TIDMTRIG
RNS Number : 3464O
Renewables Infrastructure Grp (The)
18 August 2017
The Renewables Infrastructure Group Limited
Announcement of Interim Results for the six months ended 30 June
2017
18 August 2017
The Directors of The Renewables Infrastructure Group Limited
announce the interim results for the six months ended 30 June
2017.
Highlights for the six months to 30 June 2017
Robust performance, on target for full-year dividend
* Portfolio generated 851GWh of electricity in the
period (H1 2016: 738GWh)
* Annualised total shareholder return for the period of
7.2% on a share price basis and 7.6% on a NAV basis
* Profit before tax of GBP31.3 million (H1 2016:
GBP19.2 million)
* Earnings per ordinary share of 3.5p (H1 2016: 2.6p)
* NAV per ordinary share(1) of 100.6p as at 30 June
2017 (31 December 2016: 100.1p)
* Directors' portfolio valuation of GBP951.8(2) million
as at 30 June 2017 (31 December 2016: GBP818.7
million)
* Dividends paid / declared for H1 2017 as per target;
overall target of 6.40p per share reaffirmed for the
year (2016: 6.25p(3) )
Continued growth in scale and diversity
* Invested GBP129m during the period including the
acquisition of two onshore operational wind farms
amounting to 44MW of capacity
* Raised GBP110 million of new equity capital (before
issue costs)
* Construction and commissioning of Freasdail Wind Farm
completed on schedule
* Refinanced a portfolio of three solar projects on
improved terms
Post period-end activities
* Acquired Broxburn, a 20MW battery-storage project
* TRIG's portfolio now includes 56 portfolio projects
in the UK, Ireland and France with net output
capacity of 774MW
1 The NAV per share at 30 June 2017 is calculated on the basis
of 943,070,204 (being the sum of 942,214,888 ordinary shares in
issue at that date plus a further 855,316 ordinary shares to be
issued to the Managers) in relation to part-payment of Managers'
fees for 2016 in the form of ordinary shares.
2 The Directors valuation of GBP951.8m is on the Expanded Basis
and reconciliation from the Expanded Basis to the IFRS Basis is
provided in the Analysis of Financial Results.
3 The 6.25p per share dividend relates to performance during the
2016 financial year. Total cash dividends paid during 2016 amounted
to 7.7975p per share as they included an extra quarter of dividends
that resulted from the shift in 2016 from semi-annual to quarterly
dividends (i.e. dividends equivalent to one quarter of performance
were accelerated - a one-off timing difference).
Helen Mahy CBE, Chairman of the Company, said:
"TRIG's interim results for the first half of 2017 demonstrate
the Company's robust financial and operational performance. The
success of the Company is underpinned by prudent management, a
diversified portfolio and benefits of scale, with TRIG achieving
target generation despite challenging weather conditions in certain
geographies. The Board remains confident of the Company's outlook
and we remain on track to deliver our dividend of 6.4p per share
distributions for the year."
Richard Crawford, Director, Infrastructure, InfraRed Capital
Partners, said:
"The Company has had a strong start to the year. We have
invested about GBP150 million, including TRIG's first investment in
Wales and the Company's first energy storage transaction, which was
completed after the period end. Although competition for renewables
projects remains strong, we maintain a disciplined approach to
sourcing investments across our target technologies and
geographies. We look forward to delivering further consistent
income as well as achieving additional scale efficiencies and
liquidity for our investors."
This announcement contains Inside Information.
Enquiries
InfraRed Capital Partners (Investment 020 7353 4200 (on
Manager) the day)
Richard Crawford, Director, Infrastructure
Matt Dimond, Director, Investor Relations
Phil George, Portfolio Director
RES (Operations Manager) 020 7353 4200 (on
the day)
Jaz Bains, Group Commercial Director
Rob Armstrong, Head of Group Communications
& Marketing
RES (Operations Manager) 020 7353 4200 (on
the day)
Jaz Bains, Group Commercial Director
Rob Armstrong, Head of Group Communications
& Marketing
Tulchan Communications (Financial PR) 020 7353 4200
Martin Pengelley
Latika Shah
Summary Information on TRIG and the Managers
The Renewables Infrastructure Group
The Renewables Infrastructure Group ("TRIG") was one of the
first investment companies investing in renewable energy
infrastructure projects listed on the London Stock Exchange. TRIG,
a Guernsey-based Company which completed its IPO in 2013 raising
GBP300 million, is a member of the FTSE-250 index with a market
capitalisation as at 30 June 2017 of approximately GBP1.04 billion.
TRIG has a strategy of diversification by investing in multiple
renewable energy technologies, jurisdictions and climate
systems.
TRIG has two experienced managers, InfraRed Capital Partners and
Renewable Energy Systems, working together to give the benefit of
the best services in both investment management and operational
management.
InfraRed Capital Partners
InfraRed Capital Partners Limited ("InfraRed") is TRIG's
Investment Manager and advises the Group on financial management,
sourcing and executing on new investments and providing capital
raising and investor relations services.
InfraRed is a leading international investment manager
specialised in infrastructure and real estate. With over 120
employees and offices in London, New York, Hong Kong, Seoul and
Sydney, InfraRed has a 25+ year track record in raising and
managing 15 infrastructure and real estate funds with over US$9
billion of equity under management.
InfraRed is also adviser to HICL Infrastructure Company Limited,
the largest London-listed infrastructure investment company with a
market capitalisation of c. GBP2.9 billion as at 30 June 2017.
Renewable Energy Systems
Renewable Energy Systems Limited ("RES") is TRIG's Operations
Manager and advises the Group on project operations.
RES is the world's largest independent renewable energy company
having developed and/or constructed 12GW of projects, with
operations in 10 countries and over 1,900 employees globally. RES
has the expertise to develop, engineer, construct and operate
projects around the globe across a range of technologies including
onshore and offshore wind, solar, energy storage and
transmission.
A dedicated team of more than 40 RES staff provide
portfolio-level operations management, utilising the company's
35-year experience in renewables to support the evaluation of
investment opportunities for the Group and provide project-level
services in the UK, Ireland and France.
Overview of Interim Financial Results
Six months to Six months to
30 June 2017 30 June 2016
Operating income (Expanded GBP39.5m GBP32.8m
Basis)(1)
Operating income (Statutory GBP33.3m GBP25.9m
IFRS Basis)(1)
Profit before tax GBP31.3m GBP19.2m
Earnings per share(2) 3.5p 2.6p
Interim dividends per share
for the period 3.2p 3.125p
As at As at
30 June 31 December
2017 2016
Net Asset Value (NAV) per share 100.6p(3) 100.1p
Cash balance(4) GBP8.6m GBP18.7m
Chairman's Statement
Introduction
On behalf of the Board, I am pleased to present a robust set of
results for the six months to 30 June 2017. NAV per share is
100.6p, up from 100.1p at 31 December 2016. Earnings per share are
3.5p, up from 2.6p in the comparative period in 2016. Cash
generation covered dividends paid by 1.2 times.
TRIG has a large, diversified portfolio of 56 operating projects
with 774MW of net output capacity across multiple technologies
providing long-term revenues from electricity sales and from
well-established support schemes in the UK, France and the Republic
of Ireland. Our experienced team of Managers - InfraRed as
Investment Manager and RES as Operations Manager - provide access
to a pipeline of new opportunities across multiple markets and
technologies as well as the in-depth capabilities to manage a broad
portfolio of operating projects to maximise value over their
long-term project lives.
TRIG, one of the fastest growing investment companies in recent
years(5) , enjoys strong long-term cash flows from a stable and
diversified investment portfolio in markets with the supportive
dynamics of carbon reduction targets, installation and operating
cost improvements and the imperative for improving energy security.
As a result, it is well positioned against the challenges posed by
weaker than expected power prices and by the broad political
uncertainties in the UK created by Brexit and the recent UK general
election. In addition, the Managers are actively seeking efficiency
improvements across the portfolio and have a strong pipeline of new
acquisition opportunities under review.
Portfolio and Operations
During the period, TRIG successfully made new investments of
GBP129.0 million. These predominantly constituted investments in
Neilston Community Wind Farm, a 10MW operating onshore project in
Scotland acquired from Carbon Free, and the recently commissioned
34MW onshore wind farm, Garreg Lwyd, TRIG's first investment in
Wales, acquired from RES. The latter has only recently been ROC
accredited so it benefits from a full 20 years of ROC revenues and
an expected operational life of 25 years. Both of these wind farms
were acquired as a result of established relationships with
developers. In the case of RES, the Group's Operations Manager,
TRIG through its 'right of first offer' agreement has made 21
successful acquisitions between IPO in July 2013 and 30 June
2017.
The first half of 2017 also saw the successful completion of the
construction and commissioning of the Freasdail wind farm in
Kintyre, Scotland, comprising 11 turbines with a generating
capacity of 22.6MW. This represents an important milestone for
TRIG. This was TRIG's first construction project in the wind sector
and benefitted from the extensive experience of the Company's
Managers in overseeing construction projects.
Electricity production during the first half of 2017 was 851GWh,
15% higher than the comparable period in 2016 (738GWh) as a result
of the increase in the scale of the portfolio and improved
operational performance. On the solar side, French production
mitigated lower-than-expected output from the UK portfolio, in
particular Penare which experienced exceptional downtime due to the
consequences of a grid power surge.
During the period, the Company successfully refinanced a
portfolio of three UK solar assets, taking advantage of improved
financing terms.
Power Prices
Spot wholesale power prices have been above the comparative
period last year. Forecasts for wholesale prices, however, have
reduced approximately 5% over the longer term compared to the
forecast power curves reported in our Annual Report for the period
to December 2016 as expectations for future gas prices have
adjusted downwards. The lower power price expectations are
reflected in the Company's portfolio valuation and the movement in
the valuation contributes to the Company's earnings for the
period.
Financial Results and Valuation
The Company's profit before tax was GBP31.3 million for the six
months ending 30 June 2017 (an increase of 63% over the GBP19.2
million achieved for the six months to 30 June 2016). Earnings per
share for the period were 3.5p, 35% higher than the 2.6p achieved
in the equivalent period in 2016. These results represent a robust
performance against the backdrop of lower wholesale power price
forecasts. Positive movements include reductions in valuation
discount rates (reflecting strong demand for renewables), foreign
exchange gains, changes in taxation assumptions and other
efficiency gains recognised in the valuation. Examples of
efficiency gains implemented by the Managers include reduced
maintenance costs reflected in new contracts and refinancing gains,
with the current supportive lending environment facilitating the
replacement of existing debt packages with new long-term debt on
improved terms.
The Directors have approved a valuation of GBP951.8 million as
at 30 June 2017 for the portfolio of 55 projects (31 December 2016:
GBP818.7 million and 53 projects). The net asset value ("NAV") per
share was 100.6p at 30 June 2017 (up 0.5p on the 100.1p NAV per
share as at 31 December 2016).
Cash received from the portfolio by way of distributions was
GBP35.3 million. After operating and finance costs, net cash flow
of GBP30.5 million covered the cash dividends paid in March and
June 2017, in respect of the six months to 31 March 2017 by 1.2
times (or 1.7 times, factoring in amounts invested in the repayment
of project-level debt - with the amount repaid at the project level
amounting to an additional GBP14.7 million).
Total management fees accruing to InfraRed and RES amounted to
GBP4.2 million in the period, comprising their management and
advisory fees based on 1.0% per annum in aggregate of the
applicable Adjusted Portfolio Value, with 20% of the fees to be
paid through the issue to the Managers of 855,316 shares in
aggregate. This will reduce to an aggregate fee of 0.8% on amounts
over GBP1.0bn. For the period, the Company's Ongoing Charges
Percentage, using the AIC methodology, were 1.09% on an annualised
basis, down from 1.15% for the comparative period in 2016.
Annualised total shareholder return (TSR) - based on share price
performance plus dividends - for the six months to 30 June 2016 was
7.2%. TRIG's TSR since IPO is 8.4% vs. 7.4% for the FTSE All-Share
Index. TRIG's annualised TSR on a NAV-plus-dividends basis for the
six months to 30 June 2017 was 7.6%.
Capital Raising and Financing
In April 2017, the Company completed a placing of 106,796,117
new shares under the terms of its second Share Issuance Programme
(which expired in the same month), raising gross proceeds of GBP110
million. The net proceeds from the share issuance were used to fund
the acquisition pipeline (including Garreg Lwyd and Neilston).
Distributions
During the period, the Company paid aggregate interim dividends
of 3.1625p per share, comprising the fourth interim dividend for
2016 of 1.5625p paid in March 2017 and the first interim dividend
for 2017 of 1.6p per share paid in June 2017. The Board has
declared a second interim dividend for 2017 of 1.6p per share which
is payable on 29 September 2017 to those ordinary shareholders on
the register on the record date of 18 August 2017.
The Company offers shareholders a scrip dividend alternative,
full details of which can be found in the Scrip Dividend Circular
2017 (available on the Company's website).
We remain on track for an aggregate dividend of 6.4p per share
for the current financial year to 31 December 2017, as per the
guidance issued by the Company in February 2017. Subsidy income has
benefited from its inflation linkage and spot power prices have
made a recovery over H1 2017 although, as noted, forecast power
prices have reduced. While TRIG benefits from support scheme
revenues, which are generally inflation-linked and currently
comprise the majority of the portfolio revenue, the shape of cash
flows are also affected by the outlook for electricity prices as
well as by other factors. As the Company has previously stated,
TRIG's distribution policy assumes, in particular, steady growth in
UK and European wholesale power prices and on-target operating
performance. While operationally we have performed close to target,
after successive falls in wholesale power price forecasts since
launch, future dividend increases may trend beneath inflation
unless there are sustained long-term power price increases in real
terms. The Board will keep TRIG's distribution policy under review,
taking into account these factors as well as the prevailing rate of
inflation and their impact on dividend cover when considering
whether it would be prudent to move to a progressive dividend
policy rather than one directly linked to inflation in the
future.
