Position
As at 31 December 2020
31 December
31 December 2020 2019
Note EUR'000 EUR'000
----------------------------------- ----- ----------------- ------------
Non current assets
Investments at fair value through
profit or loss 9 745,907 648,797
----------------------------------- ----- ----------------- ------------
745,907 648,797
Current assets
Receivables 11 3,772 3,015
Cash and cash equivalents 1,545 188
----------------------------------- ----- ----------------- ------------
5,317 3,203
Current liabilities
Payables 12 (2,411) (2,000)
----------------------------------- ----- ----------------- ------------
Net current assets 2,906 1,203
Net assets 748,813 650,000
----------------------------------- ----- ----------------- ------------
Capital and reserves
Called up share capital 15 7,412 6,306
Share premium account 15 507,476 385,669
Other distributable reserves 161,768 199,936
Retained earnings 72,157 58,089
----------------------------------- ----- ----------------- ------------
Total shareholders' funds 748,813 650,000
----------------------------------- ----- ----------------- ------------
Net assets per share (cent) 16 101.0 103.1
----------------------------------- ----- ----------------- ------------
The Company has taken advantage of the exemption under section
304 of the Companies Act 2014 and accordingly has not presented a
Statement of Comprehensive Income for the Company alone. The profit
after tax of the Company for
the year was EUR14,067,469 (2019: EUR17,097,394).
Authorised for issue by the Board on 28 February 2021 and signed
on its behalf by:
Rónán Murphy Kevin McNamara
Chairman Director
The accompanying notes form an integral part of the consolidated
financial statements.
Consolidated and Company Statement of Changes in Equity
For the year ended 31 December 2020
Share Share Other distributable Retained
capital premium reserves earnings Total
------------------------
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------------ ----- --------- --------- -------------------- ---------- ----------
Opening net assets
attributable to
shareholders (1
January 2020) 6,306 385,669 199,936 58,089 650,000
Issue of share capital 15 1,106 123,894 - - 125,000
Share issue costs 15 - (2,087) - - (2,087)
Dividends 8 - - (38,168) - (38,168)
Profit and total
comprehensive income
for the year - - - 14,068 14,068
------------------------ ----- --------- --------- -------------------- ---------- ----------
Closing net assets
attributable to
shareholders 7,412 507,476 161,768 72,157 748,813
------------------------ ----- --------- --------- -------------------- ---------- ----------
After taking account of cumulative unrealised gains of
EUR67,040,313, the total reserves distributable by way of a
dividend as at 31 December 2020 were EUR166,884,139.
For the year ended 31 December 2019
Share Share Other distributable Retained
capital premium reserves earnings Total
------------------------
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------------ ----- --------- --------- -------------------- ---------- ---------
Opening net assets
attributable to
shareholders (1
January 2019) 3,800 120,009 229,153 40,992 393,954
Issue of share capital 15 2,506 270,194 - - 272,700
Share issue costs 15 - (4,534) - - (4,534)
Dividends 8 - - (29,217) - (29,217)
Profit and total
comprehensive income
for the year - - - 17,097 17,097
------------------------ ----- --------- --------- -------------------- ---------- ---------
Closing net assets
attributable to
shareholders 6,306 385,669 199,936 58,089 650,000
------------------------ ----- --------- --------- -------------------- ---------- ---------
The accompanying notes form an integral part of the consolidated
financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
For the year
For the year ended ended
31 December 2020 31 December 2019
Note EUR'000 EUR'000
--------------------------------------- ----- ------------------- -----------------
Net cash flows from operating
activities 17 18,424 15,269
Cash flows from investing activities
Acquisition of investments (123,641) (112,794)
Investment acquisition costs (1,518) (5,398)
Repayment of shareholder loan
investments 9 32,442 29,482
--------------------------------------- ----- ------------------- -----------------
Net cash flows from investing
activities (92,717) (88,710)
Cash flows from financing activities
Issue of share capital 15 125,000 272,700
Payment of issue costs (2,071) (4,390)
Dividends paid 8 (38,168) (29,217)
Amounts drawn down on loan facilities 13 562,074 80,900
Amounts repaid on loan facilities 13 (553,074) (236,931)
Finance costs (8,971) (6,637)
--------------------------------------- ----- ------------------- -----------------
Net cash flows from financing
activities 84,790 76,425
Net increase in cash and cash
equivalents during the year 10,497 2,984
Cash and cash equivalents at the beginning
of the year 6,020 3,036
Cash and cash equivalents at the end
of the year 16,517 6,020
---------------------------------------------- ------------------- -----------------
The accompanying notes form an integral part of the consolidated
financial statements.
Company Statement of Cash Flows
For the year ended 31 December 2020
For the year For the year
ended ended
31 December 2020 31 December 2019
Note EUR'000 EUR'000
--------------------------------------- ----- ----------------- -----------------
Net cash flows from operating
activities 17 (4,607) (3,886)
Cash flows from investing activities
Loans advanced to Group companies 9 (6,900) (268,447)
Repayment of loans advanced to
Group companies 9 38,520 29,450
Repayment of shareholder loan
investments 9 2,658 3,294
Capital contribution to Group
companies 9 (113,075) -
--------------------------------------- ----- ----------------- -----------------
Net cash flows from investing
activities (78,797) (235,703)
Cash flows from financing activities
Issue of share capital 15 125,000 272,700
Payment of issue costs (2,071) (4,390)
Dividends paid 8 (38,168) (29,217)
Finance costs - (75)
--------------------------------------- ----- ----------------- -----------------
Net cash flows from financing
activities 84,761 239,018
Net increase/(decrease) in cash
and cash equivalents during the
year 1,357 (571)
Cash and cash equivalents at the beginning
of the year 188 759
Cash and cash equivalents at the end
of the year 1,545 188
---------------------------------------------- ----------------- -----------------
The accompanying notes form an integral part of the consolidated
financial statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2020
1. Significant accounting policies
Basis of accounting
The consolidated nancial statements have been prepared in
accordance with IFRS to the extent that they have been adopted by
the EU and with those parts of the Companies Act 2014 applicable to
companies reporting under IFRS.
These consolidated nancial statements are presented in Euro
("EUR") which is the currency of the primary economic environment
in which the Group operates and are rounded to the nearest
thousand, unless otherwise stated.
The consolidated nancial statements have been prepared on the
historical cost basis, as modi ed for the measurement of certain
nancial instruments at fair value through pro t or loss. The
nancial statements have been prepared on the going concern basis.
The principal accounting policies are set out below.
New and amended standards and interpretations applied
There were no new standards or interpretations effective for the
first time for periods beginning on or after 1 January 2020 that
had a significant effect on the Group or Company's financial
statements. Furthermore, none of the amendments to standards that
are effective from that date had a significant effect on the
financial statements.
New and amended standards and interpretations not applied
"Interest Rate Benchmark Reform - Phase 2" was issued and will
become effective for accounting periods beginning on or after 1
January 2021. The amendments require additional disclosures that
address issues that might affect financial reporting after the
reform of an interest rate benchmark, including its replacement
with alternative benchmark rates. The impact of this standard is
not expected to have a material impact on the reported results and
financial position of the Group.
Other accounting standards and interpretations have been
published and will be mandatory for the Company's accounting
periods beginning on or after 1 January 2021 or later periods. The
impact of these standards is not expected to be material to the
reported results and financial position of the Group.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Investment Manager's Report. The Group faces a
number of risks and uncertainties, as set out in the Directors'
Report. The financial risk management objectives and policies of
the Group, including exposure to price risk, interest rate risk,
credit risk and liquidity risk are discussed in note 18 to the
financial statements.
The Group continues to meet day-to-day liquidity needs through
its cash resources.
As at 31 December 2020, the Group had net current assets of
EUR15.3 million (2019: net current liabilities of EUR200.1million)
and had cash balances of EUR16.5 million (2019: EUR6.0 million).
This excludes cash balances within investee companies of EUR22.5
million (2019: EUR28.5. million), which are sufficient to meet
current obligations as they fall due. The major cash outflows of
the Group are the payment of dividends and costs relating to the
acquisition of new assets, both of which are discretionary. The
Directors are confident that the Group has sufficient access to
both debt and equity markets in order to fund commitments to
acquisitions and meet the contingent liabilities detailed in note
14 of the financial statements, should they become payable.
The Group had EUR210.8 million (2019: EUR206.0 million) of
outstanding debt as at 31 December 2020. The covenants on the
Company's banking facilities are limited to gearing and interest
cover and the Company is expected to continue to comply with these
covenants going forward.
In the period since early 2020 and up to the date of this
report, the outbreak of COVID-19 has had a negative impact on the
global economy. The Directors and Investment Manager are actively
monitoring this and its potential effect on the Group and its SPVs.
In particular, they have considered the following specific key
potential impacts:
-- Unavailability of key personnel at the Investment Manager or
Administrator;
-- Disruptions to maintenance or repair at the investee company
level; and
-- Allowance for expected counterparty credit losses.
In considering the above key potential impacts of COVID-19 on
the Group and SPV operations, the Directors have assessed these
with reference to the mitigation measures in place. At the Group
level, the key personnel at the Investment Manager and
Administrator have successfully implemented business continuity
plans to ensure business disruption is minimised, including remote
working, and all staff are continuing to assume their day-today
responsibilities.
SPV revenues are derived from the sale of electricity, and
although approximately 44 per cent of the portfolio's revenue in
2021 is exposed to the floating power price, revenue is received
through power purchase agreements in place with large and reputable
providers of electricity to the market and also through government
subsidies. These providers have been contacted by the Investment
Manager to discuss their response to COVID-19 and business
continuity
In the period since early 2020 and up to the date of this
report, there has been no significant impact on revenue and cash
flows of the SPVs. The SPVs have contractual operating and
maintenance agreements in place with large and reputable providers.
