TIDMGRP
RNS Number : 9408C
Greencoat Renewables PLC
28 February 2022
Greencoat Renewables 2021 Full Year Results
Dublin, London | 28 February 2022: 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 2021.
2021 Highlights - Stable Returns and Continued
Diversification
-- The portfolio increased to 25 assets with a net generating capacity of 800MW (2020: 557MW).
-- Geographic and technology diversification including new wind
investment in Sweden, and forward commitments to acquire assets in
both Spain and Finland.
-- The Group's portfolio generated 1,522 GWh of electricity in the period (2020: 1,404GWh).
-- Net cash generation was EUR70.5 million ([1]) (2020: EUR66.4
million) and gross dividend cover was 1.5x (2020: 1.7x).
-- Portfolio's exposure to higher market power prices and strong
inflation protection, helping to deliver NAV growth of 4 cents in
2021.
-- Declared dividend of 6.06 cent for the period, with a target of 6.18 cent per share for 2022.
-- EUR631.1 million of Group Debt as at 31 December 2021,
equivalent to 40 per cent of GAV, all of which is contracted on a
medium term basis.
-- Portfolio produced renewable energy for 339,000 homes, saving
608,856 tonnes of CO2 and over EUR1 million committed to local
communities across 153 community projects.
-- Company classified as Article 9 under the European Union's
Sustainable Finance Disclosure Regulation.
Commenting on the results, Ronan Murphy, Non-Executive Chairman
of Greencoat Renewables, said:
"I am delighted to report another successful year of strategic
diversification and growth at Greencoat Renewables, as we continue
to execute on our strategy. In a year of low wind resource, we are
pleased to deliver a robust dividend cover, reflecting the
resilience of our business model, and a continued solid financial
and operational performance.
We achieved significant growth milestones in 2021, successfully
expanding and strengthening our pan-European platform. Our
portfolio now extends to France, Finland, Sweden and Spain, where
we committed to acquire our first solar generation asset.
Finally, we are pleased to have further developed the
sophistication of our ESG reporting and remain proud to contribute
so directly to the sustainability of the economies in which we
operate."
Key Metrics
As at 31 December 2021
---------------------------------------------- -----------------------
Market capitalisation EUR996.7 million
Share price 112.0 cent
Dividends with respect to the year EUR47.2 million
Dividends with respect to the year per share 6.06 cent
GAV EUR1,566 million
NAV EUR935.2 million
NAV per share 105.1 cent
TSR 40.0 per cent
Premium to NAV 6.6 per cent
CO(2) emissions reduced 608,856 tonnes
Investment in community and social projects EUR1 million
---------------------------------------------- -----------------------
Conference call for analysts and investors
A conference call for analysts and investors will be held at
10.00 am GMT today, 28 February 2022. To register for the call
please contact FTI Consulting by email at
Greencoat@fticonsulting.com .
Presentation materials are available on the Company's website:
www.greencoat-renewables.com
2021 Annual Report
A copy of the 2021 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 be made available shortly 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
Ronan Veale
Barry Murphy
RBC (Joint Broker) +44 20 7653 4000
Matthew Coakes
Duncan Smith
Elizabeth Evans
FTI Consulting (Media Enquiries) +353 86 401 5250
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 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,
France and Sweden. 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 1,522GWh (2020: 1,404GWh)
of electricity, 16 per cent below budget.
-- Net cash generation (Group and wind farm SPVs) was EUR70.5
million (2020: EUR66.4 million) and gross dividend cover was 1.5x
(2020: 1.7x).
-- Acquisition of 4 wind farms, including our first operational
wind farm in Sweden increasing net generating capacity to
800MW.
-- Agreements to acquire the Kokkoneva wind farm in Finland, and
the Torrubia solar farm in Spain, when they become operational in
2022.
-- GAV increased to EUR1,566 million as at 31 December 2021
(2020: EUR1,177 million).
-- EUR631.1 million of Aggregate Group Debt as at 31 December
2021 (2020: EUR427.9 million) equivalent to 40 per cent of GAV
(2020: 36 per cent).
-- Issuance of 148.6 million new shares at 111 cent per share,
raising gross proceeds of EUR165 million.
-- Company declared total dividends of 6.06 cent per share with
respect to the year.
-- Company classified as Article 9 under EU SFDR.
-- Over EUR1.0 million committed to local communities across 153
community projects.
-- Portfolio generation reduced CO(2) emissions by over 600,000
tonnes.
Key Metrics
As at 31 December 2021 As at 31 December 2020
------------------------------------------------- ----------------------- -----------------------
Market capitalisation EUR996.7 million EUR863.5 million
Share price 112.0 cent 116.5 cent
Dividends with respect to the year EUR49.4 million EUR39.9 million
Dividends with respect to the year per share 6.06 cent 6.06 cent
GAV EUR1,566 million EUR1,177 million
NAV EUR935.2 million EUR748.8 million
NAV per share 105.1 cent 101.0 cent
TSR 40.0 per cent 38.3 per cent
Premium to NAV 6.6 per cent 15.3 per cent
CO(2) emissions reduced 608,856 tonnes 561,432 tonnes
Homes powered 347,630 homes 330,355 homes
Funds invested in community and social projects EUR1.0 million EUR0.8 million
------------------------------------------------- ----------------------- -----------------------
Defining Characteristics
Greencoat Renewables PLC was designed for investors from first
principles to be simple, transparent and low risk. Key
characteristics include:
-- Investments into geographies with a stable and robust
renewable energy policy framework.
-- Diversification through investing in a growing portfolio of
assets across Continental Europe.
-- Growing mix of renewable technologies.
-- The Group is wholly independent and thus avoids conflicts of
interests in its investment decisions.
-- The independent Board governs the Group, actively monitors
the efficient operation of the assets and works in conjunction with
an experienced investment management team.
-- Low gearing is important to ensure a high level of cash flow
stability and higher tolerance to downside sensitivities.
-- The Group invests only in Euro assets and thus does not incur
material currency risk.
Chairman's Statement
I'm delighted to present Greencoat Renewables PLC's full year
results for 2021 and to report a successful year of strategic
diversification and growth, as we continue to execute on our
business plan, benefiting from Irish market consolidation and
building market-leading positions in Europe.
The business achieved significant milestones in 2021,
successfully expanding our European presence, which now extends to
France, Finland, Sweden and Spain, where we committed to acquire
our first solar generation asset. The aggregation of the Irish
secondary market also continued, with the Company now the largest
owner of operating wind farms in the country, having acquired our
first Irish wind farms in early 2017.
In aggregate, our portfolio generated 1,522GWh of renewable
electricity, offsetting 608,856 tonnes of CO(2) . We are very proud
to be contributing directly to a more sustainable economy and I am
pleased that this year's Annual Report will report in line with
both TCFD recommendations, and Article 9 of the European Union
Sustainable Finance Disclosure Regulation (SFDR). The Company is
also fully aligned with the EU Taxonomy for Climate Change
Mitigation, which came into effect on 1 January 2022.
In keeping with our business model, the Group's portfolio
delivered stable dividend cover, despite the portfolio encountering
particularly low wind resource in Ireland during the year. We
benefitted from geographic diversification in the period, with
relatively higher wind speeds and generation experienced in
Continental Europe. Separately, we witnessed an increase in the
energy capture price across all markets, with the majority of our
Irish assets being able to capture this market price upside above
the REFIT tariff and we expect this upside to continue into
2022.
As expected, expansion into Europe has provided visibility of a
very large pool of assets and we are optimistic about the
investment opportunities now available to us. Our wider geographic
scope enables us to seek the best returns while reducing our
exposure to local variations in renewable resource. The
fast-developing corporate PPA market enables us to access both
merchant and subsidised assets, whilst maintaining the desired
ratio of contracted cashflows in the portfolio.
Overall, I am very pleased with the Company's performance over
the past year and look forward to continuing to deliver stable
returns as we replicate the business's Irish success in Continental
Europe. I would like to thank our Investment Manager and our
operating partners for their hard work and dedication throughout
the year, and to thank our investors for their continued
support.
Performance
The portfolio's overall performance was satisfactory, with a
strong operational performance offset by very low wind resource
over the summer and autumn in Ireland, where the majority of our
generating capacity is located.
There were no material unplanned outages in the period with
availability and curtailment for the portfolio broadly in line with
budget. The portfolio generated 1,522GWh, which was 16 per cent
below budget. This translated to net cash generation of EUR70.5
million, providing gross dividend cover of 1.5x.
The development of our co-located battery storage project at
Killala wind farm continues to progress well and was connected to
the grid in January 2022. The Group's strategy is to take advantage
of additional opportunities for revenue generation and value
enhancement as technologies demonstrate utility-scale reliability
and become economically viable for larger scale deployment.
The end of the year saw a significant rise in the spot price of
wholesale electricity and the associated benefits of Ireland's
support mechanism on our Irish portfolio. The REFIT system price
floor allows Irish wind farms to capture the upside from high power
prices, whilst insulating them from low prices.
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 25 February 2022. Since listing in July 2017, the Company
has consistently delivered on its dividend policy, and at 31
December 2021 had a TSR of 40.0 per cent.
Our dividend policy remains unchanged and aims to increase the
dividend each year, by an amount between zero and Irish CPI. As
inflation increased during 2021, we are pleased to be able to
increase our target dividend by 2 per cent to 6.18 cent per share
for 2022.
The portfolio is well positioned to benefit from increased
inflation, with over 70 per cent of the portfolio's revenue being
inflation linked to 2030.
NAV per share increased by 4.1 cent per share during the year,
primarily as a result of our inflationary protection as well as the
recovery in the short and medium-term power prices.
Acquisitions and Diversification
The Company's execution of its growth plans continued in 2021,
with over EUR480 million invested or committed across six assets in
four continental jurisdictions.
In addition to offering geographic diversification, the Torrubia
forward committed acquisition, announced in December, represents
the Group's first solar generation transaction. The Investment
Manager is one of the largest dedicated managers of solar assets in
Europe, and as such can provide experience and expertise in this
technology, in addition to onshore and offshore wind.
In Ireland, the Company continued to consolidate its position in
the Irish onshore wind market with acquisitions of three onshore
operational wind farms, representing an additional 139MW of
generating capacity.
The second quarter of 2022 will also see the first of the
Company's forward sale transactions complete, following Kokkoneva
wind farm achieving commercial operations. This model of investment
provides additional flexibility in our growth strategy and sees the
Company working alongside other development partners to deliver the
construction stage of these projects. The forward sale model also
gives the Company greater visibility of its commitments, allowing
its equity raising strategy and target gearing levels to be managed
accordingly.
As at 31 December 2021, the Group's portfolio comprised 25
operational wind farms, with an aggregate net generating capacity
of 800MW.
Gearing
The Group made substantial progress in developing its capital
structure through 2021. In April, the Group increased its 5-year
non-amortising term debt by EUR75 million, introducing ING into the
lending syndicate alongside its existing term lenders as further
detailed in note 13 of the financial statements. To further
complement the funding strategy, the Group introduced an additional
EUR200m of fixed rate 7-year non-amortising term debt, provided by
AXA, its first institutional lender.
As at 31 December 2021, the Group had EUR631.1 million of debt
outstanding (including SPV level debt), equating to 40.3 per cent
of GAV.
Equity Issuance
In line with our longstanding strategy, the Company continued to
issue new equity to maintain agility for acquisitions and growth,
whilst ensuring we remain within our targeted gearing range.
In October 2021, the Company issued EUR165 million of new equity
at an issue price of 111 cent per share. The issuance was
oversubscribed and accretive to NAV. The Group possesses
significant gearing headroom to pursue further investment
opportunities.
Environmental, Social and Governance
The Company's business model supports a more sustainable future
and every electron generated by the portfolio removes a need for
thermal generation. With our larger portfolio, the Group's
portfolio displaced 608,856 tonnes of CO(2) emissions in 2021,
rising from 561,432 tonnes in 2020. This is equivalent to providing
sufficient clean energy to meet the needs of 347,630
households.
The key highlights of our ESG agenda are described below:
-- Our commitment to operating sustainably does not end with our
renewable generation, and the Company has contributed over EUR1 m
illion during the year to local community schemes, accelerating our
schemes where possible to support those affected by the
pandemic.