Principal Risks and Uncertainties
As detailed in the Company's Annual Report to 31 December 2016,
the principal risks and uncertainties affecting the Group are as
follows:
-- portfolio electricity production falling short of
expectations;
-- electricity prices falling or not recovering as expected;
and
-- government or regulatory support for renewables changing
adversely.
Further information in relation to these principal risks and
uncertainties, which are unchanged from 31 December 2016 and remain
the risks most likely to affect the Group in the second half of the
year, may be found on pages 44 to 46 of the Company's Annual Report
for the year ended 31 December 2016. In addition to the risks
identified above, the Managers' Report herein discusses further the
implications for the Company of the ongoing Brexit process. The
Brexit process may impact on power prices and government policies
although the direction and extent of any such outcomes as yet
remain unclear.
Outlook
As a long-term investor, the Company continually assesses the
political and economic backdrop and trends. The Board believes that
governments in the UK and across Europe, under pressure from voters
to move away from austerity, may continue to look to the markets to
help fund necessary infrastructure projects as fiscal pressures
become a persistent feature of the economic landscape. The recent
increase in inflation and expected modest and gradual rises in
interest rates also provide a benign environment for the Company to
pursue prudent acquisitions as well as obtain attractive financing
for existing investments.
Following the completion of Freasdail wind farm, the Company may
engage in further construction activity (subject to its investment
limits(6) ) enabling it to secure projects at more favourable
returns in an increasingly competitive market as investors hunt out
long-term yielding assets with positive inflation-correlation. In
addition to looking at suitable projects in new markets, such as
Benelux, Germany and Scandinavia, the Investment Manager will also
continue to look at alternative technologies within the 20% limit
for projects beyond onshore wind and solar. These technologies
include offshore wind (a high-growth, large-scale market in the UK
and Northern Europe) and battery storage (an important industry for
the future balancing of renewables).
In August, following the period end, TRIG acquired a battery
storage project, Broxburn. This project marks the first investment
by TRIG in "renewables-enabling" infrastructure. Battery storage
will be used on the grid to stabilise the frequency of grid
supplied electricity - matching the variability of supply and
demand.
The broader market picture looks promising. Public and political
support for clean electricity in the UK and Europe remains strong,
underlined by government initiatives designed to provide momentum
for the switch to electric vehicles and to incentivise better
demand-side response. The reduction in the cost of deploying proven
renewables infrastructure continues apace. This may make
unsubsidised renewables generation a reality and points to a likely
resurgence in new developments in the years ahead, both to replace
fossil-fuelled generation as well as for repowering maturing "first
generation" renewables sites.
With an extensive operating portfolio, an attractive acquisition
pipeline and the skills of the management teams at InfraRed and
RES, the Company looks forward to delivering further steady
performance in the second half of 2017 and beyond.
Helen Mahy CBE
Chairman
17 August 2017
Investment Portfolio
The TRIG portfolio benefits from being diversified across
multiple jurisdictions, power markets and generating technologies
providing multiple revenue contract and/or subsidy sources, as well
as a variety of geographic areas with differing meteorological
conditions (affecting wind speeds and solar irradiation applicable
to each of TRIG's projects).
As at 30 June 2017, the TRIG portfolio comprised 55 investments
in the UK, Republic of Ireland and France, including 27 onshore
wind projects (73% by value) and 28 solar photovoltaic projects
(27% by value). The UK represented 86% of the portfolio by value
(of which England 24%, Scotland 45%, Wales 11% and Northern Ireland
6%), with France contributing 12% and the Republic of Ireland 2%.
Following the period end there were 56 investments following the
acquisition of the Broxburn battery storage project in Scotland in
August 2017.
Project Market (Region) TRIG's Net Capacity Year Commissioned(7) Turbine (MW)
Equity (MW)
Interest
ONSHORE WIND FARMS
Roos GB (England) 100% 17.1 2013 Vestas (1.9)
Grange GB (England) 100% 14.0 2013 Vestas (2.0)
Tallentire GB (England) 100% 12.0 2013 Vestas (2.0)
Garreg Lwyd GB (Wales) 100% 34.0 2017 Vestas (2.0)
Crystal Rig
2 GB (Scotland) 49% 67.6 2010 Siemens (2.3)
Hill of Towie GB (Scotland) 100% 48.3 2012 Siemens (2.3)
Mid Hill GB (Scotland) 49% 37.2 2014 Siemens (2.3)
Paul's Hill GB (Scotland) 49% 31.6 2006 Siemens (2.3)
Crystal Rig
1 GB (Scotland) 49% 30.6 2003 Nordex (2.5)
Green Hill GB (Scotland) 100% 28.0 2012 Vestas (2.0)
Rothes 1 GB (Scotland) 49% 24.8 2005 Siemens (2.3)
Freasdail GB (Scotland) 100% 22.6 2017 Senvion (2.1)
Rothes 2 GB (Scotland) 49% 20.3 2013 Siemens (2.3)
Earlseat GB (Scotland) 100% 16.0 2014 Vestas (2.0)
Meikle Carewe GB (Scotland) 100% 10.2 2013 Gamesa (0.85)
Neilston GB (Scotland) 100% 10.0 2017 Nordex (2.5)
Forss GB (Scotland) 100% 7.2 2003 Siemens (1.0-1.3)
Altahullion SEM (N. Ireland) 100% 37.7 2003 Siemens (1.3)
Lendrum's Bridge SEM (N. Ireland) 100% 13.2 2000 Vestas (0.7)
Lough Hill SEM (N. Ireland) 100% 7.8 2007 Siemens (1.3)
SEM (Rep. of
Taurbeg Ireland) 100% 25.3 2006 Siemens (2.3)
SEM (Rep. of
Milane Hill Ireland) 100% 5.9 2000 Vestas (0.7)
SEM (Rep. of
Beennageeha Ireland) 100% 4.0 2000 Vestas (0.7)
Haut Languedoc France (South) 100% 29.9 2006 Siemens (1.3)
Haut Cabardes France (South) 100% 20.8 2005 Siemens (1.3)
Cuxac Cabardes France (South) 100% 12.0 2006 Vestas (2.0)
Roussas-Claves France (South) 100% 10.5 2006 Vestas (1.8)
Total Onshore Wind at 30
June 2017 598.6
Project Market (Region) TRIG's Net Capacity Year Commissioned(8) Turbine
Equity (MW) (MW)
Interest
SOLAR PHOTOVOLTAIC PARKS
Parley Court
Farm GB (England) 100% 24.2 2014 ReneSola
Egmere Airfield GB (England) 100% 21.2 2014 ReneSola
Stour Fields GB (England) 100% 18.7 2014 Hanwha SolarOne
Tamar Heights GB (England) 100% 11.8 2014 Hanwha SolarOne
Penare Farm GB (England) 100% 11.1 2014 ReneSola
Four Burrows GB (England) 100% 7.2 2015 ReneSola
Canadian
Parsonage GB (England) 100% 7.0 2013 Solar
Canadian
Churchtown GB (England) 100% 5.0 2011 Solar
Canadian
East Langford GB (England) 100% 5.0 2011 Solar
Canadian
Manor Farm GB (England) 100% 5.0 2011 Solar
Marvel Farms GB (England) 100% 5.0 2011 LDK/Q.Cells
Midi France (South) 51% 6.1 2012 SunPower
Plateau France (South) 49% 5.9 2012 Sunpower
Puits Castan France (South) 100% 5.0 2011 Fonroche
Chateau France (South) 49% 1.9 2012 Sharp
Broussan France (South) 49% 1.0 2012 Sharp
Pascialone France (Corsica) 49% 2.2 2011 CSUN
Olmo 2 France (Corsica) 49% 2.1 2011 CSUN
Santa Lucia France (Corsica) 49% 1.7 2011 CSUN
Borgo France (Corsica) 49% 0.9 2011 Suntech
Agrinergie 1
& 3 France (Réunion) 49% 1.4 2011 Suntech/CSUN
Chemin Canal France (Réunion) 49% 1.3 2011 CSUN
Canadian
Ligne des 400 France (Réunion) 49% 1.3 2011 Solar
Agrisol France (Réunion) 49% 0.8 2011 Sunpower
Agrinergie 5 France (Réunion) 49% 0.7 2011 Sunpower
Logistisud France (Réunion) 49% 0.6 2010 Sunpower
Sainte Marguerite France (Guadeloupe) 49% 1.2 2011 Sunpower
Marie Galante France (Guadeloupe) 25% 0.5 2010 GE
Total Solar PV at 30 June 2017 155.8
Total Portfolio at 30 June 2017 754.4
Acquisition post-30 June 2017:
BATTERY STORAGE
Broxburn GB (Scotland) 100% 20.0 2018 Samsung/SMA
Total Portfolio at 17 August 2017: 774.4
Managers' Report
TRIG is advised by InfraRed Capital Partners as Investment
Manager and Renewable Energy Systems as Operations Manager.
Market Developments and Opportunities
The first half of 2017 has seen a shifting political and
economic scene, notably with elections in the UK and Continental
Europe and the triggering of the UK's exit from the EU. Inflation
has picked up in the UK following sterling's devaluation and this
will feed through into ROC values. There are signals for a
potential turn in the interest rate cycle, albeit a measured and
long-flagged one. Meanwhile, the fundamentals for growth in the
renewables market remain: a broad international commitment to
reduce greenhouse gas emissions; the improving cost-competitiveness
of renewable energy technologies as they move into the mainstream
of the global energy market; and the political and economic
imperative to plan for long-term local and regional energy
security. Although the announcement by the White House of a US
withdrawal from the 2015 "COP21" Paris Agreement is certainly
disappointing from a climate change perspective, the reaction from
other countries has been impressive in the reaffirming of
commitments to renewables, including from countries within TRIG's
core geographical focus.
United Kingdom
As an investor focused primarily on operational renewables
infrastructure projects in well-established technologies, the
Company is expected to show resilience in its performance, whatever
the manner of the UK's expected departure from the European Union.
While clearly influenced by European momentum towards greener
energy and forming part of the UK's contribution towards broader
EU-wide goals, the UK has enacted its own energy legislation, most
importantly the 2008 UK Climate Change Act which targets an 80%
reduction in carbon emissions from 1990 levels by 2050. Neither the
Renewable Obligation (RO), the historic mainstay of the government
support applicable to TRIG's UK assets, or the overarching policies
such as the Levy Control Framework (determining the UK's budgeting
strategy) are set by EU Directives. The rapid rates of deployment
of wind and solar in the UK in recent years as well as increasing
efficiency measures across energy, transport, housing and industry
have made a meaningful impact on meeting the UK's ambitious
domestic targets.
The final closure of the RO regime to new plant in April 2017
marks the end of a five-year period of impressive growth in UK
onshore wind and solar. The UK's installed solar capacity increased
dramatically from approximately 1.7GW in December 2012 to 12.2GW in
March 2017, while the UK's wind capacity (both onshore and
offshore) nearly doubled over the same period, increasing from
approximately 5.9GW to 11.7GW(9) .
Deployment of new UK onshore wind and solar capacity is expected
to plateau in the near-term, with no pending allocations under the
UK's newer Contracts-for-Difference, "CfD," support scheme for
these technologies. However, the Managers are confident that they
will be able to acquire opportunities for further portfolio
acquisitions in several areas:
-- the significant number of existing operating wind and solar
assets available from utilities and developers seeking to recycle
their investment capital;
-- the build-out of UK offshore wind under long-term CfD support
schemes as well as from the earlier RO programme, with this segment
currently accounting for some 5.5GW1 of UK generating capacity and
expected to double over the next five years; and
-- supporting infrastructure such as battery storage which
improves the integration of intermittent renewables technologies
into grid networks.
An additional area of potential investment will emerge from a
new generation of installations which seek to be viable without
subsidy. These will typically be developments in specific locations
with strong natural resources and convenient grid connectivity
allowing for a levelised cost of generation competitive with
baseload gas- and coal-fired generation. As such projects may have
a higher variability in revenues arising from wholesale power
markets than those with a major element of fixed subsidy, they are
more likely to be structured with little or no leverage to obtain a
similar level of investment risk.
Other Northern Europe
As at 30 June 2017, French assets constituted 12% of the
Company's portfolio by value. The Managers see opportunities to
increase this, especially given France's strong environmental
agenda under its new President, Emmanuel Macron. The programme of
the new French administration promises a continued shift into
renewable energy, including the doubling of French wind and solar
capacity and the closing of all coal-fired stations, both within
five years, while reducing the nuclear segment of the French power
market from close to three-quarters of generation today to half by
2025.
At the start of 2017, the Republic of Ireland was only halfway
towards achieving its 2020 target of 16% primary energy consumption
from renewable sources. It is likely that there will be significant
renewables deployment over the coming years as the government tries
to reach this target and avoid the prospect of financial penalties
imposed by the EU. The deadline for grid-connecting existing REFIT
support scheme projects has been extended to December 2019. The
Irish government has signalled its intention to provide a new
renewable energy support scheme and a public consultation is
expected imminently.
In addition to its existing assets in the UK, Ireland and
France, the Company continues to review opportunities in other
markets, in particular in Benelux, Germany and Scandinavia.
Power Prices and Currencies
Spot and forward wholesale power prices, partly supported by the
devaluation of sterling after June 2016, have staged a material
recovery over the lows of H1 2016, trading in the UK market in the
GBP40s per MWh versus the low GBP30s seen at one stage in the
comparative period.
The outlook for long-term forecast power prices is more cautious
as a result of a lower trajectory for long-term natural gas prices
in the UK and Europe which are key in setting wholesale power
prices in TRIG's portfolio countries.