Therefore the Directors and the Investment Manager do not
anticipate a threat to the Group's revenue.
Wind farm availability has not been significantly affected: wind
farms may be accessed and operated remotely in some instances;
otherwise social distancing has been possible in large part and
personal protective equipment has been used where not possible, for
instance where major component changes have been necessary. The
Investment Manager is confident that
there are appropriate continuity plans in place at each provider
to ensure that the underlying wind farms are maintained
appropriately and that any faults would continue to be
addressed
in a timely manner.
Based on the assessment outlined above, including the various
risk mitigation measures in place, the Directors do not consider
that the effects of COVID-19 have created a material uncertainty
over the assessment of the Group as a going concern.
The Directors have reviewed Group forecasts and projections
which cover a period of at least 12 months from the date of
approval of this report, taking into account foreseeable changes in
investment and trading performance, which show that the Group has
sufficient financial resources to continue in operation for at
least the next 12 months from the date of approval of this
report.
On the basis of this review, and after making due enquiries, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for at least 12 months from the date of approval of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
Accounting for subsidiaries
The Directors have concluded that the Group has all the elements
of control as prescribed by IFRS 10 "Consolidated Financial
Statements" in relation to all its subsidiaries and that the
Company satis es the criteria to be regarded as an investment
entity as de ned in IFRS 10, IFRS 12 "Disclosure of Interests in
Other Entities" and IAS 27 "Consolidated and Separate Financial
Statements". The three essential criteria are such that the entity
must:
1. Obtain funds from one or more investors for the purpose of
providing these investors with professional investment management
services;
2. Commit to its investors that its business purpose is to
invest its funds solely for returns from capital appreciation,
investment income or both; and
3. Measure and evaluate the performance of substantially all of
its investments on a fair value basis.
In satisfying the second essential criteria, the notion of an
investment time frame is critical. An investment entity should not
hold its investments indefinitely but should have an exit strategy
for their realisation. Although the Company has invested in equity
interests in wind farms that have an indefinite life, the
underlying wind farm assets that it invests in have an expected
life of 30 years. The Company intends to hold these wind farms for
the remainder of their useful life to preserve the capital value of
the portfolio. However, as the wind farms are expected to have no
residual value after their 30 year life, the Directors consider
that this demonstrates a clear exit strategy from these
investments.
Notwithstanding this, IFRS 10 requires subsidiaries that provide
services that relate to the investment entity's investment
activities but are not themselves investment entities to be
consolidated. Accordingly, the annual financial statements include
the consolidated financial statements of the Company and Holdco. In
respect of these entities, intra-Group balances and any unrealised
gains arising from intra-Group transactions are eliminated in
preparing the consolidated financial statements. Unrealised losses
are eliminated unless the costs cannot be recovered. The
consolidated financial statements of subsidiaries that are included
in the consolidated financial statements are included from the date
that control commences until the dates that control ceases.
Subsidiaries are therefore measured at fair value through pro t
or loss, in accordance with IFRS 13 "Fair Value Measurement" and
IFRS 9 as permitted by IAS 27. The nancial support provided by the
Group to its unconsolidated subsidiaries is disclosed in note
9.
Consolidation
Subsidiaries are all entities (including structured entities)
over which the Company has control. The Company controls an entity
when the Company has power over the entity, is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Company. They are derecognised
from the date that control ceases.
The Company applies the acquisition method to account for
business combinations. The consideration transferred for the
acquisition of a subsidiary (for accounting purposes) is the fair
value of the assets transferred, the liabilities incurred to the
former owners of the acquiree and the equity interests issued by
the Company. The consideration transferred includes the fair value
of any asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition
date.
The Company recognises any non-controlling interest in the
acquiree on an acquisition-by-acquisition basis, either at fair
value or at the non-controlling interest's proportionate share of
the recognised amounts of the acquiree's identifiable net
assets.
The following table outlines the consolidated entities.
Registered Owner-ship % Country of
Investment Date of Control Office Incorporation Place of Business
----------- ---------------- ------------------- ------------- --------------- ------------------
Holdco 9 March 2017 Riverside One, Sir 100% Ireland Ireland
John Rogerson's
Quay, Dublin 2
Holdco 1 2 March 2020 Riverside One, Sir 100% Ireland Ireland
John Rogerson's
Quay, Dublin 2
Holdco 2 2 March 2020 Riverside One, Sir 100% Ireland Ireland
John Rogerson's
Quay, Dublin 2
Based on control, the results of Holdco, Holdco 1 and Holdco 2
are consolidated into the Consolidated Financial Statements.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated on
Consolidation. Unrealised losses are also eliminated. When
necessary, amounts reported by subsidiaries have been adjusted to
conform to the Company's accounting policies. During the year, no
such adjustments have been made, given all subsidiaries have
uniform accounting policies.
Acquisition method
The acquisition method is used for all business
combinations.
Steps in applying the acquisition method are:
-- Identification of the acquirer.
-- Determination of the acquisition date.
-- Recognition and measurement of the identifiable assets
acquired, the liabilities assumed and any non-controlling interest
(NCI, formerly called minority interest) in the acquiree.
-- Recognition and measurement of goodwill or a gain from a bargain purchase.
The guidance in IFRS 10 "Consolidated Financial Statements" is
used to identify an acquirer in a business combination, i.e. the
entity that obtains control of the acquiree. An acquirer considers
all pertinent facts and circumstances when determining the
acquisition date, i.e. the date on which it obtains control of the
acquiree. The acquisition date may be a date that is earlier or
later than the closing date.
Financial instruments
Financial assets and nancial liabilities are recognised in the
Group's Statement of Financial Position when the Group becomes a
party to the contractual provisions of the instrument. Financial
assets and nancial liabilities are only offset and the net amount
reported in the Consolidated Statement of Financial Position when
there is a currently enforceable legal right to offset the
recognised amounts and the Group intends to settle on a net basis
or realise the asset and liability simultaneously.
At 31 December 2020 and 2019, the carrying amounts of cash and
cash equivalents, receivables, payables and borrowings re ected in
the nancial statements are reasonable estimates of fair value in
view of the nature of these instruments or the relatively short
period of time between the original instruments and their expected
realisation. The fair value of advances and other balances with
related parties which are short-term or repayable on demand is
equivalent to their carrying amount.
Financial assets
The classi cation of nancial assets at initial recognition
depends on the purpose for which the nancial asset was acquired and
its characteristics.
All nancial assets are initially recognised at fair value. All
purchases of nancial assets are recorded at the date on which the
Group and the Company became party to the contractual requirements
of the nancial asset.
Loans and receivables
These assets are non-derivative nancial assets with xed or
determinable payments that are not quoted in an active market. They
principally comprise cash and trade and other receivables and they
are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest rate method, less
provision for impairment. Transaction costs are recognised in the
Consolidated Statement of Comprehensive Income as incurred. The
Group and Company assesses whether there is any objective evidence
that nancial assets are impaired at the end of each reporting
period. If any such evidence exists, the amount of the impairment
loss is measured as the difference between the asset's carrying
amount and the present value of estimated future cash ows,
discounted at the original effective interest rate. The amount of
any impairment is recognised in the Consolidated Statement of
Comprehensive Income. Impairment provisions for loans and
receivables are recognised based on a forward looking expected
credit loss model. All financial assets assessed under this model
are immaterial to the financial statements.
Investments at Fair Value Through Pro t or Loss
Investments are designated upon initial recognition as held at
fair value through pro t or loss. Movements in fair value are
recognised in the Consolidated Statement of Comprehensive Income
during the reporting period. As shareholder loan investments form
part of a managed portfolio of assets whose performance is
evaluated on a fair value basis, loan investments are designated at
fair value in line with equity investments.
The Company's loan and equity investments in Holdco are held at
fair value through pro t or loss. Gains or losses resulting from
the movement in fair value are recognised in the Company's
Statement of Comprehensive Income at each valuation point.
Financial assets are recognised/derecognised at the date of the
purchase/disposal. Investments are initially recognised at cost,
being the fair value of consideration given. Transaction costs are
recognised in the Consolidated Statement of Comprehensive Income as
incurred.
Fair value is de ned as the amount for which an asset could be
exchanged between knowledgeable willing parties in an arm's length
transaction. Fair value is calculated on an unlevered, discounted
cash ow basis in accordance with IFRS 13 and IFRS 9. Gains or
losses resulting from the revaluation of investments are recognised
in the Consolidated Statement of Comprehensive Income.
De-recognition of financial assets
A financial asset (in whole or in part) is derecognised
either:
-- When the Group has transferred substantially all the risks and rewards of ownership; or
-- When it has neither transferred or retained substantially all
the risks and rewards and when it no longer has control over the
assets or a portion of the asset; or
-- When the contractual right to receive cash flow has expired.
Financial liabilities
Financial liabilities are classi ed according to the substance
of the contractual agreements entered into.
All nancial liabilities are initially recognised at fair value
net of transaction costs incurred. All nancial liabilities are
recorded on the date on which the Group becomes party to the
contractual requirements of the nancial liability.
All loans and borrowings are initially recognised at cost, being
fair value of the consideration received, less issue costs where
applicable. After initial recognition, all interest-bearing loans
and borrowings are subsequently measured at amortised cost using
the effective interest rate method. Loan balances as at the year
end have not been discounted to re ect amortised cost, as the
amounts are not materially different from the outstanding
balances.
The Group's other nancial liabilities measured at amortised cost
include trade and other payables and other short term monetary
liabilities which are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest rate method.
A nancial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on de-recognition is taken to the
Consolidated Statement of Comprehensive Income.
Finance expenses
Borrowing costs are recognised in the Consolidated Statement of
Comprehensive Income in the period to which they relate on an
accruals basis using the effective interest rate method.
Share capital
Financial instruments issued by the Company are treated as
equity if the holder has only a residual interest in the assets of
the Company after the deduction of all liabilities. The Company's
ordinary shares are classi ed as equity instruments.
