TIDMTRIG
RNS Number : 3135P
Renewables Infrastructure Grp (The)
17 February 2021
F
17 February 2021
The Renewables Infrastructure Group Limited
("TRIG" or "the Company", a London-listed investment company
advised by InfraRed Capital Partners ("InfraRed") as Investment
Manager and RES ("Renewable Energy Systems") as Operations
Manager)
Annual Results for the 12 months ended 31 December 2020
2020 Highlights - Resilient financial performance
-- Portfolio generated 3,953GWh of electricity in the year
(2019: 3,036GWh)
-- NAV per ordinary share of 115.3p [1] as at 31 December 2020
(June 2020: 113.0p; December 2019: 115.0p)
-- Directors' portfolio valuation [2] of GBP2,213m as at 31
December 2020 (2019: GBP1,745m) following six acquisitions
-- NAV total return of 6.1% for the year and 8.1% since IPO
(annualised) [3]
-- Earnings per ordinary share of 5.9p (2019: 11.4p) and profit
before tax of GBP100m (2019: GBP162m). Gains as a result of a
reduction in valuation discount rates and the Managers' portfolio
and asset-level initiatives dampened by lower power price
forecasts
-- Declared dividends of 6.76p per share in line with the target
for 2020 (2019: 6.64p)
-- Dividend target [4] of 6.76p per share maintained for the
year to 31 December 2021
Responsible investment practices at the heart of the
business:
-- Health & safety remains a key priority throughout the
pandemic - technology utilised to ensure governance and management
standards maintained
-- GBP0.5m allocated to help address the impact of Covid-19 on
the local communities around TRIG's sites, in addition to the c.
GBP0.9m that the portfolio companies contribute to their local
communities each year
-- TRIG is a supporter of the recommendations of the Task Force
on Climate-related Financial Disclosures
-- Sustainability considerations fully integrated into
InfraRed's investment process
-- New three-year, ESG-linked, SONIA revolving credit facility
secured aligning TRIG's ESG commitments with funding
arrangements.
Helen Mahy, CBE, Chairman of TRIG, said :
"I am pleased that in light of the Covid-19 backdrop, TRIG's
financial performance has been resilient, including an increase in
the Company's NAV per share, underpinned by a diversified portfolio
and robust operational performance. The Board and I appreciate the
performance of InfraRed, RES and our supply chain in what has been
a challenging year.
My fellow Directors and I remain grateful for the support of
TRIG's shareholders as demonstrated through two oversubscribed
fundraisings in which the Company raised GBP320m, providing further
economies of scale.
2021 is a pivotal year for the climate change agenda. We expect
to see significant development of public policy in respect of
decarbonisation of energy supply, renewables-supporting grid
infrastructure and electrification of energy systems across TRIG's
target markets in the run up to COP26."
Richard Crawford, Director, Infrastructure, InfraRed Capital
Partners said:
"The portfolio has continued to perform well with generation 1%
ahead of budget. Asset availability has been maintained by
undertaking enhanced asset condition monitoring and undertaking
proactive works when government restrictions in response to
Covid-19 have allowed.
I am pleased that the six acquisitions in the year and two since
year end have continued to enhance and diversify the portfolio
alongside reducing TRIG's power price exposure.
We have seen an increasing volume of capital looking to deploy
into sustainable investment themes, particularly renewables. In
that context, a rigorous investment process, in which
sustainability considerations are fully embedded, will remain
key."
Webcast details
TRIG will be presenting its results at 09:30 UK time today. The
presentation will be broadcast live and an archive version of the
presentation will be made available on the Group's website. The
link for the broadcast is
http://bit.ly/TRIG_FY20_results_webinar
Enquiries
InfraRed Capital Partners Limited +44 (0) 20 7484 1800
Richard Crawford
Phil George
Maitland/AMO +44 (0) 20 7379 5151
James Isola
Zara de Belder
Notes
The Company
The Renewables Infrastructure Group ("TRIG" or the "Company") is
a leading London-listed renewable energy infrastructure investment
company. The Company seeks to provide shareholders with an
attractive long-term, income-based return with a positive
correlation to inflation by focusing on strong cash generation
across a diversified portfolio of predominantly operating
projects.
TRIG is invested in a portfolio of over 75 wind, solar and
battery storage projects with aggregate net generating capacity of
over 1.8GW. TRIG is seeking further suitable investment
opportunities which fit its stated Investment Policy.
Further details can be found on TRIG's website at
www.trig-ltd.com .
Investment Manager
TRIG's Investment Manager is InfraRed Capital Partners Limited
("InfraRed") which has successfully invested in over 200
infrastructure projects since 1997. InfraRed is a leading
international investment manager focused on infrastructure and real
estate. It operates worldwide from offices in London, Hong Kong,
New York, Seoul, Sydney and Mexico City. With over 190
professionals it manages in excess of USD 12 billion of equity
capital in multiple private and listed funds, primarily for
institutional investors across the globe. InfraRed is authorised
and regulated by the Financial Conduct Authority.
The infrastructure investment team at InfraRed consists of over
85 investment professionals, all with an infrastructure investment
background and a broad range of relevant skills, including private
equity, structured finance, construction, renewable energy and
facilities management.
InfraRed implements best-in-class practices to underpin asset
management and investment decisions, promotes ethical behaviour and
has established community engagement initiatives to support good
causes in the wider community. InfraRed is a signatory of the
Principles of Responsible Investment.
Further details can be found on InfraRed's website at
www.ircp.com .
Operations Manager
TRIG's Operations Manager is RES ("Renewable Energy Systems"),
the world's largest independent renewable energy company.
RES has been at the forefront of wind energy development for
over 38 years, with the expertise to develop, engineer, construct,
finance and operate projects around the globe. RES has developed or
constructed onshore and offshore wind, solar, energy storage and
transmission projects totalling more than 17GW in capacity. RES
supports over 6.3GW of operational assets worldwide for a large
client base. Headquartered in Hertfordshire, UK, RES is active in
10 countries and has over 2,000 employees engaged in renewables
globally.
RES is an expert at optimising energy yields, with a strong
focus on safety and sustainability. Further details can be found on
the website at www.res-group.com .
Webcast details
TRIG will be presenting its results at 09:30 UK time today. The
presentation will be broadcast live and an archive version of the
presentation will be made available on the Group's website. The
link for the broadcast is
http://bit.ly/TRIG_FY20_results_webinar
01 Chairman's Statement
I am pleased to present the 2020 Annual Report & Financial
Statements for The Renewables Infrastructure Group Limited ("TRIG"
or "the Company"). In a year filled with uncertainty and
challenges, the resilient performance of your company's assets
underpinned by the Managers' portfolio enhancement initiatives,
together with sustained market demand for renewable energy
generating assets, have delivered NAV total return of 6.1% for the
year. Acquisitions have continued to enhance and diversify TRIG's
portfolio, and have reduced TRIG's power price exposure, thereby
increasing the robustness of medium-term cash flow projections.
The Covid-19 pandemic dominated 2020 and persists into 2021.
Throughout, the health, safety and welfare of the workforce of our
Managers, site personnel and supply chain has remained paramount. I
am pleased to report that Covid-aware practices were quickly
implemented as the pandemic took hold. Operationally, we maintained
our strong record of a low accident frequency rate. Generation was
1% ahead of budget, incorporating good asset availability in the
context of Covid-19-related restrictions.
The limits on the movement and activities of people following
the outbreak of the pandemic significantly depressed demand for
electricity in 2020, contributing to greater power price volatility
and lower overall power price forecasts. The timescale for recovery
in economic activity is uncertain. Nonetheless, the threat of
climate change persists. The decarbonisation agenda has remained
central to government policy across Europe, with increasing
electrification of the energy system and renewables build-out at
the core of further policy developments such as the EU's New Green
Deal and the key drivers in UK's 2020 Energy White Paper. Together,
these are key drivers in resetting the sector's power price
expectations and in 2020 we have seen an average 12% reduction in
year-on-year power price forecasts across the markets in which TRIG
has investments.
The Company draws on the expertise of its Managers: InfraRed, a
leading infrastructure manager, and RES, the world's largest
independent renewable energy company. They work on TRIG's behalf to
ensure that portfolio diversification is maintained, performance of
the portfolio is optimised, operations remain safe and efficient,
and financial targets are achieved.
By investing in renewable energy, your company is helping to
deliver a net-zero carbon future and playing an important role in
mitigating climate change. TRIG's investment activities support
progress towards many of the United Nations' Sustainable
Development Goals ("SDGs") as well as increasing the share of
renewable energy in the European energy mix. TRIG's generation
capacity stands at 1.8GW ([5]) , which can generate enough
renewable power for one million homes and avoid approximately 1.3m
tonnes of carbon emissions per annum ([6]) .
My fellow Directors and I remain grateful for the support of
TRIG's shareholders as demonstrated through two oversubscribed
fundraisings in which the Company raised GBP320m. This capital
funded investments in the UK, France and Germany, across onshore
wind, offshore wind and solar PV technologies, providing further
economies of scale. Through InfraRed's disciplined and proactive
investment process, we continue to see a pipeline of attractive
investment opportunities.
Financial Results
TRIG is notable amongst renewables investment companies for the
combination of its scale with its portfolio diversification, both
in terms of geography and technology. Diversification helps manage
exposures to individual power markets, local weather patterns and
regulatory risk (including different subsidy regimes), and resulted
in a robust financial performance in 2020. Whilst the Covid-19
pandemic has affected all markets, it has had differing impacts on
each European country where TRIG has an investment; for example,
average power demand since 1 April 2020 compared to 'business as
usual' has ranged from 2% less in Sweden to 6% less in the UK, with
even greater short-term variability.
TRIG's net asset value ("NAV") per share was 115.3p at 31
December 2020, up from 113.0p at 30 June 2020 and 115.0p at 31
December 2019. The portfolio was valued at GBP2,213m as at 31
December 2020 (2019: GBP1,745m), with significant growth in the
portfolio following investment activities and fundraising in the
year. Valuation gains were buoyed by on-going demand for the asset
class resulting in a reduction in valuation discount rates, as well
as the Managers' portfolio and asset-level initiatives. However,
gains were dampened by the reduction in power price forecasts
across the geographies in which TRIG invests.
Profit before tax was GBP100m (2019: GBP162m) and earnings per
share were 5.9p (2019: 11.4p). Cash received from the portfolio by
way of distributions ([7]) was GBP148m (2019: GBP129m). Cash
receipts were affected by lower power prices, caused by the
Covid-19-related restrictions reducing energy demand; the potential
impact was largely mitigated as the majority of asset-level
revenues in the year were linked to fixed electricity pricing or
subsidies.
TRIG continued to be acquisitive and the portfolio continued to
grow with investments totalling GBP588m made and disposals ([8]) of
GBP118m in 2020. Investments were funded by a combination of the
proceeds of equity fundraisings and cash reserves including the
reinvestment of surplus cash generated from the Company's
portfolio. At 31 December 2020, the Company was drawn GBP40m under
its renewed, three-year ESG-linked GBP500m revolving credit
facility. TRIG has current investment commitments of GBP392m, of
which GBP313m are expected to fall due by the end of H1 2021,
including the completion of the Beatrice offshore wind farm
acquisition and investments into construction projects (Blary Hill
and Grönhult onshore wind farms).
TRIG's Ongoing Charges Percentage reduced to 0.94% (2019: 0.98%)
([9]) , reflecting the economies of scale of a bigger portfolio,
including the tiered management fee, and is consistent with our
strategy of providing value to our shareholders.
Dividends
The Board has declared a fourth interim dividend for the year
ended 31 December 2020 of 1.69p per share to bring the aggregate
2020 dividend to 6.76p per share, in line with the target set for
the year.
During 2020, the Company paid a total of GBP107.0m of dividends
in cash and, in addition, issued GBP6.6m scrip for shareholders who
elected to receive their dividends in shares, making a total of
GBP113.6m of dividends (2019: GBP94.3m).
The dividend was well covered at 1.13 times, or 1.20 times after
scrip take-up; however, cover was less than in the previous year
(2019: 1.21 times and 1.32 times after scrip take-up), principally
because of lower than forecast electricity prices in 2020.
In respect of the dividend, the Board's priority remains to
ensure that it is sustainable in the long term. Accordingly, the
Company's dividend policy is to increase the dividend when the
Board considers it prudent to do so, considering forecast cash
flows, expected dividend cover, inflation across TRIG's key
markets, the outlook for electricity prices and the operational
performance of the Company's portfolio.
The timing and speed of the economic recovery from the Covid-19
downturn remains unclear, meaning it is uncertain whether the
recent recovery in near-term power prices will endure; and
medium-term forecast electricity prices have reduced materially in
the year. Given this backdrop and priority of sustainable
dividends, the Board maintains an unchanged aggregate dividend
target ([10]) of 6.76p per share for the 2021 financial year. This
represents a prospective yield of 5.3% relative to the 31 December
2020 closing share price of 127.8p.
The Company expects to pay the 2021 dividend in four equal
quarterly instalments as usual. A scrip alternative will continue
to be provided, details of which can be found in the Scrip Dividend
Circular 2020 (on the Company's website).
Investment Activity
TRIG continues to add selectively to its portfolio where the
Investment Manager, InfraRed, identifies opportunities with
attractive risk adjusted returns that complement the portfolio's
diversification. These investments are scrutinised by the Managers
through an investment process in which sustainability
considerations are fully integrated. Disposals will be made when
appropriate for portfolio balance and / or risk management, such as
the accretive sale of the Ersträsk windfarm in Sweden back to
Enercon following construction delays.
TRIG's acquisition focus remains unchanged, targeting
investments in the UK and Europe (including France, Germany,
Ireland, and the Iberian and Nordic regions) across onshore wind,
offshore wind and solar PV technologies. Geographic and
technological diversification avoids reliance on singular markets
at risk of over-priced acquisitions due to scarcity premia; and the
Company's exposure to any one regulatory regime, power price
characteristics and weather system risk is reduced.
TRIG will have five investments in the offshore wind sector,
once the investment in Beatrice in the UK is completed, having
acquired stakes in Merkur in Germany and East Anglia 1 in the UK
during 2020. These projects benefit from fixed,
government-supported, electricity pricing for a term of eight to 15
years. These acquisitions, on a committed basis including that of
Beatrice ([11]) , have been key to reducing the sensitivity of
TRIG's NAV to a 10% decrease in the portfolio power price forecast
from 7.4% of NAV at 31 December 2019 to 6.6% of NAV at 31 December
2020.
Offshore wind projects are fewer in number and significantly
larger in scale than onshore renewables projects. This means that,
with an increasing volume of capital looking to deploy into
sustainable investment themes, they can be highly sought after, and
that investment discipline is key. "Off-market" transactions
sourced by InfraRed remain an important route to attractive
opportunities.