-- Our leadership in electrical safety has been recognised by
the industry body, Wind Energy Ireland, with the Company
shortlisted for the 2021 Exemplary Health and Safety Performance
Award. The Group's electrical safety programme has been in
operation since it was first initiated in 2019.
-- The Company published a statement based on the requirements
of the EU SFDR, which requires financial market participants to
provide information to investors as to how sustainability risks are
integrated into the investment decision-making process. As our
investments are exclusively focused on renewable energy assets, the
Company is classified under Article 9 of the EU SFDR. The Company
also made its first full submission under CDP for the 2020
reporting period.
-- Following the development of our Carbon Strategy in 2020, we
calculated our full carbon footprint in 2021 for the first time.
With the support of an external consultant, we used the 2020
reporting period to calculate our Scope 1, 2 and 3 emissions, in
line with the Greenhouse Gas Protocol.
-- We released our Modern Slavery Statement in September 2021.
The Company proactively monitors the risk of modern slavery in its
supply chains. We use our understanding of modern slavery risks and
our ESG Policy to make informed decisions about new acquisitions,
and when entering into new contracts with material service
providers and suppliers.
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 .
Outlook
The Company's outlook remains strong, with our strategy of
diversification into Continental Europe now successfully underway.
The Company is clearly benefitting from having access to the widest
possible growth opportunities and expects to build significant
positions in its chosen European jurisdictions over the coming
years, replicating the aggregation strategy we have successfully
delivered in Ireland.
The portfolio continues to remain highly contracted, with a
significant number of Irish assets benefitting from higher power
prices via the REFIT mechanism. Substantial inflation protection
has also been achieved.
The Board also continues to view Ireland as an attractive market
for further investment and believes the Company remains very well
placed to achieve further growth as value-accretive acquisitions
present themselves. We expect to continue to target investment in
REFIT and RESS assets, across both onshore wind and solar PV. We
also see increasingly attractive opportunities in offshore wind,
where the Investment Manager's history of relationships and
co-investment provides significant strategic advantages.
Lastly, the Board notes and welcomes the upcoming acquisition of
the Investment Manager, by Schroders PLC. All members of the
Investment Manager's senior management team remain unchanged, and
all investment decisions will remain with the Investment Manager.
We look forward to the enhanced capabilities that the Investment
Manager will be able to bring in the future as a result of this
transaction.
Board and Governance
An external evaluation of the Board carried out in 2021 raised
no significant issues. As further described in the Corporate
Governance Report, the Board met 8 times during the year, the
majority by video conference, and was able to continue to govern
the Company effectively despite these restrictions.
The Board continues to seek expertise and to ensure best in
class diversification, with a process well under way to recruit an
additional non-executive director in 2022. We anticipate that this
appointment will further enhance our gender diversity.
The Group's governance is further described in the Corporate
Governance Report.
Annual General Meeting
Our AGM will take place at 10:00 am on Friday 29 April 2022. A
decision on the format of the AGM will be made in line with
prevailing public health guidance and will be communicated near to
the date.
Details of the formal business of the meeting are set out in a
separate circular which will be sent to shareholders with the
Annual Report.
Conclusion
In conclusion, I would like to thank my fellow directors, Emer
Gilvarry, Marco Graziano, and Kevin McNamara for their valued
dedication, stewardship and counsel. I would also like to
acknowledge the Board's appreciation of the considerable expertise,
skill and endeavour of our Investment Manager.
Rónán Murphy
Chairman
27 February 2022.
The Investment Manager's Report
The Investment Manager's experience covers renewable investment,
ownership, finance and operations. All the skills and experience
required to manage the Group's investments lie within a single
Investment Manager. The Investment Manager has over EUR8 billion of
funds under management, with renewables infrastructure portfolios
in the UK, Ireland, France, Sweden and the US, and offices in
London, Dublin, Düsseldorf and Amsterdam. The Investment Manager is
authorised and regulated by the FCA and is a full scope UK
AIFM.
The Investment Manager has a dedicated team, focused solely on
the Group and the underlying portfolio of investments, and is led
by Bertrand Gautier and Paul O'Donnell. The team is comprised of
over fifteen investment and asset management professionals with
significant experience across the Irish and European markets,
including technical asset management, along with extensive debt and
equity capital markets experience.
Bertrand has almost 30 years of operational, financial and
investment experience, including 12 years focussed on renewables.
He has been a Partner of Greencoat Capital since joining in 2010.
Prior to joining Greencoat Capital, Bertrand held senior positions
at Terra Firma Capital Partners, Merrill Lynch, and Procter &
Gamble. Bertrand holds an MSc in General Engineering from ICAM
(France) and an MBA from Harvard Business School (USA).
Paul has almost 20 years of renewables and investment
experience, of which the last 15 have been focussed 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.
In December, Schroders PLC announced that it had reached
agreement to acquire a 75 per cent interest in the Investment
Manager. The transaction is expected to complete in H1 2022,
subject to regulatory approval. The Investment Manager will
continue to operate as an independent business and will become part
of Schroders Capital, the private markets division of Schroders
PLC. Schroders PLC is a global asset manager and wealth manager,
which delivers a broad range of investments for institutions,
intermediaries and high net worth individuals with AUM of GBP700
billion.
Overview
The Investment Manager is pleased to report on another strong
year of operational performance and continued growth, as the
business continues to execute on its strategy to build a leading
European Renewable Infrastructure company.
The business delivered robust financial performance, generating
EUR70.5 million of net cashflow and providing a dividend cover of
1.5x. This was achieved during a year which saw significantly low
wind resource across Ireland during the summer and autumn
periods.
The Group has continued to expand its geographical footprint in
Continental Europe while growing its market leading position in
Ireland. During the year, the installed capacity of the Group
increased by over 40 per cent to 800MW, diversifying the Portfolio
while continuing to deliver stable returns to investors.
Investment Portfolio
Total Ownership Net
Wind Farm Country Turbines Operator PPA MW Stake MW
-------------- ----------- ---------------- ------------- ----------------- ------------ ---------- -------------
Republic
Ballincollig of
Hill Ireland Enercon Gaelforce Energia 13.3 100% 13.3
Republic
of
Ballybane Ireland Enercon EnergyPro Energia 48.3 100% 48.3
Republic
of Prepay
Beam ([1]) Ireland Vestas/Enercon EnergyPro Power/Naturgy 20.9 100% 20.9
Republic
of
Carrickallen Ireland Senvion EnergyPro SSE 20.5 50% 10.3
Republic
of
Cloosh Valley Ireland Siemens Gamesa SSE SSE 108.0 75% 81.0
Republic Electroroute
of (via Supplier
Cnoc Ireland Enercon EnergyPro Lite Structure) 11.5 100% 11.5
Republic Electroroute
of (via Supplier
Cordal Ireland GE GE Lite Structure) 89.6 100% 89.6
Erstrask Skelleftea
South Sweden Enercon Enercon Kraft 101.1 100% 101.1
Republic
of
Garranereagh Ireland Enercon Statkraft Bord Gais 9.2 100% 9.2
Republic
of Supplier
Glanaruddery Ireland Vestas EnergyPro Lite 36.3 100% 36.3
Republic
of
Glencarbry Ireland Nordex Ecopower Electroroute 35.6 100% 35.6
Republic
of
Gortahile Ireland Nordex Statkraft Energia 20.0 100% 20.0
Republic
of
Killala Ireland Siemens Gamesa EnergyPro Electroroute 20.4 100% 20.4
Republic
of
Killhills Ireland Enercon SSE Brookfield 36.8 100% 36.8
Republic
of
Knockacummer Ireland Nordex SSE Brookfield 100.0 100% 100.0
Republic
of
Knocknalour Ireland Enercon Statkraft Naturgy/Energia 9.2 100% 9.2
Republic
of
Letteragh Ireland Enercon Statkraft SSE 14.1 100% 14.1
Republic
of
Lisdowney Ireland Enercon EnergyPro Naturgy 9.2 100% 9.2
Republic
of
Monaincha Ireland Nordex Statkraft Bord Gais 36.0 100% 36.0
Pasilly France Siemens Gamesa Greensolver Sorégies 20.0 100% 20.0
Republic
of
Raheenleagh Ireland Siemens Gamesa ESB ESB 35.2 50% 17.6
Saint Martin France Senvion Greensolver Sorégies 10.3 100% 10.3
Republic
of Bord na Supplier
Sliabh Bawn Ireland Siemens Gamesa Mona Lite 64.0 25% 16.0
Sommette France Nordex Greensolver Sorégies 21.6 100% 21.6
Republic
Tullynamoyle of
II Ireland Enercon Statkraft Bord Gais 11.5 100% 11.5
Total Operating Portfolio 903 800
Contracted to acquire/in construction
([2]) 167.0 167
967
=============
[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, 25.2MW
Taghart, 43.2MW Kokkoneva
and 50MW Torrubia Solar farm
once perational.
Includes the co-located Killala Battery project (10.8MW) currently
in the final stages of construction.
Portfolio Generation Performance
Portfolio generation for the year was 1,522GWh, 16 per cent
below budget, primarily due to lower windspeeds in Ireland over the
summer and autumn periods. The following table provides a
geographical break-down of portfolio generation against budget for
the year ended 31 December 2021.
2021 Budget 2021 Actual
Country (GWh) (GWh) Variance
----------------------- ------------ ------------ ---------
Republic of Ireland 1,640.9 1,351.6 -18%
France 114.8 112.1 -2%
Sweden (1) 62.9 58.5 -7%
Portfolio Generation 1,818.6 1,522.1 -16%
(1) Generation for Sweden is post acquisition (from
22 October 2021).
Electricity Power prices and Irish REFIT
Current electricity power prices across Europe have risen to
more than four times pre-COVID-19 levels, with average power prices
in Ireland during Q4 2021 being over EUR200/MWh. This trend of
higher electricity prices is forecast to continue over the next 12
months, bringing potential upside to the Group's portfolio, which
is characterised by its ability to capture higher market prices
while being insulated from power price downside through the
effective REFIT floor.
The REFIT regime guarantees a floor price, rather than a fixed
price. If the average capture price achieved is above the REFIT
price of c.EUR81/MWh over the 12 months from October to September,
then the generator may be in a position to secure the full capture
price. Currently 55 per cent of the REFIT portfolio is entitled to
this full market price upside.
The loss of revenue due to generation shortfall (driven by low
wind speeds during summer and autumn in Ireland) has been offset by
higher portfolio capture prices, particularly in Q4 2021, which
supported the Group's 2021 dividend cover. The current NAV does not
include any cash flow associated with the potential achieved
through market price being higher than the REFIT price for
2022.
Inflation
Approximately 75 per cent of portfolio revenue is underpinned by
government support mechanisms with underlying contracted tariffs
that are inflation-linked to 2032. The past year saw significant
rises in inflation across Europe, a trend which has continued and
accelerated through 2021, with blended rates across our portfolio
sitting at more than 2 per cent on a 12-month average basis
compared to approximately 0 per cent for the calendar year 2020.
The outlook is that inflation will remain high over the medium
term, and we are pleased to have a portfolio of assets with natural
protection from inflation.
Portfolio Management and Optimisation
The Investment Manager has continued to effectively manage the
portfolio with a number of key achievements during the year,
including onboarding our first Swedish investment, the 101MW
Erstrask South wind farm, that was acquired in October 2021. Other
notable achievements include:
-- Achieving 97 per cent wind farm availability over the year
through working closely with our turbine manufacturer and O&M
partners to ensure routine maintenance and responsible
management.
-- Active PPA strategy
o We are pleased to have successfully negotiated a five-year
fixed price PPA during the period with a local energy provider in
Ireland. The attractive offtake price negotiated is a clear
illustration of a maturing PPA market and demonstrates our ability
to continue to contract the Irish portfolio's revenues for the post
REFIT period.
o In addition, the Group will benefit from a long-term fixed
price PPA with Gasum, Finland's state utility at Kokkoneva wind
farm, once it becomes operational in Q2 2022.
-- Ensuring continued good governance of assets through
consolidating portfolio technical and commercial management
services to high quality, local providers in Ireland, France and
Sweden, while maintaining active communication channels with senior
management of key turbine and electrical maintenance contractors to
maximise the standards of maintenance services.