Share issue costs of the Company directly attributable to the
issue and listing of shares are charged to the share premium
account. Share issue costs include those incurred in connection
with the placing and admission which include fees payable under a
placing agreement, legal costs and any other applicable
expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held
on call with banks and other short-term highly liquid deposits with
original maturities of 3 months or less, that are readily
convertible to a known amount of cash and are subject to an insigni
cant risk of changes in value.
Foreign currencies
Transactions in foreign currencies are translated at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
reporting date are translated at the foreign exchange rate ruling
at that date. Foreign exchange differences arising on translation
are recognised in the Consolidated Statement of Comprehensive
Income.
Dividends
Dividends payable are recognised as distributions in the
Consolidated financial statements when the Company's obligation to
make payment has been established.
Income recognition
Interest income on shareholder loan investments is recognised
when the Group's entitlement to receive payment is established.
Other income is accounted for on an accruals basis.
Gains or losses resulting from the movement in fair value of the
Group's and Company's investments held at fair value through pro t
and loss are recognised in the Consolidated Statement of
Comprehensive Income at each valuation point.
Expenses
Expenses are accounted for on an accruals basis.
Taxation
Under the current system of taxation in Ireland, the Company is
liable to taxation on its operations in Ireland.
Current tax is the expected tax payable on the taxable income
for the period, using tax rates that have been enacted or
substantively enacted at the date of the Consolidated Statement of
Financial Position.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences between the carrying amounts of assets and
liabilities in the nancial statements and the corresponding tax
bases used in the computation of taxable pro t. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable pro ts will be available against
which deductible temporary differences can be utilised.
Deferred tax assets and liabilities are not recognised if the
temporary differences arise from goodwill or from the initial
recognition of other assets and liabilities in a transaction that
affects neither the tax pro t nor the accounting pro t. Deferred
tax liabilities are recognised for taxable temporary differences
arising on investments, except where the Company is able to control
the timing of the reversal of the difference and it is probable
that the temporary difference will not reverse in the foreseeable
future. Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is settled or
the asset is realised. Deferred tax is charged or credited to the
Consolidated Statement of Comprehensive Income except when it
relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off tax assets against tax
liabilities and when they relate to income taxes levied by the same
taxation authority and the Company intends to settle its current
tax assets and liabilities on a net basis. Deferred tax assets and
liabilities are not discounted.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors, as a
whole.
The key measure of performance used by the Board to assess the
Group's performance and to allocate resources is the total return
on the Group's net assets, as calculated under IFRS, and therefore
no reconciliation is required between the measure of profit or loss
used by the Board and that contained in the Consolidated financial
statements.
For management purposes, the Group is organised into one main
operating segment, which invests in wind farm assets.
The Group is engaged in a single segment of business, being
investment in renewable infrastructure to generate investment
returns while preserving capital. The Group presents the business
as a single segment comprising a homogeneous portfolio.
2. Critical accounting judgements, estimates and assumptions
The preparation of the nancial statements requires the
application of estimates and assumptions which may affect the
results reported in the nancial statements. Estimates, by their
nature, are based on judgement and available information.
Classification of an investment entity
One area of judgement relates to the Company's classi cation as
an investment entity as de ned in IFRS 10, IFRS 12 and IAS 27. This
conclusion involved a degree of judgement and assessment as to
whether the Company met the criteria outlined in the accounting
standards. IFRS 10 requires that a Company has to ful l 3 criteria
to be an investment entity:
-- Obtains funds from one or more investors for the purpose of
providing those investor(s) with investment management
services;
-- Commits to its investor(s) that its business purpose is to
invest funds solely for returns from capital appreciation,
investment income, or both; and
-- Measures and evaluates the performance of substantially all
of its investments on a fair value basis.
IFR S 10 also determines that an investment entity would have
the following typical characteristics:
-- It has more than one investment;
-- It has more than one investor;
-- It has investors that are not related parties; and
-- It has ownership interest in the form of equity or similar interests.
An entity that does not display all of the above characteristics
could, nevertheless, meet the de nition of an investment entity.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying value of assets and
liabilities are those used to determine the fair value of the
investments as disclosed in note 9 to the financial statements.
The Directors have concluded that the Company meets the de
nition of an investment entity.
Fair value of investments
The key assumptions that have a signi cant impact on the
carrying value of investments that are valued by reference to the
discounted value of future cash ows are the useful life of the
assets, the discount rates, the level of wind resource, the rate of
in ation, the price at which the power and associated bene ts can
be sold and the amount of electricity the assets are expected to
produce. A sensitivity analysis of these assumptions is included in
note 9.
Useful lives are based on the Investment Manager's estimates of
the period over which the assets will generate revenue which are
periodically reviewed for continued appropriateness. The standard
assumption used for the useful life of a wind farm is 30 years,
which is commonly used by similar investment companies that invest
in operating wind farms. Other factors for consideration are the
lengths of site leases and planning permission of the wind farms,
which the Investment Manager monitors closely. The weighted average
lease length across the portfolio is 30 years with many leases
having options to extend and planning permission across the
portfolio is between 20 and 25 years from commissioning. The
Investment Manager fully expects to be able to renew leases and
planning.
The discount rates are subjective and therefore it is feasible
that a reasonable alternative assumption may be used resulting in a
different value. The discount rates applied to the cash ows are
reviewed annually by the Investment Manager to ensure they are at
the appropriate level. The Investment Manager will take into
consideration market transactions, where of similar nature, when
considering changes to the discount rates used.
The revenues and expenditure of the investee companies are
frequently, partly or wholly subject to indexation and an
assumption is made that in ation will increase at a long-term
rate.
The price at which the output from the revenue generating assets
is sold is a factor of both wholesale electricity prices and the
revenue received under Irish and French government support regimes.
Future power prices are estimated using external third party
forecasts which take the form of specialist consultancy reports,
which reflect various factors including gas prices, carbon prices
and renewables deployment, each of which reflect the global
response to climate change. The future power price assumptions are
reviewed as and when these forecasts are updated. There is an
inherent uncertainty in future wholesale electricity price
projection .
Speci cally commissioned external reports are used to estimate
the expected electrical output from the wind farm assets taking
into account the expected average wind speed at each location and
generation data from historical operation. The actual electrical
output may differ considerably from that estimated in such a report
mainly due to the variability of actual wind to that modelled in
any one period. Assumptions around electrical output will be
reviewed only if there is good reason to suggest there has been a
material change in this expectation.
3. Investment management fees
Under the terms of the Investment Management Agreement, the
Investment Manager is entitled to a management fee from the
Company, which is calculated quarterly in arrears in accordance
with the Investment Management Agreement.
The Fee shall be calculated in respect of each quarter and in
each case based upon the NAV:
-- on that part of the NAV up to and including EUR1 billion, an
amount equal to 0.25 per cent of such part of the NAV; and
-- on that part of the NAV in excess of EUR1 billion, an amount
equal to 0.2 per cent of such part of the NAV.
Investment management fees paid or accrued in the years ended 31
December 2020 and 31 December 2019 were as follows:
For the year
ended For the year ended
31 December 2020 31 December 2019
EUR'000 EUR'000
---------------------------- ----------------- -------------------
Investment management fees 6,522 5,221
----------------------------- ----------------- -------------------
6,522 5,221
---------------------------- ----------------- -------------------
As at 31 December 2020, EUR1,685,383 was payable in relation to
investment management fees (2019: EUR1,409,550).
4. Return on investments
For the year For the year
ended ended
31 December 2020 31 December 2019
EUR'000 EUR'000
----------------------------------------- ----------------- -----------------
Interest on shareholder loan investment
(note 19) 12,189 11,917
Dividends received (note 19) 15,311 3,950
Unrealised movement in fair value
of investments (note 9) (1,034) 10,685
Gain on adjustment to purchase price
of investments (note 9) - 2,923
------------------------------------------ ----------------- -----------------
26,466 29,475
----------------------------------------- ----------------- -----------------
5. Operating expenses
For the year For the year
ended ended
31 December 2020 31 December 2019
EUR'000 EUR'000
-------------------------------------------- ----------------- -----------------
Investment management fees (note
3) 6,522 5,221
Other expenses 1,607 928
Group and SPV administration fees 339 327
Non-executive Directors' remuneration 254 200
Fees to the Company's Auditor:
for audit of the statutory financial
statements 69 55
for other services 3 3
--------------------------------------------- -----------------
8,794 6,734
-------------------------------------------- ----------------- -----------------
The fees to the Company's Auditor include EUR3,000 (2019:
EUR3,000) paid in relation to a limited review of the Interim
Report during the year.
6. Taxation
For the year ended For the year ended
31 December 2020 31 December 2019
EUR'000 EUR'000
---------- ------------------- -------------------
Taxation - 1,237
---------- ------------------- -------------------
The tax reconciliation is explained below.