The highly contracted nature of subsidised projects, including
offshore wind, affords room to further diversify through selected
non-subsidised assets, whilst retaining a balanced portfolio. The
power price exposure of unsubsidised projects is typically managed
through offtake agreements or hedging instruments. Such
opportunities are most likely to come from the Nordic (onshore
wind) and Iberian (solar PV) regions.
Portfolio Performance
In 2020, the portfolio generated 3,953GWh of electricity,
including compensated curtailments (2019: 3,036GWh), with the
year-on-year increase primarily due to acquisitions. Overall,
generation was 1% ahead of budget. Good weather resource in Great
Britain and Sweden was offset by grid curtailments in the Republic
of Ireland and Germany, reinforcing the benefits of TRIG's
diversified portfolio.
Asset availability has remained solid despite the challenges of
Covid-19-related restrictions across Europe. TRIG benefits from
sophisticated remote monitoring undertaken by project company
management teams and the Operations Manager, and having assets that
are typically located away from densely populated areas where
infection rates have been highest.
Corporate Governance
Board composition is regularly discussed by the Board's
Nomination Committee to ensure that the Company's non-executive
Directors have a diverse range of relevant expertise and experience
to apply to the oversight of the Company and to engage effectively
with the Managers. I am pleased to welcome Tove Feld to the Board;
she was appointed as a Non-Executive Director in March 2020 and
brings with her significant experience in the offshore wind
sector.
In 2022, the Company will reach the ninth anniversary of its IPO
and three of the five Directors will have served nine years. The
Nomination Committee has established a recruitment and orderly
succession plan, which incorporates appropriate handover periods,
the principles and provisions of the AIC Code ([12]) , and the
recommendations of the Hampton-Alexander Review and the Parker
Review. An external search process has commenced.
Sustainability
The Board believes investing responsibly and the consideration
of environmental, social and governance ("ESG") factors are
essential to maintain a sustainable business model over the long
term. In addition to mitigating climate change, TRIG's
sustainability goals are to preserve our natural environment,
positively impact the communities we work in, and maintain ethics
and integrity in governance. This means, through the Managers,
ensuring each portfolio company takes responsibility for its ESG
impact, risks and opportunities.
TRIG's Sustainability Policy (published on the Company's
website) is designed to provide an overview of the Company's
approach to ESG considerations, including climate change risks and
opportunities. It comprises a framework of ESG objectives that are
designed to improve outcomes for TRIG's shareholders and its
portfolio's stakeholders. We report against these objectives in
Section 2.5 - Sustainability.
The Board has allocated an additional GBP500,000 to help address
the Covid-19 impact on the local communities around our sites. This
is in addition to the c. GBP900,000 that the portfolio companies
contribute to their local communities each year.
TRIG is a supporter of the Task Force on Climate-related
Financial Disclosures ("TCFD"), in line with our commitment to SDG
13 Climate Action. TRIG continues to expand its assessment of the
potential impact, including opportunities and risks, of climate
change and its TCFD reporting, which can be found in Section 2.11 -
Risks and Risk Management.
Through the process of renewing TRIG's revolving credit
facility, the Company has secured an ESG-linked loan. This
incorporates adjustments to the facility margin and commitment fee
based on ambitious but achievable ESG targets.
TRIG retains the London Stock Exchange's Green Economy Mark,
which recognises companies that make a significant contribution to
the transition to a zero-carbon economy.
I am pleased that the Board's ethos is shared by the Managers
who both have a longstanding commitment to sustainable investment.
InfraRed's infrastructure business has maintained its "A+" rating
in its PRI ([13]) assessment for the sixth consecutive year and RES
have continued to maintain strong ESG credentials as highlighted in
their annual Power for Good report and commitment to the Science
Based Targets Initiatives.
Principal Risks and Uncertainties
The Board and the Managers monitor and, where practicable,
mitigate a range of risks to TRIG's strategy. The main risks for
the Company continue to be:
Regulation: government or regulatory support for renewables
changing adversely;
Power prices: electricity prices falling or not increasing as
expected; and
Production performance: portfolio electricity production falling
short of expectations, including as a result of weather and asset
availability.
2020 has seen the ambition of decarbonisation targets increase
and begin to be translated into public policy, for example through
the European New Green Deal, the European Covid-19 Recovery Fund
and the UK Energy White Paper. Further detail is expected from
governments across TRIG's target jurisdictions in the run up to the
26th UN Climate Change Conference of the Parties (COP26) in
November 2021. The early pronouncements focussed on increasing the
rollout of renewables, and are being followed by detailed policy
aimed at delivering this. Public policy is now also beginning to
set out the need on the demand side for new technologies and
associated investment, such as renewables-fuelled 'green' hydrogen,
charging infrastructure for electric vehicles, grid upgrades and
long-duration storage to enable the transition to a net-zero carbon
future; although the mechanisms for delivering this side of the
equation are less clear.
Pressures on government budgets resulting from their response to
the Covid-19 pandemic may result in fiscal action, such as
regulatory change or increases in corporation tax rates. In France,
a parliamentary proposal has been voted in to reduce certain
historic tariffs on some older, higher feed-in-tariff solar
projects. The tariff reductions have not yet been determined, but
the impact is not expected to be significant for TRIG, affecting
assets representing less than 1% of TRIG's portfolio by value.
Countering the risk of retrospective regulatory action is
governments' need to maintain investor confidence to support
decarbonisation.
Power prices remain a key variable for the Company. Near-term
power price forwards, which were dampened by reduced demand
following the Covid-19 outbreak, began to recover towards the end
of the year because of supply-side generation constraints and
increasing gas prices. However, uncertainty remains with the risk
of further movement restrictions across Europe. Medium and
long-term power price forecasts are likely to be affected by the
evolution of market expectations in respect of the power generation
mix and the energy market structure. The impact of changes in power
prices is reduced through management of the Company's power price
sensitivity, which can be reduced through the acquisition of
projects with government-backed, fixed power price revenues and
fixing unsubsidised revenues through offtake agreements or hedging
instruments. Following the completion of the acquisitions of
Beatrice offshore wind farm and the Grönhult onshore wind farm, the
power price for 78% of forecast revenues over the next five years
will be fixed.
Production performance varies depending on weather and asset
availability. The Operations Manager, RES, maximises availability
through working with the respective on-site managers to ensure
careful planning, execution of operations and timely repair works.
In 2020, particular consideration has been given to Covid-aware
working. This has meant enhanced asset condition monitoring and
undertaking proactive works when government restrictions allow. The
geographical and technological diversity of TRIG's portfolio
provides resilience to varying weather conditions and spreads
TRIG's exposure to different regulatory and power price markets,
thus mitigating the key risks.
To date, the United Kingdom's departure from the European Union
has had no material impact on TRIG. The consequences of potential
supply chain disruption have been mitigated through ensuring
appropriate levels of strategic spares at sites and by suppliers.
Foreign exchange risk continues to be managed through the
Investment Manager's application of the Company's hedging
policy.
Outlook
2021 will be a pivotal year for the climate change agenda, with
the United States re-joining the Paris climate agreement and the UK
set to host COP26 in November. Government policies around the world
have shown renewable energy has a central role to play in
decarbonising our energy usage. We are confident that the markets
in which TRIG operates will continue to grow as government policy
encourages the transition to a net-zero carbon future.
TRIG's focus remains investing in the UK and other European
countries where there are stable renewable energy frameworks.
Acquisitions will continue to follow our strategy of maintaining a
balanced portfolio with an appropriate risk-return profile and
complement our existing, diversified portfolio. The greatest
investment activity in TRIG's key markets is expected from
subsidised offshore wind in the North Sea and onshore wind in
France, and unsubsidised onshore wind in the UK and Nordics and
solar in Iberia. For investments made by TRIG in unsubsidised
projects, we would expect, over time, to utilise offtake agreements
or hedging instruments to manage power price risk.
The challenges of 2020 have resulted in a recognition that, when
environmental, social and economic sustainability come together in
a strong governance framework, they create the foundations for a
sustainable, long-term investment proposition. These are core
tenets of TRIG's purpose and Sustainability Policy, and are at the
heart of our Managers' approaches, providing the bedrock for your
company's future success.
Helen Mahy CBE
Chairman
16 February 2021
02 Strategic Report
2.1 Objectives
TRIG aims to generate sustainable returns from a diversified
portfolio of renewables infrastructure that contribute towards a
zero-carbon future.
TRIG's diversified portfolio comprises predominantly operational
wind farms and solar parks in the UK and Europe. The Company aims
to provide its investors with long-term, stable dividends and to
retain the portfolio's capital through re-investment of surplus
cash flows after payment of dividends.
TRIG's key financial objectives are to provide its shareholders
with:
an attractive, long-term, income-based return by focusing on
strong cash generation across a portfolio of mostly operational
renewable energy assets;
prudent financial management in terms of the approach to cost
control, cash management, financing arrangements, foreign exchange
and interest rate hedging; and
a diversified investment portfolio at scale in order to spread
risk, increase share liquidity, obtain efficiencies and enhance NAV
per share for investors.
2.2 Business Model and Strategy
TRIG gives responsible investment great importance and places
sustainability at the heart of the business. To maintain a
sustainable business model over the long-term, we believe it is
necessary to conduct all business responsibly.
TRIG's approach to Responsible Investment is underpinned by the
Company's Environmental, Social and Governance objectives, which
are to:
mitigate Climate Change;
preserve our natural environment;
impact positively the communities in which TRIG works; and
to
maintain ethics and integrity in governance.
2.2 Business Model and Strategy
Purpose
To generate sustainable returns from a diversified portfolio or
renewables infrastructure that contribute towards a zero-carbon
future.
Introduction
TRIG was one of the first investment companies investing in
renewable energy infrastructure projects listed on the London Stock
Exchange. TRIG completed its IPO in 2013 and has been a member of
the FTSE-250 index since 2015. Its market capitalisation as at 31
December 2020 was approximately GBP2.4bn.
The growth in TRIG's portfolio since IPO has enabled the
Investment Manager, InfraRed, to add diversification through
technologies (onshore wind, offshore wind, solar PV and battery
storage) and geographies (UK, Ireland, France, Germany and Sweden),
with other geographies such as the Nordic, Benelux and Iberian
regions being actively considered.
TRIG aims to provide its shareholders with long-term,
sustainable returns from a diversified portfolio of renewables and
related investments that contribute towards a net zero-carbon
future whilst protecting the capital value of its investment
portfolio through the re-investment of surplus cash flows after the
payment of dividends.
Strategy
TRIG seeks to enhance the long-term sustainability of
shareholder returns in three ways:
Portfolio Diversification: A key element of TRIG's strategy is
to reduce the risk of concentration of assets in single power
markets, regulatory frameworks, weather patterns and technology
classes. A well-diversified portfolio helps improve the resilience
of the Company's ongoing financial performance and valuation,
contributing to the sustainability of returns to shareholders.
Responsible Investment: Our investments are long-term (with
asset lives which may be 30 years or more) and require a long-term
view to be taken both in the initial investment decisions and in
the subsequent asset management with sustainable business
practises. Through our commitment to our Sustainability Policy
(available on the TRIG website), aligned to the United Nations
Sustainability Development Goals and our own ESG goals, we place
great importance on a responsible investment approach to deliver
the Company's investment objective.
Value Enhancement: Extracting the most value from our portfolio
includes actions targeted at both the preservation and the
enhancement of value, whilst being mindful of ESG opportunities and
risks. Proactive asset management is undertaken to optimise
generation and minimise equipment downtime whilst operating safely
with a prudent approach to risk and a disciplined approach to
construction opportunities. Value maximisation underpins the
generation of returns for shareholders.
Management
The Company currently has a board of five independent
non-executive Directors (details of whom can be found in Section
3). The Board's role is to manage the governance of the Company in
the interests of shareholders and other stakeholders. In
particular, the Board monitors adherence to the Investment Policy,
determines the risk appetite of the Group, sets Group policies and
monitors the performance of the Investment Manager, the Operations
Manager and other key service providers.
The Board meets a minimum of four times per year for regular
Board meetings and there are several ad hoc meetings dependent upon
the requirements of the business. In addition, the Board has five
committees covering the areas of Audit, Nominations, Remuneration,
Management Engagement and Market Disclosure, chaired by respective
members of the Board, which receive and consider specialist
independent advisor reports and presentations.
The Board takes advice from the Investment Manager, InfraRed, as
well as from the Operations Manager, RES, on matters concerning the
market, the portfolio and new investment opportunities. Day-to-day
management of the Group's portfolio is delegated to the Investment
Manager and the Operations Manager, with investment decisions
within agreed parameters delegated to an Investment Committee
constituted by senior members of the Investment Manager.
InfraRed Capital Partners Limited ("InfraRed") is TRIG's
Investment Manager. The role of InfraRed is to provide the
day-to-day investment management of TRIG. InfraRed undertakes
investment activities including acquisitions and financial
structuring within parameters set by the Board; financial
management and reporting including portfolio valuations and
investor relations. InfraRed also advises on strategy, risk
management and funding requirements of the Group.
Renewable Energy Systems Limited ("RES") is TRIG's Operations
Manager. The role of RES is to be responsible for overseeing the
asset management of the portfolio. This includes oversight of
operating and construction projects; operational reporting for all
project companies; and designing and implementing portfolio
performance optimisation plans. RES also provide support in the
assessment of acquisition activities and investor relations
InfraRed is a leading international investment manager
specialised in infrastructure and real estate. With over 190
employees and offices in London, New York, Hong Kong, Seoul and
Sydney, InfraRed has a track record of around 20 years in raising
and managing 17 infrastructure and real estate funds with over
US$12bn of equity under management.
InfraRed is also Investment Manager to HICL Infrastructure
Company Limited, the largest London-listed infrastructure
investment company with a market capitalisation of GBP3.3bn as at
31 December 2020. Further details can be found on the website at
www.ircp.com.
InfraRed is a part of SLC Management which is the institutional
alternatives and traditional asset management business of Sun Life.
Sun Life is a leading international financial services organization
providing insurance, wealth and asset management solutions to
individual and corporate clients. As of 30 September 2020, Sun Life
had total assets under management of C$1,186 billion. For more
information please visit www.sunlife.com.
RES ("Renewable Energy Systems Limited") is TRIG's Operations
Manager. RES is the world's largest independent renewable energy
company having developed and/or constructed over 19GW of projects,
with operations in 10 countries and over 2,500 employees globally.
RES is a pure-play renewables company with the expertise to
develop, construct and operate projects around the globe across a
range of technologies including onshore and offshore wind, solar,
energy storage and transmission & distribution.
A large, dedicated team of RES staff provide portfolio-level
operations management to the Company and its subsidiaries. RES also
draws on the experience and skills of a much wider pool of
expertise from within the company in order to fulfil its Operations
Manager role, utilising nearly four decades of renewables
experience to provide project-level services to TRIG and support
the evaluation of investment opportunities for the Group.