-- Realising revenue enhancement through:
o continued engagement with wind turbine manufacturers to
deliver 1.4 per cent yield increases at two assets;
o an active forestry management strategy, helping to deliver a
1.6 per cent yield increase at one asset; and
o establishing an optimised PPA structure to maximise exposure
to high power prices in Ireland.
-- Across the portfolio, the Investment Manager will continue to
identify opportunities to engage in active management and enhance
yield returns, with a detailed active management plan in place for
2022.
DS3
The Irish portfolio has increased its share of DS3 revenues,
earning approximately EUR4 million during the year. This has been
achieved through a range of technology upgrades to the portfolio.
We continue to work closely with wind turbine manufacturers to
incentivise them to develop software to allow DS3 services to be
provided more frequently.
Co-located battery project at Killala
With large-scale batteries maturing, we see the technology as an
increasingly investible opportunity and are developing a 11MW
battery at Killala, utilising the additional grid capacity specific
to the site. The project significantly enhances DS3 contracted
revenues and allows future upside in trading revenues, improving
the overall IRR at Killala. The Investment Manager oversaw the full
design and construction of the battery, which achieved grid
connectivity in January 2022.
We will continue to analyse the portfolio for value enhancement
opportunities and will continue to make further investments into
batteries and other power balancing and transmission technologies
as they become return enhancing.
Health and Safety
Health and safety is of paramount importance for both the Group
and the Investment Manager. On a monthly basis, the Investment
Manager reviews comprehensive health and safety reports provided by
operations managers, with information then reviewed by the SPV
directors at each of the scheduled board meetings. Across the
portfolio, there have been in excess of 180 audits and site
inspections carried out to ensure best practice is being
maintained. As recognition of these efforts, the Company was
shortlisted by Wind Energy Ireland for an Exemplary Health and
Safety Performance Award in 2021.
The Investment Manager is pleased to report that there were no
major incidents in the year ended 31 December 2021, with plans in
place to further enhance health and safety reporting over the
course of 2022.
Environmental, Social and Governance
Over the past year, the Company has continued to embed
sustainability across our activities. The following summarises our
accomplishments in 2021 as we continued to deliver on the ESG
Standards set out in our ESG Policy.
-- Our leadership in electrical safety was recognised by the
industry body, Wind Energy Ireland. The Company was shortlisted for
the 2021 Exemplary Health and Safety Performance Award, an award
that honours an organisation's commitment to excellence within the
field of occupational health and safety.
-- We published a statement based on the requirements of EU
SFDR. As our investments are exclusively focused on renewable
energy assets, the Company is classified as Article 9 under EU
SFDR.
-- In 2021, the Company submitted its first full environmental
data disclosure to CDP for the reporting period of 2020. The
Company will further develop our approach to CDP for the next
reporting year, pursuing continuous improvement in our rating.
-- Following the development of our Carbon Strategy in 2020, we
calculated our full carbon footprint in 2021 for the first time.
With the support of an external consultant, we used the 2020
reporting period to calculate our Scope 1, 2 and 3 emissions, in
line with the GHG Protocol.
-- We released our Modern Slavery Statement in September 2021.
The Group takes the risk of modern slavery in its supply chains
seriously. We use our understanding of modern slavery risks and our
ESG Policy to make informed decisions when considering new
investments, and when entering into new contracts with service
providers and suppliers.
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
The business continued to execute against its growth strategy in
2021, with over EUR480 million invested or committed across six
assets. The Group successfully expanded its European presence,
which now covers France, Finland, Sweden and Spain, where it has
committed to acquiring its first solar generation asset.
The Company's aggregation strategy in the Irish secondary market
also continued in 2021. The Group is now the largest owner of
operating wind farms in the country, having acquired its first
Irish wind farms in early 2017.
We continued to see many opportunities for value accretive
investments in the Company's target jurisdictions, and during the
year priced and assessed over 100 projects totalling 4GW. Of the
projects assessed, 6 investments were made by the Group (including
forward commitments), 13 are subject to continuing discussions and
the remaining projects were either lost to other buyers or the
vendor decided not to sell.
During the year ended 31 December 2021, the Group completed four
acquisitions as noted below:
-- Cordal wind farm, located in County Kerry, Ireland and
comprising 28 GE 3.2MW turbines and a generating capacity of
89.6MW. The site has been operational since May 2018 and was
developed by Cubico Sustainable Investments. The wind farm benefits
from a REFIT 2 tariff, providing inflation-linked revenue until
2032;
-- Glencarbry wind farm, located in County Tipperary, Ireland
and comprising 7 Nordex N100 3.3MW turbines and 5 Nordex N90 2.5MW
turbines and a generating capacity of 35.6MW. The site has been
operational since September 2017 and was developed by John Laing
Group PLC. The wind farm benefits from a REFIT 2 tariff, providing
inflation-linked revenue until 2032;
-- Erstrask South wind farm, located in Norrbotten County,
Sweden and comprising 26 Enercon E103 and 10 Enercon E126 turbines
with a combined capacity of 101.1MW. The site has been fully
operational since January 2021. Enercon will provide long term
operations and maintenance services. Erstrask South forms part of a
large emerging cluster of renewable generation in the Markbygden
area, with a potential installed capacity of 4GW. Currently the
wind farm exports electricity into Nord Pool on a purely merchant
basis, however it has the flexibility in the future to contract the
electricity produced via a corporate PPA; and
-- Ballincollig Hill wind farm, located in County Kerry, Ireland
and comprising 11 x Enercon E44 0.8MW and 5 x Enercon E44 0.9MW
turbines and a generating capacity of 13.3MW. The site has been
operational since June 2010 and was developed by Lee Strand. The
project is currently contracted under the REFIT 1 subsidy support
regime providing inflation-linked revenue until June 2025.
In addition, the Group made two forward sale commitments:
-- In February, the Group agreed to acquire Kokkoneva wind farm
in Northern Ostrobothnia, Finland, comprising 9 Nordex N149 4.8MW
turbines with a generating capacity of 43.2MW. Construction is
being overseen by Abo Wind and the project is expected to achieve
commercial operations in Q2 2022; and
-- In December, the Group agreed to acquire the Torrubia solar
farm in Zaragoza, Spain. This not only provides further geographic
diversification into Continental Europe but also provides
technological diversification, being the Group's first solar
investment. The asset will have a generating capacity of 50.0MW and
is expected to have offtake arrangements on a fully merchant
basis.
Forward Sale
In aggregate, the Group is committed to invest in 156MW across
four projects, representing an additional EUR228 million of GAV
growth. All of the projects under construction are proceeding as
planned, with no material issues on the construction timetable. In
addition to the Kokkoneva and Torrubia forward commitments, entered
into in 2021, the Group's previous forward committed investments,
being Cloghan and Taghart wind farms in Ireland, are expected to
become operational in Q4 2022 and Q1 2023 respectively. With
respect to all forward committed acquisitions, the Group does not
take any construction risk.
Gearing
Aggregate Group Debt as at 31 December 2021 was EUR631.1
million, which is well within our acceptable medium term range and
below the 60 per cent Investment policy limit. We were very pleased
to continue to add 5 and 7 year fixed rate term debt tranches
during the year and continue to value the support from our
relationship banks and institutional lenders.
The Group now benefits from a scalable debt structure. As at 31
December 2021, EUR475.0 million of the EUR631.1 million comprised 5
and 7 year bullet facilities. This non amortising debt is either
fixed rate or has an interest rate swap in place providing a fixed
weighted average cost of debt of 1.4 per cent. The remainder of the
Group's share of longer-term debt is structured as project finance
debt at the SPV level.
As at 31 December 2021, the Group's EUR300 million RCF was
undrawn, providing funding flexibility for the Group's active
pipeline of investment opportunities.
Equity Issuance
In October 2021, the Company issued 148,648,649 new shares at an
issue price of 111 cent per share raising gross proceeds of EUR165
million in an oversubscribed and NAV-accretive share placing. 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
EUR70.5 million (gross of SPV level debt repayment) or EUR56.0
million (net of SPV level debt repayment), providing dividend cover
of 1.5x (gross) or 1.2x (net).
Cash balances (Group and wind farm SPVs) increased by EUR34.5
million from EUR39.0 million to EUR73.5 million over the year.
For the year ended
Group and wind farm SPV cashflows 31 December 2021
------------------------------------------------- -----------------------
Net (1) Gross (1)
EUR'000 EUR'000
Net cash generation 55,999 70,526
Dividends paid (47,171) (47,171)
SPV level Capex & PSO cashflow (2) 26,812 26,812
SPV level debt repayment - (14,527)
Acquisitions (3) (378,873) (378,873)
Acquisition costs (3,603) (3,603)
Equity issuance 165,000 165,000
Equity issuance costs (2,585) (2,585)
Net drawdown under debt facilities 220,125 220,125
Upfront finance costs (1,265) (1,265)
Movement in cash (Group and wind farm SPVs) 34,439 34,439
Opening cash balance (Group and wind farm SPVs) 39,024 39,024
------------------------------------------------- ---------- -----------
Closing cash balance (Group and wind farm SPVs) 73,463 73,463
Net cash generation 55,999 70,526
Dividends 47,171 47,171
Dividend cover 1.2x 1.5x
------------------------------------------------- ---------- -----------
(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 (EUR14.5 million), and the second shows net
cash generation gross of SPV level debt repayments.
(2) Cashflows reflect residual capital expenditure from acquired
SPVs (EUR7 million) (covered by the vendor of the SPVs) and the
receipt of REFIT working capital movements associated with the PSO
relating to wind farm SPVs (EUR33 million).
(3) Acquisition consideration is net of the acquired SPV cash
(EUR30 million) and the full prepayment of the project level debt
of both Sommette and Saint Martin (EUR40 million).
The following 2 tables provide further detail in relation to net
cash generation figures of EUR70.5 million (gross) and EUR56.0
million (net):
For the year ended
Net Cash Generation - Breakdown 31 December 2021
----------------------------------- ---------------------
Net Gross
EUR'000 EUR'000
Revenue 139,292 139,292
Operating expenses (45,129) (45,129)
Tax / VAT (2,506) (2,506)
----------------------------------- ---------- ---------
Wind farm operating cashflow 91,657 91,657
SPV level debt interest (5,960) (5,960)
SPV level debt repayment (14,527) -
----------------------------------- ---------- ---------
Wind farm cashflow 71,170 85,697
Management fee (7,474) (7,474)
Operating expenses (2,641) (2,641)
Ongoing finance costs (5,078) (5,078)
VAT (325) (325)
Other 347 347
----------------------------------- ---------- ---------
Group cashflow (15,171) (15,171)
Net cash generation 55,999 70,526
----------------------------------- ---------- ---------
For the year ended
Net Cash Generation - Reconciliation to Net Cash Flows from Operating Activities 31 December 2021
---------------------------------------------------------------------------------- ---------------------
Net Gross
EUR'000 EUR'000
Net cash flows from operating activities (1) 16,067 16,067
Movement in cash balances of wind farm SPVs (2) 15,624 15,624
SPV capex & PSO cashflow (3) (27,472) (27,472)
Repayment of debt at SPV level - 14,527
Repayment of shareholder loan investment (1) 56,810 56,810
Finance costs (1) (6,343) (6,343)
Upfront finance costs (cash) (4) 1,313 1,313
---------------------------------------------------------------------------------- ---------- ---------
Net cash generation 55,999 70,526
---------------------------------------------------------------------------------- ---------- ---------
(1) Consolidated Statement of Cash Flows.
(2) Note 9 to the Financial Statements (excludes acquired
cash).
(3) C ashflows reflect residual capital expenditure from
acquired SPVs (EUR7 million) and REFIT working capital movements
with the PSO relating to wind farm SPVs (EUR33 million) less SPV
working capital (EUR13 million).
(4) EUR0.8 million finance costs capitalised during the year
plus EUR0.5 million professional fees (note 13 of the financial
statements).
NAV as at 31 December 2021 was EUR935.2 million (105.1 cent per
share), which is an increase from the NAV as at 31 December 2020,
which was EUR748.8 million (101.0 cent per share).