Recent power price forecasts maintain the expectation for rises,
in real terms, over the longer term. Key factors impacting on the
long-term outlook include:
-- increased expected natural gas prices over the longer term
driven by increased demand for LNG (Liquefied Natural Gas) from
growth in Asian economies;
-- the continued transition away from coal and the accelerated
decommissioning of older fossil fuel generators;
-- potential delays in the commissioning of replacement nuclear facilities;
-- increased electrification of transport (noting the recent
emphasis from policy setters as well as leading manufacturers);
-- expected higher carbon costs; and
-- counterbalancing efficiency improvements in power usage.
The continued weakness of sterling also benefits the sterling
value of TRIG's euro-denominated assets. Non-sterling assets
constituted 14% of the portfolio as at 30 June 2017. A depreciation
of sterling of 10% against the euro results in approximately a 0.6%
increase in NAV.
Portfolio Performance
Capital Raising
A total of GBP110 million new equity before expenses was raised
in April 2017 following an institutional placing under the
Company's second Share Issuance Programme. This placing was
oversubscribed and investors were subject to material scale-backs.
The net proceeds were applied to fund new investments in the Garreg
Lwyd and Neilston UK onshore wind projects. As at 30 June 2017 the
Company's revolving acquisition facility was GBP8.5 million
drawn.
Acquisitions
In the first half of 2017, TRIG made investments of GBP129.0
million, comprising two acquisitions for GBP125.4 million in
aggregate consideration and two small follow-on investments for
GBP3.5 million. TRIG's net generating capacity as a result has
increased from to 710MW to 754MW.
In May 2017, TRIG acquired a 100% interest in Neilston Community
Wind Farm, a 10MW onshore project in East Renfrewshire, Scotland.
TRIG acquired the asset from a private developer, Carbon Free, and
Neilston Development Trust for GBP22.6 million with no third party
debt. The asset benefits from ROC accreditation and is due to
receive 1.0 ROCs per MWh for the next 16 years of its operational
life.
In the same month, TRIG acquired a 100% interest in a newly
operational 34MW onshore wind farm, Garreg Lwyd in Powys, Wales.
This significant purchase represents TRIG's first Welsh project and
is now TRIG's largest asset by value. The Company acquired this
project from RES who developed the project under TRIG's Right of
First Offer Agreement. The total investment in the project
(including a small element of funding to cover the completion of
construction works) was GBP102.8 million, with no third party debt.
Garreg Lwyd is one of the last projects to be accredited under the
UK's ROC regime for onshore wind and is entitled to receive 0.9
ROCs per MWh for the next 20 years.
During the period TRIG took the opportunity to purchase the
freehold interest in the land at the Marvel Farms solar park for
GBP1.1 million enhancing its long-term interest in the site. TRIG
paid GBP2.4 million to RES (TRIG's Operations Manager) pursuant to
the post acquisition true-up relating to the Meikle Carewe and
Tallentire wind farms that TRIG purchased from RES in June 2014 as
a result of an updated yield assessment.
In August 2017, since period end, TRIG acquired Broxburn battery
storage for a total investment of GBP20 million once construction
has completed. The project is located in West Lothian, Scotland,
and has 20MW of two-way capacity. It was developed by RES and
construction is expected to be completed by Q1 2018. The asset is
then expected to have an operational life of 15 years. Broxburn has
no debt financing and benefits from a bespoke long-term bilateral
contract with National Grid Electricity Transmission plc to provide
dynamic grid balancing services. For the initial four years of
operations under the contract, revenues are substantially based on
pre-determined, RPI-indexed availability payments. This is the
first investment for TRIG beyond the onshore wind and solar
sectors. In addition to storage assets, TRIG will continue to
review opportunities in other technologies including offshore wind
and demand-side response. Under its investment policy, TRIG can
invest up to 20% of the portfolio by value in other such
technologies.
The acquisitions made since January 2017 were achieved via
well-established relationships. Broxburn battery storage and Garreg
Lwyd wind farm were both acquired from RES, who developed the
assets. Neilston Wind Farm was acquired from Carbon Free, a
developer with whom InfraRed has successfully transacted in the
past and which was a vendor of TRIG's Earlseat wind farm.
Operations
Between January and June 2017, the TRIG portfolio generated a
total of 851 gigawatt hours (GWh) of electricity (including
compensated downtime). This includes contributions from the
recently acquired UK wind farms Neilston, Freasdail and Garreg
Lwyd. Generation has increased by 15% compared to the same period
in 2016, reflecting growth in the portfolio's generating capacity
and improved performance. Overall generation was in line with
budget for the period despite slightly weaker than average
weather.
Generation at TRIG's Scottish wind assets exceeded expectations.
Wind production in England and Wales was broadly in line with
budget, while low wind speeds adversely impacted the French and
Irish assets.
Most of the solar projects performed close to budget although
some assets had exceptional downtime. Most notably, Penare, the
11.1MW solar farm in Cornwall, had an outage for just over two
months stemming from grid issues which caused onsite protection
device failures. Detailed root cause analysis identified additional
electrical surge protection requirements which have now been
retrofitted and the site has been returned to full operational
status. An insurance claim is under review and an enhanced spares
strategy to mitigate the impact of any future failures has also
been implemented. Rectification works on build quality issues on
some English solar sites, which are being funded by bond claims,
have also impacted modestly on availability.
The Operations Manager, RES, continues to engage in initiatives
to enhance the value of the portfolio. RES takes a comprehensive
approach to saving cost and maximizing yield, considering both
contractual and technical opportunities.
In the first quarter of 2017, new turbine O&M contracts were
secured bringing significant cost savings and improved guarantees
of performance on several projects. One new contract for a Scottish
wind farm will deliver a GBP3.7 million saving over 10 years
compared to the acquisition case, while new contracts at three
Irish wind sites secured a 30% saving as well as the inclusion of
new availability warranties, providing additional protection to the
projects. Similarly, the RES team continues to focus on several
solar sites where outsourced O&M management has underperformed
or where unexpected grid outages have affected production. RES took
over responsibility for the operation of six sites from Isolux
Corsán prior to its entry into insolvency.
On the technical side, RES undertakes condition monitoring on
TRIG sites to detect and proactively address potential problems
before failure, reducing cost. One successful example is the early
detection of the faulty Roussas-Claves generator, which was
replaced following condition monitoring analysis. The fault would
likely have caused two weeks of downtime and required additional
component replacements; therefore the detection saved an estimated
EUR170,000. A further example of technical enhancements is on wind
sites in France, where blade alignment is being addressed. A
misaligned blade on one site has been successfully identified and
corrected, improving yield.
The energy yield budgets represent the expected average annual
production for the projects in normal operating environment and
average weather conditions (known as the P50 budget - see 'Energy
yield assumptions' in the Valuation Sensitivities section of the
Manager's Report for an explanation of P50). The energy yield
budgets are updated periodically using current industry methodology
and incorporate technical analysis of site specific variables
(including topography, historical weather patterns and the
associated production history where available), equipment capacity
and efficiency, grid capacity and availability, and any operating
restrictions.
During the period the Company replaced the project finance debt
pertaining to three of the UK solar projects in order to take
advantage of the current supportive lending environment for
infrastructure assets and low long-term cost of debt. These
projects, located in Cornwall and commissioned in 2011 with a
combined capacity of 15MW, benefit from an indexed feed-in-tariff
(FIT). Following a detailed review of the lending options
available, an index-linked private institutional debt solution was
put in place at an all-in cost of RPI less 0.17%. The new debt
fully amortises over the remaining FIT term with no refinancing
risk. The replacement debt is at a lower cost, enhancing the value
of these assets and improving investment returns.
Environmental, Social and Governance
The current portfolio of 55 projects at 30 June 2017 is capable
of powering 440,000 homes and saving 660,000 tonnes of CO(2)
annually. There were no major health and safety incidents in
portfolio projects owned by TRIG during the six months to 30 June
2017.
TRIG supports a number of initiatives that enhance the
communities and environments local to its assets. In June, for
example, a group of local school children enjoyed a tour of
Altahullion wind farm in Northern Ireland, where they learnt
first-hand how wind power is generating clean energy for local
homes and businesses. An example of an environmental initiative
undertaken by TRIG can be seen around the Freasdail wind farm where
RES has overseen the planting of more than 400,000 trees in the
Argyll area in accordance with its planning conditions.
Additionally, TRIG contributes financially to various community
funds. In this half-year, these funds have invested in projects
including improving sports facilities, installing more
energy-efficient lighting at a community hall and funding a memory
project that has enhanced the wellbeing of local people with
dementia.
Valuation of the Portfolio
The Investment Manager is responsible for carrying out the fair
market valuation of the Group's investment portfolio which is
presented to the Directors for their approval and adoption. The
valuation is carried out on a six-monthly basis as at 31 December
and 30 June each year.
For non-market traded investments (being all the investments in
the current portfolio), the valuation principles used are based on
a discounted cash flow methodology, and adjusted in accordance with
the European Venture Capital Associations' valuation guidelines
where appropriate to comply with IFRS 13 and IAS 39, given the
special nature of infrastructure investments. Fair value for each
investment is derived from the application of an appropriate
discount rate to reflect the perceived risk to the investment's
future cash flows to give the present value of those cash flows.
The Investment Manager exercises its judgment in assessing both the
expected future cash flows from each investment based on the
project's expected life and the financial models produced by each
project company and the appropriate discount rate to apply.
The Directors' valuation of the portfolio of 55 project
investments as at 30 June 2017 was GBP951.8 million (31 December
2016: GBP818.7 million across 53 project investments).
Valuation Movements
A breakdown of the movement in the Directors' valuation of the
portfolio in the period is illustrated in the table below.
Valuation movement in the six months from 31 December 2016 to 30
June 2017 (GBP million)
Valuation of portfolio at 31 December 2016 818.7
New investments 129.0
Cash distributions from portfolio (35.3)
Rebased valuation of portfolio** 912.3
Changes in forecast power prices (35.2)
Reduction in discount rates 14.7
Foreign exchange movement (before effect
of hedges) 3.5*
Changes in tax rates in France 5.7
Balance of portfolio return
Valuation of portfolio at 30 June 2017 50.8 951.8
* A net gain of GBP2.0 million after the impact of foreign exchange
hedges held at Company level.
Allowing for new investments of GBP129.0 million and cash
receipts from investments of GBP35.3 million, the rebased valuation
is GBP912.3 million. Investments of GBP129.0 million include the
GBP102.8 million investment in Garreg Lwyd Wind Farm, the GBP22.6
million investment in Neilston Community Wind Farm, a GBP1.1m
investment in the freehold land interest at the Marvel Farms Solar
Park and a GBP2.4m true-up payment payable in relation to the
Meikle Carewe and Tallentire Wind Farms following increased post
acquisition yields.
Each movement between the rebased valuation and the 30 June 2017
valuation is considered in turn below:
(i) Forecast power prices: Reductions in power price forecasts
during the six-month period had the impact of reducing the
valuation of the portfolio by a net GBP35.2 million. The valuation
uses updated power price forecasts for each of the markets in which
TRIG invests, namely the GB market, the Single Electricity Market
of Ireland, and the French market.
The main driver reducing the forecast power prices continues to
be reduced gas prices, both in the near term as global gas prices
remain subdued and in the longer term as forecasters adopt slightly
lower and more cautious projections in sterling terms of future gas
prices.
The weighted average power price used to determine the
Directors' valuation is comprised of the blend of the forecasts for
each of the three power markets in which TRIG is invested as
modelled to be received by each of the project companies. The
forecast assumes an increase in power prices in real terms over
time.
(ii) Reduction in valuation discount rates: During the period
there has continued to be strong demand for income-producing
assets, including renewable energy projects where the market
continues to mature and more investors seek to gain exposure. This
has resulted in a continued reduction in the prevailing discount
rates applied for operating projects which partially offsets the
reductions in power price forecasts. Based on this market data and
on the Investment Manager's experience of bidding and transacting
in the secondary market for renewable infrastructure assets, TRIG
has applied an average reduction of 0.2% in discount rates. This
change in assumption has led to an increase in the valuation of the
investments of GBP14.7 million.
The weighted average portfolio valuation discount rate as at 30
June 2017 was 8.1% (31 December 2016: 8.4%). The reduction reflects
continued market discount rate compression and the acquisition of
the two ungeared UK wind projects in the period.
There have been no changes made to the way that the portfolio is
valued. The discount rate used for valuing each investment
represents an assessment of the rate of return at which
infrastructure investments with similar risk profiles would trade
on the open market.
(iii) Foreign exchange: Weakening of sterling versus the euro
has led to a GBP3.5 million gain on foreign exchange in the period
in relation to the euro-denominated investments located in France
and the Republic of Ireland, or a GBP2.0 million net gain after the
impact of TRIG's interest rate hedges as stated below.
Euro-denominated investments comprised 14% of the portfolio at the
period end.
The Group enters into forward hedging contracts (selling euros,
buying sterling) for an amount equivalent to its expected income
from euro-denominated investments over the short term, currently
approximately the next 18 months. In addition, the Group enters
into further forward hedging contracts such that, when combined
with the "income hedges", the overall level of hedge achieved in
relation to the euro-denominated assets is approximately 50%. As
sterling depreciated, the currency hedge generated a GBP1.5 million
loss in the six-month period to 30 June 2017 and serves to reduce
the sensitivity to movements in the sterling: euro exchange
rate.
The Investment Manager keeps under review the level of euro
exposure and utilises hedges, with the objective of minimising
variability in shorter term cash flows with a balance between
managing the sterling value of cash flow receipts and potential
mark-to-market cash outflows.
(iv) Changes in tax rates in France: The valuation of the French
investments, that comprise 12% of the portfolio at the period end,
has increased by GBP5.7 million as a result of a recently enacted
phased reduction in the corporation tax rate from 33% to 28% over
the period to 2020.