For the year ended For the year ended
31 December 2020 31 December 2019
EUR'000 EUR'000
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year before taxation 14,068 18,334
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year multiplied by the standard rate of corporation tax of
12.5 per cent 1,758 2,292
Tax on income at a higher rate 142 -
Movement in deferred tax asset - 1,237
Fair value movements (not subject to taxation) (214) (1,701)
Dividends received (not subject to taxation) (1,914) (494)
Expenditure not deductible for tax purposes 504 230
Receipt of tax losses from unconsolidated subsidiaries (276) (327)
---------------------------------------------------------------------------- ------------------- -------------------
- 1,237
---------------------------------------------------------------------------- ------------------- -------------------
7. Earnings per share
For the year For the year
ended ended
31 December 31 December
2020 2019
------------------------------------- ------------- -------------
Profit attributable to equity
holders of the Company - EUR'000 14,068 17,097
Weighted average number of ordinary
shares in issue 636,966,488 493,861,074
-------------------------------------- ------------- -------------
Basic and diluted earnings from
continuing operations in the year
(cent) 2.21 3.46
-------------------------------------- ------------- -------------
8. Dividends declared with respect to the year
Interim dividends paid during the year ended 31 December 2020 Dividend per Total
Share Dividend
cent EUR'000
--------------------------------------------------------------- ------------- ----------
With respect to the quarter ended 31 December 2019 1.5075 9,506
With respect to the quarter ended 31 March 2020 1.5150 9,554
With respect to the quarter ended 30 June 2020 1.5150 9,554
With respect to the quarter ended 30 September 2020 1.5150 9,554
6.0525 38,168
--------------------------------------------------------------- ------------- ----------
Interim dividends declared after 31 December 2020 and not accrued in the year Dividend per Total
Share Dividend
cent EUR'000
------------------------------------------------------------------------------- ------------- ----------
With respect to the quarter ended 31 December 2020 1.5150 11,230
------------------------------------------------------------------------------- ------------- ----------
1.5150 11,230
------------------------------------------------------------------------------- ------------- ----------
On 28 January 2021, the Company announced a dividend of 1.5150
cent per share with respect to the quarter ended 31 December 2020,
bringing the total dividend declared with respect to the year to 31
December 2020 to 6.06 cent per share. The record date for the
dividend was 5 February 2021 and the payment date was 26 February
2021.
The following table shows dividends paid in the prior year.
Interim dividends paid during the year ended 31 December 2019 Dividend per Total
Share Dividend
cent EUR'000
--------------------------------------------------------------- ------------- ----------
With respect to the quarter ended 31 December 2018 1.5000 5,700
With respect to the quarter ended 31 March 2019 1.5075 7,839
With respect to the quarter ended 30 June 2019 1.5075 7,839
With respect to the quarter ended 30 September 2019 1.5075 7,839
--------------------------------------------------------------- ------------- ----------
6.0225 29,217
--------------------------------------------------------------- ------------- ----------
9. Investments at fair value through profit or loss
Loans Equity interest Total
Group as at 31 December 2020 EUR'000 EUR'000 EUR'000
-------------------------------- ---------- ---------------- ----------
Opening balance 435,336 414,771 850,107
Additions 98,578 25,063 123,641
Shareholder loan interest
capitalised (note 19) 1,339 - 1,339
Repayment of shareholder
loan investments (note 19) (32,442) - (32,442)
Unrealised movement in fair
value of investments (note
4) 2,741 (1,034) 1,707
-------------------------------- ---------- ---------------- ----------
505,552 438,800 944,352
-------------------------------- ---------- ---------------- ----------
Loans Equity interest Total
Group as at 31 December 2019 EUR'000 EUR'000 EUR'000
-------------------------------- ---------- ---------------- ------------
Opening balance 419,016 338,383 757,399
Additions 49,704 65,703 115,407
Repayment of shareholder
loan investments (note 19) (29,482) - (29,482)
Adjustment to purchase price
of investments (note 14) - (2,923) (2,923)
Gain on adjustment to purchase
price of investment (note
14) - 2,923 2,923
Unrealised movement in fair
value of investments (note
4) (3,902) 10,685 6,783
--------------------------------
435,336 414,771 850,107
-------------------------------- ---------- ---------------- ------------
The unrealised movement in fair value of investments of the
Group during the year were made up as follows:
For the year For the year
ended ended
31 December 31 December
2020 2019
EUR'000 EUR'000
------------------------------------------- ------------- -------------
Decrease in valuation of investments (31,998) (14,008)
Movement in swap fair values within
SPVs 511 (1,627)
Repayment of debt at SPV level 14,009 8,212
Repayment of shareholder loan investments
(note 19) 32,442 29,482
Movement in cash balances of SPVs (14,798) (16,912)
Investment acquisition costs (1) 1,541 1,636
-------------------------------------------- -------------
1,707 6,783
------------------------------------------- ------------- -------------
(1) EUR399k of acquisition costs were not related to investments
acquired in the current year as well as accrual adjustments from
previous years.
Loans Equity interest Total
Company as at 31 December
2020 EUR'000 EUR'000 EUR'000
-------------------------------- ---------- ---------------- ------------
Opening balance 551,968 96,829 648,797
Loans advanced to Holdco (note
19) 6,900 - 6,900
Loans repaid by Holdco. (note
19) (38,520) - (38,520)
Loans repaid by wind farm
SPVs (note 19) (2,658) - (2,658)
Capital contribution to Group
companies (note 19) - 113,075 113,075
Unrealised movement in fair
value of investments - 18,313 18,313
-------------------------------- ---------- ---------------- ------------
517,690 228,217 745,907
-------------------------------- ---------- ---------------- ------------
Loans Equity interest Total
Company as at 31 December
2019 EUR'000 EUR'000 EUR'000
-------------------------------- ---------- ---------------- ----------
Opening balance 316,265 76,269 392,534
Loans advanced to Holdco (note
19) 268,447 - 268,447
Loans repaid by Holdco (note
19) (29,450) - (29,450)
Loans repaid by wind farm
SPVs (note 19) (3,294) - (3,294)
Unrealised movement in fair
value of investments - 20,560 20,560
--------------------------------
551,968 96,829 648,797
-------------------------------- ---------- ---------------- ----------
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level.
The level of fair value hierarchy which the financial assets or
financial liabilities are recognised is on the basis of the lowest
level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in their
entirety into only one of the following 3 levels:
-- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the assets or liabilities, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
-- Level 3 - inputs for assets or liabilities that are not based
on observable market data (unobservable inputs).
The determination of what constitutes 'observable' requires
significant judgement by the Group. The Group considers observable
data to be market data that is readily available, regularly
distributed or updated, reliable and verifiable, not proprietary,
and provided by independent sources that are actively involved in
the relevant market.
The only financial instruments held at fair value are the
investments held by the Group in the SPVs, which are fair valued at
each reporting date. The Group's investments have been classified
within level 3 as the investments are not traded and contain
unobservable inputs. The Company's investments are all considered
to be level 3 assets. As the fair value of the Company's equity and
loan investments in Holdco is ultimately determined by the
underlying fair values of the SPV investments, the Company's
sensitivity analysis of reasonably possible alternative input
assumptions is the same as for the Group.
Due to the nature of the investments, they are always expected
to be classified as level 3. There have been no transfers between
levels during the year ended 31 December 2020.
Any transfers between the levels would be accounted for on the
last day of each financial period.
The Investment Manager carries out the asset valuations, which
form part of the NAV calculation. These asset valuations are based
on discounted cash flow methodology in line with IPEV Valuation
Guidelines and adjusted where appropriate, given the special nature
of wind farm investments.
Valuations are derived using a discounted cashflow methodology
in line with IPEV Valuation Guidelines and take into account, inter
alia, the following:
-- due diligence findings where relevant;
-- the terms of any material contracts including PPAs;
-- asset performance;
-- power price forecast from a leading market consultant; and
-- the economic, taxation or regulatory environment.
The DCF valuation of the Group's investments represents the
largest component of GAV and the key sensitivities are considered
to be the discount rate used in the DCF valuation and long-term
assumptions in relation to inflation, energy yield, power prices,
and asset life.
The base case discount rate is a blend of a lower discount rate
for fixed cash flows and a higher discount rate for merchant cash
flows. The blended discount rate reduced by 0.2 per cent from 31
December 2019 reflecting market valuations observed through 2020.
The blended discount rate as at 31 December 2020 remains within 6
and 7 per cent, which is considered to be an appropriate base case
for sensitivity analysis. A variance of +/- 0.25 per cent is
considered to be a reasonable range of alternative assumptions for
discount rate.
The base case long term CPI assumption is 2.0 per cent for both
Irish and French assets.
Base case energy yield assumptions are P50 (50 per cent
probability of exceedance) forecasts produced by expert consultants
based on long term wind data and operational history. The P90 (90
per cent probability of exceedance over a 10 year period) and P10
(10 per cent probability of exceedance over a 10 year period)
sensitivities reflect the future variability of wind and the
uncertainty associated with the long term data source being
representative of the long term mean.
Long term power price forecasts are provided by leading market
consultants, updated quarterly and adjusted by the Investment
Manager where more conservative assumptions are considered
appropriate. The independent forecasts are never adjusted upwards.
Base case real power prices increase from approximately EUR57/MWh
(2030) to approximately EUR62/MWh (2040) in Ireland and
approximately EUR50/MWh (2030) to approximately EUR55/MWh (2040) in
France. The sensitivity below assumes a 10 per cent increase or
decrease in power prices relative to the base case for every year
of the asset life.
The base case asset life is 30 years. The sensitivity below
assumes that asset life may be 5 years shorter or longer than the
base case, which is impacted by technical durability of the wind
farm components and commercial aspects of each investment,
including the renewals of site leases, planning permission and grid
connection agreements.
The base case valuation assumption for Irish wind farm portfolio
is that all grid connection conditions have been appropriately
satisfied for the wind farms to considered exempted developments,
which do not require specific planning permission. The independent
planning authorities in Ireland may deem these as developments
rather than exempted developments, which would require the
appropriate planning permission. This could potentially impair the
fair value of the affected investments due to any potential costs
to regularise planning, which are expected to be immaterial.
Sensitivity analysis
The fair value of the Group's investments is EUR944,352,444
(2019: EUR850,106,884). The following analysis is provided to
illustrate the sensitivity of the fair value of investments to a
change in an individual input, while all other variables remain
constant. The Board considers these changes in inputs to be within
reasonable expected ranges. This is not intended to imply the
likelihood of change or that possible changes in value would be
restricted to this range.