During the year, the 4.1 cent per share NAV increase is
attributable to:
-- Cash generated over the period (minus dividend paid) of +2.8
cent;
-- short term (mostly) power price increased curved of +2.7
cent;
-- impact of short-term CPI increase of +3.1 cent;
-- portfolio depreciation (and other movements) of -4.5
cent.
Total dividends of EUR47.2 million have been paid or declared
with respect to 2021 (6.06 cent per share). The target dividend for
2022 is expected to increase by 2 per cent to 6.18 cent per share
in line with the Company's dividend policy.
cent per share per cent
NAV at 31 December 2020 101.0
Less February 2021 dividend (1.5)
NAV at 31 December 2020 (ex-dividend) 99.5
NAV at 31 December 2021 105.1
Less February 2022 dividend (1.5)
NAV at 31 December 2021 (ex-dividend) 103.6
Movement in NAV (ex-dividend) 4.1 4.1
Dividends with respect to the year 6.1 6.1
--------------------------------------- --------------- ---------
Total return on NAV 10.2 10.2
--------------------------------------- --------------- ---------
The share price at 31 December 2021 was 112.0 cent per share,
representing a 6.6 per cent premium to NAV.
Reconciliation of Statutory Net Assets to Reported NAV
As at As at
31 December 2021 31 December 2020
---------------------------------------- ------------------ ------------------
EUR'000 EUR'000
DCF valuation 1,470,117 1,112,352
Other relevant assets (wind farm SPVs) 20,397 22,370
Cash (wind farm SPVs) 68,419 22,507
---------------------------------------- ------------------ ------------------
Fair value of investments (1) 1,558,933 1,157,229
Cash (Group) 5,045 16,517
Other relevant assets (2) 2,302 2,944
---------------------------------------- ------------------ ------------------
GAV 1,566,280 1,176,690
Aggregate Group Debt (3) (631,080) (427,877)
---------------------------------------- ------------------ ------------------
NAV 935,200 748,813
Reconciling items - -
---------------------------------------- ------------------ ------------------
Statutory net assets 935,200 748,813
Shares in issue 889,887,587 741,238,938
NAV per share (cent) 105.1 101.0
---------------------------------------- ------------------ ------------------
(1) The fair value of investments are shown gross of EUR156
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 2021 are gross of EUR3 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 EUR475 million relating to
amounts drawn under the Group's revolving credit and term
facilities (gross of EUR4 million of capitalised facility
arrangement fees and consistent with note 13 to the financial
statements), and EUR156. 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 as at 31 December 2021 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
Irish, French and Swedish 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.
Captured central base case real power prices are approximately
EUR59/MWh to 2030 and remain at approximately EUR59/MWh to 2040 in
Ireland. In France, the captured central base case real power is
approximately EUR46/MWh to 2030 and approximately EUR48/MWh to
2040. In Sweden, the captured central base case real power price is
approximately EUR39/MWh to 2030 and approximately EUR47/MWh to
2040. 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 past 2 years has seen the Group successfully expand into
Continental Europe, with operating assets owned in Ireland, France
and Sweden, and forward-committed investments made in Spain and
Finland.
The number of investment and portfolio optimisation
opportunities that are being considered by the Investment Manager
continue to grow, as the Company continues to execute on its
strategy to build a pan-European renewable infrastructure
portfolio.
Continental Europe
We continue to see the European market as attractive allowing
the Group to continue to diversify geographically and
technologically to capture the benefit of different weather
systems, as well as advantageous power markets and regulatory
frameworks, while not taking any currency risk. We continue to
consider a range of portfolio offtake structures, including
government support regimes and corporate PPAs.
We continue to see significant investment opportunities in
Continental Europe. These opportunities are mostly from sellers
well known to the Investment Manager, including European utilities
and developers with whom we have transacted previously.
Irish Wind Market
The Company continues to execute its strategy to consolidate the
Irish market, where it is already the largest owner of operating
wind farms.
Progress in 2021 is evidenced by the strong growth dynamics in
the Irish renewables market, with the continued buildout of new
renewable assets under the RESS framework, as well as the emergence
of a maturing corporate PPA market. We continue to see new
investment opportunities of assets under both REFIT and RESS
frameworks, with over 4GW of onshore wind capacity in operation or
construction, representing a c.EUR8 billion market size.
Looking ahead further, we see other long term, national scale
drivers for expansion and value enhancement in Ireland. The Irish
government announced plans in 2021 to boost the country's offshore
wind sector, build additional interconnection capacity, and provide
incentives to develop an advanced green hydrogen industry. The
Company is well positioned to benefit from this strong commitment
to capitalise on the country's exceptional wind resource and drive
towards a net zero economy.
Board of Directors
The Directors are of the opinion that the Board 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 64, 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 67, 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 64, 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. Emer is also 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 64, 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.
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 2021.
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 2021 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
2021) 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 Continental Europe while maintaining a
continued focus on Ireland. Key investment criteria include:
-- Ireland is 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, Denmark, Finland, France, Germany, the
Netherlands, Norway, Portugal, Sweden and Spain).
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 either
refinancing this debt in the equity markets at appropriate times or
introducing additional term debt on favourable terms in order to
refresh overall 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
third-party 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
date of the next AGM (or the date which is 15 months after the
passing of such resolution, 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 2021 are detailed
below:
Shareholder Ordinary shares held %
----------------------------------
31 December 2021
---------------------------------- -----------------------
BlackRock Inc 7.12
Abrdn Standard Capital 6.78
Brewin Dolphin Wealth Management 6.60
KBI Global Investors 6.10
Newton Investment Management 5.17
Foresight Group 4.83
Irish Life Investment Managers 4.80
Davy Stockbroker 4.43
M&G Investment Management 4.07
FIL Investment International 3.91
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 are 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 are no agreements to which the Company is party that
may affect its control following a takeover bid; and
-- there are 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 2021 31 December 2020
---------------------- -------------------- --------------------
EUR000 % EUR000 %
Management fee 7,944 1.00% 6,522 1.00%
Directors' fees 325 0.04% 254 0.04%
Ongoing expenses (1) 1,182 0.16% 1,382 0.21%
---------------------- -------- ---------- -------- ----------
Total 9,451 1.21% 8,158 1.24%
---------------------- -------- ---------- -------- ----------
Weighted Average NAV 778,777 651,082
(1) Ongoing expenses do not include broken deal costs EUR543k
and SPV administration fees EUR289k.
Based on the 31 December 2021 NAV of EUR935.2 million, the total
ongoing charges ratio is 1.21 per cent. of NAV. Assuming no change
in NAV, the 2022 ongoing charges ratio is expected to be 1.19 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
The Group invests in wind farms and the environmental benefits
of renewable energy are proven. As the largest owner of wind farms
in Ireland, the Company continues to prove the viability of
renewable energy as a robust sector for investment.
The Company is proud to be playing a critical role in helping to
achieve key renewable energy targets as well as contributing to the
broader net zero economy. The Company recognises that its long-term
success is tied to the effective management of ESG factors
associated its business, including those that are important to its
shareholders and stakeholders.
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 policy.
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, which require the Group to make reasonable endeavours to
procure the ongoing compliance of its investee companies with its
policies on responsible investment.
The Company's full ESG policy and its ESG report are available
on the Company's website: www.greencoat-renewables.com .
T ask Force on Climate-Related Disclosures (TCFD)
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 companies'
climate-related financial risk.
The premise of such climate related financial disclosures is
that financial markets need clear, comprehensive, 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 a changing
world.
The Company made its first disclosure under TCFD in its 2020
Annual Report. Having officially become a supporter of the TCFD
recommendations in 2021, the Company continues to evolve its
implementation of such recommendations. The Investment Manager has
a dedicated ESG Committee to manage the implementation of TCFD
disclosures.
The Company also became a partner to the Ireland TCFD Supporters
Campaign in 2021. This initiative was created by Sustainable
Finance Ireland of which the Company is a member. It is also
supported by the Department of Finance, Irish Road to COP26
initiative & the UN Environment Programmer's Finance
Initiative. The programme included corporate events, a TCFD
implementation workshop and formal TCFD training throughout 2021
which will continue in 2022. The learnings from this initiative
will be incorporated into the development of the TCFD strategy for
2022.
The core elements of these disclosures, as recommended by the
TCFD, comprise of 4 thematic areas.
1. 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
its growing business. It does this through regular meetings between
the Board and the Investment Manager where risk management of the
Company and its investments are 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.
The Audit Committee also consider the Company's climate related
disclosures in its Annual Report and Financial Statements.
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 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 on a regular basis to discuss ESG
and climate related risk management.
2. Strategy
As a significant investor in renewables energy infrastructure
with investments in Ireland, France and Sweden, the Group's growth
has been achieved through the acquisition and operation of
renewable energy generation assets with stable revenues backed
predominately 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
generating capacity.
The Company considers that the decarbonisation of the economy
will present significant investment opportunity 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. A description of climate related risks and
opportunities is considered below. The material risk of markets
includes scenario modelling and results of the financial impact to
the valuation of the Company.
3. Risk Management
The Board and the Investment Manager monitor climate related
risks and their impact on the Group. This includes both high
transition and high physical risks. The Company's business model is
well positioned to take advantage of the transition to a low carbon
economy. More extreme weather patterns arising from global warming
have the capacity to damage infrastructure in general, including
above ground grid infrastructure. However, it is considered
unlikely that damage will be caused to generating equipment that is
designed to take advantage of changing weather systems. Appropriate
insurance against property damage and business interruption is held
for any such eventuality.
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.
To ensure strong performance, the Group reinforces its specific
oversight on environmental and social issues with a range of
activities, including:
-- appointing at least one director from the Investment Manager
to the boards of SPVs companie, to ensure monitoring and influence
of both financial and ESG performance;
-- carrying out due diligence to ensure that any new outsourced
service providers are reputable and responsible organisations;
-- carrying out due diligence during the acquisition of new wind
farms in accordance with the Investment Manager's established
procedures and ESG Framework Policy, and in compliance with the
AIFMD Due Diligence Policy; and
-- complying with all applicable anti-bribery and
anti-corruption, and anti-money laundering laws and regulations and
implementing policies to ensure this performance is in line with
the policies of the Investment Manager.
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 as well as to opportunities identified during due diligence.
A formal ESG checklist is also considered by the Investment
Committee in the approval process of any new investment.
4. Metrics and Targets
The Company considers its climate related metrics in the wider
context of its sustainability performance in accordance with the
ESG Policy which includes:
-- renewables energy generation.
-- CO(2) 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 level.
-- appropriate internal controls / audit system / board level
oversight at SPV level.
-- policies in place at SPV Level (Health and Safety,
Anti-Bribery and Corruption and Conflicts).
Renewable generators avoid carbon dioxide emissions on a net
basis at a rate of approximately 0.4t CO(2) per MWh. Given the size
of the Group's investment portfolio at 31 December 2021, the
portfolio's CO(2) emission reductions will be in excess of 0.6
million tonnes per annum. The portfolio is also generating
sufficient electricity to power over 0.3 million homes per
annum.
The Company's Scope 1, Scope 2 and Scope 3 greenhouse gas
emissions are disclosed below:
Year ended Year ended
Disclosure 31 December 2021 31 December 2020
------------------------------------------------------------ ----------------- -----------------
Scope 1 - direct emissions (tonnes CO(2) ) 19 15
Scope 2 - indirect emissions (tonnes CO(2) ) 41 28
Scope 3 - indirect emissions (tonnes CO(2) ) (1) 125,696 57,767
----------------- -----------------
Total Scope 1, 2 and 3 emissions (tonnes CO(2) ) 125,756 58,023
------------------------------------------------------------ ----------------- -----------------
Scope 2 - indirect emissions, market based (tonnes CO(2) ) 0.08 0.04
------------------------------------------------------------ ----------------- -----------------
(1) Scope 3 emissions are the result of activities from assets
not owned or controlled by the Group, but that the Group indirectly
impacts in its value chain. Scope 3 emissions include all sources
not within the Group's Scope 1 and 2 boundary and include, inter
alia, emissions arising from the construction of each wind farm
acquired in 2021, including those emissions associated with the
manufacturing and transport of all equipment and material, before
the wind farm was commissioned as well as the expected spare part
provision throughout its lifetime.
These climate related risk and further metric disclosures can be
found in the Company's ESG report available on the Company's
website: www.greencoat-renewables.com .