(v) Balance of portfolio returns: This refers to the balance of
valuation movements in the period (excluding (i) to (iv) above) and
represents an uplift of GBP50.8 million and a 5.6% increase in the
rebased value of the portfolio. The balance of portfolio return
mostly reflects the net present value of the cashflows brought
forward by six months at the prevailing portfolio discount rate
(8.4% per annum) and also some additional valuation adjustments.
These include items such as reduced maintenance costs on renewal of
contracts as this market has become more competitive and refinance
gains as some of the older project debt packages are refinanced
with new long term debt in the current supportive lending
environment (notably the refinancing of the portfolio of three
solar projects mentioned in the "Operations" section of the
Managers' Report.
Valuation Sensitivities
The Investment Manager provides sensitivity analysis to show the
impact of changes in key assumptions adopted to arrive at the
valuation. For each of the sensitivities, it is assumed that
potential changes occur independently of each other with no effect
on any other base case assumption, and that the investments in the
portfolio remain unchanged throughout the model life. All of the
NAV per share sensitivities are calculated on the basis of 943.1
million ordinary shares as at 30 June 2017 (which includes those in
issue as well as approximately 0.9 million shares due to be issued
in September 2017 as part payment of the Managers' fees).
The analysis below shows the sensitivity of the portfolio value
to changes in key assumptions as follows:
* Discount rate assumptions
The weighted average valuation discount rate applied to calculate the
portfolio valuation is 8.1% at 30 June 2017. The sensitivity shows
the impact on valuation of increasing or decreasing this rate by 0.5%.
Discount rate -0.5% Base +0.5%
----------------------- ------------------ ------------------ ------------------
Implied change +GBP35.9 million GBP951.8 million -GBP33.8 million
in portfolio
valuation
----------------------- ------------------ ------------------ ------------------
Implied change
in NAV per ordinary
share +3.8p 100.6p -3.6p
----------------------- ------------------ ------------------ ------------------
-- Energy yield assumptions
The base case assumes a "P50" level of output. The P50 output is
the estimated annual amount of electricity generation (in MWh) that
has a 50% probability of being exceeded - both in any single year
and over the long term - and a 50% probability of being under
achieved. Hence the P50 is the expected level of generation over
the long term.
The sensitivity illustrates the effect of assuming "P90 10-year"
(a downside case) and "P10 10-year" (an upside case) energy
production scenarios on the portfolio applied for all future
periods. A P90 10-year downside case assumes the average annual
level of energy generation that has a 90% probability of being
exceeded over a 10-year period. A P10 10-year upside case assumes
the average annual level of energy generation that has a 10%
probability of being exceeded over a 10-year period. This means
that the portfolio aggregate production outcome for any given
10-year period would be expected to fall somewhere between these
P90 and P10 levels with an 80% confidence level, with a 10%
probability of it falling below that range of outcomes and a 10%
probability of it exceeding that range. The sensitivity is applied
throughout the life of each asset in the portfolio (even though
this exceeds 10 years in all cases).
Energy yield P90 (10-year) Base P10 (10-year)
------------------ ------------------ ------------------ ------------------
Implied change -GBP91.7 million GBP951.8 million +GBP90.3 million
in portfolio
valuation
------------------ ------------------ ------------------ ------------------
Implied change
in NAV per
ordinary share -9.7p 100.6p +9.6p
------------------ ------------------ ------------------ ------------------
-- Power price assumptions
The sensitivity considers a flat 10% movement in power prices
for all years, i.e. the effect of adjusting the forecast
electricity price assumptions in each of the jurisdictions
applicable to the portfolio down by 10% and up by 10% from the base
case assumptions for each year throughout the operating life of the
portfolio.
Power price -10% Base +10%
------------------ ------------------ ------------------ ------------------
Implied change -GBP69.5 million GBP951.8 million +GBP70.9 million
in portfolio
valuation
------------------ ------------------ ------------------ ------------------
Implied change
in NAV per
ordinary share -7.4p 100.6p +7.5p
------------------ ------------------ ------------------ ------------------
-- Inflation assumptions
The projects' income streams are principally a mix of subsidies,
which are amended each year with inflation, and power prices, which
the sensitivity assumes will move with inflation. The projects'
management, maintenance and tax expenses typically move with
inflation but debt payments are, in the majority of cases, fixed.
This results in the portfolio returns and valuation being
positively correlated to inflation.
The portfolio valuation generally assumes 2.75% p.a. inflation
for the UK and 2.0% p.a. for each of France and the Republic of
Ireland.
The sensitivity illustrates the effect of a 0.5% decrease and a
0.5% increase from the assumed annual inflation rates in the
financial model for each year throughout the operating life of the
portfolio.
Inflation rate -0.5% Base +0.5%
----------------------- ------------------ ------------------ ------------------
Portfolio valuation -GBP44.9 million GBP951.8 million +GBP50.3 million
----------------------- ------------------ ------------------ ------------------
Implied change
in NAV per ordinary
share -4.8p 100.6p +5.3p
----------------------- ------------------ ------------------ ------------------
-- Operating costs at project company level
The sensitivity shows the effect of a 10% increase and a 10%
decrease in annual operating costs for the portfolio, in each case
assuming that the change in operating costs occurs on 1 July 2017
and thereafter remains constant at the new level during the life of
the projects.
Operating costs -10% Base +10%
---------------------- ------------------ ------------------ ------------------
Portfolio valuation +GBP30.7 million GBP951.8 million -GBP30.3 million
---------------------- ------------------ ------------------ ------------------
Implied change
in NAV per
ordinary share +3.3p 100.6p -3.2p
---------------------- ------------------ ------------------ ------------------
-- Euro / sterling exchange rates
This sensitivity shows the effect of a 10% decrease and a 10%
increase in the value of the euro relative to sterling used for the
30 June 2017 valuation (based on a 30 June 2017 exchange rate of
EUR1.1392 to GBP1). In each case it is assumed that the change in
exchange rate occurs on 1 July 2017 and thereafter remains constant
at the new level throughout the life of the projects.
The hedging referred to above under "Valuation Movements"
reduces the sensitivity of the portfolio value to foreign exchange
movements and accordingly the impact is shown net of the benefit of
the foreign exchange hedge in place.(10)
Euro value (relative
to sterling) -10% Base +10%
----------------------- ----------------- ------------------ -----------------
Portfolio valuation -GBP5.3 million GBP951.8 million +GBP5.3 million
----------------------- ----------------- ------------------ -----------------
Implied change
in NAV per ordinary
share -0.6p 100.6p +0.6p
----------------------- ----------------- ------------------ -----------------
-- Interest rates applying to project company debt and cash balances
This shows the sensitivity of the portfolio valuation to the
effects of changes in interest rates.
The sensitivity shows the impact on the portfolio of an increase
in interest rates of 2% and a reduction of 1%. The change is
assumed with effect from 1 July 2017 and continues unchanged
throughout the life of the assets. It is assumed that the
acquisition facility is repaid within 12 months as a result of
future equity capital raises and the sensitivity does not apply the
impact of changes in interest rates to the acquisition
facility.
The portfolio is relatively insensitive to changes in interest
rates. This is an advantage of TRIG's approach of favouring long
term structured project financing (over shorter term corporate
debt) which is secured with the substantial majority of this debt
having the benefit of long term interest rate swaps which fix the
interest cost to the projects.
Interest rates -1% Base +2%
----------------------- ----------------- ------------------ -----------------
Portfolio valuation +GBP0.6 million GBP951.8 million -GBP2.1 million
----------------------- ----------------- ------------------ -----------------
Implied change
in NAV per ordinary
share +0.1p 100.6p -0.2p
----------------------- ----------------- ------------------ -----------------
-- Corporation Tax Rate Sensitivity
The profits of each project company are subject to corporation
tax in their home jurisdictions at the applicable rates (the tax
rates adopted in the valuation are set out in Note 4 to the
financial statements).
The tax sensitivity looks at the effect on the Directors'
valuation and the NAV per share of changing the tax rates by +/- 2%
each year in each jurisdiction and is provided to show that tax can
be a material variable in the valuation of investments.
Tax sensitivity -2% Base +2%
----------------------- ------------------ ------------------ ------------------
Portfolio valuation +GBP15.1 million GBP951.8 million -GBP15.1 million
----------------------- ------------------ ------------------ ------------------
Implied change
in NAV per ordinary
share +1.6p 100.6p -1.6p
----------------------- ------------------ ------------------ ------------------
It should be noted that all of TRIG's sensitivities above are
stated after taking into account the impact of project-level
gearing on returns.
Financing
The Group has a GBP150 million revolving acquisition facility
(which includes a GBP15 million working capital element) with the
Royal Bank of Scotland and National Australia Bank to fund new
acquisitions. The facility expires on 30 September 2019. This type
of short term financing is limited to 30% of the portfolio value.
It is intended that any facility used to finance acquisitions is
likely to be repaid, in normal market conditions, within a year
through equity fundraisings.
The acquisition facility was drawn GBP8.5 million at 30 June
2017. The acquisitions in the period (GBP129 million) were funded
initially by the residual funds from the September 2016 equity fund
raise of GBP62 million (around GBP10 million of these funds were
remaining at 31 December 2016 and applied in the period), from the
net proceeds of the March 2017 GBP110 million fund raise, drawdown
on the revolving acquisition facility and use of Group cash
available for reinvestment.
The majority of the projects within the Company's investment
portfolio have underlying long term debt (by value, 70% of the
Group's investments have project finance raised against them and
30% are ungeared). There is an additional gearing limit in respect
of such project finance debt, which is non-recourse to TRIG, of 50%
of the Gross Portfolio Value (being the total enterprise value of
the Group's portfolio companies), measured at the time the debt is
drawn down or acquired as part of an investment. The Company may,
in order to secure advantageous borrowing terms, secure a project
finance facility over a group of portfolio companies.
The project-level gearing across the portfolio was 36% as at 30
June 2017.
As at 30 June 2017, the Group had cash balances of GBP8.6
million, excluding cash held in investment project companies as
working capital or otherwise.
Largest Investments
The largest investment is Garreg Lwyd which accounts for 11% of
the portfolio as at 30 June 2017 (June 2016: Crystal Rig II, 12%).
The ten largest investments together represent 53% of the overall
portfolio value as at 30 June 2017 (June 2016: 54%).
Analysis of Financial Results
As at 30 June 2017, the Group had investments in 55 projects. As
an investment entity for IFRS reporting purposes, the Company
carries these 55 investments at fair value.
Basis of preparation
In accordance with IFRS 10 the Group carries investments at fair
value as the Company meets the conditions of being an Investment
Entity. In addition IFRS 10 states that investment entities should
measure their subsidiaries that are themselves investment entities
at fair value. Being investment entities, The Renewables
Infrastructure Group (UK) Limited ("TRIG UK") and The Renewables
Infrastructure Group (UK) Investments Limited ("TRIG UK I"), the
Company's subsidiaries, through which investments are purchased,
are measured at fair value as opposed to being consolidated on a
line-by-line basis, meaning their cash, debt and working capital
balances are included as an aggregate number in the fair value of
investments rather than the Group's current assets. In order to
provide shareholders with more transparency into the Group's
capacity for investment, ability to make distributions, operating
costs and gearing levels, adjusted results have been reported in
the pro forma tables below.
The pro forma tables that follow show the Group's results for
the six months ended 30 June 2017 and the comparative period on a
non-statutory "Expanded Basis", where TRIG UK and TRIG UK I are
consolidated on a line-by-line basis, compared to the Statutory
IFRS financial statements (the "Statutory IFRS Basis").
The Directors consider the non-statutory Expanded Basis to be a
more helpful basis for users of the accounts to understand the
performance and position of the Company because key balances of the
Group including cash and debt balances carried in TRIG UK and TRIG
UK I and expenses incurred in TRIG UK and TRIG UK I are shown in
full rather than being netted off.
The necessary adjustments to get from the Statutory IFRS Basis
to the non-statutory Expanded Basis are shown for the primary
financial statements. The commentary provided on the primary
statements of TRIG is on the Expanded Basis.
Income statement
Summary Six months to 30 June 2017 Six months to 30 June 2016
income GBP'million GBP'million
statement
Statutory Adjustments(1) Expanded Statutory Adjustment(1) Expanded
IFRS Basis Basis IFRS Basis Basis
Operating
income 33.3 6.2 39.5 25.9 6.9 32.8
Acquisition
costs - (0.5) (0.5) - - -
--------------- ---------------- --------------- --------------- --------------- ---------------
Net operating
income 33.3 5.7 39.0 25.9 6.9 32.8
Fund expenses (0.6) (4.8) (5.4) (0.5) (4.1) (4.6)
Foreign
exchange
losses (1.4) (0.1) (1.5) (6.2) 0.1 (6.1)
Finance costs - (0.8) (0.8) - (2.9) (2.9)
Profit before
tax 31.3 - 31.3 19.2 - 19.2
--------------- ---------------- --------------- --------------- --------------- ---------------
EPS(2) 3.5p 3.5p 2.6p 2.6p
(1.) The following were incurred within TRIG UK and TRIG UK I;
acquisition costs, the majority of expenses
and acquisition facility fees and interest. The income adjustment offsets these cost adjustments.
(2.) Calculated based on the weighted average number of shares
during the period being approximately 887.1 million shares.
Expanded Basis versus Statutory IFRS Basis
The Statutory IFRS Basis nets off TRIG UK and TRIG UK I's costs,
including overheads, management fees and acquisition costs against
income. The Expanded Basis includes the expenses incurred within
TRIG UK and TRIG UK I to enable users of the accounts to fully
understand the Group's costs. There is no difference in profit
before tax or earnings per share between the two bases.
Analysis of Expanded Basis financial results
Profit before tax for the six months to 30 June 2017 was GBP31.3
million, generating earnings per share of 3.5p, which compares to
GBP19.2 million and earnings per share of 2.6p for the six months
to 30 June 2016.