Change in fair value Change in NAV per
Input Base case Change in input of investments share
---------------- ------------------------ ------------------------ ----------------------- -----------------------
EUR'000 cent
Discount rate 6 - 7 per cent + 0.25 per cent (20,824) (2.8)
- 0.25 per cent 21,528 2.9
Energy yield P50 10 year P90 (62,049) (8.4)
10 year P10 61,713 8.3
Forecast by leading
Power price consultant - 10 per cent (50,271) (6.8)
+ 10 per cent 50,271 6.8
Inflation rate 2.00 per cent - 0.5 per cent (35,854) (4.8)
+ 0.5 per cent 39,781 5.4
- 5
Asset Life 30 years years (84,281) (11.3)
+ 5 years 68,235 9.2
The sensitivities above are assumed to be independent of each
other. Combined sensitivities are not presented.
10. Unconsolidated subsidiaries, associates and joint
ventures
The following table shows subsidiaries of the Group. As the
Company is regarded as an Investment Entity as referred to in note
1, these subsidiaries have not been Consolidated in the preparation
of the Consolidated financial statements:
Ownership Interest as at
Investment Place of Business Registered Office 31 December 2020
----------------------------- -------------------- ---------------------------- -------------------------
Riverside One, Sir John
Ballybane Windfarms Limited Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Beam Wind Limited Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Carrickallen Wind Limited Ireland Rogerson's Quay, Dublin 2 50%
6(th) Floor, South Bank
Cloosh Valley Wind Farm House, Barrow Street,
Holdings DAC Ireland Dublin 4 75%
Riverside One, Sir John
Cnoc Windfarms Limited Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Gortahile Windfarm Limited Ireland Rogerson's Quay, Dublin 2 100%
Killala Community Wind Farm Riverside One, Sir John
DAC Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Killhills Windfarm Limited Ireland Rogerson's Quay, Dublin 2 100%
Knockacummer Wind Farm Riverside One, Sir John
Limited Ireland Rogerson's Quay, Dublin 2 100%
Knocknalour Wind Farm Riverside One, Sir John
Holdings Limited Ireland Rogerson's Quay, Dublin 2 100%
Kostroma Holdings Limited Riverside One, Sir John
(1) Ireland Rogerson's Quay, Dublin 2 100%
Lisdowney Wind Farms Riverside One, Sir John
Limited Ireland Rogerson's Quay, Dublin 2 100%
Meenaward Wind Farm Limited Riverside One, Sir John
(2) Ireland Rogerson's Quay, Dublin 2 100%
Monaincha Sigatoka Wind Riverside One, Sir John
Holdings DAC (3) Ireland Rogerson's Quay, Dublin 2 100%
Parc Eolien Des Tournevents 20, Avenue de la Paix, 67000
SAS (4) France Strasbourg, France 100%
Parc Eolien Des Courtibeaux 20, Avenue de la Paix, 67000
SAS (5) France Strasbourg, France 100%
Two Gateway, East Wall Road,
Raheenleagh Power DAC Ireland Dublin 3 50%
Seahound Wind Developments Riverside One, Sir John
Limited (6) Ireland Rogerson's Quay, Dublin 2 100%
Dublin Road,
Sliabh Bawn Wind Holdings Newtownmountkennedy, Co.
DAC Ireland Wicklow 25%
Société
d'Exploitation du Parc 20, Avenue de la Paix, 67000
Eolien du Tonnerois (7) France Strasbourg, France 100%
Tullynamoyle Wind Farm II Riverside One, Sir John
Limited Ireland Rogerson's Quay, Dublin 2 100%
(1) The Group's investment in Glanaruddery is held through
Kostroma Holdings Limited
(2) The Group's investment in Beam Hill Extension is held
through Meenaward Wind Farm Limited
(3) The Group's investments in Monaincha and Garranereagh are
held through Monaincha Sigatoka Wind Holdings DAC
(4) The Group's investment in Pasilly is held through Parc
Eolien Des Tournevents SAS
(5) The Group's investment in Saint Martin is held through Parc
Eolien Des Courtibeaux SAS
(6) The Group's investment in Letteragh is held through Seahound
Wind Developments Limited
(7) The Group's investment in Sommette is held through Société
d'Exploitation du Parc Eolien du Tonnerois
Security deposits and guarantees provided by the Group on behalf
of its investments are as follows:
Provider of security Investment Beneficiary Nature Purpose Amount
EUR'000
--------------------------------------------------------------------- --------
The Company Killhills AIB Cash Planning 100
---------------------- ------------ ------------- -------- ---------- --------
100
--------------------------------------------------------------------- --------
The fair value of cash security deposits are as disclosed in the
table above.
11. Receivables
31 December 2020 31 December
2019
Group EUR'000 EUR'000
--------------------- ----------------- ------------
Accrued income 3,774 2,959
Sundry receivables 218 180
VAT receivable 58 127
Prepayments 45 77
--------------------- ----------------- ------------
4,095 3,343
-------------------- ----------------- ------------
31 December 2020 31 December 2019
Company EUR'000 EUR'000
-------------------------- ----------------- -----------------
Due from wind farm SPVs 3,713 2,939
Prepayments 34 28
VAT receivable 25 22
Accrued income - 26
----------------- -----------------
3,772 3,015
------------------------- ----------------- -----------------
The Company has reviewed the receivable from wind farm SPV's in
accordance with IFRS 9 "Financial Instruments" and has not
accounted for any expected credit losses. At the 28 February 2021,
the current balance outstanding is EURnil.
12. Payables
31 December 2020 31 December 2019
Group EUR'000 EUR'000
------------------------------------ ----------------- -----------------
Investment management fee payable 1,685 1,410
Acquisition costs payable 1,389 1,007
Other payables 1,325 722
Loan interest payable 556 124
Commitment fee payable 224 36
Share issue costs payable 57 171
Other finance costs payable 7 -
5,343 3,470
----------------------------------- ----------------- -----------------
31 December 2020 31 December 2019
Company EUR'000 EUR'000
------------------------------------ ----------------- -----------------
Investment management fee payable 1,685 1,410
Other payables 569 419
Share issue costs payable 157 171
2,411 2,000
----------------------------------- ----------------- -----------------
13. Loans and borrowings
The Company did not hold any loans or borrowings at 31 December
2020 (2019: EURnil).
31 December 2020 31 December 2019
Group at 31 December 2020 EUR'000 EUR'000
-------------------------------------- ----------------- -----------------
Opening balance 206,000 362,031
Revolving Credit Facility
Drawdowns 362,074 80,900
Repayments (553,074) (236,931)
Finance costs capitalised during (2,897) -
the year
Amortisation 725 -
Term debt facilities
Drawdowns 200,000 -
Finance costs capitalised during (2,120) -
the year
Amortisation 100 -
Closing balance 210,808 206,000
-------------------------------------- ----------------- -----------------
Reconciled as:
Current liabilities - 206,000
-------------------------------------- ----------------- -----------------
Non-current liabilities 210,808 -
-------------------------------------- ----------------- -----------------
For the year For the year
ended 31 December ended 31 December
2020 2019
EUR'000 EUR'000
-------------------------------- ------------------- -------------------
Loan interest 2,900 5,266
Professional fees 1,139 36
Amortised facility arrangement
fees 825 139
Commitment fees 531 584
Other facility fees 48 -
5,443 6,025
-------------------------------- ------------------- -------------------
In relation to non-current loans and borrowings, the Directors
are of the view that the current market interest rate is not
significantly different to the respective instrument's contractual
interest rates therefore the fair value of the loans and borrowings
at the end of the reporting periods is not significantly different
from their carrying amounts.
On 2 April 2020, the Group placed a new EUR300 million revolving
credit facility with CIBC, RBC and Santander with a refreshed
3-year tenor and a margin of 1.3 per cent per annum plus EURIBOR.
The Group is obliged to pay a quarterly commitment fee of 0.46 per
cent per annum of the undrawn commitment available under the
facility. Lenders' security consists of comprehensive debentures
incorporating a fixed and floating charge over the Group including
a charge over the Group's bank accounts and shares in the
underlying investments.
As at 31 December 2020, the principal balance of the facility
was EUR15,000,000 gross of capitalised facility arrangement fees
(2019: EUR206,000,000), accrued interest was EUR5,284 (2019:
EUR123,600) and the outstanding commitment fee was EUR223,662
(2019: EUR36,540).
On 7 October 2020, the Group entered into new 5-year term debt
arrangements with CBA, NAB and Natwest with associated interest
rate swaps. Details of the Group's term debt facilities and
associated interest rate swaps are set out in the below table:
Loan Swap fixed Loan
Provider Maturity date margin rate principal Accrued interest at 31 December 2020
% % EUR'000 EUR'000
--------------------------- -------- ----------- ----------- -------------------------------------
CBA 7 October 2025 1.55 (0.399) 75,000 206
NAB 7 October 2025 1.55 (0.399) 75,000 206
Natwest 7 October 2025 1.55 (0.396) 50,000 138
200,000 550
--------------------------- -------- ----------- ----------- -------------------------------------
These loans contain swaps that are contractually linked.
Accordingly they have been treated as single fixed rate loan
agreements, which effectively set interest payable at fixed
rates.
All borrowing ranks pari passu with a debenture over the assets
of Holdco, Holdco 1 and Holdco 2 and a floating charge over Holdco,
Holdco 1 and Holdco 2's bank accounts.
14. Contingencies & Commitments
At the time of acquisition, wind farms which had less than 12
months' operational data may have a wind energy true-up applied,
whereby the purchase price for these wind farms may be adjusted so
that it is based on a 2 year operational record, once operational
data has become available.
In November 2019, the Group acquired Killala wind farm for an
initial consideration of EUR37.2 million for the 5 operating
turbines on the site. An additional turbine has recently been
constructed and the Group paid further consideration of EUR6.7
million in January 2021 to the existing developer after the final
turbine became operational.
The following wind energy true-ups remain outstanding and the
maximum adjustments are as follows: Letteragh: EUR2,500,000 and,
Killala: EUR2,000,000.