Targets
The Board and the Investment Manager will continue to develop
the Company's approach to TCFD recommendations in the coming year.
This will include:
-- researching and keeping updated on TCFD developments,
including the TCFD Status Reports;
-- further developing our processes for identifying and
incorporating climate-related risks and opportunities into the
Company's risk matrix;
-- alongside leading industry bodies, developing an appropriate
scenario modelling methodology
Transition Risks
Policy and Legal
-- increased pricing of greenhouse gas emissions;
-- enhanced emissions reporting; and
-- mandates on and regulations on existing products and
services.
Since 2017, the portfolio has saved 1.8 million tonnes of CO(2)
from being released into the atmosphere. An increase of pricing in
greenhouse gas emissions would have a positive impact on the
business model. The Company has voluntarily reported on emissions
through CDP since 2020. It has also made disclosures under TCFD
since 2020 and in 2021, made its first disclosures under SFDR. The
Company is a member of the UK AIC and applies its Code of Corporate
Governance to ensure best practice The Company keeps abreast of
regulations and industry best practice with support from expert
consultants.
Technology
-- substitution of existing products and services with lower
emissions options;
-- unsuccessful investment in new technologies; and
-- costs to transition to lower emissions technology.
Electrification is a key enabler in the transition to a low
carbon economy. As the Group forecasts increased electricity demand
in the markets that it operates in, the Group is well positioned to
take advantage of the move to lower emission products and services.
The Group has been in operation since 2017 and has a proven track
record across the EU in investment in renewable technologies. The
Investment Manager continues to track the technical maturity and
the associated costs of new renewable technologies.
Market
-- long term power price;
-- uncertainty in market signals; and
-- changing customer behaviour.
The Board and the Investment Manager believe that the key factor
that could impact the Company in the transition to a lower carbon
economy is the variability of long-term prices for wholesale
electricity. In a lower carbon economy, where considerable buildout
of renewable generation capacity will be required, there is a risk
that the renewable energy power price could be negatively impacted.
This will depend on the pace of renewable deployment and any future
changes to electricity market design.
In a scenario where global temperature increases are limited to
only 1.5(o) C to 2.0(o) C, under our scenario analysis, power price
forecasts could be seen to fall below the case included in the
Company's NAV with a potential financial impact of a 2 to 3 cent
per share reduction.
A large proportion of the Group's revenues are contracted for up
to 15 years in stable economies. As the Company's growth strategy
is implemented, all new jurisdictions are risk assessed during the
acquisition process. This includes government policy, regulatory
and political factors.
Physical Risks
Acute
-- increased severity of extreme weather events such as cyclones
and floods.
The development stage of each project includes a technical
assessment of the key risks including location and site
suitability. The renewables equipment is fully compliant with CE
certification and is chosen based on their suitability for the
location including high winds, temperatures, and other climate
related risks. Appropriate insurance against property damage and
business interruption is held for any such eventuality.
Chronic
-- changes in extreme precipitation patterns and extreme
variability in weather patterns; and
-- reduced revenues.
Renewable energy generation is subject to inter-annual
variations that have a direct impact to annual revenues. Before
investment, the Investment Manager carries out extensive due
diligence using historical resource data that underpins the
long-term business case.
In addition, the Investment Manager plays an active role in
managing the portfolio to maximise value. This includes operational
energy assessments, six monthly expert analysis, forestry felling
and turbine upgrades.
Energy Source
-- use of lower emission sources of energy;
-- use of supportive policy for incentives;
-- use of new technologies;
-- participation in the carbon market; and
-- shift towards de-centralised energy production.
Across Ireland and its targeted jurisdictions in Continental
Europe, the Company expects over 400GW of renewable capacity to be
in operation by 2030. In 2021, the Company continued to acquire new
sites, including the acquisition of three operational wind farms in
Ireland and one operational wind farm in Sweden. The Company
continues to see many value-accretive opportunities for growth in
the Irish and Continental European secondary market, benefiting
from its execution track record, relationships with developers and
potential asset vendors, and the ability to transact at any
scale.
Products and Services
-- development and/or expansion of low emission goods and
services;
-- development of new products or services through R&D and
innovation;
-- ability to diversify business activities; and
-- shift consumer preferences.
The Company considers that the decarbonisation of the EU economy
will present significant investment opportunities and that the
Company's growth will be related to the success of the sector and
the engagement of its stakeholders. The Company anticipates a
growing number of large corporate entities seeking new products and
services including long term PPA arrangements to meet their energy
obligations.
Markets
-- access to new markets, assets and locations; and
-- use of public sector incentives.
The Company is able to make acquisitions in Belgium, Denmark
Finland, France, Germany, Netherlands, Norway, Portugal, Sweden,
and Spain in line with its investment policy. Continental Europe
can provide further diversification of intra-year generation
volumes and localised risks. It also gives the Company access to a
considerably larger pool of assets from which to seek best
risk-adjusted returns. Many of the operational assets across the
continent are owned by parties with whom the Investment Manager has
strong existing relationships. The Company's position is further
improved by the absence of currency risk when acquiring assets in
Europe.
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 across the portfolio in
Ireland, France and Sweden 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 six 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 relies on
the national private placement regimes/marketing requirements in
place in the relevant jurisdictions. On 7 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 1 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 will 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 by its portfolio companies.
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 merchant 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.EUR81/MWh whereas the
2021 wholesale electricity price was c.EUR135/MWh.
Under the French subsidy tariff mechanism established in 2000, a
producer can sell its whole production to 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 2021.
In Sweden, the market does not typically attract subsidies.
Electricity is typically traded through the Nord Pool, which is a
leading European power market that offers day ahead and intra-day
markets across 16 European countries. The average market price for
electricity in the Nord Pool SEI region (location of Erstrask
South) was c.EUR42/MWh in 2021.
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, French and
Swedish 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. To date, Brexit has
not had 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 of 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 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 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 2021. 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 2021 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 2021:
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
The biographical details of the Directors are set out in the
Board of Directors section.
Directors' Interests in Shares in the Company
Directors' interests in Company shares as at 31 December 2021
are detailed below.
Shareholder Ordinary shares of EUR0.01 each held as at Ordinary shares of EUR0.01 each held as at
------------------------
31 December 2021 31 December 2020
------------------------ ------------------------------------------- -------------------------------------------
Rónán Murphy 217,694 192,694
Emer Gilvarry 100,000 67,832
Kevin McNamara 78,327 68,327
Marco Graziano 65,000 65,000
------------------------ ------------------------------------------- -------------------------------------------
The Company does not have any share option schemes in place.
Dividend
The Board recommended an interim dividend of EUR13.5 million,
equivalent to 1.515 cent per share with respect to the quarter
ended 31 December 2021, bringing total dividends with respect to
the year to EUR47.2 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 2021.
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 Company 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.
Directors' Compliance Statement 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
27 February 2022 27 February 2022
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 entirely
independent. Annually, the Board considers the level of
remuneration in accordance with the AIC Code. Following a review,
the level of remuneration for Directors was benchmarked by an
independent consultant and a number of recommendations were made to
the Remuneration Committee. The subsequent change to non-executive
Directors' remuneration, effective from 1 January 2021, is detailed
later in this report. This has been the first increase in
non-executive director remuneration since the Company's listing in
2017.
Remuneration Policy
As at the date of this report, the Board comprised four
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 met at such times as the Committee Chairman required.
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 were 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 the
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 France and expanded its investment
portfolio into Sweden during the year, with future acquisitions in
Finland and Spain also agreed upon when these committed investments
become operational. It's GAV has grown to EUR1.6 billion through
acquisitions and equity raisings, and since listing, the Board and
its committees have held 27 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
2021 2020
-------------------------- --------------------- ------------------------- ------------------- -------------------
Rónán Murphy
(chairman) 16 June 2017 EUR130,000 EUR130,000 EUR100,000
Kevin McNamara 16 June 2017 EUR65,000 EUR65,000 EUR50,000
Emer Gilvarry 16 June 2017 EUR65,000 EUR65,000 EUR50,000
Marco Graziano 30 January 2020 EUR65,000 EUR65,000 EUR54,167
-------------------------- --------------------- ------------------------- ------------------- -------------------
Total EUR325,000 EUR254,167
------------------------------------------------- ------------------------- ------------------- -------------------
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 for the year ended 31 December
2021, totalled EUR325,000 (2020: EUR254,167) in comparison to
dividends paid to shareholders over the same period being
EUR47,171,244 (2020: EUR39,891,425).
On behalf of the Board,
Emer Gilvarry
Chair of the Remuneration Committee
27 February 2022.
Statement of Directors
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
27 February 2022 27 February 2022
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 2021, 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 2021.
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 net-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 renewable
energy-generating assets in Ireland, France and Sweden, thereby
increasing the resources and capital dedicated to the deployment of
renewable energy and the reduction of greenhouse gas emissions.
As an investment trust with no employees, the Board have agreed
that its culture and values 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 importance
being placed on transparency, trustworthiness and
dependability.
-- The trust of stakeholders is very important to maintain the
Company's reputation, particularly for execution certainty for
asset sellers and delivery of investment promises to investors.
-- Respect for differing opinions is to be shown across all
interaction 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.
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.
Chair Tenure
The Company's policy on Chair tenure is that the Chair should
normally serve no longer than nine years as a Director and Chair.
However, in exceptional circumstances, where it is in the best
interests of the Company, the Chair may serve for a limited time
beyond that. In such circumstances, the independence of the other
directors will ensure that the Board as a whole remains
independent.
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 57 men and 23 women as at
31 December 2021.
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
per cent and entry into material new financing facilities.
The Investment Manager, once every calendar quarter, submits 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,
promptly reports 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 2021 by each Director is set
out below:
2021 Scheduled Board Meetings (Total of 8) Additional Board Meetings (Total of 10)
------------------------ -------------------------------------- ----------------------------------------
Rónán Murphy 8 10
Emer Gilvarry 7 8
Kevin McNamara 8 10
Marco Graziano 8 9
------------------------ -------------------------------------- ----------------------------------------
Board Meetings, Committee Meetings and Directors' Attendance
During the year, there were also 9 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.
2021 Audit Committee Management Nomination Committee Remuneration
Meetings (Total of 4) Engagement Committee Meetings (Total of 2) Committee Meetings
Meetings (Total of (Total of 1)
2)
----------------------- ---------------------- --------------------- ---------------------- ----------------------
Rónán Murphy n/a 2 2 1
Emer Gilvarry 3 2 2 1
Kevin McNamara 4 2 2 1
Marco Graziano 4 2 2 1
----------------------- ---------------------- --------------------- ---------------------- ----------------------
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 of 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 Board and the Investment Manager are
currently in discussions about extending the Investment Management
Agreement, with every expectation of concluding agreement before
the end of the initial term.
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 holds a general meeting annually and specifies the
meeting as such. All general meetings other than annual general
meetings are called extraordinary general meetings. Extraordinary
general meetings are convened on such requisition, or in default,
and may be convened by such requisitions as provided by the
Companies Act 2014.
All business shall be deemed special if it 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 they are a holder. On a poll a member entitled to more than
one vote need not cast all their votes or cast all the votes they
use 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 6.18 cent per share for
2022, 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 three new wind farms in
Ireland and one in Sweden, along with two forward sale transactions
to acquire another wind farm in Finland and a solar farm in Spain
once operational. 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 Issuances
During the year, the Company issued 148,648,649 further shares,
raising a total EUR165 million in gross proceeds, 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 5 year non-amortising term debt facility with ING and
a new 7 year non-amortising term debt facility with AXA 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 SPV site managers and annual habitat management plans
are agreed by SPV boards for all relevant 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
27 February 2022.
Audit Committee Report
At the date of this report, the Audit Committee comprised of
Kevin McNamara (Chairman), Emer Gilvarry, and Marco Graziano. 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 should 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 2021. 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:
-- detailed analysis of the Company's quarterly NAVs;
-- reviewing the updated risk matrix of the Company including
climate related reporting disclosures under the TCFD framework;
-- 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 Audit 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 January 2022 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 2021, to determine that these were
unchanged from those disclosed in the Company's 2020 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
2022 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
27 February 2022.
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 2021, 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 2021 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 2021;
-- 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
EUR18.7m, 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 EUR7.1m 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 EUR0.9m, 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.