The EPS of 3.5p is after the impact of reductions in power
prices in the period offset by reduced valuation discount rates,
beneficial foreign exchange movements and a strong level of
portfolio return.
Operating income reflects the portfolio value movement in the
six months and is fully described in the "Valuation Movements"
section of the Managers' Report.
Increases in both net operating income and fund expenses in the
six months to 30 June 2017 as compared to the six months to 30 June
2016 reflect the increase in the size of the portfolio.
Acquisition costs relate to principally two wind farm
investments in the period, being Garreg Lwyd and Neilston.
Fund expenses of GBP5.4 million (2016: GBP4.6 million) includes
all operating expenses and GBP4.2 million (2016: GBP3.7 million)
fees paid to the Investment and Operations Managers. Management
fees are charged at 1% of Adjusted Portfolio Value as set out in
more detail in the Related Party and Key Advisor Transactions note,
Note 13 to the financial statements.
The slight strengthening of the euro against sterling during the
period has increased the value of the euro-denominated assets in
the TRIG investment portfolio, with foreign exchange gains
recognised in the portfolio of GBP3.5 million (2016: GBP11.8
million gain). This was partially offset by the foreign exchange
losses on hedges held outside the portfolio of GBP1.5 million
(2016: GBP6.1 million loss) which are expected to reduce the impact
of foreign exchange movements. Portfolio value movements (included
in operating income) are more fully described in the "Valuation of
the Portfolio" section in the Managers' Report. The net foreign
exchange gain in the period is hence GBP2.0 million (2016: GBP5.7
million gain).
Finance costs relate to the interest and fees incurred relating
to the Group's revolving acquisition facility. The finance costs in
the prior period are higher reflecting the renewal of the revolving
acquisition facility in April 2016 on better terms including lower
margins that led to early recognition of arrangement fees in the
first half of 2016.
Ongoing charges
Ongoing Charges (Expanded Basis) Six months to 30 June 2017 Six months to 30 June 2016
GBP'000s GBP'000s
Investment and Operations Management fees 4,234 3,727
Audit fees 59 55
Directors' fees and expenses 99 95
Other ongoing expenses 447 312
---------------------------- ----------------------------
Total expenses(1) 4,839 4,189
---------------------------- ----------------------------
Annualised equivalent 9,757 8,424
Average net asset value 891,436 735,355
Ongoing Charges Percentage (OCP) 1.09% 1.15%
(1.) Total expenses exclude GBP0.5 million (2016: GBP0.4m) of
lost bid costs incurred during the year.
The Ongoing Charges Percentage is 1.09% (2016: 1.15%). The
ongoing charges have been calculated in accordance with AIC
guidance and are defined as annualised ongoing charges (i.e.
excluding acquisition costs and other non-recurring items) divided
by the average published undiluted net asset value in the period.
The Ongoing Charges Percentage has been calculated on the Expanded
Basis and therefore takes into consideration the expenses of TRIG
UK and TRIG UK I as well as the Company's. The reduction in OCP
reflects portfolio growth during the year as the Group's expenses
are spread over a larger capital base. There is no performance fee
paid to any service provider.
Balance sheet
Summary balance As at 30 June 2017 As at 31 December 2016
sheet GBP'million GBP'million
Statutory Adjustments Expanded Statutory Adjustments Expanded
IFRS Basis Basis IFRS Basis Basis
Portfolio value 941.7 10.1 951.8 817.8 0.9 818.7
Working capital (1.6) (1.7) (3.3) (2.0) (1.1) (3.1)
Debt - (8.5) (8.5) - - -
Cash 8.5 0.1 8.6 18.5 0.2 18.7
--------------- ------------- --------------- --------------- ------------- ---------------
Net assets 948.6 948.6 834.3 834.3
--------------- ------------- --------------- --------------- ------------- ---------------
Net asset value
per share 100.6p 100.6p 100.1p 100.1p
Expanded Basis versus Statutory IFRS Basis
The Statutory IFRS basis includes TRIG UK and TRIG UK I's cash,
debt and working capital balances as part of portfolio value. The
Expanded Basis shows these balances gross. There is no difference
in net assets between the Statutory IFRS Basis and the Expanded
Basis.
The majority of cash generated from investments had been passed
up from TRIG UK and TRIG UK I to the Company at both 30 June 2017
and 31 December 2016.
As at 30 June 2017, TRIG UK I was GBP8.5 million drawn on its
revolving acquisition facility (2016: GBPnil million drawn)
equalling the difference between the Statutory IFRS Basis and the
Expanded Basis.
Analysis of Expanded Basis financial results
Portfolio value grew by GBP133.1 million in the six months to
GBP951.8 million, primarily as a result of the investments made in
the six months to 30 June 2017 as described more fully in the
"Valuation Movements" section of the Managers' Report.
Group cash at 30 June 2017 was GBP8.6 million (December 2016:
GBP18.7 million) and acquisition facility debt drawn was GBP8.5
million (December 2016: GBPnil).
Net assets grew by GBP114.3 million in the period to GBP948.6
million. The Company raised GBP108.6 million (after issue expenses)
of new equity during the period and produced a GBP31.3 million
profit in the period, with net assets being stated after accounting
for dividends paid in the period (net of scrip take up) of GBP26.3
million. Other movements in net assets totalled GBP0.8 million,
being Managers' shares accruing in H1 2017 and to be issued on or
around 30 September 2017.
Net asset value ("NAV") per share as at 30 June 2017 was 100.6p
compared to 100.1p as at 31 December 2016.
Net asset value ("NAV") and Earnings per share ("EPS")
reconciliation
NAV per share Shares in issue (million) Net assets (GBP'million)
Net assets at 31 December 2017 100.1p 833.8 834.3
Profit/EPS to 30 June 2017 3.5p(1) - 31.3
Dividends paid in H1 2017(2) (3.1625)p - (28.1)
Scrip dividend take-up(3) - 1.6 1.8
Shares issued (net of costs) 0.2 106.8 108.5
--------------- --------------------------- --------------------------
H1 2017 Managers' shares to be issued - 0.9 0.8
--------------- --------------------------- --------------------------
Net assets at 30 June 2017 100.6p 943.1 948.6
(1.) Calculated based on the weighted average number of shares
during the period being 887.1 million shares
(2.) 1.5625p dividend paid 31 March 2017 related to Q4 2016
(GBP13.0 million) and 1.60p dividend paid 30 June 2017 related to
Q1 2017 (GBP15.1 million).
(3.) Scrip dividend take-up comprises 0.6 million shares,
equating to GBP0.7 million, and 1.0 million shares, equating to
GBP1.1 million, issued in lieu of the dividends paid in March 2017
and June 2017, respectively.
Cash flow statement
Summary cash flow statement Six months to 30 June 2017 Six months to 30 June 2016
GBP'million GBP'million
Statutory Adjustments Expanded Statutory Adjustments Expanded
IFRS Basis IFRS Basis
Basis Basis
Cash received from investments 25.3 10.0 35.3 23.8 7.0 30.8
Operating and finance costs (0.3) (4.5) (4.8) (0.7) (4.1) (4.8)
----------- ------------- ------------- ----------- ------------- -------------
Cash flow from operations 25.0 5.5 30.5 23.1 2.9 26.0
Debt arrangement costs - (0.2) (0.2) - (1.6) (1.6)
Foreign exchange losses (2.0) - (2.0) (1.4) 0.1 (1.3)
Issue of share capital (net of
costs) 109.3 (0.7) 108.6 30.3 (0.7) 29.6
Acquisition facility drawn 8.5 8.5 - 15.9 15.9
Purchase of new investments
(including acquisition costs) (116.0) (13.2) (129.2) (29.3) (16.3) (45.6)
Distributions paid(1) (26.3) - (26.3) (32.0) - (32.0)
----------- ------------- ------------- ----------- ------------- -------------
Cash movement in period (10.0) (0.1) (10.1) (9.3) 0.3 (9.0)
Opening cash balance 18.5 0.2 18.7 14.9 0.3 15.2
----------- ------------- ------------- ----------- ------------- -------------
Net cash at end of period 8.5 0.1 8.6 5.6 0.6 6.2
1. The distribution paid in the six months to 30 June 2016 is
higher than that paid in the six months to 30 June 2017 as a result
of distributions being paid in H1 2016 that relate to nine months
of operations, being the six months to 31 December 2015 and the
three months to 31 March 2016 in March 2016 and June 2016
respectively. This was a result of the Company changing its
dividend policy of payment every six months to every three
months.
Analysis of Expanded Basis financial results
The Statutory Basis shows cash movements for the top company
only (TRIG Limited). The Expanded Basis shows the consolidated cash
movements above the investment portfolio which are relevant to
users of the accounts. Differences include income received by TRIG
UK and TRIG UK I applied to reinvestment and expenses incurred by
TRIG UK and TRIG UK I that are excluded under the Statutory IFRS
Basis.
Analysis of Expanded Basis financial results
Cash received from investments in the period was GBP35.3 million
(2016: GBP30.8 million). The increase in cash received compared
with the previous period reflects the increase in the size of the
portfolio.
Dividends paid in the period totalled GBP26.3 million (net of
GBP1.8m scrip dividends) and reflect dividends declared for the
quarter ended 31 March 2017 (2016: 12.3 million, net of GBP0.7
million scrip dividends) and the quarter ended 30 June 2017
(GBP14.0 million, net of GBP1.1 million scrip dividends). Dividends
paid in the comparative period totalled GBP32.0 million (net of
GBP2.8 million scrip dividends) and related to nine months of
operations as the Company moved from paying dividends semi-annually
to quarterly during the first half of 2016.
Cash flow from operations in the period was GBP30.5 million
(2016: GBP26.0 million) and covers dividends paid of GBP26.3
million in the period by 1.2 times (or 1.1 times without the
benefit of scrip take up), or 1.7 times before factoring in amounts
invested in the repayment in project-level debt. The Group repaid
GBP14.7 million of project-level debt (pro-rata to the Company's
equity interest) in the period.
Share issue proceeds (net of costs) totalling GBP108.6 million
(2016: GBP29.6 million) reflects the net proceeds of the 106.8
million shares issued during the period under the Share Issuance
Programme launched in April 2016.
In the period, GBP129.2 million was invested in acquisitions and
acquisition expenses. This was funded through GBP10.0 million of
share capital raised in 2016 carried forward, GBP108.6 million of
share capital raised (net of costs), GBP8.5 million of acquisition
facility debt that remained drawn at the period end and the balance
being GBP2.1m of reinvested cash generated in the 6 months to 30
June 2017.
Cash balances reduced in the period reflecting the application
of the share capital raised in 2016 invested in 2017.
Going Concern
The Directors believe that the Group has adequate resources to
continue in operational existence for the foreseeable future. Thus
they continue to adopt the going concern basis of accounting in
preparing the interim financial statements.
Related Parties
Related party transactions are disclosed in Note 13 to the
condensed set of financial statements.
There have been no material changes in related party
transactions described in the last annual report.
Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
1. The condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting; and
2. The Chairman's Statement and the Managers' Report meets the
requirements of an Interim Managers' Report, and includes a fair
review of the information required by
a. DTR 4.2.7R, being an indication of important events during
the first six months and description of principal risks and
uncertainties for the remaining six months of the year; and
b. DTR 4.2.8R, being the disclosure of related parties' transactions and changes therein.
By order of the Board
Helen Mahy
Chairman
17 August 2017
Consolidated Financial Statements
Condensed Income Statement
For the six-month period 1 January 2017 to 30 June 2017
Six months ended Six months ended
30 June 2017 30 June 2016
(unaudited) (unaudited)
Note GBP'000s GBP'000s
-------------------------------------------- ----- ----------------- -----------------
Total operating income 4 33,314 25,850
Fund expenses 5 (554) (464)
-------------------------------------------- ----- ----------------- -----------------
Operating profit for the period 32,760 25,386
Finance and other expenses 6 (1,443) (6,156)
-------------------------------------------- ----- ----------------- -----------------
Profit before tax 31,317 19,230
Income tax 7 - -
-------------------------------------------- ----- ----------------- -----------------
Profit for the period 8 31,317 19,230
-------------------------------------------- ----- ----------------- -----------------
Attributable to:
Equity holders of the parent 8 31,317 19,230
-------------------------------------------- ----- ----------------- -----------------
8 31,317 19,230
-------------------------------------------- ----- ----------------- -----------------
Ordinary shares earnings per share (pence) 8 3.5 2.6
All results are derived from continuing operations.
There is no other comprehensive income or expense apart from
those disclosed above and consequently a statement of comprehensive
income has not been prepared.
Condensed Balance Sheet
As at 30 June 2017
As at As at
30 June 2017 31 December 2016
(unaudited) (audited)
Note GBP'000s GBP'000s
--------------------------------------------------- ----- --------------- -------------------
Non-current assets
Investments at fair value through profit or loss 11 941,734 817,761
--------------------------------------------------- ----- --------------- -------------------
Total non-current assets 11 941,734 817,761
--------------------------------------------------- ----- --------------- -------------------
Current assets
Other receivables 852 815
Cash and cash equivalents 8,475 18,537
--------------------------------------------------- ----- --------------- -------------------
Total current assets 9,327 19,352
--------------------------------------------------- ----- --------------- -------------------
Total assets 951,061 837,113
--------------------------------------------------- ----- --------------- -------------------
Current liabilities
Other payables (2,456) (2,847)
--------------------------------------------------- ----- --------------- -------------------
Total current liabilities (2,456) (2,847)
--------------------------------------------------- ----- --------------- -------------------
Total liabilities (2,456) (2,847)
--------------------------------------------------- ----- --------------- -------------------
Net assets 10 948,605 834,266
--------------------------------------------------- ----- --------------- -------------------
Equity
Share premium 12 938,677 827,650
Other reserves 12 847 776
Retained reserves 9,081 5,840
--------------------------------------------------- ----- --------------- -------------------
Total equity attributable to owners of the parent 10 948,605 834,266
--------------------------------------------------- ----- --------------- -------------------
Net assets per Ordinary Share (pence) 10 100.6 100.1
The accompanying Notes are an integral part of these interim
financial statements.