RES is an expert at optimising energy yields, with a strong
focus on safety and sustainability. Further details can be found on
the website at www.res-group.com.
Other key service providers to the TRIG Group include Aztec
Financial Services (Guernsey) Limited providing Company Secretarial
and Administrative services, Investec Bank PLC and Liberum Capital
Limited as joint brokers, Maitland/AMO as financial public
relations advisers, Carey Olsen as legal advisers as to Guernsey
law, Norton Rose Fulbright LLP as legal advisers as to English law,
Link Asset Services (Guernsey) Limited as registrars and Deloitte
LLP as auditor. Lenders to the Group's Revolving Credit Facility
are National Australia Bank, Royal Bank of Scotland International,
ING Group, Sumitomo Banking Corporation, Barclays and
Santander.
The Board reviews the performance of all key service providers,
including adherence of the Investment Manager and Operations
Manager with TRIG's Sustainability Policy, on an annual basis
through its Management Engagement Committee.
Group Structure
Through the group structure, the Company owns a portfolio of
renewable energy infrastructure investments in the UK, Ireland,
France, Germany and Sweden. TRIG seeks to protect and enhance the
income from and value of the existing portfolio through active
management and sourcing of new investments that enhance the
diversity and scale of the portfolio, utilising the expertise of
the market-leading Investment and Operations Managers appointed by
the Company. The Company has a 31 December year-end, announces
interim results in August and full year results in February. The
Company pays dividends quarterly.
The Company is a self-managed Alternative Investment Fund under
the European Union's Alternative Investment Fund Managers
Directive.
TRIG is a Guernsey-registered investment company (which is not
uncommon for UK-listed investment companies). Tax is paid by the
portfolio companies in the markets in which they operate and by the
Company's shareholders on the dividends they receive (according to
the jurisdiction and taxation status of each shareholder). The
structure ensures investors are not in a disadvantageous tax
position compared to direct investors in infrastructure projects;
in effect this emulates the structure formalised for real estate
investors by the creation in the UK of Real Estate Investment
Trusts ("REITs"). A similar tax treatment can be achieved by UK
Investment Trust Companies located onshore by applying the UK's
Investment Trust (Approved Company) (Tax) Regulations (2011) with
the company deeming a portion of its dividends paid to investors as
interest distributions (although we note that for certain UK
shareholders the tax treatment of interest income is different to
dividend income).
2.3 Investment Approach and Policy
Investment Approach
TRIG's investment approach is based on the following two
factors:
The renewables market opportunity; and
The ability to construct a diversified portfolio across
established, low-risk technologies, electricity markets, weather
systems and revenue types.
Investment Policy
In order to achieve its investment objective, the Company
invests principally in operational assets which generate
electricity from renewable energy sources, with a particular focus
on wind farms and solar PV parks.
Investments will be made principally by way of equity and
shareholder loans which will generally provide for 100% or majority
ownership of the assets by the holding entities. In circumstances
where a minority equity interest is held in the relevant portfolio
company, the holding entities will secure their respective
shareholder rights (including voting rights) through shareholder
agreements and other transaction documentation.
The Group aims to achieve diversification principally through
investing in a range of portfolio assets across a number of
distinct geographies and a mix of renewable energy
technologies.
Limits
Investments are made in the UK and other European countries
(including France, Ireland, Germany and Sweden with active
consideration given to the Nordic, Benelux and Iberian regions)
where the Directors, the Investment Manager and the Operations
Manager believe there is a stable renewable energy framework. Not
more than 65 per cent. of the Portfolio Value (calculated at the
time of investment) may be invested in investments that are located
outside the UK.
Investments will be made in onshore and offshore wind farms and
solar PV parks, with the amount invested in other forms of energy
technologies (or infrastructure that is complementary to, or
supports the roll-out of, renewable energy generation) limited to
20 per cent. of the Portfolio Value, calculated at the time of
investment.
In respect of investments in Portfolio Companies which have
assets under development or construction (including the repowering
of existing assets), the cost of works on such assets under
development or construction (and not yet operational) to which
Portfolio Companies are exposed may not in aggregate account for
more than 15 per cent. of the Portfolio Value, calculated at the
time of investment or commitment.
The Company will not invest more than 15 per cent., in
aggregate, of the value of its total assets in other investment
companies or investment trusts that are listed on the Official List
[14] . In order to ensure that the Group has an adequate spread of
investment risk, it is the Company's intention that no single asset
will account for more than 20 per cent. of the Portfolio Value,
calculated at the time of investment.
The Group may enter into borrowing facilities in the short term,
principally to finance acquisitions. Such short-term financing is
limited to 30 per cent. of the Portfolio Value. It is intended that
any acquisition facility used to finance acquisitions is likely to
be repaid, in normal market conditions, within a year through
further equity fundraisings.
Wind farms and solar parks, generally assumed to have operating
lives in excess of 25 years, with 30 years or more increasingly
being assumed, held within Portfolio Companies generate long-term
cash flows that can support longer term project finance debt. Such
debt is nonrecourse and typically is fully amortising over a 10 to
15-year period. There is an additional gearing limit in respect of
such non-recourse debt of 50 per cent. of the Gross Portfolio Value
(being the total enterprise value of such 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 and may acquire Portfolio Companies which have
project finance arranged in this way.
Revenue
Generally, the Group will manage its revenue streams to moderate
its revenue exposure to merchant power prices with appropriate use
of power purchase agreements, Contracts-for-Difference,
Feed-in-Tariffs and green certificates.
Hedging
The Company may borrow in currencies other than Pounds Sterling
as part of its currency hedging strategy. The Group may enter into
hedging transactions in relation to currency, interest rates and
power prices for the purposes of efficient portfolio management.
The Group will not enter into derivative transactions for
speculative purposes.
Cash Balances
When the Company is not fully invested and pending reinvestment
or distribution of cash receipts, cash received by the Group will
be held as cash, or invested in cash equivalents, near cash
instruments or money market instruments.
Origination of Further Investments
Each of the investments comprising the portfolio complies with
the Company's investment policy and further investments will only
be acquired if they comply with the Company's investment policy. It
is expected that further investments will include operational
onshore wind and solar PV investments that have been originated and
developed by Renewable Energy Systems Limited, the Company's
Operations Manager. The Company will also review investment
opportunities originated by third parties, including from
investment funds managed or advised by the Investment Manager or
its affiliates.
Pursuant to the First Offer Agreement, the Company has a
contractual right of first offer, for so long as the Operations
Manager remains the operations manager of the Company in respect of
the acquisition of investments in projects of which the Operations
Manager wishes to dispose and which are consistent with the
Company's investment policy. It is envisaged that the Operations
Manager will periodically make available for sale further interests
in projects although there is no guarantee that this will be the
case. Investment approvals in relation to any acquisitions of
investments from the Operations Manager are made by the Investment
Manager through the Investment Committee.
Furthermore, any proposed acquisition of assets by the Group
from InfraRed Funds will be subject to detailed procedures and
arrangements established to manage any potential conflicts of
interest that may arise. In particular, any such acquisitions will
be subject to approval by the Directors (who are all independent of
the Investment Manager and the Operations Manager) and will also be
subject to an independent private valuation in accordance with
valuation parameters agreed between the InfraRed Funds and the
Company.
A key part of the Company's investment policy is to acquire
assets that have been originated by RES by exercising the Company's
rights under the First Offer Agreement. As such, the Company will
not seek the approval of Shareholders for acquisitions of assets
from the Operations Manager or members of its group in the ordinary
course of its Investment Policy. However, in the event that the
Operations Manager is categorised as a substantial shareholder of
the Company for the purposes of the Listing Rules (i.e. it holds 10
per cent. or more of the Company's issued share capital and for a
period of 12 months after its shareholding first drops below this
threshold), the related party requirements of Chapter 11 of the
Listing Rules will apply to the acquisition of solar assets from
the Operations Manager or any member of its group and accordingly
the Company will seek Shareholder approval, as necessary, for such
acquisitions. Further Investments will be subject to satisfactory
due diligence and agreement on price which will be negotiated on an
arm's length basis and on normal commercial terms. It is
anticipated that any Further Investments will be acquired out of
existing cash resources, borrowings, funds raised from the issue of
new capital in the Company or a combination of the three.
Repowering
The Company has the opportunity to repower the sites in some of
the projects in the investment portfolio. For these purposes,
repowering will include the removal of substantially all of the old
electricity generating equipment in relation to a project, and the
construction of new electricity generating equipment excluding, for
the avoidance of doubt, repair, maintenance and refurbishment of
existing equipment. Where the Company determines to repower a
project originally acquired from the Operations Manager, the
Operations Manager has the first option to repower such assets in
partnership with the Company, whilst the Company has the right to
acquire the newly constructed assets on completion, subject to
satisfactory due diligence and for a price determined in accordance
with a pre-agreed valuation mechanism and on normal commercial
terms. Repowering projects will be treated as development or
construction activity which, when aggregated with the cost of works
to assets under development or construction to which Portfolio
Companies are exposed, may not in aggregate account for more than
15 per cent. of the Portfolio Value, calculated at the time of
investment or commitment.
Material Amendments
Material changes to the Company's investment policy may only be
made in accordance with the approval of the Financial Conduct
Authority and the Shareholders (by way of an ordinary resolution)
and, for so long as the Ordinary Shares are listed on the Official
List, in accordance with the Listing Rules. The investment limits
detailed above apply at the time of the acquisition of the relevant
investment. The Company will not be required to dispose of any
investment or to rebalance its investment portfolio as a result of
a change in the respective valuations of its assets. Non-material
changes to the investment policy must be approved by the Board,
taking into account advice from the Investment Manager and the
Operations Manager, where appropriate.
2.4 Market Development
The role of electrification in achieving net zero [15]
Despite the ongoing global pandemic, 2020 has been an important
year for the climate change agenda with a significant number of
countries pledging to reduce their CO2 emissions levels to help
combat climate change in an effort to ensure global warming remains
within 2 degrees Celsius of pre-industrial levels by 2100.
Of the major global economies, during 2020 China and Japan
joined the European Union and the UK in setting out targets to
achieve net-zero emissions by 2060 and 2050, respectively. In the
Unites States, President Joe Biden has led the country to re-join
the Paris Agreement and to target net-zero carbon emissions by
2050. With a clear global tailwind behind the drive to reduce
carbon emissions, policy decisions will be crucial to achieving
these bold ambitions.
Importantly, there have been indications on the direction policy
will take to achieving net-zero in the Company's core markets of
the UK and Europe. For example, the UK Government's Energy White
Paper "Powering our net zero future" provides a framework for the
UK's path to net zero emissions. It includes significant
electrification of heating and transport powered by renewable
electricity bringing about a shift to electricity over other forms
of power, whilst reducing overall energy consumption. The UK
Government's analysis suggests electricity demand could double by
2050.
Similarly, in mainland Europe, significantly increasing
electrification of energy use has been identified as essential in
the EU's Strategy for Energy System Integration, published in
summer 2020. The EU is also focusing on greater electrification of
end-use sectors, specifically targeting heating and transport.
In both Europe and the UK, hydrogen has also been identified as
a key tool for the decarbonisation of industry and buildings'
energy usage where electrification is more difficult to achieve.
Hydrogen is also a useful alternative for long-term energy storage
to balance variable renewable electricity generation. The cleanest
form of hydrogen production utilises renewable energy generation
(commonly referred to as "green hydrogen"), though the development
of technologies such as Carbon Capture Usage and Storage (CCUS) may
also enable hydrogen to be produced using gas but capturing the
carbon released by the process (commonly referred to as "blue
hydrogen"). It is likely that both hydrogen production techniques
will be necessary to decarbonise, with renewable electricity
generation playing an essential long-term role in providing green
hydrogen.
Building the renewable capacity required for net zero
With renewable electricity demand clearly expected to accelerate
as we move towards 2050, there have been a number of pledges made
by governments across Europe for the build-out of renewable
generation capacity to support this. Reducing capital costs and low
operational costs now makes most renewables the cheapest form of
electricity generation across Europe - a journey TRIG and its
Managers have actively participated in during the last eight years
since the Company's launch.
United Kingdom
2020 saw the UK Government commit to holding regular
Contract-for-Difference ("CfD") auctions every two years, with the
fourth allocation round scheduled for late 2021. This fourth
allocation round will reintroduce subsidies for onshore wind and
solar. The UK Government is seeking to double the overall capacity
awarded in allocation round four to 12GW. TRIG and its Managers
each responded to the UK Government's consultation on the proposed
amendments to the Contracts for Difference scheme, and will be
submitting evidence to the 'Enabling a High Renewable, Net Zero
Electricity System: Call for Evidence' consultation. TRIG's
Managers also engage directly with policy makers and indirectly
through industry bodies such as the Global Infrastructure Investor
Association, The Infrastructure Forum and RenewablesUK.
Whilst it is positive for the renewables market in the UK that
subsidies will be re-introduced for new onshore wind and solar
projects, due to onshore planning and physical constraints it is
still expected that the vast majority of renewables capacity
developed in the UK will be offshore wind. The UK Government also
reiterated its 40GW offshore wind capacity target for 2030. This is
juxtaposed with the December 2020 GB power price forecasts that
incorporate an assumption of c. 30GW of UK offshore wind is
deployed by 2030, which itself is a substantial increase from 10GW
today. This difference reflects the ongoing debate regarding the
practicalities of the rate of deployment achievable, such as
permitting timescales and build capacity; although as industry
scales up, faster assumed deployment would put downward pressure on
power price forecasts. The power price forecasts are expected to
continue to change as market events and the consequences of the
commitment to net zero evolve.
During 2020, the UK Government, as part of its Ten Point Plan
for a green economic recovery, also set a target of 5GW of
low-carbon hydrogen capacity by 2030 aiming to attract GBP4bn of
private investment, with a detailed hydrogen strategy to be
published in early 2021. Increased demand for electricity would
help mitigate the impact of faster renewables deployment on power
price forecasts.
Mainland Europe
The most significant EU policy development during 2020 in
respect of the net zero carbon transition was the EUR750bn
NextGenerationEU recovery fund pledge, as part of the next EU
budget, which includes near-term support for renewable auctions and
support to meet hydrogen deployment plans of 40GW of electrolyser
capacity by 2030. EU member states will now incorporate this
funding into established renewables frameworks.
Germany has also published a detailed hydrogen strategy as part
of its economic stimulus in response to the Covid-19 pandemic, with
EUR9bn of funding for hydrogen projects. The strategy aims to have
5GW of hydrogen production capacity by 2030 with a further 5GW
added by 2040. Importantly, the strategy emphasises that green
hydrogen is the most sustainable form of hydrogen generation in the
long term, which could support demand for excess renewable
generation in Germany during periods of high renewable
resource.