Our evaluation of the directors' assessment of the Group and
Company's ability to continue to adopt the going concern basis of
accounting including agreeing the inputs and assumptions within the
directors' assessment to supporting documentation and our own
understanding of the Group and Company. We stress tested their
assessment as well as conducting a robust review of the liquidity
position of the Group and Company. We have also reviewed the
adherence to bank covenants in place based on the stress tested
forecasts and considered the likelihood of these being breached in
the future.
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 or Parent'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
27 February 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
For the year For the year
ended ended
31 December 31 December
2021 2020
Note EUR'000 EUR'000
------------------------------------ ----- ------------- -------------
Return on investments 4 93,023 26,466
Other income 67 3,779
------------------------------------ ----- ------------- -------------
Total income and gains 93,090 30,245
Operating expenses 5 (10,283) (8,794)
Investment acquisition costs (3,166) (1,940)
------------------------------------ ----- ------------- -------------
Operating profit 79,641 19,511
Finance expense 13 (8,498) (5,443)
------------------------------------ ----- ------------- -------------
Profit for the year before tax 71,143 14,068
Taxation 6 - -
------------------------------------ ----- ------------- -------------
Profit for the year after tax 71,143 14,068
Profit and total comprehensive
income attributable to:
Equity holders of the Company 71,143 14,068
Earnings per share
------------------------------------ ----- ------------- -------------
Basic and diluted earnings from
continuing operations in the year
(cent) 7 9.3 2.2
------------------------------------ ----- ------------- -------------
The accompanying notes form an integral part of the consolidated
financial statements.
Consolidated Statement of Financial Position
As at 31 December 2021
31 December 2021 31 December 2020
Note EUR'000 EUR'000
----------------------------------- ----- ----------------- -----------------
Non current assets
Investments at fair value through
profit or loss 9 1,408,802 944,352
----------------------------------- ----- ----------------- -----------------
1,408,802 944,352
Current assets
Receivables 11 359 4,095
Cash and cash equivalents 5,045 16,517
----------------------------------- ----- ----------------- -----------------
5,404 20,612
Current liabilities
Payables 12 (6,297) (5,343)
----------------------------------- ----- ----------------- -----------------
Net current (liabilities)/assets (893) 15,269
Non current liabilities
Loans and borrowings 13 (472,709) (210,808)
----------------------------------- ----- ----------------- -----------------
Net assets 935,200 748,813
----------------------------------- ----- ----------------- -----------------
Capital and reserves
Called up share capital 15 8,898 7,412
Share premium account 15 668,405 507,476
Other distributable reserves 114,597 161,768
Retained earnings 143,300 72,157
----------------------------------- ----- ----------------- -----------------
Total shareholders' funds 935,200 748,813
----------------------------------- ----- ----------------- -----------------
Net assets per share (cent) 16 105.1 101.0
----------------------------------- ----- ----------------- -----------------
Authorised for issue by the Board on 27 February 2022 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 2021
31 December
31 December 2021 2020
Note EUR'000 EUR'000
----------------------------------- ----- ----------------- ------------
Non current assets
Investments at fair value through
profit or loss 9 935,069 745,907
----------------------------------- ----- ----------------- ------------
935,069 745,907
Current assets
Receivables 11 227 3,772
Cash and cash equivalents 2,480 1,545
----------------------------------- ----- ----------------- ------------
2,707 5,317
Current liabilities
Payables 12 (2,576) (2,411)
----------------------------------- ----- ----------------- ------------
Net current assets 131 2,906
Net assets 935,200 748,813
----------------------------------- ----- ----------------- ------------
Capital and reserves
Called up share capital 15 8,898 7,412
Share premium account 15 668,405 507,476
Other distributable reserves 114,597 161,768
Retained earnings 143,300 72,157
----------------------------------- ----- ----------------- ------------
Total shareholders' funds 935,200 748,813
----------------------------------- ----- ----------------- ------------
Net assets per share (cent) 16 105.1 101.0
----------------------------------- ----- ----------------- ------------
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 EUR71,143,477 (2020: EUR14,067,469).
Authorised for issue by the Board on 27 February 2022 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 2021
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 2021) 7,412 507,476 161,768 72,157 748,813
Issue of share capital 15 1,486 163,514 - - 165,000
Share issue costs 15 - (2,585) - - (2,585)
Dividends 8 - - (47,171) - (47,171)
Profit and total
comprehensive income
for the year - - - 71,143 71,143
------------------------ ----- --------- --------- -------------------- ---------- ---------
Closing net assets
attributable to
shareholders 8,898 668,405 114,597 143,300 935,200
------------------------ ----- --------- --------- -------------------- ---------- ---------
After taking account of cumulative unrealised gains of
EUR131,972,313, the total reserves distributable by way of a
dividend as at 31 December 2021 were EUR125,924,912.
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
------------------------ ----- --------- --------- -------------------- ---------- ---------
The accompanying notes form an integral part of the consolidated
financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
For the year
For the year ended ended
31 December 2021 31 December 2020
Note EUR'000 EUR'000
--------------------------------------- ----- ------------------- -----------------
Net cash flows from operating
activities 17 16,067 18,424
Cash flows from investing activities
Acquisition of investments (449,647) (123,641)
Investment acquisition costs (3,603) (1,518)
Repayment of shareholder loan
investments 9 56,810 32,442
--------------------------------------- ----- ------------------- -----------------
Net cash flows from investing
activities (396,440) (92,717)
Cash flows from financing activities
Issue of share capital 15 165,000 125,000
Payment of issue costs (2,585) (2,071)
Dividends paid 8 (47,171) (38,168)
Amounts drawn down on loan facilities 13 654,780 562,074
Amounts repaid on loan facilities 13 (394,780) (553,074)
Finance costs (6,343) (8,971)
--------------------------------------- ----- ------------------- -----------------
Net cash flows from financing
activities 368,901 84,790
Net (decrease)/increase in cash
and cash equivalents during the
year (11,472) 10,497
Cash and cash equivalents at the beginning
of the year 16,517 6,020
Cash and cash equivalents at the end
of the year 5,045 16,517
---------------------------------------------- ------------------- -----------------
The accompanying notes form an integral part of the consolidated
financial statements.
Company Statement of Cash Flows
For the year ended 31 December 2021
For the year For the year
ended ended
31 December 2021 31 December 2020
Note EUR'000 EUR'000
--------------------------------------- ----- ----------------- -----------------
Net cash flows from operating
activities 17 (5,663) (4,607)
Cash flows from investing activities
Loans advanced to Group companies 9 (162,000) (6,900)
Repayment of loans advanced to
Group companies 9 34,400 38,520
Repayment of shareholder loan
investments 9 18,954 2,658
Capital contribution to Group
companies 9 - (113,075)
--------------------------------------- ----- ----------------- -----------------
Net cash flows from investing
activities (108,646) (78,797)
Cash flows from financing activities
Issue of share capital 15 165,000 125,000
Payment of issue costs (2,585) (2,071)
Dividends paid 8 (47,171) (38,168)
Net cash flows from financing
activities 115,244 84,761
Net increase in cash and cash
equivalents during the year 935 1,357
Cash and cash equivalents at the beginning
of the year 1,545 188
Cash and cash equivalents at the end
of the year 2,480 1,545
---------------------------------------------- ----------------- -----------------
The accompanying notes form an integral part of the consolidated
financial statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
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 annual 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 2021 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
Updated accounting standards and interpretations have been
published and will be mandatory for the Company's accounting
periods beginning on or after 1 January 2022 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 2021, the Group had net current liabilities of
EUR0.9 million (2020: net current assets of EUR15.3 million) and
had cash balances of EUR5.0 million (2020: EUR16.5 million). This
excludes cash balances within investee companies of EUR68.5 million
(2020: EUR22.5 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 EUR472.7 million (2020: EUR210.8 million) of
outstanding debt as at 31 December 2021. 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.
SPV revenues are derived from the sale of electricity, and
although approximately 4 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 2021 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 Holdcos.
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 2021 and 2020, 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 Holdcos 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 quarterly 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 is 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 2021 and 31 December 2020 were as follows:
For the year
ended For the year ended
31 December 2021 31 December 2020
EUR'000 EUR'000
---------------------------- ----------------- -------------------
Investment management fees 7,944 6,522
----------------------------- ----------------- -------------------
7,944 6,522
---------------------------- ----------------- -------------------
As at 31 December 2021, EUR2,155,526 was payable in relation to
investment management fees (2020: EUR1,685,383).
4. Return on investments
For the year For the year
ended ended
31 December 2021 31 December 2020
EUR'000 EUR'000
----------------------------------------- ----------------- -----------------
Interest on shareholder loan investment
(note 19) 16,741 12,189
Dividends received (note 19) 11,350 15,311
Unrealised movement in fair value
of investments (note 9) 64,932 (1,034)
------------------------------------------ ----------------- -----------------
93,023 26,466
----------------------------------------- ----------------- -----------------
5. Operating expenses
For the year For the year
ended ended
31 December 2021 31 December 2020
EUR'000 EUR'000
-------------------------------------------- ----------------- -----------------
Investment management fees (note
3) 7,944 6,522
Other expenses 1,684 1,607
Non-executive Directors' remuneration 325 254
Group and SPV administration fees 251 339
Fees to the Company's Auditor:
for audit of the statutory financial
statements 76 69
for other services 3 3
--------------------------------------------- -----------------
10,283 8,794
-------------------------------------------- ----------------- -----------------
The fees to the Company's Auditor include EUR3,000 (2020:
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 2021 31 December 2020
EUR'000 EUR'000
---------- ------------------- -------------------
Taxation - -
---------- ------------------- -------------------
The tax reconciliation is explained below.
For the year ended For the year ended
31 December 2021 31 December 2020
EUR'000 EUR'000
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year before taxation 71,143 14,068
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year multiplied by the standard rate of corporation tax of
12.5 per cent 8,893 1,758
Tax on income at a higher rate 997 142
Fair value movements (not subject to taxation) (8,117) (214)
Dividends received (not subject to taxation) (1,419) (1,914)
Losses available for surrender 129 -
Group relief at higher rate of tax (997) -
Expenditure not deductible for tax purposes 514 504
Receipt of tax losses from unconsolidated subsidiaries - (276)
---------------------------------------------------------------------------- ------------------- -------------------
- -
---------------------------------------------------------------------------- ------------------- -------------------
7. Earnings per share
For the For the
year ended year ended
31 December 31 December
2021 2020
------------------------------------- ------------ ------------
Profit attributable to equity
holders of the Company - EUR'000 71,143 14,068
Weighted average number of ordinary
shares in issue 767,303,359 636,966,488
------------------------------------- ------------ ------------
Basic and diluted earnings from
continuing operations in the year
(cent) 9.3 2.2
------------------------------------- ------------ ------------
8. Dividends declared with respect to the year
Interim dividends paid during the year ended 31 December 2021 Dividend per Total
Share Dividend
cent EUR'000
--------------------------------------------------------------- ------------- ----------
With respect to the quarter ended 31 December 2020 1.5150 11,230
With respect to the quarter ended 31 March 2021 1.5150 11,230
With respect to the quarter ended 30 June 2021 1.5150 11,230
With respect to the quarter ended 30 September 2021 1.5150 13,481
6.060 47,171
--------------------------------------------------------------- ------------- ----------
Interim dividends declared after 31 December 2021 and not accrued in the year Dividend per Total
Share Dividend
cent EUR'000
------------------------------------------------------------------------------- ------------- ----------
With respect to the quarter ended 31 December 2021 1.5150 13,481
------------------------------------------------------------------------------- ------------- ----------
1.5150 13,481
------------------------------------------------------------------------------- ------------- ----------
On 27 January 2022, the Company announced a dividend of 1.5150
cent per share with respect to the quarter ended 31 December 2021,
bringing the total dividend declared with respect to the year to 31
December 2021 to 6.06 cent per share. The record date for the
dividend was 4 February 2022 and the payment date was 25 February
2022.