The interim financial statements were approved and authorised
for issue by the Board of Directors on 17 August 2017, and signed
on its behalf by:
Helen Mahy CBE Jon Bridel
Director Director
Condensed Changes in Shareholders Equity
For the period ended 30 June 2017 Share premium Other reserves Retained reserves Total equity
(unaudited) (unaudited) (unaudited) (unaudited)
GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------------- --------------- ---------------- ------------------- --------------
Shareholders' equity at beginning of period 827,650 776 5,840 834,266
-------------------------------------------- --------------- ---------------- ------------------- --------------
Profit for the period - - 31,317 31,317
Dividends paid - - (26,294) (26,294)
Scrip shares issued in lieu of dividend 1,782 - (1,782) -
Ordinary Shares issued 110,000 - - 110,000
Costs of Ordinary Shares issued (1,531) - - (1,531)
Ordinary Shares issued in period in lieu of
Management Fees, earned in H2 2016(1) 776 (776) - -
Ordinary Shares to be issued in lieu of
Management Fees, earned in H1 2017(2) - 847 - 847
Shareholders' equity at end of period 938,677 847 9,081 948,605
-------------------------------------------- --------------- ---------------- ------------------- --------------
For the year ended 31 December 2016
Share premium Other reserves Retained reserves Total equity
(audited) (audited) (audited) (audited)
GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------------------------- --------------- ---------------- ------------------- --------------
Shareholders' equity at beginning of period 728,227 706 (2,341) 726,592
---------------------------------------------- --------------- ---------------- ------------------- --------------
Profit for the period - - 67,903 67,903
Dividends paid - - (52,987) (52,987)
Scrip shares issued in lieu of dividend 6,735 - (6,735) -
Ordinary Shares issued 92,920 - - 92,920
Costs of Ordinary Shares issued (1,684) - - (1,684)
Ordinary Shares issued in period in lieu of
Management Fees, earned in H2 2015(3) 706 (706) - -
Ordinary Shares to be issued in lieu of
Management Fees, earned in H1 2016(4) 746 - - 746
Ordinary Shares to be issued in lieu of
Management Fees, earned in H2 2016(1) - 776 - 776
Shareholders' equity at end of period 827,650 776 5,840 834,266
---------------------------------------------- --------------- ---------------- ------------------- --------------
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent. of
the management fees are to be settled in Ordinary Shares.
(1.) The GBP776,325 transfer between reserves represents the
787,847 shares that relate to management fees earned in the six
months to 31 December 2016 and were recognised in other reserves at
31 December 2016, and were issued to the Managers during the
period, with the balance being transferred to share premium
reserves, on 31 March 2017.
(2.) As at 30 June 2017, 855,316 shares equating to GBP846,762,
based on a Net Asset Value ex dividend of 99.0 pence per share (the
Net Asset Value at 30 June 2017 of 100.6 pence per share less the
interim dividend of 1.6 pence per share) were due but had not been
issued. The Company intends to issue these shares to the Managers
on or around 30 September 2017.
(3.) The GBP705,933 transfer between reserves represents the
736,190 shares that relate to management fees earned in the six
months to 31 December 2015 and were recognised in other reserves at
31 December 2015, and were issued to the Managers during the year,
with the balance being transferred to share premium reserves, on 31
March 2016.
(4.) The GBP745,506 addition to the share premium reserve
represents the 781,125 shares that relate to management fees earned
in the six months to 30 June 2016 and were issued to the Managers
on 30 September 2016.
Condensed Cash Flow Statement
For the six-month period 1 January 2017 to 30 June 2017
Six months ended Six months ended
30 June 2017 30 June 2016
(unaudited) (unaudited)
Note GBP'000s GBP'000s
-------------------------------------------------------- ----- ----------------- -----------------
Cash flows from operating activities
Profit before tax 8 31,317 19,230
Adjustments for:
Gain on investments 4 (12,854) (7,569)
Interest income from investments 4 (20,460) (18,281)
Movement in Other reserves relating to Managers shares 71 39
Movement in accrued share issue costs 29 (59)
Finance and similar expenses 6 1,443 6,156
Operating cash flow before changes in working capital (454) (484)
Changes in working capital:
Increase in receivables 28 (13)
Decrease in payables 67 (123)
-------------------------------------------------------- ----- ----------------- -----------------
Cash flow from operations (359) (620)
Interest received from investments 22,844 22,281
Loanstock and equity repayments received 2,490 1,500
Interest income 24 16
-------------------------------------------------------- ----- ----------------- -----------------
Net cash from operating activities 24,999 23,177
-------------------------------------------------------- ----- ----------------- -----------------
Cash flows from investing activities
Purchases of investments 11 (116,000) (29,300)
Net cash used in investing activities (116,000) (29,300)
-------------------------------------------------------- ----- ----------------- -----------------
Cash flows from financing activities
Proceeds from issue of share capital during period 110,776 31,006
Costs in relation to issue of shares (1,531) (729)
Dividends paid to shareholders 9 (26,294) (32,021)
Net cash from/ (used in) financing activities 82,951 (1,744)
-------------------------------------------------------- ----- ----------------- -----------------
Net decrease in cash and cash equivalents (8,050) (7,867)
-------------------------------------------------------- ----- ----------------- -----------------
Cash and cash equivalents at beginning of period 18,537 14,873
Exchange losses on cash (2,012) (1,369)
-------------------------------------------------------- ----- ----------------- -----------------
Cash and cash equivalents at end of period 8,475 5,637
-------------------------------------------------------- ----- ----------------- -----------------
The accompanying Notes are an integral part of these interim
financial statements.
Notes to the Unaudited Financial Statements
For the six-month period 1 January 2017 to 30 June 2017
1. General information
The Renewables Infrastructure Group Limited ("TRIG" or the
"Company") is a closed ended investment company incorporated in
Guernsey under Section 20 of the Companies (Guernsey) Law, 2008.
The shares are publicly traded on the London Stock Exchange under a
premium listing. Through its subsidiaries, The Renewables
Infrastructure Group (UK) Limited ("TRIG UK") and The Renewables
Infrastructure Group (UK) Investments Limited ("TRIG UK I"), TRIG
invests in operational renewable energy generation projects,
predominantly in onshore wind and solar PV segments, across the
United Kingdom and Northern Europe. The Company, TRIG UK, TRIG UK I
and its portfolio of investments are known as the "Group".
The interim condensed unaudited financial statements of the
Company (the "interim financial statements") as at and for the six
months ended 30 June 2017 comprise only the results of the Company,
as all of its subsidiaries are measured at fair value following the
amendment to IFRS 10 as explained below in Note 2.
The annual financial statements of the Company for the year
ended 31 December 2016 were approved by the Directors on 20
February 2017 and are available from the Company's Administrator
and on the Company's website http://trig-ltd.com/. The auditor's
report on these accounts was unqualified.
2. 2. Key accounting policies
Basis of preparation
The interim financial statements were approved and authorised
for issue by the Board of Directors on 17 August 2017.
The annual financial statements of the Company are prepared in
accordance with IFRS as adopted by the European Union ("EU") using
the historical cost basis, except that the financial instruments
classified at fair value through profit or loss are stated at their
fair values and that the Company has applied the amendment to IFRS
10, as adopted by the EU and as described below. The condensed set
of financial statements included in this half-yearly financial
report has been prepared in accordance with IAS 34 'Interim
Financial Reporting', as adopted by the EU and in compliance with
the Companies (Guernsey) Law, 2008.
The interim financial statements are presented in sterling,
which is the Company's functional currency.
IFRS 10 states that investment entities should measure all of
their subsidiaries that are themselves investment entities at fair
value. Being an investment entities, TRIG UK and TRIG UK I are
measured at fair value as opposed to being consolidated on a
line-by-line basis, meaning their cash, debt and working capital
balances are included in the fair value of investments rather than
the Group's current assets.
The Chief Operating Decision Maker (the "CODM") is of the
opinion that the Group is engaged in a single segment of business,
being investment in renewable infrastructure to generate investment
returns while preserving capital. The financial information used by
the CODM to allocate resources and manage the Group presents the
business as a single segment comprising a homogeneous portfolio.
The CODM has been identified as the Board of Directors of the
Company acting collectively.
The Directors believe that the Group has adequate resources to
continue in operational existence for the foreseeable future. Thus
they continue to adopt the going concern basis of accounting in
preparing the interim financial statements.
The condensed interim financial information has been prepared on
the basis of the accounting policies, significant judgements, key
assumptions and estimates as set out in the notes to the Group's
annual financial statements for the year ended 31 December
2016.
The same accounting policies, presentation and methods of
computation are followed in these interim financial statements as
were applied in the preparation of the Company's financial
statements for the year ended 31 December 2016.
The Company's financial performance does not suffer materially
from seasonal fluctuations.
3. 3. Financial instruments
30 June 2017 31 December 2016
GBP'000s GBP'000s
-------------------------------------------------- ------------- -----------------
Financial assets
Designated at fair value through profit or loss:
Investments 941,734 817,761
Financial assets at fair value 941,734 817,761
--------------------------------------------------- ------------- -----------------
At amortised cost:
Other receivables 852 815
Cash and cash equivalents 8,475 18,537
-------------------------------------------------- ------------- -----------------
Financial assets at amortised cost 9,327 19,352
--------------------------------------------------- ------------- -----------------
Financial liabilities
Designated at fair value through profit or loss:
Other financial liabilities 2,087 2,633
-------------------------------------------------- ------------- -----------------
Financial liabilities at fair value 2,087 2,633
--------------------------------------------------- ------------- -----------------
At amortised cost:
Other payables 369 214
Financial liabilities at amortised cost 369 214
--------------------------------------------------- ------------- -----------------
The Directors believe that the carrying values of all financial
instruments are not materially different to their fair values.
Other financial liabilities represents the fair value of foreign
exchange forward agreements in place at the period end.
Fair value hierarchy
The fair value hierarchy is defined as follows:
-- 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 asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices)
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
As at 30 June 2017
Level 1 Level 2 Level 3 Total
GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------------------- ---------- --------- --------- ---------
Investments at fair value through profit or loss - - 941,734 941,734
- - 941,734 941,734
------------------------------------------------------------- --------- --------- ---------
Other financial liabilities - 2,087 - 2,087
---------- --------- --------- ---------
- 2,087 - 2,087
------------------------------------------------------------- --------- --------- ---------
As at 31 December 2016
Level 1 Level 2 Level 3 Total
GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------------------- ---------- --------- --------- ---------
Investments at fair value through profit or loss - - 817,761 817,761
- - 817,761 817,761
------------------------------------------------------------- --------- --------- ---------
- - - -
Other financial liabilities - 2,633 - 2,633
---------- --------- --------- ---------
- 2,633 - 2,633
------------------------------------------------------------- --------- --------- ---------
Investments at fair value through profit or loss comprise the
fair value of the investment portfolio, on which the sensitivity
analysis is calculated, and the fair values of TRIG UK and TRIG UK
I, the Company's subsidiaries, being their cash, working capital
and debt balances.
30 June 2017 31 December 2016
GBP'000s GBP'000s
Portfolio value 951,845 818,672
TRIG UK and TRIG UK I
Cash 174 188
Working capital (3,015) (2,343)
Debt(1) (7,268) 1,244
------------- -----------------
(10,111) (911)
Investments at fair value through profit or loss 941,734 817,761
------------- -----------------
(1.) Debt arrangement costs of GBP1,232k (Dec 2016: GBP1,244k)
have been netted off the GBP8,500k (Dec 2016: GBPNil) debt drawn by
TRIG UK and TRIG UK I.
Level 2
Valuation methodology
Fair value is based on price quotations from financial
institutions active in the relevant market. The key inputs to the
discounted cash flow methodology used to derive fair value include
foreign currency exchange rates and foreign currency forward
curves. Valuations are performed on a six monthly basis every June
and December for all financial assets and all financial
liabilities.
Level 3
Valuation methodology
The Investment Manager has carried out fair valuations of the
investments as at 30 June 2017 and the Directors have satisfied
themselves as to the methodology used, the discount rates and key
assumptions applied, and the valuation. All investments are at fair
value through profit or loss and are valued using a discounted cash
flow methodology.
The following economic assumptions were used in the discounted
cash flow valuations at:
30 June 2017 31 December 2016
--------------------------------------- ------------------------------------- --------------------------------------
UK inflation rates 2.75% 2.75%
--------------------------------------- ------------------------------------- --------------------------------------
Ireland and France inflation rates 2.00% 2.00%
--------------------------------------- ------------------------------------- --------------------------------------
UK, Ireland and France deposit 1.00% to 31 March 2021, 2.00% 1.00% to 31 March 2021, 2.00%
interest rates thereafter thereafter
--------------------------------------- ------------------------------------- --------------------------------------
UK corporation tax rate 20.00%, reducing to 19% from 1 April 20.00%, reducing to 19% from 1 April
2017 and then to 17% from 1 April 2017 and then to 17% from 1 April
2020 2020
--------------------------------------- ------------------------------------- --------------------------------------
France corporation tax rate 33.3% reducing to 28% by 2020 33.3% + 1.1% above EUR763,000
threshold
--------------------------------------- ------------------------------------- --------------------------------------
Ireland corporation tax rate 12.5% active rate, 25% passive rate 12.5% active rate, 25% passive rate
--------------------------------------- ------------------------------------- --------------------------------------
Euro/sterling exchange rate 1.1392 1.1709
--------------------------------------- ------------------------------------- --------------------------------------
Energy yield assumptions P50 case P50 case
--------------------------------------- ------------------------------------- --------------------------------------
Discount rates
The discount rates used for valuing each renewable
infrastructure investment are based on market information and the
current bidding experience of the Group and its Managers.