In 2020, Germany, the Netherlands and Portugal also held
auctions for wind and solar co-located with storage - an
increasingly important trend to support grid stability. Whilst the
past year demonstrated that European grids are capable of managing
high levels of variable renewable generation (solar generation
peaked at 54% in Spain, whilst Germany saw levels of intermittent
renewable generation as high as 57%), the high costs of system
flexibility in 2020 highlighted that further investment into grid
infrastructure will be essential to decarbonisation.
Energy System Implications
With the increasing imperative to decarbonise energy consumption
and utilise renewable electricity wherever possible, the European
energy systems will need to adapt. Whilst the Covid-19 pandemic has
provided insight into how a system with higher levels of renewable
generation may operate, it has also highlighted the need for
flexibility in the system as intermittent renewable generation
becomes a greater proportion of the energy mix.
As well as the challenge of the physical integration of ever
higher levels of intermittent generation, other market challenges
will also emerge. With the low marginal cost of renewable
electricity, in instances where renewables can meet or exceed the
required demand the power price is reduced significantly
("cannibalisation") and can, at times, be negative. This results in
increases in expected renewables deployment having a dampening
effect on power price forecasts, as renewables are expected to set
the power price more than previously expected over the long term.
This phenomenon has been a factor behind the reduction in long-term
power price forecasts seen over the year and reflected in the
Company's 2020 financial performance and portfolio valuation. We
discuss this further in Section 2.8 - Valuation of the
Portfolio.
Given this dynamic, it is likely that market behaviours will
need to change if the desired renewables build out is to be
achieved. A suitable investment return is a prerequisite for
private sector investment and whilst this return is achievable on
current power price trajectories, if the market power price
forecasts were to reduce to such an extent that a reasonable return
were not achievable this would lead to a slowing in the expected
capacity build out for renewables. Allowances are made in the power
price forecasts used by TRIG for reductions in the base load prices
where renewables set the marginal price more often and for the
cannibalisation effect, reducing the captured prices beneath that
which would be expected for a base load (i.e. "24/7") generator.
Such allowances increase over time in keeping with power price
forecasters' assumptions for renewables deployment.
This potentially negative impact on investment into renewables
may be addressed by the expansion of subsidy mechanisms, but this
may present upwards pressure on subsidy levels if the market power
price is not providing sufficient pricing signals for returns to be
achieved outside of subsidy periods. The UK Government's call for
evidence to enable a high renewable, net zero electricity system is
specifically consulting on many of these factors and demonstrates
the UK Government's appreciation for the requirement of private
capital investment and the importance of a supportive market
environment for existing and future investments in renewable
capacity.
How society uses energy will necessarily change. Enabling users
to shift their demand to react to power pricing in a dynamic way
will be essential to the transformation of Europe's energy system
to address both physical and market requirements. Similarly,
flexibility will also need to be provided through green hydrogen
and other storage technologies, such as batteries, leading to
smarter matching of the supply and demand for clean electricity.
The transition to a net zero carbon energy system necessitates that
currently separate networks for electricity, gas for heating and
petrol or diesel for transport will increasingly need to become one
system, as renewable electricity becomes the bedrock of the future
energy system. In such a system, investment from companies such as
TRIG will be fundamental to the future wellbeing of our societies
and environment.
Expectations in respect of renewables build-out and electricity
demand assumptions will evolve as the path to net-zero carbon
becomes clearer. Nonetheless, important markers have been laid down
by policy makers that point to a substantial role for investors in
renewable energy in the energy transition and the Company will
continue to play its role in the decarbonisation of energy systems
across its key markets.
Portfolio Construction
TRIG invests across Europe in geographies that have a stable
regulatory framework in wind, solar and related technologies such
as battery storage. Diversification of geography and technology
gives the portfolio exposure to different weather systems,
regulatory environments and electricity markets while avoiding
reliance on any single market. This strategy of portfolio growth
and diversification supports the long-term investment proposition
of delivering stable and sustainable dividends together with NAV
resilience.
Combining assets across the available range of revenue options
(from fully subsidised to completely unsubsidised) allows returns
to be maintained at attractive levels whilst keeping power price
exposure consistent. Increasingly a greater range of tools are
becoming available to manage power price risk on assets exposed to
market power prices and provide options to hedge power prices at a
portfolio level, reducing the overall risk to the portfolio. With
the changing dynamics of the energy system, the Managers continue
to focus on power price exposure as a key metric to mitigate the
risk associated with reductions in power prices.
A consequence of the greater visibility of revenues in the
structure of CfDs, such as those used for newer subsidised offshore
wind investments, or Feed in Tariffs, is that these projects can
accommodate higher levels of financial gearing relative to
ROC-subsidised or unsubsidised projects.
Market Outlook
2020 was a turbulent year for the European power sector with a
reduction in economic output having a significant impact on the
sector. Gas prices reached a low of 3 Euro per megawatt hour whilst
electricity consumption fell by significantly across Europe [16] .
These factors, combined with record levels of renewable generation,
served to depress European power prices through much of 2020. On
occasions, a confluence of abundant renewable resource and lower
than usual levels of demand due to reduced economic activity led to
instances of power prices turning negative in Germany. In the
Nordics, where hydro power has a significant impact on short term
power prices, higher rainfall contributed to the depression in
power prices, but helped to stabilise short term pricing in
comparison to other markets.
As economies begin to recover over the course of 2021, and with
higher gas prices and thermal generation outages, European power
prices are set to recover with forward prices significantly ahead
of the troughs seen in early 2020; however, the timing and pace of
this recovery is uncertain. In relation to the medium to long term,
upcoming policy announcements addressing the plans for
electrification will be key to providing the demand for their
renewables build-out ambitions.
The Investment Manager's disciplined approach to portfolio
construction ensures the Company has a balanced portfolio that is
being selectively enhanced through diversifying investments whilst
retaining a focus on the power price sensitivity of the portfolio's
valuation. There is an attractive pipeline of opportunities after a
material slow down in sale processes at the start of the pandemic
and the Company, with the support of its shareholders, is in a
strong position to benefit and to continue to provide sustainable,
long-term returns to shareholders.
2.5 Sustainability
The TRIG Board and its Managers believe that renewable energy is
an asset class where it is possible to achieve long-term investment
yield whist making a material contribution to lower global carbon
emissions.
For TRIG, investing responsibly is essential for us to maintain
a sustainable business model over the long term. This goes further
than our commitment to reducing carbon emissions through renewables
investment but also includes other Environmental, Social and
Governance ("ESG") considerations.
TRIG has four ESG goals which we seek to fulfil with every
investment we make and as we conduct ourselves on a day-to-day
basis:
Mitigate Climate Change
Preserve our natural environment
Positively impact the communities we work in
Maintain ethics and integrity in governance
ESG Objective: to mitigate climate change
Importance
Our business is focussed on owning and operating renewable
energy assets. TRIG's primary sustainability goal is to mitigate
climate change, and all investments in the portfolio contribute
towards this. TRIG's Investment Policy only permits investment in
renewables and other forms of infrastructure that is complementary
to, or supports the roll-out of, renewable energy generation.
Reducing carbon emissions is core to TRIG and its Managers.
InfraRed and RES are both carbon neutral companies and offset their
business's carbon emissions, including those associated with
electricity usage and business travel. In addition, emissions are
offset for the TRIG Board for business travel.
RES has also officially committed to the Science Based Targets
Initiative (SBTi), the leading standard for corporate emissions
reduction targets. This SBTi net-zero strategy aligns with both
Managers' vision and TRIG's purpose.
2020 performance:
1.2 million tonnes of carbon emissions avoided ([17]) (2019:
800,000 tonnes)
3,953GWh of renewable electricity generated in the year (2019:
3,036GWh)
1.1 million homes (equivalent) powered by clean energy (2019:
720,000 homes)
72% of UK portfolio sourcing electricity under Renewable
Electricity Supply Contracts ([18]) (2019: 52%)
Case Study New ESG-Linked Revolving Credit Facility
In December, TRIG refinanced and expanded its revolving credit
facility ("RCF"). This new loan is one of the first ESG-linked
SONIA loans of its kind and sets TRIG ambitious but achievable
targets, noted below. This underlines TRIG's commitment to
sustainability and helps align TRIG's interests with those of its
debt and equity investors.
The interest charged in respect of the renewed RCF is linked to
the Company's ESG performance. TRIG will incur a premium or
reduction to its margin and commitment fee based on performance
against defined sustainability targets. Those targets include:
Environmental: increase in the number of homes powered by clean
energy from TRIG's portfolio
Social: increase in the number of community funds supported by
TRIG
Governance: maintaining a low Lost Time Accident Frequency Rate
(LTAFR)
The LTAFR is a key metric monitored by asset owners that
measures the number of personnel injured and unable to perform
their normal duties for seven days or more for each hundred
thousand hours worked. The inclusion of this target aligns the cost
of the renewed RCF with a key metric for TRIG: safety at work.
Performance against these targets will be measured annually from
2021 with the cost of the RCF being amended in the following
year.
Case Study The carbon payback of windfarms
Elements of a renewable energy project's lifecycle result in
carbon emissions, such as construction. Nonetheless, renewable
energy projects make a positive contribution towards
decarbonisation and limiting global warming to the science-based
target of 1.5C by offsetting significantly more carbon emissions
than they create.
The carbon payback period of onshore wind farms ranges from six
to 12 months. This range includes the carbon associated with
decommissioning the site, such as machinery for dismantling on site
or transportation of people and waste to and from site. This means
that a typical project's carbon emissions are offset in a much
shorter timeframe than the intended lifetime of a wind farm.
This carbon payback range for different wind farms depends on
the location and environment in which the wind farm has been built.
For instance, the carbon payback period of windfarms in the UK is
expected to lengthen as the electricity mix continues to
decarbonize, thereby reducing the amount of carbon available to be
displaced. Site windiness or the disturbance of peat on site also
have a major influence on the carbon payback period.
Offshore wind farms have a slightly longer payback period, due
to the use of vessels throughout the life cycle of the project,
where the distance to shore is a major influence. Material
extraction is one of the most carbon intensive aspects of wind
turbines. Whilst there is more work to be done by the industry to
improve the position further, particularly in respect of blades,
overall the materials remain highly recyclable, providing an offset
to the emissions at end-of-life if the carbon value of the
materials is considered.
Overall, with wind farms expected to have an operational life
which is often 30 years or more, the carbon payback ensures that
the turbines deliver a net reduction in carbon emissions over the
vast majority of their operating lives.
Mapping TRIG's contribution to the United Nations Sustainable
Development Goals [19] ("SDGs")
SDG 7 - Affordable and clean energy: TRIG supports increasing
the share of renewable energy in the global energy mix, which has a
lower marginal cost, helping to keep wholesale electricity prices
low. While TRIG constructs some assets, it generally acquires
operational assets enabling developers to recycle capital into the
build-out of more renewables.
SDG 9 - Industry, innovation and infrastructure : TRIG is
responsible for a reliable, sustainable and resilient portfolio
which makes renewable energy more affordable for all and supports
increased renewables penetration. Where possible, TRIG seeks to
upgrade its assets to increase resource use efficiency and with
greater adoption of clean and environmentally-sound processes. In
doing so, the aim is to improve efficiency and asset longevity, and
to use the best, often innovative, operations & maintenance
techniques to enhance asset productivity.
ESG Objective: to preserve the natural environment
Importance
RES as Operations Manager works with asset managers to preserve
the natural environment by executing environmental management plans
agreed with the authorities during the project consenting process,
undertaking vegetation surveys, preventing biodiversity loss,
recycling where possible and careful usage of materials. Further
opportunities with landowners and other stakeholders are also
sought. These activities are carried out in accordance with site
specific Construction Method Statements and Habitat Management
plans where applicable.
2020 performance:
14 Active Environmental Management Projects [20] (2019: 12)
Mapping TRIG's contribution to the United Nations Sustainable
Development Goals [21] ("SDGs")
SDG 12 - Responsible consumption and production: In its
day-to-day asset management and operations maintenance, TRIG uses
materials in a sustainable and efficient way where possible. Site
managers collaborate across the supply chain to manage materials
used by improving waste management, recycling and innovation in
construction. When managing TRIG's assets, consideration is given
as to how to limit waste through prevention, reduction, recycling
and re-use.
SDG 15 - Life on land : Many of TRIG's assets have implemented
measures to reduce the degradation of natural habitats and to
protect local flora and fauna, including endangered species.
Case Study Garreg Lwyd
Hedgerow monitoring and maintenance is an important part of
Garreg Lwyd's Habitat Management Plan.
The plant failure rate is well below the expected failure rate
of 10-15% due to the ground and exposure conditions in the
location. Other habitat management activities that continue to be
surveyed at the site include stream corridors and ponds with
associated habitat. These are monitored alongside other key
receptors such as bat, dormouse, and great crested newt
populations.
BSG Ecology surveyed the site in 2020 and confirmed the
ecological success of the plan.
ESG Objective: to impact positively the communities in which
TRIG works
Importance
We are sensitive to the impact that a large renewables asset
could have on a local community. It is important that our assets
make a positive contribution both to the environment and local
communities. TRIG's assets are often in rural areas where
communities may experience unemployment as well as limited social
and health facilities. Local initiatives can produce tangible local
benefits. Examples include:
Using local employment and sourcing materials locally where
possible;
The Local Electricity Discount Scheme (LEDS), whereby properties
closest to certain wind farms are eligible for a discount on their
electricity bills;
Educating the next generation about sustainability and renewable
energy through school education days on TRIG sites; and
Supporting local good causes, often via community funds, such as
donating to help fund social hubs, local healthcare, schools and
entertainment.
The Blary Hill project, which commenced construction in the
year, is an example of community engagement in action:
As part of the Covid-19 management plan, RES used a local
contractor to limit the number of people travelling to site from
outside the area and to benefit local businesses.
Prior to works commencing on site, the project team engaged with
the chair of the local community council to address any concerns in
respect of working practices during the Covid-19 outbreak, with a
follow up letter being sent to local residents.
In July 2020, the Blary Hill project team held a virtual 'Meet
the Buyer' event during the lockdown to identify further local
businesses and suppliers to support the project.
TRIG's Operations Manager RES and its asset managers proactively
engage with the community, meeting with the public on a regular
basis and has protocols in place to govern community benefit
arrangements which are administered by local organisations who are
best placed to understand local priorities.
2020 performance:
GBP1.2m community investment [22] (2019: GBP950,000)
1,116 properties supported by Local Electricity Discount Schemes
(2019: 1,125)
33 community funds (2019: 32)
Case Study Educational site visits
The TRIG Covid-19 Recovery Fund continues to provide important
financial support to charities, not-for-profit and voluntary
organisations across the UK and Ireland, impacted by Covid-19.
Around GBP300,000 has now been distributed providing an array of
services including conservation, education, alleviation of fuel
poverty and emergency medical intervention. The remaining monies
are expected to be distributed early in 2021.