The following table shows dividends paid in the prior 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
--------------------------------------------------------------- ------------- ----------
9. Investments at fair value through profit or loss
Loans Equity interest Total
Group as at 31 December 2021 EUR'000 EUR'000 EUR'000
------------------------------ --------- ---------------- ----------
Opening balance 505,552 438,800 944,352
Additions 378,342 74,205 452,547
Repayment of shareholder
loan investments (note 19) (56,810) - (56,810)
Restructure of shareholder
loan investment (note 19) (51,000) 51,000 -
Shareholder loan adjustment (657) - (657)
Unrealised movement in fair
value of investments (note
4) 4,438 64,932 69,370
779,865 628,937 1,408,802
------------------------------ --------- ---------------- ----------
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
------------------------------ --------- ---------------- ----------
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
2021 2020
EUR'000 EUR'000
------------------------------------------- ------------- -------------
Decrease in valuation of investments (24,792) (31,998)
Movement in swap fair values within
SPVs 4,166 511
Repayment of debt at SPV level 14,527 14,009
Repayment of shareholder loan investments 56,810 32,442
Shareholder loan balance adjustment 657 -
Movement in cash balances of SPVs 15,624 (14,798)
Investment acquisition costs (1) 2,378 1,541
-------------------------------------------- -------------
69,370 1,707
------------------------------------------- ------------- -------------
(1) EUR788k 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
2021 EUR'000 EUR'000 EUR'000
------------------------------- --------- ---------------- -----------
Opening balance 517,690 228,217 745,907
Loans advanced to Holdcos
(note 19) 162,000 - 162,000
Loans repaid by Holdcos (note
19) (34,400) - (34,400)
Loans repaid by wind farm
SPVs (note 19) (69,954) - (69,954)
Restructure of shareholder
loan (note 19) - 51,000 51,000
Unrealised movement in fair
value of investments - 80,516 80,516
------------------------------- --------- ---------------- -----------
575,336 359,733 935,069
------------------------------- --------- ---------------- -----------
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 Holdcos
(note 19) 6,900 - 6,900
Loans repaid by Holdcos (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
------------------------------- --------- ---------------- ---------
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 Holdcos 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 2021.
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. There has been no change in the blended discount rate when
compared to the prior year, with the blended discount rate as at 31
December 2021 remaining 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 the
Group's investments in Ireland, France and Sweden.
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 EUR59/MWh
(2030) and remains at approximately EUR59/MWh (2040) in Ireland,
approximately EUR46/MWh (2030) to approximately EUR48/MWh (2040) in
France and approximately EUR39/MWh (2030) to approximately
EUR47/MWh (2040) in Sweden. 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 EUR1,408,802,257
(2020: EUR944,352,444). 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 (27,346) (3.1)
-0.25 per cent 28,251 3.2
Energy yield P50 10-year P90 (62,387) (7.0)
10-year P10 62,147 7.0
Forecast by leading
Power price consultant -10 per cent (82,267) (9.2)
10 per cent 83,313 9.4
Inflation rate 2.0 per cent - 0.5 per cent (52,337) (5.9)
+0.5 per cent 55,934 6.3
- 5
Asset Life 30 years years (111,153) (12.5)
+ 5 years 78,418 8.8
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 2021
------------------------------- ------------------- ------------------------------- -------------------------
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%
Cloosh Valley Wind Farm 6(th) Floor, South Bank House,
Holdings DAC Ireland Barrow Street, Dublin 4 75%
Riverside One, Sir John
Cnoc Windfarms Limited Ireland Rogerson's Quay, Dublin 2 100%
Cordal Windfarm Holdings Riverside One, Sir John
Limited(1) Ireland Rogerson's Quay, Dublin 2 100%
Jägershillgatan 18, 213
Erstrask Vind South AB(2) Sweden 75 Malmö 100%
Riverside One, Sir John
Glencarbry Windfarm 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%
Riverside One, Sir John
Knockacummer Wind Farm Limited Ireland Rogerson's Quay, Dublin 2 100%
Knocknalour Wind Farm Holdings Riverside One, Sir John
Limited(3) Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Kostroma Holdings Limited (4) Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Lisdowney Wind Farms Limited Ireland Rogerson's Quay, Dublin 2 100%
Meenaward Wind Farm Limited Riverside One, Sir John
(5) Ireland Rogerson's Quay, Dublin 2 100%
Monaincha Sigatoka Wind Riverside One, Sir John
Holdings DAC (6) Ireland Rogerson's Quay, Dublin 2 100%
Parc Eolien Des Tournevents du 20, Avenue de la Paix, 67000
Cos SAS(7) France Strasbourg, France 100%
Parc Eolien Des Courtibeaux 20, Avenue de la Paix, 67000
SAS (8) France Strasbourg, France 100%
Two Gateway, East Wall Road,
Raheenleagh Power DAC Ireland Dublin 3 50%
Seahound Wind Developments Riverside One, Sir John
Limited(9) Ireland Rogerson's Quay, Dublin 2 100%
Dublin Road,
Newtownmountkennedy, Co.
Sliabh Bawn Wind Holdings DAC Ireland Wicklow 25%
Riverside One, Sir John
SMSF Holdings Limited(10) Ireland Rogerson's Quay, Dublin 2 100%
Société
d'Exploitation du Parc Eolien 20, Avenue de la Paix, 67000
du Tonnerois(11) France Strasbourg, France 100%
Riverside One, Sir John
Tra Investments Limited (12) Ireland Rogerson's Quay, Dublin 2 100%
Tullynamoyle Wind Farm II Riverside One, Sir John
Limited Ireland Rogerson's Quay, Dublin 2 100%
1) The Group's investment in Cordal is held through Cordal Windfarm Holdings Limited
2) The Group's investment in Erstrask Vind South is held through Erstrask Vind South AB
3) The Group's investment in Knocknalour is held through Knocknalour Wind Farm Holdings Limited
4) The Group's investment in Glanaruddery is held through Kostroma Holdings Limited
5) The Group's investment in Beam Hill Extension is held through Meenaward Wind Farm Limited
6) The Group's investments in Monaincha and Garranereagh are
held through Monaincha Sigatoka Wind Holdings DAC
7) The Group's investment in Pasilly is held through Parc Eolien Des Tournevents du Cos SAS
8) The Group's investment in Saint Martin is held through Parc Eolien Des Courtibeaux SAS
9) The Group's investment in Letteragh is held through Seahound Wind Developments Limited
10) The Group's investment in South Meath is held through SMSF
Holdings Limited
11) The Group's investment in Sommette is held through Société
d'Exploitation du Parc Eolien du Tonnerois
12) The Group's investment in Ballincollig Hill is held through
Tra Investments Limited
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 2021 31 December
2020
Group EUR'000 EUR'000
----------------------------- ----------------- ------------
Sundry receivables 157 218
VAT receivable 118 58
Prepayments 46 45
Accrued income 20 3,774
Withholding tax receivable 18 -
---------------------------- ----------------- ------------
359 4,095
---------------------------- ----------------- ------------
31 December 2021 31 December 2020
Company EUR'000 EUR'000
-------------------------- ----------------- -----------------
Due from wind farm SPVs 108 3,713
VAT receivable 83 25
Prepayments 36 34
227 3,772
------------------------- ----------------- -----------------
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 27 February 2022,
the current balance outstanding is EURnil.
12. Payables
31 December 2021 31 December 2020
Group EUR'000 EUR'000
------------------------------------ ----------------- -----------------
Investment management fee payable 2,156 1,685
Other payables 1,739 1,425
Acquisition costs payable 1,327 1,389
Loan interest payable 781 556
Commitment fee payable 257 224
Share issue costs payable 37 57
Other finance costs payable - 7
6,297 5,343
----------------------------------- ----------------- -----------------
31 December 2021 31 December 2020
Company EUR'000 EUR'000
------------------------------------ ----------------- -----------------
Investment management fee payable 2,156 1,685
Other payables 383 669
Share issue costs payable 37 57
2,576 2,411
----------------------------------- ----------------- -----------------
13 .Loans and borrowings
The Company did not hold any loans or borrowings at 31 December
2021 (2020: EURnil).
31 December 2021 31 December 2020
Group at 31 December 2020 EUR'000 EUR'000
-------------------------------------- ----------------- -----------------
Opening balance 210,808 206,000
Revolving Credit Facility
Drawdowns 379,780 362,074
Repayments (394,780) (553,074)
Finance costs capitalised during
the year - (2,897)
Amortisation 2,173 725
Term debt facilities
Drawdowns 275,000 200,000
Finance costs capitalised during
the year (816) (2,120)
Amortisation 544 100
Closing balance 472,709 210,808
-------------------------------------- ----------------- -----------------
The finance costs associated with the revolving credit facility
that were capitalised and amortised in the prior year were fully
amortised due to the facility being EURnil drawn at 31 December
2021 (2020: EUR15,000,000).
For the year For the year
ended 31 December ended 31 December
2021 2020
EUR'000 EUR'000
-------------------------------- ------------------- -------------------
Loan interest 4,550 2,900
Professional fees 490 1,139
Amortised facility arrangement
fees 2,717 825
Commitment fees 741 531
Other facility fees - 48
8,498 5,443
-------------------------------- ------------------- -------------------
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.
The Group maintained a EUR300 million revolving credit facility
with CIBC, RBC and Santander with 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 2021, the principal balance of the facility
outstanding was EURnil (2020: EUR15,000,000), accrued interest was
EURnil (2020: EUR5,284) and the outstanding commitment fee was
EUR256,719 (2020: EUR223,662).
In April 2021, the Group increased the aggregate 5-year term
debt arrangements adding ING into the banking syndicate. Details of
the Group's term debt facilities and associated interest rate swaps
are set out in the tables below:
Loan Swap fixed Loan
Provider Maturity date margin rate principal Accrued interest at 31 December 2021
% % 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
ING 7 October 2025 1.55 (0.300) 75,000 231
Natwest 7 October 2025 1.55 (0.396) 50,000 138
275,000 781
--------------------------- -------- ----------- ----------- -------------------------------------
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.
Loan Mid swap Loan
Provider Maturity date margin rate principal Accrued interest at 31 December 2021
% % EUR'000 EUR'000
--------------------------- -------- --------- ----------- -------------------------------------
AXA September 2028 1.85 (0.141) 150,000 -
AXA September 2028 1.85 (0.045) 50,000 -
200,000 -
--------------------------- -------- --------- ----------- -------------------------------------
In July 2021, the Group entered into new 7-year term debt
arrangement with AXA. This fixed rate non-amortising term debt of
EUR200 million was utilised in three tranches on 30 September 2021
(EUR100 million), 10 December 2021 (EUR50 million) and 17 December
2021 (EUR50 million).
The funds were used to reduce borrowings under the Group's
revolving credit facility (undrawn at 31 December 2021), to finance
acquisitions in Q4, 2021 and for the prepayment of the project
finance debt in both Sommette and Saint Martin.
All borrowing ranks pari passu with a debenture over the assets
of, Holdco 1 and Holdco 2 and a floating charge over 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 typically based on a 2-year operational record, once
operational data has become available. The following wind energy
true-ups remain outstanding and the maximum adjustments are as
follows: Letteragh: EUR2,500,000.
During the year, the wind energy true up for Killala was also
agreed which resulted in no payment or receipt.
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.
In February 2021, the Group entered into an agreement to acquire
the Kokkoneva wind farm for headline consideration of EUR60
million. The investment is scheduled to complete in Q2, 2022 once
the wind farm is fully operational.
In December 2021, the Group entered into an agreement to acquire
Torrubia, a 50MW solar farm currently under construction in La
Muela, Spain. The investment is scheduled to complete in Q4, 2022
once the solar farm is fully operational.