During the year, the wind energy true up for Knocknalour was
also agreed which resulted in no net payment.
In December 2020, the Group entered into an agreement to acquire
the Cloghan and Taghart wind farms for a headline consideration of
EUR123 million. The investment is scheduled to complete in late
2022 once the wind farms are fully operational.
15. Share capital - ordinary shares
At 31 December 2020, the Company had authorised share capital of
2,000,000,000 ordinary shares of EUR0.01 each.
Number
Issued and fully of shares
Date paid issued Share capital Share premium Total
EUR'000 EUR'000 EUR'000
----------------------------------- ------------ -------------- -------------- ---------
1 January 2020 Opening balance 630,619,469 6,306 385,669 391,975
10 December
2020 Issued and paid 110,619,469 1,106 123,894 125,000
10 December Less share issue
2020 costs - - (2,087) (2,087)
31 December 2020 741,238,938 7,412 507,476 514,888
------------------------------------ ------------ -------------- -------------- ---------
Number
Issued and fully of shares
Date paid issued Share capital Share premium Total
EUR'000 EUR'000 EUR'000
----------------------------------- ------------ -------------- -------------- ---------
1 January 2019 Opening balance 380,000,000 3,800 120,009 123,809
22 March 2019 Issued and paid 140,000,000 1,400 146,300 147,700
Less share issue
22 March 2019 costs - - (2,431) (2,431)
17 December
2019 Issued and paid 110,619,469 1,106 123,894 125,000
17 December Less share issue
2019 costs - - (2,103) (2,103)
31 December
2019 630,619,469 6,306 385,669 391,975
------------------------------------ ------------ -------------- -------------- ---------
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 residual
assets of the Company.
16. Net assets per share
Group and Company 31 December 2020 31 December 2019
---------------------------------- ----------------- -----------------
Net assets - EUR'000 748,813 650,000
Number of ordinary shares issued 741,238,938 630,619,469
----------------------------------- ----------------- -----------------
Total net assets - cent 101.0 103.1
----------------------------------- ----------------- -----------------
17. Reconciliation of operating profit for the year to net cash
from operating activities
Group For the year ended For the year ended
31 December 2020 31 December 2019
EUR'000 EUR'000
--------------------------------------- ------------------- -------------------
Operating profit for the year 19,511 24,359
Adjustments for:
Movement in fair value of investments
(note 4) 1,034 (10,685)
Gain on adjustment to purchase
price of investments (note 4) - (2,923)
Investment acquisition costs 1,940 1,397
Capitalised loan interest (note (1,339) -
9)
Finance costs capitalised during (5,017) -
the period
Amortisation of finance costs 825 -
(note 13)
(Increase)/decrease in receivables
(note 11) (752) 2,858
Increase in payables 2,222 263
---------------------------------------- ------------------- -------------------
Net cash flows from operating
activities 18,424 15,269
---------------------------------------- ------------------- -------------------
Company For the year For the year
ended 31 December ended 31 December
2020 2019
EUR'000 EUR'000
--------------------------------------- ------------------- -------------------
Operating profit for the year 14,068 17,172
Adjustments for:
Movement in fair value of investments
(note 4) (18,313) (20,560)
Increase in receivables (note
11) (758) (990)
Increase in payables 396 492
---------------------------------------- ------------------- -------------------
Net cash flows from operating
activities (4,607) (3,886)
---------------------------------------- ------------------- -------------------
18. Financial risk management
The Investment Manager and the Administrator report to the Board
on a quarterly basis and provide information to the Board which
allows it to monitor and manage financial risks relating to its
operations. The Group's activities expose it to a variety of
financial risks: market risk (including price risk, interest rate
risk and foreign currency risk), credit risk and liquidity
risk.
The Group's market risk is managed by the Investment Manager in
accordance with the policies and procedures in place. The Group's
overall market positions are monitored on a quarterly basis by the
Board of Directors.
Price risk
Price risk is defined as the risk that the fair value of a
financial instrument held by the Group will fluctuate. Investments
are measured at fair value through profit or loss and are valued on
an unlevered, discounted cash flow basis. Therefore, the value of
these investments will be (amongst other risk factors) a function
of the discounted value of their expected cash flows and, as such,
will vary with movements in interest rates and competition for such
assets. Note 9 details sensitivity analysis on the impact of
changes to the inputs used on the fair value of the
investments.
Interest rate risk
The Group's most significant exposure to interest rate risk is
due to floating interest rates required to service external
borrowings through the revolving credit facility. An increase of
0.5 per cent represents the Investment Manager's assessment of a
reasonably possible change in interest rates. Should the EURIBOR
rate increase from 0 per cent to 0.5 per cent, the annual interest
due on the facility would increase by EUR54,040 (2019:
EUR1,030,000) based on amounts drawn under the facility at 31
December 2020. The Investment Manager regularly monitors interest
rates to ensure the Group has adequate provisions in place in the
event of significant fluctuations.
In accordance with the Company's investment policy, it may enter
into hedging transactions in relation to interest rates for the
purposes of efficient financial risk management. The Company will
not enter into derivative transactions for speculative
purposes.
The Directors consider shareholder loan investments to be
similar in nature to equity investments and, as these loans bear
interest at a fixed rate, they do not carry an interest rate
risk.
The Group's interest and non-interest bearing assets and
liabilities as at 31 December 2020 are summarised below:
Interest bearing
Group Floating Non-interest
Fixed rate rate bearing Total
EUR'000 EUR'000 EUR'000 EUR'000
------------------------- ----------- ---------- -------------- ----------------
Assets
Cash at bank - 16,417 100 16,517
Other receivables (note
11) - - 4,095 4,095
Investments (note 9) 401,536 - 542,816 944,352
------------------------- ----------- ---------- -------------- ----------------
401,536 16,417 547,011 964,964
------------------------- ----------- ---------- -------------- ----------------
Liabilities
Other payables (note
12) - - (5,343) (5,343)
Loans and borrowings
(note 13) (197,980) (12,828) - (210,808)
------------------------- ----------- ---------- -------------- ----------------
(197,980) (12,828) (5,343) (216,151)
------------------------- ----------- ---------- -------------- ----------------
The Group's interest and non-interest bearing assets and
liabilities as at 31 December 2019 are summarised below:
Interest bearing
Group Floating Non-interest
Fixed rate rate bearing Total
EUR'000 EUR'000 EUR'000 EUR'000
-------------- ----------
Assets
Cash at bank - 5,920 100 6,020
Other receivables (note
11) - - 3,266 3,266
Investments (note 9) 331,965 - 518,142 850,107
-------------- ----------
331,965 5,920 521,508 859,393
Liabilities
Other payables (note
12) - - (3,470) (3,470)
Loans and borrowings
(note 13) - (206,000) - (206,000)
- (206,000) (3,470) (209,470)
The Company's interest and non-interest bearing assets and
liabilities as at 31 December 2020 are summarised below:
Interest bearing
Company Floating Non-interest
Fixed rate rate bearing Total
EUR'000 EUR'000 EUR'000 EUR'000
------------------------- -------------- ---------
Assets
Cash at bank - 1,445 100 1,545
Other receivables (note
11) - - 3,772 3,772
Investments (note 9) - - 745,907 745,907
------------------------- -------------- ---------
- 1,445 749,779 751,224
------------------------- -------------- ---------
Liabilities
Other payables (note
12) - - (2,411) (2,411)
------------------------- -------------- ---------
- - (2,411) (2,411)
------------------------- -------------- ---------
The Company's interest and non-interest bearing assets and
liabilities as at 31 December 2019 are summarised below:
Interest bearing
Company Floating Non-interest
Fixed rate rate bearing Total
EUR'000 EUR'000 EUR'000 EUR'000
------------------------- -------------- ---------
Assets
Cash at bank - 88 100 188
Other receivables (note
11) - - 3,015 3,015
Investments (note 9) - - 648,797 648,797
------------------------- -------------- ---------
- 88 651,912 652,000
-------------------------
Liabilities
Other payables (note
12) - - (2,000) (2,000)
------------------------- -------------- ---------
- - (2,000) (2,000)
-------------------------
Foreign currency risk
Foreign currency risk is defined as the risk that the fair
values of future cash flows will fluctuate because of changes in
foreign exchange rates. The Group's financial assets and
liabilities are denominated in EUR and substantially all of its
revenues and expenses are in EUR. The Group is not considered to be
materially exposed to foreign currency risk.
Credit risk
Credit risk is the risk of loss due to the failure of a borrower
or counterparty to fulfil its contractual obligations. The Group is
exposed to credit risk in respect of other receivables and cash at
bank. The Group minimises its credit risk exposure by dealing with
financial institutions with investment grade credit ratings and
making loan investments which are equity in nature.
The table below details the Group's maximum exposure to credit
risk:
31 December 2020 31 December 2019
Group EUR'000 EUR'000
-----------------
Other receivables (note 11) 4,095 3,266
Cash at bank 16,517 6,020
Loan investments (note 9) 505,552 435,336
526,164 444,622
The table below details the Company's maximum exposure to credit
risk:
31 December 2020 31 December 2019
Company EUR'000 EUR'000
-----------------
Other receivables (note 11) 3,772 3,015
Cash at bank 1,545 188
Loan investments (note 9) 630,765 551,968
636,082 555,171
The tables below shows the cash balances of the Group and credit
rating for each counterparty:
Rating 31 December 2020
Group EUR'000
Northern Trust A+ 1,438
AIB BBB+ 13,640
Santander BBB 1,439
16,517
Rating 31 December 2019
Group EUR'000
Northern Trust A+ 51
AIB BBB+ 5,969
6,020
The table below shows the cash balances of the Company and the
credit rating for each counterparty:
Rating 31 December 2020
Company EUR'000
Northern Trust A+ 1,438
AIB BBB+ 107
1,545
Rating 31 December 2019
Company EUR'000
Northern Trust A+ 51
AIB BBB+ 137
188
Liquidity risk
Liquidity risk is the risk that the Group and the Company may
not be able to meet a demand for cash or fund an obligation when
due. The Investment Manager and the Board continuously monitor
forecast and actual cash flows from operating, financing and
investing activities to consider payment of dividends, repayment of
the Company's outstanding debt or further investing activities.