The weighted average portfolio valuation discount rate used for
valuing the projects in the portfolio is 8.1% (Dec 2016: 8.4%).
A change to the weighted average discount rate of 8.1% (Dec
2016: 8.4%) by plus 0.5% has an impact of -GBP33.8m or minus 0.5%
has an impact of +GBP35.9m on the valuation.
Power Price
The power price forecasts are based on the base case assumptions
from the valuation date and throughout the operating life of the
portfolio. The base case power pricing is based on the current
forecast real price reference curve data provided by a leading
power price forecaster, adjusted to reflect the value the market
will place on such generation in an arm's length transaction.
A change in the forecast electricity price assumptions by plus
10% has an impact of +GBP70.9m or minus 10% has an impact of
-GBP69.5m on the valuation.
Energy Yield
The portfolio's aggregate production outcome for a 10 year
period would be expected to fall somewhere between a P90 10 year
exceedance (downside case) and a P10 10 year exceedance (upside
case).
A P90 10 year exceedance has an impact of -GBP91.7m and a P10 10
year exceedance has an impact of +GBP90.3m on the valuation.
Inflation rates
The portfolio valuation assumes long-term inflation of 2.75% per
annum for UK investments, and 2.00% per annum for France and
Republic of Ireland investments.
A change in the inflation assumptions by plus 0.5% has an impact
of +GBP50.3m or minus 0.5% has an impact of -GBP44.9m on the
valuation.
Operating costs
A change in operating costs by plus 10% has an impact of
-GBP30.3m or minus 10% has an impact of +GBP30.7m on the
valuation.
Currency rates
The spot rate used for the 30 June 2017 valuation, from Euro to
Sterling, was 1.1392 (Dec 2016: 1.1709).
A strengthening in the value of the Euro by plus 10% has an
impact of +GBP5.3m or minus 10% has an impact of -GBP5.3m on the
valuation.
Taxation rates
A change in taxation rates by plus 2% has an impact of -GBP15.1m
and minus 2% has an impact of +GBP15.1m on the valuation.
4. 4. Total operating income
5.
For six For six
months ended months ended
30 June 2017 30 June 2016
Total Total
GBP'000s GBP'000s
---------------------- --------------- ---------------
Interest income 20,460 18,281
Gains on investments 12,854 7,569
---------------------- --------------- ---------------
33,314 25,850
---------------------- --------------- ---------------
On the Expanded basis, which includes TRIG UK and TRIG UK I, the
Company's subsidiaries, that the Directors consider to be an
extension of the Company's investment activity, the total operating
income is GBP39,520k (Jun 2016: GBP32,784k). The reconciliation
from the Statutory IFRS basis to the Expanded basis is shown in
"Analysis of Financial Results" section.
6. 5. Fund expenses
For six For six
months ended months ended
30 June 2017 30 June 2016
Total Total
GBP'000s GBP'000s
-------------------------------------------------------------------------------- --------------- ---------------
Fees payable to the Company's auditors for the audit of the Company's accounts 29 24
Fees payable to the Company's auditors for audit-related assurance services 26 26
Investment and management fees (Note 13) 99 99
Directors' fees (Note 13) 96 94
Other costs 304 221
-------------------------------------------------------------------------------- --------------- ---------------
554 464
-------------------------------------------------------------------------------- --------------- ---------------
On the Expanded basis, fund expenses are GBP5,385k (Jun 2016:
GBP4,661k); the difference being the costs incurred within TRIG UK
and TRIG UK I, the Company's subsidiaries. The reconciliation from
the Statutory IFRS basis to the Expanded basis is shown in the
"Analysis of Financial Results".
The Company had no employees during the current or prior period.
The Company has appointed the Investment Manager and the Operations
Manager to advise on the management of the portfolio, the Company
and its subsidiaries, on its behalf.
7. 6. Finance and other (expenses)/income
For six For six
months ended months ended
30 June 2017 30 June 2016
Total Total
GBP'000s GBP'000s
--------------------------------------------- --------------- ---------------
Interest income:
Interest on bank deposits 23 16
--------------------------------------------- --------------- ---------------
Total finance income 23 16
--------------------------------------------- --------------- ---------------
(Loss)/gain on foreign exchange:
Realised loss on settlement of FX forwards (2,017) (1,278)
Fair value movement of FX forward contracts 546 (4,803)
Other foreign exchange movements 5 (91)
--------------------------------------------- --------------- ---------------
Total loss on foreign exchange (1,466) (6,172)
--------------------------------------------- --------------- ---------------
Finance and similar expenses (1,443) (6,156)
--------------------------------------------- --------------- ---------------
On the Expanded basis, excluding foreign exchange movements,
finance income is GBP25k (Jun 2016: GBP23k) and finance costs are
GBP860k (Jun 2016: GBP2,930k); the difference being the Group's
acquisition facility costs which are incurred within TRIG UK and
TRIG UK I, the Company's subsidiaries. These costs are detailed in
the "Analysis of Financial Results" section.
The loss on foreign exchange on the Expanded basis is GBP1,497k
(Jun 2016: loss of GBP6,079k). The reconciliation from the
Statutory IFRS basis to the Expanded basis, which includes a small
FX movement within TRIG UK and TRIG UK I, the Company's
subsidiaries, is shown in the "Analysis of Financial Results".
8. 7. Income tax
Under the current system of taxation in Guernsey, the Company is
exempt from tax in Guernsey other than on Guernsey source income
(excluding Guernsey bank interest). Therefore, income from
investments is not subject to any tax in Guernsey, although these
investments will bear tax in the individual jurisdictions in which
they operate.
9. 8. Earnings per share
Earnings per share ("EPS") is calculated by dividing the profit
attributable to equity shareholders of the Company by the weighted
average number of Ordinary Shares in issue during the period.
30 June 2017 30 June 2016
Profit attributable to equity holders of the
Company (GBP'000s) 31,317 19,230
Weighted average number of Ordinary Shares in
issue ('000s) 887,115 742,233
Basic and diluted EPS (pence) 3.5 2.6
----------------------------------------------- ------------- -------------
10. 9. Dividends
31 December
30 June 2017 2016
GBP'000s GBP'000s
------------------------------------------------------------------------------------ ------------- -------------
Amounts recognised as distributions to equity holders during the period:
Interim dividend for the six months ended 31 December 2015 of 3.11p per share - 22,791
Interim dividend for the three months ended 31 March 2016 of 1.5625p per share - 11,974
Interim dividend for the three months ended 30 June 2016 of 1.5625p per share - 11,975
Interim dividend for the three months ended 30 September 2016 of 1.5625p per share - 12,982
Interim dividend for the three months ended 31 December 2016 of 1.5625p per share 13,016 -
Interim dividend for the three months ended 31 March 2017 of 1.6p per share 15,059 -
------------------------------------------------------------------------------------ ------------- -------------
28,075 59,722
------------------------------------------------------------------------------------ ------------- -------------
Dividends settled as a scrip dividend alternative 1,781 6,735
Dividends settled in cash 26,294 52,987
------------------------------------------------------------------------------------ ------------- -------------
28,075 59,722
------------------------------------------------------------------------------------ ------------- -------------
On 27 July 2017 (see Note 16), the Company declared an interim
dividend of 1.6 pence per share for the three month period ended 30
June 2017. The dividend, which is payable on 29 September 2017, is
expected to total GBP15,075,438, based on a record date of 19
August 2017 and the number of shares in issue being
942,214,888.
11. 10. Net assets per Ordinary Share
31 December
30 June 2017 2016
Shareholders' equity at balance sheet date (GBP'000s) 948,605 GBP834,266
---------------------------------------------------------------------------------------- ------------- -------------
Number of shares at balance sheet date, including management shares accrued but not yet
issued
('000s) 943,070 833,786
---------------------------------------------------------------------------------------- ------------- -------------
Net Assets per Ordinary Share at balance sheet date (pence) 100.6 100.1
---------------------------------------------------------------------------------------- ------------- -------------
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent of the Group's
management fees are to be settled in Ordinary Shares. Shares are
issued to the Investment Manager and the Operations Manager twice a
year in arrears, usually in March and September for the half year
ending December and June, respectively.
As at 30 June 2017, 855,316 shares equating to GBP846,762, based
on a Net Asset Value ex dividend of 99.0 pence per share (the Net
Asset Value at 30 June 2017 of 100.6 pence per share less the
interim dividend of 1.6 pence per share) were due but had not been
issued. The Company intends to issue these shares on or around 30
September 2017.
As at 31 December 2016, 787,847 shares equating to GBP776,325,
based on a Net Asset Value ex dividend of 98.54 pence per share
(the Net Asset Value at 31 December 2016 of 100.1 pence per share
less the interim dividend of 1.5625 pence per share) were due but
had not been issued. The Company issued these shares on 31 March
2017.
In view of this, the denominator in the above Net Assets per
Ordinary Share calculation is as follows:
31 December
30 June 2017 2016
Ordinary Shares in issue at balance sheet date 942,215 832,998
Number of shares to be issued in lieu of Management fees 855 788
-------------------------------------------------------------------------- ------------- -------------
Total number of shares used in Net Assets per Ordinary Share calculation 943,070 833,786
-------------------------------------------------------------------------- ------------- -------------
11. Investments at fair value through profit or loss
Investments at fair value through profit or loss is the sum of
the Portfolio Valuation and the carrying amount of TRIG UK and TRIG
UK I, the Company's subsidiaries.
31 December
30 June 2017 2016
GBP'000s GBP'000s
------------------------ ------------- -------------
Brought forward 817,761 711,604
Investments 116,000 77,526
Distributions received (25,341) (47,395)
Interest income 20,460 37,351
Gain on valuation 12,854 38,675
Carried forward 941,734 817,761
------------------------ ------------- -------------
The following information is non-statutory. It provides
additional information to users of the interim financial
statements, splitting the fair value movements between the
investment portfolio and TRIG UK and TRIG UK I, the Company's
subsidiaries.
31 December
30 June 2017 2016
GBP'000s GBP'000s
-------------------------------------------------------- ------------- -------------
Fair value of investment portfolio
Brought forward value of investment portfolio 818,672 712,284
Investments in the period 128,991 77,667
Distributions received (35,338) (59,467)
Interest income 12,485 24,435
Dividend income - 1,959
Gain on valuation 27,035 61,794
-------------------------------------------------------- ------------- -------------
Carried forward value of investment portfolio 951,845 818,672
-------------------------------------------------------- ------------- -------------
Fair value of TRIG UK and TRIG UK I
Brought forward value of TRIG UK and TRIG UK I (911) (680)
Cash movement (14) (159)
Working capital movement (751) 419
Debt movement(1) (8,435) (491)
-------------------------------------------------------- ------------- -------------
Carried forward value of TRIG UK and TRIG UK I (10,111) (911)
-------------------------------------------------------- ------------- -------------
Total investments at fair value through profit or loss 941,734 817,761
-------------------------------------------------------- ------------- -------------
1 Debt arrangement costs of GBP1,232k (Dec 2016: GBP1,735k) have
been netted off the GBP8,500k (Dec 2016: GBPNil) debt drawn by TRIG
UK and TRIG UK I.
The gains on investment are unrealised.
Investments are generally restricted on their ability to
transfer funds to the Company under the terms of their senior
funding arrangements for that investment. Significant restrictions
include:
- Historic and projected debt service and loan life cover ratios exceed a given threshold;
- Required cash reserve account levels are met;
- Senior lenders have agreed the current financial model that
forecasts the economic performance of the project company;
- Project company is in compliance with the terms of its senior funding arrangements; and
- Senior lenders have approved the annual budget for the company.