Case Study Wells Community Support Hub, supported by Egmere
Solar Farm
The Wells Community Hospital is a local charity that provides
health and wellbeing services to the community. In response to the
pandemic, a support hub was created with early services including
prescription delivery, shopping and other similar services to serve
the community. As the pandemic continued, the support hub evolved
their services to include signposting to appropriate services,
financial help and support, befriending and provision of free hot
meals in partnership with a local arts organisation. With local
foodbanks unable to cover the Wells area, a food parcel delivery
service was initiated in partnership with the Trussell Trust.
The support hub has also been instrumental in the development of
a local Good Neighbour Scheme, an initiative of Community Action
Norfolk. To promote community cohesion, once regulations allow, all
people supported through the hub will be invited to social meetings
within the grounds of the hospital where they have a landscaped
sensory garden. A donation of GBP3,500 was made to the support hub
to help them continue their important work.
Case Study Keep Northern Ireland Beautiful, supported by Lough
Hill Wind Farm
Keep Northern Ireland Beautiful is an independent charity
dedicated to creating a cleaner and more sustainable Northern
Ireland by improving environmental education, increasing public
engagement for communities in need and raising environmental
standards.
As a direct response to Covid-19, Keep Northern Ireland
Beautiful ran their pilot "Food for Thought" programme. Over 500
food growing packs were distributed to those identified as most in
need, followed by a course of 12 webinars covering growing and
caring for their homegrown food and healthy cooking classes using
this produce.
Covid-19 has reinforced the need for localisation and food
sustainability and the TRIG Covid Fund has provided GBP10,000 for
an expansion to the "Food for Thought" initiative with the "Fruit
for Thought" scheme. The scheme will plant two community orchards
at two schools within the Lough Hill Wind Farm catchment area.
Benefits of the planting scheme include education in fruit growing
and cookery and improved biodiversity to the area.
Workshops will be delivered at both schools covering engagement,
site planning and then prepping and planting. These workshops will
be followed up with sessions on maintenance and preserving the
sites and its produce so both schools will be in a good position to
manage their own orchards once established.
Mapping TRIG's contribution to the United Nations Sustainable
Development Goals [23] ("SDGs")
SDG 11 - Sustainable cities and communities : TRIG implements
measures to improve the quality of life for the local communities
in which it operates, for example through hiring local contractors
to improve local employment or donating to community funds. Such
measures enable communities to be inclusive, safe and
sustainable.
SDG 4 - Quality education: TRIG is able to help local schools
add colour to their curriculum relating to climate change, energy
and renewables and also to inspire young people about potential
careers in an evolving industry. This is especially important
because many of TRIG's assets are located in rural areas where
employment options are limited.
ESG Objective: to maintain ethics and integrity in
governance
Importance
For TRIG to perform its fiduciary function for its shareholders
and to continue to operate over the longer-term, it is essential
that TRIG is run responsibly and that the highest standards of
ethics and integrity in governance are maintained across all areas
including health and safety, managing conflicts of interests, and
maintaining policies.
The Board has overall responsibility for TRIG's Sustainability
Policy (www.trig-ltd.com/investor-relations/reports-publications)
and its application, whilst the day-to-day management of the
portfolio is delegated to both Managers.
InfraRed, the Investment Manager publishes its own
sustainability policy, including its approach to the integration of
sustainability considerations into the investment cycle, on
InfraRed's website (www.ircp.com/sustainability-policy).
RES work together with InfraRed to ensure that Sustainability
considerations are also prioritised in the ongoing management and
reporting of the assets throughout the ownership period. The
Project Company Boards maintain a responsibility to review and
update SPV policies on an annual basis. This includes HSQE, Tax,
ESG, and Cybersecurity.
RES, the Operations Manager, leads management of project level
ESG policies and activities, whilst actively overseeing the ESG
KPIs, community outreach activities, and health and safety
standards.
Both Managers stress ethics and integrity in their own
governance and believe it is vital to consider the needs of all
stakeholders. They maintain policies on Sustainability, Modern
Slavery, Diversity & Inclusion, and Whistleblowing and publish
their own Sustainability Reports available on both the InfraRed and
RES websites.
RES also achieved a new accreditation under ISO 55001 within
2020. ISO (International Organisation for Standardization)
accreditation is an independently recognized standard for quality
management systems. Certification to ISO 55001 provides a tangible
measure of the capability and approach of RES as an asset manager,
providing assurance to stakeholders through on-going validation of
the value improvement process through external audits.
ISO 55001 provides a framework to:
Provide end-to-end lifecycle asset management;
Successfully optimise asset management
Optimise plant and equipment;
Adopt a risk-based approach;
Identify opportunities for value improvement;
Identify and manage asset risks;
Improve ESG performance.
Achieving and maintaining ISO accreditation demonstrates a
commitment to providing consistently high quality services. RES is
one of the first renewables asset managers in the UK and Ireland to
achieve this standard.
RES already holds accreditation to various ISO management
standards that provide assurance of a high level of service for
TRIG sites including:
ISO 9001 - Quality Management
ISO 18001 - Environmental Management
ISO 45001 - Health & Safety Management
ISO 55001 compliments these standards and is intrinsically
linked to work together.
2020 performance:
0.49 Reportable Lost Time Accidents per 100,000 hours [24]
(2019: 0)
"A+" PRI rating achieved by InfraRed's Infrastructure division
for the sixth consecutive year
60% female Board (2019: 50%)
Case Study Ethical governance
An investment opportunity was declined during the year,
following due diligence findings in respect of birdlife protection.
The findings meant that it was not clear whether the investment
economics, particularly in respect of environmental permitting,
could be delivered. Therefore, the opportunity did not present
appropriate risk-reward dynamics for TRIG.
TRIG's Managers
Over 2020 InfraRed and RES have made further progress in
enhancing and delivering their sustainability programmes in line
with industry best practices.
InfraRed highlights of 2020 include:
Introducing new sustainability reporting framework across
InfraRed to measure performance against a wider base of
Sustainability KPIs.
Refining investment processes to include the introduction of
early sustainability screening to ensure that InfraRed only pursues
opportunities that align with its Sustainability Policy and key
risks and opportunities are identified at the outset. While TRIG
has its own Sustainability Policy, InfraRed's policy is also
applied to the management of TRIG and its portfolio.
All InfraRed partners and employees have been set a
sustainability objective reflective of their role, which directly
impacts their performance assessment and overall remuneration.
InfraRed appointed a full-time Sustainability Manager to oversee
the wider sustainability programme at InfraRed, but foremost to
ensure investment and asset management processes comprehensively
incorporate sustainability risks and considerations.
InfraRed became a certified CarbonNeutral(R) company, effective
from 1 January 2019, and will remain carbon neutral as it firstly
reduces, then offsets future carbon emissions.
InfraRed became a Supporter of the recommendations of the Task
Force on Climate-related Financial Disclosures.
Sustainability has been at the heart of RES' activities since it
commenced operation since 1982 as a pioneer in the development and
deployment of wind energy projects, which has expanded over the
years to encompass solar, offshore wind, storage as well as
involvement in many other renewable technologies.
RES has:
Committed to the Science Based Targets Initiative. This
initiative champions the adoption of "science-based" GHG emission
reduction targets in-line with what the latest climate science says
is necessary to meet the goals of the Paris Agreement;
Developed and produced annual Power for Good Report
(https://www.res-group.com/media/342469/powerforgoodreport_2020.pdf);
Continued efforts in its Technology Recycling TaskForce, to
maximise recycling in multiple technologies from turbine blades and
PV modules to batteries;
Signed the New Plastics Economy Global Commitment, led by the
Ellen MacArthur Foundation. As a signatory, RES will continue to
work to eliminate unnecessary plastic.
Mapping TRIG's contribution to the United Nations Sustainable
Development Goals [25] ("SDGs")
SDG 13 - Climate action: TRIG supports Climate Action primarily
by integrating climate change measures into its policies and
planning and by seeking to raise awareness of how to mitigate
climate change. For example, climate change related risks are
considered in the investment process and ongoing management of
TRIG's assets. TRIG makes climate change risk disclosures in line
with the Taskforce for Climate-related Financial Disclosure
("TCFD").
SDG 5 - Gender equality: TRIG's Board have chosen to adopt
definitive policies with quantitative targets for Board diversity.
The Managers report to the Board their progress on inclusion and
diversity in the workplace.
SDG 3 - Good health and well-being: Health and Safety matters
are reported to the Board on a quarterly basis. Asset managers and
operations and maintenance contractors are required to have
appropriate health and safety procedures in place and these are
monitored on a regular basis.
2.6 Portfolio
The TRIG portfolio as at 31 December 2020 plus Beatrice Offshore
wind farm and Grönhult onshore windfarm (both announced subsequent
to the financial year end), includes 77 investments in the UK,
Republic of Ireland, France, Sweden and Germany comprising 47 wind
projects, 28 solar PV projects, one battery storage project and one
mezzanine debt investment in a mixed portfolio
Project TRIG's Net Capacity Year Commissioned3
Equity (MW)
Interest(2)