As disclosed in note 14, the purchase price of wind farms
acquired with less than 12 months' operational data may be adjusted
subject to a wind energy true-up based on a 2 years' operational
record once the operational data has become available.
The following tables detail the Group's expected maturity for
its financial assets (excluding equity) and liabilities together
with the contractual undiscounted cash flow amounts as at 31
December 2020 and 31 December 2019:
Group - 31 December
2020
Less than
1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables (note
11) 4,095 - - 4,095
Cash at bank 16,517 - - 16,517
Loan investments 16,201 48,418 505,552 570,171
Liabilities
Other payables (note
12) (5,343) - - (5,343)
Loan and borrowings (3,295) (226,922) - (230,217)
28,175 (178,504) 505,552 355,223
Group - 31 December
2019
Less than
1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables (note
11) 3,266 - - 3,266
Cash at bank 6,020 - - 6,020
Loan investments 12,802 51,105 435,336 499,243
Liabilities
Other payables (note
12) (3,470) - - (3,470)
Loan and borrowings (209,708) - - (209,708)
(191,090) 51,105 435,336 295,351
The following tables detail the Company's expected maturity for
its financial assets (excluding equity) and liabilities together
with the contractual undiscounted cash flow amounts as at 31
December 2020 and 31 December 2019:
Company - 31 December Less than
2020 1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables 3,772 - - 3,772
Cash at bank 1,545 - - 1,545
Loan investments - - 630,765 630,765
Liabilities
Other payables (2,411) - - (2,411)
2,906 - 630,765 633,671
Company - 31 December Less than
2019 1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables 2,987 - - 2,987
Cash at bank 188 - - 188
Loan investments - - 551,968 551,968
Liabilities
Other payables (2,000) - - (2,000)
1,175 - 551,968 553,143
The Group and Company will use cash flow generation, equity
raisings, debt refinancing or disposal of assets to manage
liabilities as they fall due in the longer term.
Capital risk management
The Company considers its capital to comprise ordinary share
capital, distributable reserves and retained earnings. The Company
is not subject to any externally imposed capital requirements.
The Group's and the Company's primary capital management
objectives are to ensure the sustainability of its capital to
support continuing operations, meet its financial obligations and
allow for growth opportunities. Generally, acquisitions are
anticipated to be funded by a combination of current cash, debt and
equity.
19. Related party transactions
During the year, the Company advanced interest-free loans to
Holdco of EUR6,900,000 (2019: EUR268,446,764), and Holdco made
repayments of EUR38,520,000 (2019: EUR29,450,000). The Company also
provided a capital contribution to Holdco 2 of EUR113,074,417
(2019: nil). During the year, the Company also received shareholder
loan repayments from Knockacummer of EUR1,994,445 (2019:
EUR1,846,867) and Killhills of EUR663,187 (2019: EUR1,447,246).
During the year, the Company also paid remuneration to the
Directors as disclosed in the Directors' Remuneration Report. The
Directors' interests in Company Shares as at 31 December 2020 are
also disclosed in the Directors' Report. The table below shows the
number of Company shares acquired by the Directors:
For the year ending 31 December 2020 For the year ending 31 December 2019
Rónán Murphy 22,123 45,819
Kevin McNamara - 18,327
Emer Gilvarry - 18,327
Marco Graziano 65,000 n/a
87,123 82,473
The below tables shows the Group's dividend and management fee
income from wind farm SPVs:
For the year ending For the year ending
31 December 2020 31 December 2019
Management Dividend Management Dividend
Fee income Income Fee income Income
EUR'000 EUR'000 EUR'000 EUR'000
Cloosh Valley - 8,988 - 3,950
Ballybane 494 2,750 434 -
Raheenleagh - 1,100 - -
Beam Hill 204 773 118 -
Lisdowney 90 600 78 -
Carrickallen - 500 - -
Monaincha 352 400 305 -
Knocknalour 90 200 78 -
Knockacummer 1,000 - 871 -
Killhills 381 - 336 -
Glanaruddery 355 - 307 -
Gortahile 195 - 169 -
Killala 166 - 144 -
Letteragh 138 - - -
An Cnoc 112 - - -
Tullynamoyle II 112 - 97 -
Garranereagh 90 - 78 -
3,779 15,311 3,015 3,950
The table below shows the Group's shareholder loans with the
wind farm investments
Loans 2020 interest
at 1 Loans Loans Accrued on
January advanced at 31 interest shareholder
2020 in the Loan interest Loan December at 31 December loan
(1) year capitalised repayments 2020 2020 Total investment
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Knockacummer 120,329 - - (3,827) 116,502 2,061 118,563 3,242
Monaincha 69,668 - 373 (4,767) 65,274 - 65,274 1,596
Glanaruddery 51,310 - 213 (3,490) 8,033 163 48,196 1,077
Ballybane 41,773 - 218 (2,883) 39,108 - 39,108 942
Killala 27,006 - - (300) 26,706 - 26,706 834
Letteragh - 29,979 - (4,629) 25,350 - 25,350 814
Killhills 24,946 - 175 (50) 25,071 - 25,071 484
An Cnoc - 17,547 - - 17,547 69 17,616 69
Kostroma 16,473 - 104 - 16,577 - 16,577 360
Gortahile 19,632 - 102 (3,395) 16,339 1 16,340 423
Tullynamoyle
II 16,239 - 80 (1,808) 14,511 - 14,511 353
Garranereagh 13,659 - 74 - 13,733 - 13,733 312
Carrickallen - 13,598 - (100) 13,498 - 13,498 268
Sommette - 13,590 - (983) 12,607 319 12,926 433
Lisdowney 11,282 - - (659) 10,623 - 10,623 325
Beam Hill
Extension - 9,140 - - 9,140 20 9,160 20
Pasilly - 9,020 - (150) 8,870 89 8,959 301
Cloosh Valley 7,015 - - - 7,015 - 7,015 -
Sliabh Bawn 9,224 2,161 - (4,506) 6,879 27 6,906 27
Knocknalour 6,522 - - (727) 5,795 - 5,795 198
Saint Martin - 3,543 - - 3,543 82 3,625 111
Raheenleagh 168 - - (168) - - - -
435,246 98,578 1,339 (32,442) 502,721 2,831 505,552 12,189
(1) Excludes accrued interest at 31 December 2019 of
EUR90,210.
20. Ultimate controlling party
In the opinion of the Directors, on the basis of the
shareholdings advised to them, the Company has no ultimate
controlling party.
21. Subsequent events
On 8 January 2021, the Group made a further EUR6.7 million
investment into Killala following the successful construction and
commissioning of turbine 6.
On 28 January 2021, the Company announced a dividend of EUR11.2
million, equivalent to 1.515 cent per share with respect to the
quarter ended 31 December 2020, bringing total dividend declared
with respect to the year to 31 December 2020 to 6.06 cent per
share. The record date for the dividend was 5 February 2021 and the
payment date was 26 February 2021.
On 28 January 2021, the Company held an EGM to seek approval by
shareholder resolution to replace CREST with a system operated by
Euroclear Bank SA/NV for the electronic settlement of trading in
the Company's ordinary shares. The resolutions passed by 100 per
cent of the vote.
On 15 February 2021, the Company announced its agreement to
acquire the Kokkoneva wind farm in Finland. The transaction is
expected to complete in Q2 2022 after the wind farm has become
fully operational.
On 26 February 2021, the Company announced its agreement to
acquire the Cordal wind farm in Ireland. The transaction is
expected to complete in April 2021.
Company Information
Directors (all non-executive) Registered Company Number
Rónán Murphy (Chairman) 598470
Emer Gilvarry
Kevin McNamara
Marco Graziano (appointed 30 January 2020) Registered Office
Riverside One
Sir John Rogerson's Quay
Investment Manager Dublin 2
Greencoat Capital LLP
4(th) Floor The Peak
5 Wilton Road Registered Auditor
London SW1V 1AN BDO
Beaux Lane House
Mercer Street Lower
Company Secretary Dublin 2
Ocorian Administration (UK) Limited
(formerly Estera Administration (UK) Limited)
Unit 18 Innovation Centre Legal Advisers
Northern Ireland Science Park McCann Fitzgerald
Queens Road Riverside One
Belfast BT3 9DT Sir John Rogerson's Quay
Dublin 2
Administrator
Northern Trust International Fund
Administration Services (Ireland) Limited
Georges Court Euronext Growth Advisor, NOMAD and Broker
54-62 Townsend Street J&E Davy
Dublin 2 Davy House
49 Dawson Street
Dublin 2
Depositary
Northern Trust International Fiduciary
Services (Ireland) Limited Account Banks
Georges Court Allied Irish Banks plc.
54-62 Townsend Street 40/41 Westmoreland Street
Dublin 2 Dublin 2
Northern Trust International Fiduciary
Registrar Services (Ireland) Limited
Computershare Investor Services Georges Court
(Ireland) Limited 56-62 Townsend St reet
Heron House, Corrig Road Dublin 2
Sandyford Industrial Estate
Dublin 18
Supplementary Information (unaudited)
Disclosure required under the Alternative Investment Fund
Managers Directive ("AIFMD") for annual reports of alternative
investment funds ("AIFs")
Alternative Investment Fund Manager's Directive
Under the Alternative Investment Fund Manager Regulations 2013
(as amended) the Company is an Irish AIF and the Investment Manager
is a full scope UK AIFM.