Details of investments recognised at fair value through profit
or loss were as follows:
30 June 2017 31 December 2016
---------------------------
Investments (project name) Country Equity Subordinated loanstock Equity Subordinated loanstock
--------------------------- --------------------- ------- ----------------------- ------- -----------------------
TRIG UK UK 100.0% 100.0% 100.0% 100.0%
TRIG UK I UK 100.0% 100.0% 100.0% 100.0%
Roos UK 100.0% 100.0% 100.0% 100.0%
The Grange UK 100.0% 100.0% 100.0% 100.0%
Hill of Towie UK 100.0% 100.0% 100.0% 100.0%
Green Hill UK 100.0% 100.0% 100.0% 100.0%
Forss UK 100.0% 100.0% 100.0% 100.0%
Altahullion UK 100.0% 100.0% 100.0% 100.0%
Lendrums Bridge UK 100.0% 100.0% 100.0% 100.0%
Lough Hill UK 100.0% 100.0% 100.0% 100.0%
Milane Hill Republic of Ireland 100.0% 100.0% 100.0% 100.0%
Beennageeha Republic of Ireland 100.0% 100.0% 100.0% 100.0%
Haut Languedoc France 100.0% 100.0% 100.0% 100.0%
Haut Cabardes France 100.0% 100.0% 100.0% 100.0%
Cuxac Cabardes France 100.0% 100.0% 100.0% 100.0%
Roussas-Claves France 100.0% 100.0% 100.0% 100.0%
Puits Castan France 100.0% 100.0% 100.0% 100.0%
Churchtown UK 100.0% 100.0% 100.0% 100.0%
East Langford UK 100.0% 100.0% 100.0% 100.0%
Manor Farm UK 100.0% 100.0% 100.0% 100.0%
Parsonage UK 100.0% 100.0% 100.0% 100.0%
Marvel Farms UK 100.0% 100.0% 100.0% 100.0%
Tamar Heights UK 100.0% 100.0% 100.0% 100.0%
Stour Fields UK 100.0% 100.0% 100.0% 100.0%
Meikle Carewe UK 100.0% 100.0% 100.0% 100.0%
Tallentire UK 100.0% 100.0% 100.0% 100.0%
Parley UK 100.0% 100.0% 100.0% 100.0%
Egmere UK 100.0% 100.0% 100.0% 100.0%
Penare UK 100.0% 100.0% 100.0% 100.0%
Earlseat UK 100.0% 100.0% 100.0% 100.0%
Taurbeg Republic of Ireland 100.0% 100.0% 100.0% 100.0%
Four Burrows UK 100.0% 100.0% 100.0% 100.0%
Rothes 2 UK 49.0% 80.5% 49.0% 84.0%
Mid Hill UK 49.0% 80.5% 49.0% 84.0%
Paul's Hill UK 49.0% 80.5% 49.0% 84.0%
Rothes 1 UK 49.0% 80.5% 49.0% 84.0%
Crystal Rig 1 UK 49.0% 80.5% 49.0% 84.0%
Crystal Rig 2 UK 49.0% 80.5% 49.0% 84.0%
Broussan Solar France 48.9% 100.0% 48.9% 100.0%
Chateau Solar France 48.9% 100.0% 48.9% 100.0%
Plateau Solar France 48.9% 100.0% 48.9% 100.0%
Borgo Solar France 48.9% 100.0% 48.9% 100.0%
Olmo 2 Solar France 48.9% 100.0% 48.9% 100.0%
Pascialone Solar France 48.9% 100.0% 48.9% 100.0%
Santa Lucia Solar France 48.9% 100.0% 48.9% 100.0%
Agrinergie 1&3 Solar France 48.9% 100.0% 48.9% 100.0%
Agrinergie 5 Solar France 48.9% 100.0% 48.9% 100.0%
Agrisol Solar France 48.9% 100.0% 48.9% 100.0%
Chemin Canal Solar France 48.9% 100.0% 48.9% 100.0%
Ligne des 400 Solar France 48.9% 100.0% 48.9% 100.0%
Logistisud Solar France 48.9% 100.0% 48.9% 100.0%
Marie Gallante Solar France 24.9% 100.0% 24.9% 100.0%
Ste Marguerite Solar France 48.9% 100.0% 48.9% 100.0%
Freasdail UK 100.0% 100.0% 100.0% 100.0%
FVP du Midi France 51.0% 100.0% 51.0% 100.0%
Neilston UK 100% 100.0% - -
Garreg Lwyd UK 100% 100.0% - -
On 27 April 2017, TRIG acquired, from private developers Carbon
Free and Neilston Development Trust, a 100% shareholder loan
interest and a 100% equity interest in Neilston Community Wind
Farm, a UK onshore operational wind farm for consideration of
GBP22.6m.
On 16 May 2017, TRIG acquired, from RES (the Operations
Manager), a 100% shareholder loan interest and a 100% equity
interest in Garreg Lwyd Hill Farm, a UK onshore operational wind
farm for consideration of GBP102.8m.
Further detail of acquisitions made in the period can be found
in the Interim Management Report.
12. Share capital and reserves
Ordinary Shares Ordinary Shares
31 December
30 June 2017 2016
000s 000s
---------------------------------------- ----------------- -----------------
Opening balance 832,998 732,838
Issued for cash 106,796 92,000
Issued as a scrip dividend alternative 1,633 6,643
Issued in lieu of management fees 788 1,517
---------------------------------------- ----------------- -----------------
Issued at end of period - fully paid 942,215 832,998
---------------------------------------- ----------------- -----------------
On 1 April 2017, the Company issued 106,796,117 shares raising
GBP110m before costs. The Company used the funds to fund the
acquisitions made in the period.
The holders of the 942,214,888 (Dec 2016: 832,998,413) Ordinary
Shares are entitled to receive dividends as declared from time to
time and are entitled to one vote per share at meetings of the
Company. The Company shares are issued at nil par value.
Share Premium
31 December
30 June 2017 2016
GBP'000s GBP'000s
-------------------------------- ------------- -------------
Opening balance 827,650 728,227
Ordinary Shares issued 112,558 101,107
Cost of Ordinary Shares issued (1,531) (1,684)
-------------------------------- ------------- -------------
Closing balance 938,677 827,650
-------------------------------- ------------- -------------
Other reserves
31 December
30 June 2017 2016
GBP'000s GBP'000s
------------------------------------------------------------------------------ ------------- -------------
Opening balance 776 706
Shares to be issued in lieu of management fees incurred in H1 2016 - 746
Shares to be issued in lieu of management fees incurred in H2 2016 (Note 13) - 776
Shares to be issued in lieu of management fees incurred in H1 2017 (Note 13) 847 -
Shares issued in the period, transferred to share premium (776) (1,452)
------------------------------------------------------------------------------ ------------- -------------
Closing balance 847 776
------------------------------------------------------------------------------ ------------- -------------
Retained reserves
Retained reserves comprise retained earnings, as detailed in the
statement of changes in shareholders' equity.
13. Related party and key advisor transactions
Loans to related parties:
31 December
30 June 2017 2016
GBP'000s GBP'000s
---------------------------------------------------------------------------------------- ------------- -------------
Short-term balance outstanding from TRIG UK, in relation to Management fees to be
settled
in shares 855 776
Long-term loan to TRIG UK - 485,569
Long-term loan to TRIG UK I 623,788 -
----------------------------------------------------------------------------------------
624,643 486,345
---------------------------------------------------------------------------------------- ------------- -------------
During the period, interest totalling GBP20,460k (Jun 2016:
GBP18,281k) was earned, and settled, in respect of the long-term
interest-bearing loan between the Company and its subsidiaries,
TRIG UK and TRIG UK I.
Key advisor transactions
The Investment Manager to the Group (InfraRed Capital Partners
Limited) is entitled to 65 per cent of the aggregate management fee
(see below), payable quarterly in arrears. The Operations Manager
to the Group (Renewable Energy Systems Limited) is entitled to 35
per cent of the aggregate management fee (see below), payable
quarterly in arrears.
The aggregate management fee payable to the Investment Manager
and the Operations Manager is 1 per cent of the Adjusted Portfolio
Value in respect of the first GBP1 billion of the Adjusted
Portfolio Value, and 0.8 per cent in respect of the Adjusted
Portfolio Value in excess of GBP1 billion. These fees are payable
by TRIG UK, the Company's direct subsidiary, less the proportion
that relates solely to the Company, the advisory fees, which are
payable by the Company.
The advisory fees payable to the Investment Manager and the
Operations Manager in respect of the advisory services they provide
to the Company are GBP130k per annum and GBP70k per annum,
respectively. The advisory fees charged to the Company are included
within the 1% total fee amount charged to the Company and its
direct subsidiary, TRIG UK. The Investment Manager advisory fee
charged to the income statement for the period was GBP65k (Jun
2016: GBP65k), of which GBP32k (Jun 2016: GBP32k) remained payable
in cash at the balance sheet date. The Operations Manager advisory
fee charged to the income statement for the period was GBP35k (Jun
2016: GBP35k), of which GBP35k (Jun 2016: GBP17k) remained payable
in cash at the balance sheet date.
The Investment Manager management fee charged to TRIG UK for the
period was GBP2,688k (Jun 2016: GBP2,358k), of which GBP1,118k (Jun
2016: GBP946k) remained payable in cash at the balance sheet date.
The Operations Manager management fee charged to TRIG UK for the
period was GBP1,447k (Jun 2016: GBP1,270k), of which GBP602k (Jun
2016: GBP509k) remained payable in cash at the balance sheet
date.
In addition, the Operations Manager received GBP2,722k (Jun
2016: GBP2,072k) for services in relation to Asset Management.
These expenses are incurred in the project companies and are not
included in these interim financial statements.
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent of the Group's
aggregate management fees are to be settled in Ordinary Shares. The
shares issued to the Managers by the Company relate to amounts due
to the Managers by TRIG UK. Accordingly, TRIG UK reimburses the
Company for the shares issued.
On 31 March 2017, the Company issued 787,826 shares equating to
GBP776,325, based on a Net Asset Value ex dividend of 98.54 pence
per share (the Net Asset Value at 31 December 2016 of 100.1 pence
per share less the interim dividend of 1.5625 pence per share) in
respect of management fees earned in H2 2016.
As at 30 June 2017, 855,315 shares equating to GBP846,761, based
on a Net Asset Value ex dividend of 99.0 pence per share (the Net
Asset Value at 30 June 2017 of 100.6 pence per share less the
interim dividend of 1.6 pence per share) were due, in respect of
management fees earned in H1 2017, but had not been issued. The
Company intends to issue these shares on or around 30 September
2017.
The Directors of the Company received fees for their services.
Total fees for the Directors for the period were GBP96,350 (Jun
2016: GBP94,000). Directors' expenses of GBP2,462 (Jun 2016:
GBP936) were also paid in the period.
On 16 May 2017, TRIG acquired, from RES (the Operations
Manager), a 100% shareholder loan interest and a 100% equity
interest in Garreg Lwyd Hill Farm, a UK onshore operational wind
farm for consideration of GBP102.8m.
On 11 August 2017, TRIG entered into a binding sale and purchase
agreement to acquire, from RES, a 100% equity interest and 100%
shareholder loan interest in Broxburn, a battery storage plant in
Scotland for consideration of GBP20.0 million.
All of the above transactions were undertaken on an arm's length
basis.
14. Guarantees and other commitments
As at 30 June 2017, the Company and or TRIG UK and or TRIG UK I
and its subsidiaries, had provided GBP20.8 million (Dec 2016:
GBP18.5 million) in guarantees to the projects in the TRIG
portfolio.
The Company also guarantees the revolving acquisition facility,
entered into by TRIG UK and TRIG UK I, to enable it to acquire
further investments.
15. Contingent consideration
The Group has performance-related contingent consideration
obligations of up to GBP3.9 million (Dec 2016: GBP10.2 million)
relating to acquisitions completed prior to 30 June 2017. These
payments depend on the performance of certain wind farms and solar
parks and other contracted enhancements. The payments, if
triggered, would be due before 2020. The valuation of the
investments in the portfolio does not assume that these
enhancements are achieved. If further payments do become due they
would be expected to be offset by an increase in fair value of the
investment due to increased assumed revenues. The arrangements are
generally two way in that if performance is below base case levels
some refund of consideration may become due.
16. Events after the balance sheet date
On 27 July 2017, the Company declared an interim dividend of 1.6
pence per share for the three month period ended 30 June 2017. The
dividend, which is payable on 30 September 2017, is expected to
total GBP15,075,438, based on a record date of 19 August 2017 and
the number of shares in issue being 942,214,888.
On 11 August 2017, TRIG entered into a binding sale and purchase
agreement to acquire, from RES (the Operations Manager), a 100%
equity interest and 100% shareholder loan interest in Broxburn, a
battery storage plant in Scotland for consideration of GBP20.0
million.
There are no other events after the balance sheet date, which
are required to be disclosed.
DIRECTORS
Helen Mahy (Chairman)
Jonathan (Jon) Bridel
Shelagh Mason
Klaus Hammer
REGISTRAR
Capita Registrars (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St. Sampson
Guernsey GY2 4LH
DESIGNATED ADMINISTRATOR TO COMPANY, COMPANY SECRETARY AND
REGISTERED OFFICE
Aztec Financial Services (Guernsey) Limited
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3PP
INVESTMENT MANAGER
InfraRed Capital Partners Limited
12 Charles II Street
London SW1Y 4QU
OPERATIONS MANAGER
Renewable Energy Systems Limited
Beaufort Court
Egg Farm Lane
Kings Langley
Hertfordshire WD4 8LR
FINANCIAL PR
Tulchan Communications LLP
85 Fleet Street
London EC4Y 1AE
UK TRANSFER AGENT
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Helpline: 0871 664 0300
AUDITORS
Deloitte LLP
Regency Court
Esplanade
St Peter Port
Guernsey GY1 3HW
BROKERS
Canaccord Genuity Limited
9(th) Floor
88 Wood Street
London EC2V 7QR
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
(1) Operating Income shown above is both on the Expanded Basis
and the Statutory IFRS Basis. On the Expanded Basis, The Renewables
Infrastructure Group (UK) Limited ("TRIG UK") and The Renewables
Infrastructure Group (UK) Investments Limited ("TRIG UK I"), which
is are direct subsidiaries of The Renewables Infrastructure Group
Limited ("TRIG") and are the entities through which investments are
purchased, are consolidated rather than being accounted for at fair
value. On the Statutory IFRS Basis, TRIG UK and TRIG UK I are
accounted for at fair value rather than being consolidated. Further
explanation of the difference in the two accounting approaches is
provided in the Analysis of Financial Results.
(2) The earnings per ordinary share are calculated on the basis
of a weighted average of 887,114,588 ordinary shares in issue
during the period.
(3) The NAV per share at 30 June 2017 is calculated on the basis
of 943,070,204 ordinary shares in issue and to be issued at 30 June
2017.
(4) Cash balances shown above are stated on the Expanded Basis.
Under the Statutory IFRS Basis, cash balances at 30 June 2017 and
31 December 2016 would have been GBP8.5 million and GBP18.5
million, respectively. The difference in both periods is the cash
balance held within TRIG UK and TRIG UK I.
(5) Investment Week / AIC, 19 July 2017.
(6) Under the Company's Investment Policy, the cost of works on
investments in portfolio companies which have assets under
development may not in aggregate account for than 15% of the
overall portfolio value, calculated at the time of investment or
commitment.
(7) Where a project has been commissioned in stages, this refers
to the earliest commissioning date.
(8) Where a project has been commissioned in stages, this refers
to the earliest commissioning date.
(9) BEIS Renewables Statistics
(10) The euro / sterling exchange rate sensitivity does not
attempt to illustrate the indirect influences of currencies on UK
power prices which are interrelated with other influences on power
prices.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAXPXFLKXEFF
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