Onshore wind Farms
----------------- ------------ ------------ ------------------
Roos GB (England) 100% 17.1 2013
----------------- ------------ ------------ ------------------
Grange GB (England) 100% 14.0 2013
----------------- ------------ ------------ ------------------
Tallentire GB (England) 100% 12.0 2013
----------------- ------------ ------------ ------------------
Garreg Lwyd GB (Wales) 100% 34.0 2017
----------------- ------------ ------------ ------------------
Crystal Rig 2 GB (Scotland) 49% 67.6 2010
----------------- ------------ ------------ ------------------
Hill of Towie GB (Scotland) 100% 48.3 2012
----------------- ------------ ------------ ------------------
Mid Hill GB (Scotland) 49% 37.2 2014
----------------- ------------ ------------ ------------------
Blary Hill(4) GB (Scotland) 100% 35.0 2022
----------------- ------------ ------------ ------------------
Paul's Hill GB (Scotland) 49% 31.6 2006
----------------- ------------ ------------ ------------------
Crystal Rig 1 GB (Scotland) 49% 30.6 2003
----------------- ------------ ------------ ------------------
Solwaybank GB (Scotland) 100% 30.0 2020
----------------- ------------ ------------ ------------------
Green Hill GB (Scotland) 100% 28.0 2012
----------------- ------------ ------------ ------------------
Little Raith GB (Scotland) 100% 24.8 2012
----------------- ------------ ------------ ------------------
Rothes 1 GB (Scotland) 49% 24.8 2005
----------------- ------------ ------------ ------------------
Freasdail GB (Scotland) 100% 22.6 2017
----------------- ------------ ------------ ------------------
Rothes 2 GB (Scotland) 49% 20.3 2013
----------------- ------------ ------------ ------------------
Earlseat GB (Scotland) 100% 16.0 2014
----------------- ------------ ------------ ------------------
Meikle Carewe GB (Scotland) 100% 10.2 2013
----------------- ------------ ------------ ------------------
Neilston GB (Scotland) 100% 10.0 2017
----------------- ------------ ------------ ------------------
Forss GB (Scotland) 100% 7.5 2003
----------------- ------------ ------------ ------------------
Altahullion SEM (N. Ireland) 100% 37.7 2003
----------------- ------------ ------------ ------------------
Lendrum's Bridge SEM (N. Ireland) 100% 13.2 2000
----------------- ------------ ------------ ------------------
Lough Hill SEM (N. Ireland) 100% 7.8 2007
----------------- ------------ ------------ ------------------
SEM (Rep. of
Pallas Ireland) 100% 55.0 2008
----------------- ------------ ------------ ------------------
SEM (Rep. of
Taurbeg Ireland) 100% 25.3 2006
----------------- ------------ ------------ ------------------
SEM (Rep. of
Milane Hill Ireland) 100% 5.9 2000
----------------- ------------ ------------ ------------------
SEM (Rep. of
Beennageeha Ireland) 100% 4.0 2000
----------------- ------------ ------------ ------------------
Haut Vannier(4) France (North) 100% 43.0 2022
----------------- ------------ ------------ ------------------
Venelle France (North) 100% 40.0 2020
----------------- ------------ ------------ ------------------
Epine France (North) 100% 36.0 2019
----------------- ------------ ------------ ------------------
Rosières France (North) 100% 17.6 2018
----------------- ------------ ------------ ------------------
Energie du Porcien France (North) 42% 16.3 2012
----------------- ------------ ------------ ------------------
Montigny France (North) 100% 14.2 2018
----------------- ------------ ------------ ------------------
Les Vignes France (North) 42% 5.2 2009
----------------- ------------ ------------ ------------------
Fontaine-Mâcon France (North) 42% 5.1 2011
----------------- ------------ ------------ ------------------
Haut Languedoc France (South) 100% 29.9 2006
----------------- ------------ ------------ ------------------
Haut Cabardes France (South) 100% 20.8 2006
----------------- ------------ ------------ ------------------
Cuxac Cabardes France (South) 100% 12.0 2006
----------------- ------------ ------------ ------------------
Roussas-Claves France (South) 100% 10.5 2006
----------------- ------------ ------------ ------------------
Rully France (North) 42% 5.0 2010
----------------- ------------ ------------ ------------------
Val de Gronde France (North) 37% 4.5 2011
----------------- ------------ ------------ ------------------
Jädraås Sweden 100% 212.9 2013
----------------- ------------ ------------ ------------------
Grönhult Sweden 100% 67.0 2022
----------------- ------------ ------------ ------------------
Total onshore wind at
31 December 2020 incl.
Grönhult 1,210.5
------------ ------------ ------------------
Offshore wind Farms
----------------- ------------ ------------ ------------------
East Anglia 1 GB (England) 14.3% 102.1 2020
----------------- ------------ ------------ ------------------
Sheringham Shoal GB (England) 14.7% 46.6 2012
----------------- ------------ ------------ ------------------
Beatrice(5) GB (Scotland) 17.5% 102.9 2018
----------------- ------------ ------------ ------------------
Merkur Germany 25% 99.0 2019
----------------- ------------ ------------ ------------------
Gode Wind 1 Germany 25% 82.5 2017
----------------- ------------ ------------ ------------------
Total offshore wind at
31 December 2020 incl.
Beatrice 433.1
------------ ------------ ------------------
Project Market (Region)(1) TRIG's Net Capacity Year Commissioned3
Equity (MW)
Interest2
Solar Photovoltaic Parks
---------------------- ---------- ------------ ------------------
Parley Court GB (England) 100% 24.2 2014
---------------------- ---------- ------------ ------------------
Egmere Airfield GB (England) 100% 21.2 2014
---------------------- ---------- ------------ ------------------
Stour Fields GB (England) 100% 18.7 2014
---------------------- ---------- ------------ ------------------
Tamar Heights GB (England) 100% 11.8 2014
---------------------- ---------- ------------ ------------------
Penare Farm GB (England) 100% 11.1 2014
---------------------- ---------- ------------ ------------------
Four Burrows GB (England) 100% 7.2 2015
---------------------- ---------- ------------ ------------------
Parsonage GB (England) 100% 7.0 2013
---------------------- ---------- ------------ ------------------
Churchtown GB (England) 100% 5.0 2011
---------------------- ---------- ------------ ------------------
East Langford GB (England) 100% 5.0 2011
---------------------- ---------- ------------ ------------------
Manor Farm GB (England) 100% 5.0 2011
---------------------- ---------- ------------ ------------------
Marvel Farms GB (England) 100% 5.0 2011
---------------------- ---------- ------------ ------------------
Midi France (South) 51% 6.1 2012
---------------------- ---------- ------------ ------------------
Plateau France (South) 49% 5.9 2012
---------------------- ---------- ------------ ------------------
Puits Castan France (South) 100% 5.0 2011
---------------------- ---------- ------------ ------------------
Chateau France (South) 49% 1.9 2012
---------------------- ---------- ------------ ------------------
Broussan France (South) 49% 1.0 2012
---------------------- ---------- ------------ ------------------
Pascialone France (Corsica) 49% 2.2 2011
---------------------- ---------- ------------ ------------------
Olmo 2 France (Corsica) 49% 2.1 2011
---------------------- ---------- ------------ ------------------
Santa Lucia France (Corsica) 49% 1.7 2011
---------------------- ---------- ------------ ------------------
Borgo France (Corsica) 49% 0.9 2011
---------------------- ---------- ------------ ------------------
Agrinergie 1 & 3 France (Réunion) 49% 1.4 2011
---------------------- ---------- ------------ ------------------
Chemin Canal France (Réunion) 49% 1.3 2011
---------------------- ---------- ------------ ------------------
Ligne des 400 France (Réunion) 49% 1.3 2011
---------------------- ---------- ------------ ------------------
Agriso(l) France (Réunion) 49% 0.8 2011
---------------------- ---------- ------------ ------------------
Agrinergie 5 France (Réunion) 49% 0.7 2011
---------------------- ---------- ------------ ------------------
Logistisud France (Réunion) 49% 0.6 2010
---------------------- ---------- ------------ ------------------
Sainte Marguerite France (Guadeloupe) 49% 1.2 2011
---------------------- ---------- ------------ ------------------
Marie Galante France (Guadeloupe) 49% 1.0 2010
---------------------- ---------- ------------ ------------------
Total solar at 31 December
2020 156.3
---------- ------------ ------------------
Battery Energy Storage/
Mixed portfolio
---------------------- ---------- ------------ ------------------
Broxburn Energy Storage GB (Scotland) 100% 20.0 2018
---------------------- ---------- ------------ ------------------
Phoenix SAS Mezzanine France 0% - 2015
Loan(6)
---------------------- ---------- ------------ ------------------
Total Portfolio at 31
December 2020
incl. Beatrice and Grönhult
(77 assets)(5) 1,819.9
---------- ------------ ------------------
Operating assets 1,644.9
---------- ------------ ------------------
Construction assets4 175.0
---------- ------------ ------------------
Contracted to acquire(5) 169.9
---------- ------------ ------------------
Total Portfolio at 31
December 2020
incl. Beatrice and Grönhult
(77 assets)(5) 1,819.9
---------- ------------ ------------------
1 SEM refers to the Irish Single Electricity Market.
2. This is TRIG's equity share of the nominal capacity of the
asset.
3. Where a project has been commissioned in stages, this refers
to the earliest commissioning date. For construction assets, this
refers to expected completion date.
4. Blary Hill and Haut Vannier are under construction.
5. An investment in Beatrice offshore wind farm was announced in
January 2021 and is expected to complete later in Q1 2021, and an
investment in the construction project Grönhult onshore wind farm
was announced in February 2021.
6. This investment is in the form of mezzanine level bonds where
the Company does not have an equity stake. The portfolio comprises
five onshore wind farms in Northern France with a combined capacity
of 74MW and four operational solar parks with battery storage
located on the islands of Corsica and La Réunion with a combined
capacity of 29MW ("the Portfolio"). All the Portfolio assets are
backed by the French government's Feed-in-Tariff subsidy and have
an average year of commission of 2015.
Portfolio Diversification
The TRIG portfolio benefits from being diversified across
jurisdictions, power markets and generating technologies providing
multiple revenue sources (contracted and/or subsidy sources and
merchant sales into wholesale markets) 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) and regulations. This is illustrated in the tables
below, which is presented by project value as at 31 December
2020.
The tables below include all assets on a fully invested basis as
at 31 December 2020 including the mezzanine level debt investment
in Phoenix SAS and separately a fully committed basis including
Beatrice and Grönhult.
Portfolio as at 31 December 2020
By Country/Power Market(1,2)
England Scotland Northern Republic France Sweden Germany
& Wales (GB) Ireland of Ireland
(GB) (SEM) (SEM)
Invested
basis at
31 December
2020 32% 25% 3% 3% 14% 9% 14%
-------- -------- -------- ----------- ------ ------ -------
Committed
basis at
16 February
2021 27% 33% 3% 3% 12% 10% 12%
-------- -------- -------- ----------- ------ ------ -------
By Technology(1)
Onshore wind Offshore wind Solar PV Battery
Invested basis
at 31 December
2020 60% 28% 11% 1%
------------ ------------- -------- -------
Committed basis
at 16 February
2021 55% 35% 9% 1%
------------ ------------- -------- -------
By Project Revenue Type
Indexed fixed Indexed ROC ROC Recycle PPA Market PPA Market
PPAs & FiTs Buyout and Other Revenue at Revenue
Floor
Next 12 months 65% 17% 2% 4% 12%
------------- ----------- ----------- ----------- ----------
1 The segmentation above for investment commitments includes
Beatrice as well as Grönhult and Blary Hill which are under
construction.
2 Northern Ireland and the Republic of Ireland form a Single
Electricity Market, distinct from that operating in Great
Britain.
Revenue Profile
TRIG has the benefit of being diversified across several
separate power markets: Great Britain, the Single Electricity
Market (of The Republic of Ireland and Northern Ireland), France
and Germany (which sit within the main continental European power
market) and Sweden (which sits in the Nordic electricity
market).
The TRIG portfolio has substantial near-term protection in cash
revenues from movements in wholesale power prices as the portfolio
receives a high proportion of its revenue from selling electricity
generated via Power Purchase Agreements ("PPAs") with fixed prices
and from government subsidies such as Feed -- in -- Tariffs
("FiTs"), Contract for Differences ("CfDs"), Renewable Obligation
Certificates ("ROCs") or from other hedges.
In the longer term, based on its current portfolio, TRIG is
expected to have greater exposure to future wholesale electricity
prices as subsidies and contracts with pre-determined pricing
run-off. As existing fixed-price contracts expire, the replacement
contracts may also have fixed-price elements, and any future
additions to the portfolio may have subsidies, decreasing the
merchant proportion.
Acquisitions and Outstanding Commitments
The Group made gross investments in the year totalling GBP588m
(excludes Beatrice offshore wind farm investment announced in
January 2021 and Grönhult Onshore wind farm investment announced in
February 2021), with divestment proceeds of GBP118m relating to the
disposal of Estrask and the partial sell-down of Merkur, resulting
in net investments made of GBP470m.
As at the date of this report, The Group has commitments of
GBP392m relating to Blary Hill wind farm (in construction),
Beatrice offshore wind farm and Grönhult onshore wind farm. The
investments in Beatrice and Grönhult were announced after the year
end. The investment in Beatrice is expected to complete later in Q1
2021, whilst the investment in Grönhult, a construction asset, will
occur over the period of construction.
Investments Made
% of
portfolio
Net on a
Capacity committed
Date Investment Year Equity (MW) Revenue basis
Acquired Project type commissioned Share [26] Type [27] Location [28]
2022
Blary (currently
January Hill onshore New under Wholesale
2020 wind farm investment construction) 100% 35MW market UK 2%
--------------- ------------- --------------- ---------- --------- ------------------------ -------- ---------
Merkur
offshore New
May 2020 wind farm investment June 2019 24.6% 99.0MW Feed-in-Tariff Germany 7%
--------------- ------------- --------------- ---------- --------- ------------------------ -------- ---------
Fujin Increased
onshore from
wind farm 35% to
May 2020 portfolio Incremental 2009-2012 42% 36MW Feed-in-Tariff France 1%
--------------- ------------- --------------- ---------- --------- ------------------------ -------- ---------
Due 2022
Haut Vannier (currently
October onshore New under
2020 wind farm Investment construction) 100% 43MW Contract-for-Difference France 1%
--------------- ------------- --------------- ---------- --------- ------------------------ -------- ---------
East Anglia
November 1 offshore New
2020 wind farm Investment 2020 14.3% 102.1MW Contract-for-Difference UK 9%
--------------- ------------- --------------- ---------- --------- ------------------------ -------- ---------
Phoenix
SAS onshore
wind, New
solar Investment
December & battery - mezzanine 2015 (Weighted
2020 portfolio debt average) 0% [29] 74MW Feed-in-Tariff France 2%
--------------- ------------- --------------- ---------- --------- ------------------------ -------- ---------
Announced after 31 December 2020
Beatrice
January offshore New
2021 wind farm Investment 2018 17.5% 102.9MW Contract-for-Difference UK 12%
--------------- ------------- --------------- ---------- --------- ------------------------ -------- ---------
Due 2022
Grönhult (currently
February onshore New under Wholesale
2021 wind farm Investment construction) 100% 67MW Market Sweden 3%
--------------- ------------- --------------- ---------- --------- ------------------------ -------- ---------
Outstanding Commitments
H1 2021 H2 2021 H1 2022 Total
Outstanding Commitments
(GBPm) 313 26 53 392
------------------------- ------- ------- ------- -----
At the date of this Annual report and following the initial
investment in the Grönhult onshore wind farm which was announced in
February 2020 and which is in construction, the Company is GBP65m
drawn on its Revolving Credit Facility, having been GBP40m drawn at
31 December 2020. The Company has commitments falling due in H1
2020 of GBP313m mainly relating to the completion of the investment
in the Beatrice offshore wind farm.
Projects Under Construction
By acquiring assets at an earlier stage in their development,
TRIG seeks to access improved returns and enhanced deal flow.
Moreover, TRIG has been able to seek value by capitalising on its
Managers' expertise in the construction process: InfraRed as
greenfield investor across its unlisted vehicles over many years
and RES as a developer and/or constructor of over 16GW of renewable
assets globally.
Vannier, the second project acquired from Envision, has
commenced construction - but is currently on hold due to a
challenge against an environmental permit. With commercial
protection in place, the turbines are still being shipped from
China, whilst legal proceedings continue. During 2020 TRIG acquired
and commenced construction on the Blary Hill and Haut Vannier
projects, in the UK and France respectively, as shown in the table
of investments made during the year and post balance sheet
date.
During 2020 construction was successfully completed by RES on
Solwaybank, a UK onshore wind farm acquired in June 2018 and by
Envision on Venelle, a French onshore wind farm acquired in March
2019, despite the challenges presented by the Covid-19 and the
requirement to switch turbine supplier at Solwaybank.
6% of TRIG's portfolio by value, on a fully committed basis i.e.
including investment commitments in Beatrice and Grönhult, was
allocated to investments in construction assets, against an
investment policy limit of 15%.
Ten Largest Investments
Set out below are the ten largest investments in the portfolio.
As at 31 December 2020, the largest investment (East Anglia 1)
accounted for approximately 10% of the portfolio by value. In
total, the 10 largest projects accounted for approximately 55% of
the project portfolio by value (2019: 52%).
Ten Largest Investments - Invested to date basis
% of portfolio by
value at
----------- ------------- ------------------------
31 December 31 December
Project Location Type 2020 2019
----------- ------------- ----------- -----------
Offshore
East Anglia 1 England Wind 10% -
----------- ------------- ----------- -----------
Jädraås Sweden Onshore Wind 9% 11%
----------- ------------- ----------- -----------
Offshore
Merkur Germany Wind 8% -
----------- ------------- ----------- -----------
Offshore
Gode Germany Wind 6% 9%
----------- ------------- ----------- -----------
Onshore
Garreg Lwyd Wales Wind 5% 7%
----------- ------------- ----------- -----------
Onshore
Solwaybank Scotland Wind 4% 3%
----------- ------------- ----------- -----------
Offshore
Sheringham Shoal England Wind 4% 5%
----------- ------------- ----------- -----------
Onshore
Crystal Rig II Scotland Wind 3% 4%
----------- ------------- ----------- -----------
Onshore
Pallas Ireland Wind 3% 5%
----------- ------------- ----------- -----------
Mid Hill Scotland Onshore Wind 2% 3%
----------- ------------- ----------- -----------
December 2020 largest ten investments 55% [30] 46%
----------- -----------
Onshore
Altahullion N. Ireland Wind 2% 3%
----------- ------------- ----------- -----------
Onshore
Little Raith Scotland Wind 2% 3%
----------- ------------- ----------- -----------
December 2019 largest ten investments 52%
----------- -----------
Ten Largest Investments - Committed to date basis
% of portfolio
by value
at
31 December
Project Location Type 2020
---------- ------------- ---------------
Offshore
Beatrice England Wind 12%
---------- ------------- ---------------
Offshore
East Anglia 1 England Wind 9%
---------- ------------- ---------------
Jädraås Sweden Onshore Wind 7%
---------- ------------- ---------------
Offshore
Merkur Germany Wind 7%
---------- ------------- ---------------
Offshore
Gode Germany Wind 5%
---------- ------------- ---------------
Onshore
Garreg Lwyd Wales Wind 5%
---------- ------------- ---------------
Onshore
Solwaybank Scotland Wind 4%
---------- ------------- ---------------
Grönhult Sweden Onshore Wind 3%
---------- ------------- ---------------
Offshore
Sheringham Shoal England Wind 3%
---------- ------------- ---------------
Onshore
Crystal Rig II Scotland wind 3%
---------- ------------- ---------------
December 2020 largest ten investments 57% [31]
---------------
2.7 Operational Review
The Company sets out below its key metrics which it utilises to
track its performance over time against its objectives.