15. Share capital - ordinary shares
At 31 December 2021, 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 2021 Opening balance 741,238,938 7,412 507,476 514,888
29 October
2021 Issued and paid 148,648,649 1,486 163,514 165,000
29 October Less share issue
2021 costs - - (2,585) (2,585)
---------------- ------------------ ------------ -------------- -------------- --------
31 December 2021 889,887,587 8,898 668,405 677,303
------------------------------------ ------------ -------------- -------------- --------
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
------------------------------------ ------------ -------------- -------------- --------
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 2021 31 December 2020
---------------------------------- ----------------- -----------------
Net assets - EUR'000 935,200 748,813
Number of ordinary shares issued 889,887,587 741,238,938
----------------------------------- ----------------- -----------------
Total net assets - cent 105.1 101.0
----------------------------------- ----------------- -----------------
17. Reconciliation of operating profit for the year to net cash
from operating activities
Group For the year For the year
ended 31 December ended 31 December
2021 2020
EUR'000 EUR'000
--------------------------------------- ------------------- -------------------
Operating profit for the year 79,641 19,511
Adjustments for:
Movement in fair value of investments
(note 4) (64,932) 1,034
Investment acquisition costs 3,166 1,940
Capitalised loan interest (note
9) - (1,339)
Finance costs capitalised during
the period (816) (5,017)
Amortisation of finance costs
(note 13) 2,717 825
(Increase)/decrease in receivables
(note 11) 3,736 (752)
(Decrease)/Increase in payables (7,445) 2,222
---------------------------------------- ------------------- -------------------
Net cash flows from operating
activities 16,067 18,424
---------------------------------------- ------------------- -------------------
Company For the year For the year
ended 31 December ended 31 December
2021 2020
EUR'000 EUR'000
------------------------------------------ ------------------- -------------------
Operating profit for the year 71,143 14,068
Adjustments for:
Movement in fair value of investments
(note 9) (80,516) (18,313)
Increase/(decrease) in receivables
(note 11) 3,545 (758)
Increase in payables 165 396
------------------------------------------- ------------------- -------------------
Net cash flows from operating activities (5,663) (4,607)
------------------------------------------- ------------------- -------------------
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. As the Group's
revolving credit facility was undrawn as at 31 December 2021, the
Group does not have any interest rate risk exposure. 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 not increase as currently EURnil
drawn (2020: EUR54,050). 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 2021 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 - 5,045 - 5,045
Other receivables (note
11) - - 359 359
Investments (note 9) 757,937 - 650,865 1,408,802
757,937 5,045 651,224 1,414,206
Liabilities
Other payables (note
12) - - (6,297) (6,297)
Loans and borrowings
(note 13) (472,709) - - (472,709)
(472,709) - (6,297) (479,006)
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 Company's interest and non-interest-bearing assets and
liabilities as at 31 December 2021 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 - 2,480 - 2,480
Other receivables (note
11) - - 227 227
Investments (note 9) - 162,000 773,069 935,069
- 164,480 773,296 937,776
Liabilities
Other payables (note
12) - - (2,576) (2,576)
- - (2,576) (2,576)
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)
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 2021 31 December 2020
Group EUR'000 EUR'000
-----------------
Other receivables (note 11) 359 4,095
Cash at bank 5,045 16,517
Loan investments (note 9) 779,865 505,552
785,269 526,164
The table below details the Company's maximum exposure to credit
risk:
31 December 2021 31 December 2020
Company EUR'000 EUR'000
Other receivables (note 11) 227 3,772
Cash at bank 2,480 1,545
Loan investments (note 9) 575,336 517,690
578,043 523,007
The tables below shows the cash balances of the Group and credit
rating for each counterparty:
Rating 31 December 2021
Group EUR'000
AIB BBB+ 5,045
5,045
Rating 31 December 2020
Group EUR'000
Northern Trust A+ 1,438
AIB BBB+ 13,640
Santander BBB 1,439
16,517
The table below shows the cash balances of the Company and the
credit rating for each counterparty:
Rating 31 December 2021
Company EUR'000
AIB BBB+ 2,480
2,480
Rating 31 December 2020
Company EUR'000
Northern Trust A+ 1,438
AIB BBB+ 107
1,545
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 2021 and 31 December 2020:
Group - 31 December
2021
Less than
1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables (note
11) 359 - - 359
Cash at bank 5,045 - - 5,045
Loan investments 22,441 89,765 779,865 892,071
Liabilities
Other payables (note
12) (6,297) - - (6,297)
Loan and borrowings (6,341) (300,364) (206,200) (512,905)
15,207 (210,599) 573,665 378,273
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
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 2021 and 31 December 2020:
Company - 31 December Less than
2021 1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables 227 - - 227
Cash at bank 2,480 - - 2,480
Loan investments 3,240 12,960 573,284 589,484
Liabilities
Other payables (2,576) - - (2,576)
3,371 12,960 573,284 589,615
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 - - 517,690 517,690
Liabilities
Other payables (2,411) - - (2,411)
2,906 - 517,690 520,596
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-bearing loans to
Holdco of EUR162,000,000 (2020: EUR6,900,000), and Holdco made
repayments of EUR34,400,000 to the Company (2020: EUR38,520,000).
As part of the restructure of a shareholder loan investment, the
Company also provided capital to Holdco 2 of EUR51,000,000 (2020:
EUR113,074,417). During the year, the Company also received
shareholder loan repayments from Knockacummer of EUR67,353,852
(2020: EUR1,994,445) and Killhills of EUR2,600,428 (2020:
EUR663,187).
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 2021 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 2021 For the year ending 31 December 2020
Rónán Murphy 25,000 22,123
Emer Gilvarry 32,168 -
Kevin McNamara 10,000 -
Marco Graziano - 65,000
67,168 87,123
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 2021 31 December 2020
Management Dividend Income Management Dividend Income
Fee income Fee income
EUR'000 EUR'000 EUR'000 EUR'000
Cordal - 5,500 - -
Ballybane - 1,700 494 2,750
Gortahile - 1,450 195 -
Beam - 700 204 773
Knocknalour - 600 90 200
Raheenleagh - 500 - 1,100
Carrickallen - 350 - 500
Garranereagh - 350 90 -
Lisdowney - 200 90 600
Cnoc - - 112 -
Cloosh Valley - - - 8,988
Glanaruddery - - 355 -
Killala - - 166 -
Killhills - - 381 -
Knockacummer - - 1,000 -
Letteragh - - 138 -
Monaincha - - 352 400
Tullynamoyle
II - - 112 -
- 11,350 3,779 15,311
The table below shows the Group's shareholder loans with the
wind farm investments:
Loans at 1 Loans Loans Loan Loans at 31 Accrued Total 2021
January 2021 advanced in adjusted in repayments December interest at interest on
(1) the year the year 2021 31 December shareholder
2021 loan
investment
Knockacummer 116,502 - - (70,273) 46,229 1,591 47,820 3,165
Monaincha 65,274 - - (1,800) 63,474 329 63,803 1,313
Glanaruddery 48,033 - - (1,700) 46,333 132 46,465 942
Ballybane 39,108 - - (3,300) 35,808 366 36,174 741
Killala 26,706 6,470 (657) (450) 32,069 263 32,332 906
Letteragh 25,350 - - (150) 25,200 419 25,619 831
Killhills 25,071 - - (3,600) 21,471 136 21,607 273
An Cnoc 17,547 - - (1,300) 16,247 84 16,331 346
Kostroma 16,577 1,854 - (3,950) 14,481 188 14,669 373
Gortahile 16,339 - - (699) 15,640 160 15,800 319
Tullynamoyle
II 14,511 - - (650) 13,861 71 13,932 288
Garranereagh 13,733 - - (500) 13,233 63 13,296 254
Carrickallen 13,498 - - (500) 12,998 266 13,264 533
Sommette 12,607 27,599 - - 40,206 579 40,785 765
Lisdowney 10,623 - - (1,020) 9,603 145 9,748 296
Beam Hill
Extension 9,140 - - (500) 8,640 44 8,684 182
Pasilly 8,870 - - (150) 8,720 264 8,984 527
Cloosh Valley 7,015 - - (2,441) 4,574 - 4,574 -
Sliabh Bawn 6,879 - - (1,827) 5,052 - 5,052 (8)
Knocknalour 5,795 - - - 5,795 96 5,891 191
Saint Martin 3,543 12,276 - - 15,819 279 16,098 197
Cordal 0 179,499 - (11,000) 168,499 862 169,361 2,627
Glencarbry 0 73,263 - (2,000) 71,263 370 71,633 1,118
Killala
Battery 0 - 0 0
Erstrask Vind
South AB 0 44,334 - - 44,334 355 44,689 355
GRP Sweden
Holdings AB 0 25,223 - - 25,223 202 25,425 202
TRA
Investments
Limited 0 7,824 - - 7,824 5 7,829 5
502,721 378,342 (657) (107,810) 772,596 7,269 779,865 16,741
(1) Excludes accrued interest as at 31 December 2021 of
EUR2,831.
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 27 January 2022, the Company announced a dividend of EUR13.5
million, equivalent to 1.515 cent per share with respect to the
quarter ended 31 December 2021, bringing the total dividend
declared with respect to the year to 31 December 2021 to 6.06 cent
per share. The record date for the dividend was 4 February 2022 and
the payment date is 25 February 2022.
On 15 February 2022, the Group acquired Tullahennel wind farm
from funds managed by affiliates of Apollo Global Management, Inc.
The wind farm is located in County Kerry, Ireland and consists of
13 GE 2.85MW turbines adding an additional 37MW to the Group's
installed capacity. The wind farm has been operational since
September 2018 and the acquisition brings the Groups' total
installed capacity to 837MW.
Company Information
Directors (all non-executive) Registered Company Number
Rónán Murphy (Chairman) 598470
Emer Gilvarry
Kevin McNamara
Marco Graziano 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
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 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 88 staff for the financial year ending 31 December
2021 was GBP16.5 million, consisting of GBP11.4 million fixed and
GBP5.1 million variable remuneration. The aggregate amount of
remuneration for the 5 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 GBP1.1
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
AXA means funds managed by AXA Investment Managers UK
Limited
Ballincollig Hill means Tra Investments Limited
Ballybane means Ballybane Windfarms Limited
BDO means the Company's Auditor as at the reporting date
Beam means Beam Hill and Beam Hill Extension
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
CBI means the Central Bank of Ireland
CDP means Carbon Disclosure Project
CFD means Contract for Difference
CIBC means Canadian Imperial Bank of Commerce
Cloosh Valley means Cloosh Valley Wind Farm Holdings DAC and
Cloosh Valley Wind Farm DAC
Cnoc means Cnoc Windfarms Limited
Company means Greencoat Renewables PLC
Cordal means Cordal Windfarm Holdings Limited, Oak Energy Supply
Limited and Cordal Windfarms Limited
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
Erstrask South means Erstrask Vind South AB
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
Glencarbry means Glencarbry Windfarm Limited
Gortahile means Gortahile Windfarm Limited
Group means the Company, Holdco, Holdco 1 and Holdco 2
GRP Sweden means GRP Sweden Holding AB
Holdco means GR Wind Farms 1 Limited
Holdco 1 means Greencoat Renewables 1 Holdings Limited
Holdco 2 means Greencoat Renewables 2 Holdings Limited
Holdcos mean GR Wind Farms 1 Limited, Greencoat Renewables 1
Holdings Limited and Greencoat Renewables 2 Holdings Limited
IAS means International Accounting Standards
IFRS means International Financial Reporting Standards
ING means ING Bank N.V.
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), 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
RCF means the Group's Revolving Credit Facility
REFIT means Renewable Energy Feed-In Tariff
RESS means Renewable Energy Support Scheme
Saint Martin means Parc Eolien Des Courtibeaux SAS
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
SFDR means Sustainable Finance Disclosure Regulation
Sliabh Bawn means Sliabh Bawn Holding DAC, Sliabh Bawn Supply
DAC and Sliabh Bawn Power DAC
SMSF means SMSF Holdings Limited
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
South Meath means SMSF Holdings Limited
SPVs means the Special Purpose Vehicles, which hold the Group's
investment portfolio of underlying operating wind farms
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 avoided The estimate of the portfolio's annual
per annum CO(2) emissions avoided through the displacement
of thermal generation, based on the portfolio's
estimated 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 estimated generation
as at the relevant reporting date.
Generation The amount of energy generated by the
underlying SPV's (investments) in the
portfolio over the period.
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.
This Annual Report has been prepared for the Company as a whole
and therefore gives greater emphasis to those matters which are
significant in respect of Greencoat Renewables PLC and its
subsidiary undertakings when viewed as a whole.
[1] Net cash generation before the repayment of project level
debt of EUR14.7 million.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR BSGDDUDDDGDR
(END) Dow Jones Newswires
February 28, 2022 02:00 ET (07:00 GMT)
Greencoat Renewables (LSE:GRP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Greencoat Renewables (LSE:GRP)
Historical Stock Chart
From Apr 2023 to Apr 2024