Northern Trust International Fiduciary Services (Ireland)
Limited provide depositary services under the AIFMD. Northern Trust
International Fund Administration Services (Ireland) Limited
provide accounting and administration services to the Company.
The AIFMD outlines the required information which has to be made
available to investors prior to investing in an AIF and directs
that material changes to this information be disclosed in the
Annual Report of the AIF. There were no material changes in the
year.
All information required to be disclosed under the AIFMD is
either disclosed in this Annual Report or within a schedule of
disclosures on the Company's website at
www.greencoat-renewables.com.
The information in this paragraph relates to the Investment
Manager, the AIFM, and its subsidiary company providing services to
the AIFM and it does not relate to the Company. The total amount of
remuneration paid by the Investment Manager, in its capacity as
AIFM, to its 58 staff for the financial year ending 31 December
2020 was GBP11.9 million, consisting of GBP8.0 million fixed and
GBP3.9 million variable remuneration. The aggregate amount of
remuneration for the 6 staff members of the Investment Manager
constituting senior management and those staff whose actions have a
material impact on the risk profile of the Company was GBP1.5
million.
The Investment Manager covers the potential professional
liability risks resulting from its activities by holding
professional indemnity insurance in accordance with Article 9(7)(b)
of AIFMD.
Defined Terms
Admission Document means the Admission Document of the Company
published on 31 December 2019
Aggregate Group Debt means the Group's proportionate share of
outstanding third party debt.
AIB means Allied Irish Bank plc
AIC means the Association of Investment Companies
AIC Code of Corporate Governance sets out a framework of best
practice in respect of the governance of investment companies. It
has been endorsed by the Financial Reporting Council as an
alternative means for our members to meet their obligations in
relation to the UK Corporate Governance Code
AIC Guide means the AIC's Corporate Governance Guide for
Investment Companies
AIF means Alternative Investment Funds (as defined in AIFMD)
AIFM means Alternative Investment Fund Manager (as defined in
AIFMD)
AIFMD means Alternative Investment Fund Managers Directive
AGM means Annual General Meeting of the Company
An Cnoc means Cnoc Windfarms Limited
Ballybane means Ballybane Windfarms Limited
BDO means the Company's Auditor as at the reporting date
Beam Hill means Beam Wind Limited
Beam Hill Extension means Meenaward Wind Farm Limited
Brexit mean the withdrawal of the United Kingdom from the
European Union
Board means the Directors of the Company
Carrickallen means Carrickallen Wind Limited
CBA means Commonwealth Bank of Australia
Cloosh Valley means Cloosh Valley Wind Farm Holdings DAC and
Cloosh Valley Wind Farm DAC
Company means Greencoat Renewables PLC
CBI means the Central Bank of Ireland
CFD means Contract for Difference
CIBC means Canadian Imperial Bank of Commerce
CPI means Consumer Price Index
DCF means Discounted Cash Flow
DS3 means Delivering a Secure, Sustainable Electricity
System
EGM means Extraordinary General Meeting of the Company
ESG means the Environmental, Social and Governance
EU means the European Union
Euronext means the Euronext Dublin, formerly the Irish Stock
Exchange
EURIBOR means the Euro Interbank Offered Rate
Eurozone means the area comprising 19 of the 28 Member States
which have adopted the euro as their common currency and sole legal
tender
FCA means Financial Conduct Authority
FIT means Feed-In Tariff
FRC means Financial Reporting Council
GAV means Gross Asset Value as defined in the Admission
Document
Garranereagh means Sigatoka Limited
Glanaruddery means Glanaruddery Windfarms Limited and
Glanaruddery Energy Supply Limited
Gortahile means Gortahile Windfarm Limited
Group means the Company, Holdco, Holdco 1 and Holdco 2
Holdco means GR Wind Farms 1 Limited
Holdco 1 means Greencoat Renewables 1 Holdings Limited
Holdco 2 means Greencoat Renewables 2 Holdings Limited
IAS means International Accounting Standards
IFRS means International Financial Reporting Standards
Investment Management Agreement means the agreement between the
Company and the Investment Manager
Investment Manager means Greencoat Capital LLP
IPEV means the International Private Equity and Venture Capital
Valuation Guidelines
IPO means Initial Public Offering
Irish Corporate Governance Annex is a corporate governance annex
addressed to companies with a primary equity listing on the Main
Securities Market of Euronext
IRR means internal rate of return
I-SEM means the Integrated Single Electricity Market, which is
the wholesale electricity market arrangement for Ireland and
Northern Ireland
Killala means Killala Community Wind Farm DAC
Killhills means Killhills Windfarm Limited
Knockacummer means Knockacummer Wind Farm Limited
Knocknalour means Knocknalour Wind Farm Holdings Limited and
Knocknalour Wind Farm Limited
Kostroma Holdings means Kostroma Holdings Limited
Letteragh means Seahound Wind Developments Limited
Lisdowney means Lisdowney Wind Farm Limited
Monaincha means Monaincha Wind Farm Limited
NAB means National Australia Bank
Natwest means National Westminster Bank
NAV means Net Asset Value as defined in the Admission
Document
NAV per Share means the Net Asset Value per Ordinary Share
NOMAD means a company that has been approved as a nominated
advisor for the Alternative Investment Market (AIM), by Euronext
Dublin and London Stock Exchange
O&M means operations and maintenance
Pasilly means Société d'Exploitation du Parc Eolien du
Tonnerois
PPA means Power Purchase Agreement entered into by the Group's
wind farms
PSO means Public Support Obligation
Raheenleagh means Raheenleagh Power DAC
RBC means Royal Bank of Canada
REFIT means Renewable Energy Feed-In Tariff
RESS means Renewable Energy Support Scheme
Review Section means the front end review section of this report
(including but not limited to the Chairman's Statement and the
Investment Manager's Report)
Santander means Abbey National Treasury Services Plc (trading as
Santander Global Corporate Banking)
SEM means the Single Electricity Market, which is the wholesale
electricity market operating in the Republic of Ireland and
Northern Ireland
Sliabh Bawn means Sliabh Bawn Holding DAC, Sliabh Bawn Supply
DAC and Sliabh Bawn Power DAC
Solar PV means a solar photovoltaic system, which is a power
system designed to supply usable solar power by means of
photovoltaics.
Sommette means Parc Eolien Des Tournevents SAS
SPVs means the Special Purpose Vehicles, which hold the Group's
investment portfolio of underlying operating wind farms
Saint Martin means Parc Eolien Des Courtibeaux SAS
TCFD means Task Force on Climate-Related Financial
Disclosures
TSR means Total Shareholder Return
Tullynamoyle II means Tullynamoyle Wind Farm II Limited
UK means United Kingdom of Great Britain and Northern
Ireland
UK Code means UK Corporate Governance Code issued by the FRC
Alternative Performance Measures
Performance Measure Definition
CO(2) emissions reduced The estimate of the portfolio's annual
per annum CO(2) emission reductions, based on the
portfolio's estimate generation as at
the relevant reporting date.
Homes powered per annum The estimate of the number of homes powered
by electricity generated by the portfolio,
based on the portfolio's estimate generation
as at the relevant reporting date.
NAV movement per share Movement in the ex-dividend Net Asset
(adjusting for dividends) Value per ordinary share during the year.
NAV per share The Net Asset Value per ordinary share.
Net cash generation The operating cash flow of the Group
and wind farm SPVs.
Premium to NAV The percentage difference between the
published NAV per ordinary share and
the quoted price of each ordinary share
as at the relevant reporting date.
Total return (NAV) The movement in the ex-dividend NAV per
ordinary share, plus dividend per ordinary
share declared or paid to shareholders
with respect to the year.
Total Shareholder Return The movement in share price, combined
with dividends paid during the year,
on the assumption that these dividends
have been reinvested.
Forward Looking Statements and other Important Information
This document may include statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "may", "plans", "projects",
"will", "explore" or "should" or, in each case, their negative or
other variations or comparable terminology or by discussions of
strategy, plans, objectives, goals, future events or
intentions.
These forward-looking statements include all matters that are
not historical facts. They may appear in a number of places
throughout this document and may include, but are not limited to,
statements regarding the intentions, beliefs or current
expectations of the Company, the Directors and/or the Investment
Manager concerning, amongst other things, the investment objectives
and investment policy, financing strategies, investment
performance, results of operations, financial condition, liquidity,
prospects, and distribution policy of the Company and the markets
in which it invests.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to future events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Company's actual investment performance, results
of operations, financial condition, liquidity, distribution policy
and the development of its financing strategies may differ
materially from the impression created by, or described in or
suggested by, the forward-looking statements contained in this
document.
In addition, even if actual investment performance, results of
operations, financial condition, liquidity, distribution policy and
the development of its financing strategies, are consistent with
any forward looking statements contained in this document, those
results or developments may not be indicative of results or
developments in subsequent periods. A number of factors could cause
results and developments of the Company to differ materially from
those expressed or implied by the forward looking statements
including, without limitation, general economic and business
conditions, global renewable energy market conditions, industry
trends, competition, changes in law or regulation, changes in
taxation regimes, the availability and cost of capital, currency
fluctuations, changes in its business strategy, political and
economic uncertainty. Any forward-looking statements herein speak
only at the date of this document.
As a result, you are cautioned not to place any reliance on any
such forward-looking statements and neither the Company nor any
other person accepts responsibility for the accuracy of such
statements.
Subject to their legal and regulatory obligations, the Company,
the Directors and the Investment Manager expressly disclaim any
obligations to update or revise any forward- looking statement
contained herein to reflect any change in expectations with regard
thereto or any change in events, conditions or circumstances on
which any statement is based.
In addition, this document may include target figures for future
financial periods. Any such figures are targets only and are not
forecasts. Nothing in this document should be construed as a profit
forecast or a profit estimate.
[1] Gross of SPV level debt repayment
[2] Net cash generation and dividend cover are gross of SPV level debt repayment
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