Operational Metrics
Operating
history
(portfolio
Largest weighted Electricity Average
single Largest average) Production Revenue
Metrics investment ten investments years % increase (GBP/MWh)
as % of portfolio
by value [32]
------------------------------- ------------ ------------ -----------
3,953GWh
(Year to) 2020 10% 55% 4.7 years +30% 96.22
31 December
------------ ----------------- ------------ ------------ -----------
3,036GWh
2019 11% 52% 5.6 years +51% 90.55
--------------------- ------------ ----------------- ------------ ------------ -----------
2,042GWh
2018 9% 51% 5.4 years +16% 105.63
--------------------- ------------ ----------------- ------------ ------------ -----------
1,766GWh
2017 10% 52% 5.7 years +20% 92.44
--------------------- ------------ ----------------- ------------ ------------ -----------
1,469GWh
2016 11% 52% 6.7 years +9% 82.83
--------------------- ------------ ----------------- ------------ ------------ -----------
1,344GWh
2015 12% 56% 5.9 years +65% 78.63
--------------------- ------------ ----------------- ------------ ------------ -----------
2014 10% 65% 5.0 years 814GWh +136% 84.43
--------------------- ------------ ----------------- ------------ ------------ -----------
TRIG Portfolio Update
The portfolio performed well across the year, delivering a 1.3%
positive generation variance to budget, ultimately stemming from
the exceptional first quarter. Very strong production in January to
March arose from good wind resource in all regions. Whilst the
Scandinavian wind assets and solar assets continued to perform
well, the positive impact of the first quarter was partially offset
by below budget production from April to June and from August to
the end of the year. Good wind resource dominated the beginning of
the year, while grid unavailability dampened performance over the
latter part of the year.
Regional Commentary
The table below shows the TRIG share of production by region
against budget across the year.
Year ended 31 December
2020
Production
----------------------------
Actual Budget Var.
Portfolio MWh MWh %
---------- ---------- ----
GB Wind 1,321,076 1,250,173 6%
---------- ---------- ----
Offshore 905,604 971,589 -7%
---------- ---------- ----
Scandinavia 707,097 635,810 11%
---------- ---------- ----
France Wind 505,002 519,253 -3%
---------- ---------- ----
Ireland Wind 341,907 358,653 -5%
---------- ---------- ----
Solar 171,963 168,320 2%
---------- ---------- ----
Total 3,952,648 3,903,798 1.3%
---------- ---------- ----
GB Wind
Generation was 6% above budget due to high wind resource in the
first quarter. Operational performance for the year has been
positive for all sites, with the exception of Little Raith.
Little Raith was acquired in late 2019 and suffered availability
issues, for which compensation will be provided by the operations
and maintenance provider. The availability issues were linked to
pitch faults, which have been resolved through a series of planned
upgrades performed in the second half of the year reducing the
associated downtime and positioning the site well for the year
ahead.
Solwaybank wind farm, located just north of Gretna in western
Scotland, was commissioned in December 2020 and has entered the
operational phase. During construction the site made good use of
local stone and has planted more than 90,000 trees of varying
variety including 14,000 native non-commercial broadleaf trees. The
site has started active habitat management with water quality
monitoring, peat dam surveys and habitat surveys.
Construction has started at Blary Hill wind farm on the Kintyre
Peninsula in western Scotland and is progressing well with the
targeted commercial operation date in January 2022.
Offshore Wind
TRIG's offshore generation was hampered by a month-long grid
outage at Gode in the German North Sea, with Merkur also suffering
grid outages earlier in the year. Within the UK North Sea,
Sheringham Shoal ended the year up on budget.
At Gode, the combination of wind, negative pricing events and
grid availability resulted in negative budget variance for the
year. Merkur saw the introduction of a new Service Operation vessel
this year which should lead to improved availability at the
site.
Scandinavia Wind
Scandinavia performed strongly with production well above budget
due to high wind resource with good availability.
As previously disclosed within the interim accounts, TRIG
exercised its right to return the Ersträsk project (part of which
was operational and part of which was under construction), to
Enercon following a series of construction delays. Due to the
contractual measures in place, the Company bore no construction or
delay risks and therefore suffered no financial loss.
France Wind
Good availability from the newer sites in the north ensured the
region benefited from the strong wind resource in the first and
fourth quarter of 2020. The older sites in the south faced some
operational challenges in the first half of the year. There were
minor delays to repairs due to Covid-19 which have since been
rectified with much improved availability and repowering work
progressing well. In October, Envision achieved full commissioning
of Venelle despite significant Covid-19-related delays, with the
original take-over targeted in January 2020.
Vannier, also being built by Envision, has commenced
construction, but is currently on hold due to an unexpected
technical challenge against an environmental permit. It is hoped
that this will be rectified in the coming months enabling
construction to restart, and TRIG has the benefit of contractual
protection. The project accounts for 1% of TRIG's portfolio.
Northern Ireland and Republic of Ireland Wind
The Ireland region enjoyed good wind resource but ended the year
5% below budget due to high regional grid curtailments, which had
an approximate 10% impact upon production. TRIG has been
represented by RES grid specialists throughout the year within an
IWEA [33] working group, seeking grid improvements on curtailment
and constraint issues across Ireland.
Despite restricted movement and health and safety guidelines
relating to Covid-19, all Irish sites continued operating well with
major component replacements being performed as required,
benefitting from RES O&M stepping in for essential major
component work on sites throughout the year.
GB Solar
GB solar generation was above budget due to high irradiation in
the first half of the year. Rectification works and associated
packages were completed at Penare, with Parley and Egmere sites due
to follow during 2021, but are currently delayed due to Covid-19.
As solar parks in some areas of England have increasingly been
targeted by thieves, stealing panels or cabling, a range of
advanced security measures are being applied across much of the GB
portfolio.
A program of proactive inverter replacements was completed
across the Cornwall Solar sites, replacing inverter technology
which had performance issues, which will further improve the
operating resilience of the portfolio.
Long-term Portfolio Performance against Budget
While there is some variance from month to month and year to
year, performance during 2020 remains within long-term
expectations. The geographical and technological diversity of the
TRIG portfolio has provided good resilience to varying weather
conditions, with total production close to budget since IPO.
Operational Enhancements
As Operations Manager, RES is dedicated to enhancing the value
of the portfolio through both commercial and technical initiatives.
RES has a structured enhancements framework that fosters a culture
of innovation, with opportunities regularly identified and assessed
both at individual site level and portfolio level.
Examples of some of the commercial and technical value
enhancements secured in 2020 include:
Yield-enhancing turbine upgrades: potential yield uplifts were
assessed and implemented across the portfolio, including:
High Wind Ride Through upgrade at Crystal Rig 2, Rothes 2 and
Mid Hill, increasing production by enabling turbines to continue
generating at higher wind speeds
Energy Thrust upgrade at Meikle Carewe, increasing production
through employing sensors to change the operating parameters
dynamically as weather conditions change
Winter Ice Operation Mode implementation at recent acquisition
Little Raith, improving turbine performance during icy periods,
with site-specific technical assessment conducted to ensure the
site continues to be operated safely.
Protecting revenue: RES' fast response to National Grid's
Optional Downward Flexibility Management scheme enabling multiple
projects to participate, protecting revenue during periods of
oversupply and removing the risk of an emergency disconnection.
Enhancing revenue: additional revenue streams were secured for
TRIG's first subsidy-free GB windfarm, Blary Hill, through a
15-year Capacity Market contract
Reducing operational costs through technical expertise: grid
settings were promptly rectified on a recent operational
acquisition reducing ongoing grid charges, and bespoke CCTV
solution implemented for French windfarms at significantly reduced
cost.
Optimising contractual structures : new O&M contracts were
put in place at three French projects, designed to improve
performance and reduce costs.
Condition monitoring coupled with a robust approach to strategic
spares across the portfolio continues to enable components to be
proactively replaced ahead of failure, reducing downtime and repair
costs.
The impact of Covid-19
Covid-19 was an important consideration across the full range of
operation and maintenance, asset management and portfolio
management teams that keep TRIG's sites running. Activities in the
Covid-19 response effort can be broadly split into the following
categories:
People: ensuring business continuity, but more importantly, the
safety of employees, customers, suppliers and the wider community
that interacts with TRIG. Strong resilience was demonstrated whilst
changes were applied to working practices, with flexible and remote
working embraced. Neither of the Managers has accessed any of the
government's Covid-19 financial support programmes nor accessed the
UK government's furlough scheme. Both Managers have continued to
hire more resource to contribute towards the ongoing improvement in
the day-to-day management of TRIG.
Operations: RES activated business continuity plans on both the
operational and construction aspects of TRIG's assets, which are
designated as critical renewable energy infrastructure. Site level
management plans were modified to ensure safety of contractors,
staff and the local community. At the construction sites, such as
Solwaybank and Blary Hill, this includes temperature checks,
continuous cleaning of shared spaces and rotating lunch breaks to
minimise interactions. Additionally, contractors distanced
themselves from the local community by staying in self-catering
properties. RES' rigorous approach to strategic spares as well as
condition monitoring, which helps to predict failures in advance,
has minimised additional downtime due to Covid-19 restrictions.
These measures along with other measures that RES undertook to also
prepare for any potential risks associated with Brexit, also helped
to secure services and TRIG's supply chain.
Control Centre: The RES global control centre in Glasgow
maintained normal service despite the rapid transition to remote
and home working. Investment in the control centre capability and
retro-fitting older sites with new equipment to broaden the remote
monitoring and reset capability for turbines and solar sites, has
reduced the need for travel to operational sites.
Systems and technology: Prior to the pandemic, all of InfraRed's
staff and 94% of RES staff already had laptops to support remote
working. In RES case, further IT provision was rapidly made for the
remainder, with computer-based telephony also already in place.
Previous investment in system architecture and an enhanced and
integrated suite of software to support communications and
collaboration, facilitated the strong continuity of service to
TRIG.
On-going evolution: As the virus and government responses
continue to evolve, so do the site systems of work and wider
support provided, to ensure that personnel are kept physically
safe.
Health and Safety
A high standard of Health and Safety ("H&S") has always been
essential in TRIG's operations. Covid-19 management, response and
mitigation plans were developed at the start of the pandemic for
the construction and operational sites and these were reviewed and
updated through the year.
Reportable incidents and accidents are tracked and accident
frequency rates are calculated so trends in performance can be
seen.
The different asset managers across the portfolio continue to
meet twice a year to share experiences on their sites, discuss
matters impacting the industry and to promote best practice.
Additionally, many of the asset managers ran their own initiatives
such as the 'Don't Risk It' campaign within RES. Site specific
H&S activities have also been undertaken such as the helicopter
emergency rescue drill at the Merkur offshore project.
This year the annual quality assurance audits were undertaken
remotely but still provided an opportunity to ensure that adequate
emphasis, support and resources are given to H&S administration
of the TRIG portfolio whilst ensuring compliance with current
legislation and guidelines.
2.8 Valuation of the Portfolio
Introduction
The Investment Manager is responsible for carrying out the fair
market valuation of the Group's investments which is presented to
the Directors for their approval and adoption. A valuation is
carried out on a six-monthly basis as at 30 June and 31 December
each year.
For non-market traded investments (being all the investments in
the current portfolio), the valuation is based on a discounted cash
flow methodology and adjusted in accordance with the European
Venture Capital Association's valuation guidelines where
appropriate to comply with IFRS 13 and IFRS 10, given the special
nature of infrastructure investments. Where an investment is
traded, a market quote is used.
The valuation for each investment in the portfolio 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 judgement in assessing the expected future cash flows from each
investment based on the project's expected life and the financial
model produced by each project entity. In determining the
appropriate discount rate to apply to a given investment the
Investment Manager takes into account the relative risks associated
with the revenues which include fixed price per MWh income (lower
risk) or merchant power sales income (higher risk). As a refinement
to the process of determining the appropriate discount rate, in
view of the increasing variation of project ages and revenue mixes
within the portfolio, where a project has both income types a
theoretical split of future receipts has been applied, with a
different (higher) discount rate used for an investment's return
deriving from the merchant income compared to the fixed price
income, equivalent to using an appropriate blended rate for the
investment.
The Directors' Valuation of the portfolio as at 31 December 2020
was GBP2,213.0m. This valuation compares to GBP1,745.2m as at 31
December 2019 and GBP2,009.3m at 30 June 2020.
Valuation Movements
A breakdown of the movement in the Directors' valuation in the
year is set out in the table below.
Valuation movement during the period to
31 December 2020 GBPm GBPm
Valuation of portfolio at 31 December 2019 1,745.2
Cash investments 588.2
Sell downs / exits (118.0)
Cash distributions from portfolio (148.0)
Rebased valuation of portfolio 2,067.5
--------------------------------------------- -------- -------
Changes in power prices forecast (137.2)
Movement in discount rates 62.8
Foreign Exchange Movement 42.6
Balance of portfolio return 177.3
--------------------------------------------- -------- -------
Valuation of portfolio at 31 December 2020 2,213.0
--------------------------------------------- -------- -------
(does not cast due to rounding differences)
The opening valuation at 31 December 2019 was GBP1,745.2m.
Allowing for investments of GBP588.2m, cash receipts from
investments of GBP148.0m and the proceeds of disposals of
GBP118.0m, from the sell down of Merkur [34] and exit from
Ersträsk, the rebased valuation as at 31 December 2020 was
GBP2,067.5m.
Cash investments of GBP588.2m during the year comprise the
following investments:
Investment during 2020 % of committed
Portfolio
Value [35]
Less than
Incremental acquisition on Fujin 1%
Solwaybank (construction funding) 1%
Haut Vannier 1%
Blary Hill 1%
Phoenix SAS 2%
Merkur (gross) 10% [36]
East Anglia 1 10%
----------------------------------- --------------
Further detail on each investment is included in section
2.6.
Each movement between the rebased valuation of GBP2,067.5m and
the 31 December 2020 valuation of GBP2,213.0m is considered in turn
below:
(i) Forecast power prices:
Forecasts for wholesale power prices have reduced materially
across the forecast period (c.12% reduction from December 2019),
having the impact of decreasing the valuation of the portfolio at
31 December 2020 by a net GBP137.2m. The valuation uses updated
power price forecasts for each of the markets in which TRIG
invests.
During the year the impact of Covid-19, the associated measures
taken to combat its spread and the resultant impact on large
sectors of national economies pushed down current and forecast
electricity demand with knock on reductions in gas and carbon
prices across most markets. These impacts compounded an already
well supplied gas market, further exacerbated by particularly
strong renewable generation during Q1 2020, pushing prices to low
levels most noticeably during summer 2020.
Relaxations in the public health restrictions, coupled with
developments in vaccinations and treatments and seasonal weather
effects, led to a recovery in achieved power prices over H2 2020.
In GB recent disruptions and delays to existing and planned
interconnectors, coupled with some periods of low wind, resulted in
increased gas consumption than would otherwise have been expected -
this has increased short-term GB pricing. Colder temperatures and
increased carbon prices have also added to near term electricity
forward contracts.
Whilst over the medium and longer term forecasters expect global
gas demand to increase in excess of supply which, in turn,
forecasters expect to increase power prices, these increases are
taking place from a lower baseline than expected in December 2019
as a result of economic contraction brought about by the Covid-19
pandemic. Furthermore the focused government stimulus packages and
heightened attention on renewable energy as part of preventing
climate change have also resulted in some assumed increases in
renewables penetration for some of the markets TRIG invests in. The
resulting curve is broadly flat in real terms and significantly
lower than December 2019, reflecting a reduction of approximately
12%, primarily driven by the above. Please refer to Section 2.11
Risks and Risk Management for further analysis within the TCFD
disclosure.
Power prices are one of the key risks faced by the Company: a
number of factors go into power price forecasting to estimate
electricity demand including the mix of generation technology
meeting this demand and each technology's associated costs of
supply. As such, it is inherently difficult to estimate and then
apply these factors to accurately forecast the outcome of this
dynamic market.
Material factors influencing the movement in the forecasts are
an expectation for greater volumes of renewables within the
generation mix (which has a low marginal cost so has the effect of
reducing power price forecasts), reductions in the forecast cost of
gas (reducing the costs of gas generation and therefore
expectations for power prices when gas generation is the marginal
price setter) offset by increases in the price of carbon
(increasing the cost of thermal (gas & coal) generation and
therefore expectations for power prices where these are the
marginal price setters).
The weighted average power price used to determine the
Directors' valuation [37] is shown below in real terms - this is
comprised of the blend of forecasts for each of the power markets
in which TRIG is invested after applying expected PPA power sales
discounts and reflecting cannibalisation [38] .
Region Average Average
2021-2025 2026-2050
GB (Real 2019 GBP/MWh) 44 42
Average of 4 euro jurisdictions* (Real 2019
EUR/MWh) 42 46
--------------------------------------------- ---------- ----------
*France, SEM, Germany and Sweden SE3
Cannibalisation is assumed within the adopted power price
forecasts across each jurisdiction. The reduction in captured
wholesale electricity power prices is forecast to be further
impacted in each geography over time as the proportion of
production coming from renewables in each market increases.
(ii) Foreign Exchange Movement:
Over the year, sterling has depreciated by 5% versus the euro,
leading to a GBP42.6m valuation gain on foreign exchange in
relation to the euro-denominated investments located in Germany,
Sweden [39] , France and the Republic of Ireland, which reduces to
a net GBP21.7m gain after the impact of hedges held outside the
portfolio at company level. At 31 December 2020, euro-denominated
investments comprised 40% of the portfolio. Once the investments in
Beatrice (UK), and Blary Hill (UK) and Grönhult (Sweden) wind farms
are complete, the proportion of euro denominated investments based
on the current portfolio will decrease to 37%.
(iii) Movement in valuation discount rates:
The weighted average portfolio valuation discount rate as at 31
December 2020 was 6.7% (31 December 2019: 7.25%). The discount
rates used for valuing each investment represent an assessment of
the rate of return at which infrastructure investments with similar
risk profiles would trade on the open market. In addition, the mix
of investments made in the year in lower risk projects decreased
the discount rate by approximately 0.1% and achievement of
construction completion on Solwaybank and Venelle resulted in a
reduction in discount rates applied to each asset.
During the year we have observed continuing strong competition
for renewables infrastructure, which remains a very sought-after
asset class, and we continued to see new entrants to the market
seeking to buy assets. This has resulted in a continued reduction
in the prevailing discount rates applied to renewables investments.
Other factors include the continued abundance of low-cost debt and
very low risk-free returns. Overall the Investment Manager, based
on its experience of bidding and transacting in the secondary
market for renewable infrastructure assets, has applied an average
reduction of 0.4% to discount rates across the portfolio compared
to 31 December 2019.
During the year, the Company engaged an independent valuation of
the portfolio and a further review of the discount rates adopted
for the December 2020 valuation, which confirmed that the rates
used were appropriate. This change in assumption has led to an
increase in the valuation of the investments of GBP62.8m.
(iv) Balance of portfolio return:
This refers to the balance of valuation movements in the year
(excluding (i) to (iii) above) and represents an uplift of
GBP177.3m, equivalent to an 8.5% increase over the rebased value of
the portfolio. The balance of portfolio return comprises the
expected return, reflecting the net present value of the cash flows
brought forward by a year at the average prevailing portfolio
discount rate (7.25% before the discount rate reductions in the
year), and outperformance comprising exceptional value enhancing
items.
Value enhancing items include:
Solar asset life extensions: Following a detailed review of the
portfolio of solar assets in H2 2020, the assumed lives of some
assets were extended. Extension was considered on a case-by-case
basis factoring in economic, technical and commercial constraints
with a maximum life assumed of 40 years, some asset lives were not
extended and others were extended less than the maximum. The
assumed extensions incorporated the potential for increased
maintenance requirements, reductions in availability, additional
inverter replacements, the physical degradation of the panels and
the inherent risks of the merchant revenues, including
cannibalisation. The impact of extending assumed solar asset lives
across the portfolio was an additional GBP8.0m of value as at 31
December 2020 and the weighted average asset life of the portfolio
as at 31 December 2020 is 30 years with an average of 29 years for
the wind portfolio and 37 years for the solar portfolio
Reduced maintenance costs: on renewal of O&M contracts and
improved power purchase agreement terms
Reduced grid costs: removing Balancing Services Use of System
(BSUoS) charges from transmission connected assets as of 1 April
2023. BSUoS charges represent the recovery of costs incurred by the
network operator to keep the network balanced, these are currently
being recovered from both consumers and generators, however from
April 2023 this will solely be recovered from consumers. This
impacts the larger wind farms in the portfolio [40] which have seen
reduced forecast operating costs, however this change also
contributed to a reduction in the GB price curve by lowering the
marginal cost of generation in the forecasts
Reduction of discount rates post-construction: following the
completion of construction at Venelle and Solwaybank the
construction risk premia applied to the valuation discount rate for
both assets has been reduced
Other items include:
Deposit rates: Over the year, there has been a reduction in
interest rates assumed across all jurisdictions. This is a
reflection of current macroeconomic projections. As at 31 December
2020, deposit rates assumptions remain at 0.25% and 0.00% in the
short term (up to March 2023) in the UK and Europe respectively.
These rates are then assumed to increase to 1.00% and 0.50%
thereafter. 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, rather than shorter-term corporate
debt. Structured project financing is secured against the
underlying assets, with the substantial majority benefitting from
long-term interest rate swaps which fix the interest cost to the
projects. As such, the overall impact of deposit rate changes are
negligible
Solar FiT potential charges: in France a parliamentary proposal
has been voted in to reduce certain historic tariffs on some older
higher FiT solar projects. The tariff reductions have not yet been
determined, but the impact is not expected to be significant for
TRIG, affecting assets representing less than 1% of TRIG's
portfolio by value
Investment Obligations
At the balance sheet date, the Company had outstanding
investment commitments in relation to the construction of Blary
Hill wind farm.
Name Announced Net MW Status Completion Outstanding Value (fully
Date Commitment* committed)*
Blary Hill Jan-20 35.0 Construction Q1 2022 1% 2%
------------ ---------- ------ ------------ ---------- ------------ ------------
After the balance sheet date, the Company entered into
investment commitments in relation to two wind farms.
Name Announced Net MW Status Completion Value (fully
Date committed)*
Beatrice Jan-21 102.9 Operational Q2 2019 12%
Grönhult Feb-21 67.2 Construction Q4 2022 3%
--------------- ---------- ------ ------------ ---------- ------------
*Expressed as a percentage of fully committed valuation of
GBP2,629.8m
The timeline of outstanding commitments is presented below:
H1 2021 H2 2021 FY 2022 Total
Outstanding Commitments
(GBPm) 312.6 25.7 53.6 391.8
------------------------- ------- ------- ------- -----
TRIG's Construction Wind farms
The three construction projects being managed by the company are
as follows and represent 3% of the fully committed portfolio value
at year end and 6% (including Grönhult) at the reporting date.
Name of Asset Location Capacity Expected
(MW) Completion
Date
Vannier France (North) 42.5 Q1 2022
Blary Hill GB (Scotland) 35 Q1 2022
Grönhult Sweden (South) 67.2 Q4 2022
-------------- -------------- -------- -----------
Fully Invested Portfolio Valuation
The valuation of the portfolio on a fully invested basis can be
derived by adding the valuation at 31 December 2020 and the
expected outstanding commitments as follows:
Portfolio valuation 31 December 2020 GBP2,213.0m
Initial investment in Grönhult (February 2021) GBP25.0m
Future investment commitments GBP391.8m
Portfolio valuation once fully invested GBP2,629.8m
---------------------------------------------------- -----------
Key Sensitivities
The following table illustrates the sensitivity of TRIG's NAV
per share to changes in key input assumptions:
Sensitivity Impact (NAV per share) Impact (NAV per share)
Discount rate +/- 0.5% - 3.8% 4 .1%
----------------------- -----------------------
Output P90 / P10 (10
year) - 12.3% 1 3.2%
----------------------- -----------------------
Power price -/+ 10% - 6.6% 6 .5%
----------------------- -----------------------
Inflation -/+ 0.5% - 4.2% 4 .5%
----------------------- -----------------------
Operating costs +/-
10% - 5.0% 5 .0%
----------------------- -----------------------
Exchange rate -/+ 10% - 1.3% 1 .3%
----------------------- -----------------------
Interest rate + 2%
/ - 1% 0 .0% 0 .0%
----------------------- -----------------------
Tax +/- 2% - 1.4% 1 .4%
----------------------- -----------------------
Asset Life -/+ 1yrs - 1.0% 0 .9%
----------------------- -----------------------
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 number of investments in
the portfolio remains static throughout the modelled life.
The sensitivities assume the portfolio is fully invested and
hence the Portfolio Value for the sensitivity analysis is the sum
of the Portfolio Valuation at 31 December 2020 (GBP2,213.0m), the
initial investment in Grönhult made in February 2021 (GBP25m) and
the outstanding investment commitments as set out above
(GBP391.8m), i.e. GBP2,629.8m.
Accordingly, the NAV per share impacts shown above assumes the
issue of further shares to fund the balance of these
commitments.
All of TRIG's sensitivities above are stated after taking into
account the impact of project level gearing on returns.
The output sensitivity above incorporates an updated calculation
of the portfolio effect which reduces the variability as a result
of the diversification of the portfolio. The increased
diversification of the portfolio has increased this effect and
consequently reduced the sensitivity of the portfolio.
2.9 Analysis of Financial Results
At 31 December 2020, the Group had investments in 75 projects.
As an investment entity for IFRS reporting purposes, the Company
carries these 75 investments at fair value. The results below are
shown on a statutory and on an "expanded" basis as we have done in
previous years. See the box below for further explanation.
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 year ended 31 December 2020 and the prior year 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 Balance Sheet Cash Flow Statement
The Statutory IFRS basis The Statutory IFRS basis The Statutory basis
nets off TRIG UK and includes TRIG UK and shows cash movements
TRIG UK I's costs, including TRIG UK I's cash, debt for the top company
overheads, management and working capital only (TRIG Limited).
fees and acquisition balances as part of The Expanded basis shows
costs against income. portfolio value. The the consolidated cash
The Expanded basis includes Expanded basis shows movements above the
the expenses incurred these balances gross. investment portfolio
within TRIG UK and TRIG There is no difference which are relevant to
UK I to enable users in net assets between users of the accounts.
of the accounts to fully the Statutory IFRS basis Differences include
understand the Group's and the Expanded basis. income received by TRIG
costs. There is no difference The majority of cash UK and TRIG UK I applied
in profit before tax generated from investments to reinvestment and
or earnings per share had been passed up from expenses incurred by
between the two bases. TRIG UK and TRIG UK TRIG UK and TRIG UK
I to the Company by I that are excluded
31 December 2020. under the Statutory
At 31 December 2020, IFRS basis.
TRIG UK I was GBP40m The purchase of investments
drawn on its revolving on the Expanded basis
credit facility (2019: is funded by both the
GBPnil drawn) equalling company's revolving
the difference between credit facility and
the Statutory IFRS basis amounts passed down
and the Expanded basis. after capital raises.
The remaining balance
is that of reinvestment.
---------------------------- -----------------------------
Income statement
Year to 31 December 2020 Year to 31 December 2019
Summary income statement GBP'million GBP'million
Statutory Expanded Statutory Expanded
IFRS Basis Adjustments(1) Basis IFRS Basis Adjustments(1) Basis
Operating income 119.2 26.6 145.8 145.6 16.7 162.3
Acquisition costs - (0.8) (0.8) - (2.1) (2.1)
----------- -------------- -------- ----------- -------------- --------
Net operating income 119.2 25.8 145.0 145.6 14.6 160.2
Fund expenses (1.8) (18.2) (20.0) (1.6) (14.2) (15.8)
Foreign exchange
(loss)/ gains (17.0) (3.9) (20.9) 18.3 2.4 20.7
Finance costs (0.2) (3.7) (3.9) (0.3) (2.8) (3.1)
----------- -------------- -------- ----------- -------------- --------
Profit before tax 100.2 - 100.2 162.0 - 162.0
----------- -------------- -------- ----------- -------------- --------
EPS(2) 5.9p - 5.9p 11.4p - 11.4p
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 year being approximately 1,712.0 million shares.
Analysis of Expanded Basis financial results
Profit before tax for the year to 31 December 2020 was
GBP100.2m, generating earnings per share of 5.9p, which compares to
GBP162.0m and earnings per share of 11.4p for the year to 31
December 2019.
The EPS of 5.9p reflects lower valuation growth in the year
versus a particularly strong period of valuation growth in the
comparative period. The most significant adverse movement in
valuation for the year has been due to a reduction in power price
forecasts across all geographies. This is mostly attributable to
the fall in demand and near to medium term forecast demand for
electricity and the primary commodities that support wholesale
electricity prices (gas, carbon and to some extent coal) caused by
the worldwide Covid-19 crisis.
The adverse impact of power prices has been offset by favourable
foreign exchange movements, a valuation discount rate reduction,
efficient portfolio management and other valuation
enhancements.
Operating Income reflects the portfolio value movement in the
year and is more fully described in Section 2.6.
An increase in fund expenses in the year to 31 December 2020 as
compared to the year to 31 December 2019 reflects the increase in
the size of the portfolio.
Fund expenses of GBP20.0m (2019: GBP15.8m) includes all
operating expenses and GBP16.9m (2019: GBP14.3m) fees paid to the
Investment and Operations Managers. Management fees are charged at
1% of Adjusted Portfolio Value up to GBP1bn, 0.8% of Adjusted
Portfolio Value in excess of GBP1bn and 0.75% of Adjusted Portfolio
Value in excess of GBP2bn as set out in more detail in the Related
Party and Key Advisor Transactions note, Note 14 to the financial
statements.
During the year sterling weakened against the euro resulting in
positive foreign exchange valuation movements for existing euro
denominated assets resulting in a gain of GBP42.6m (2019: GBP42.3m
loss), partially offset by loss on foreign exchange hedges and cash
and debt balances held at Company level of GBP20.9m (2019: GBP20.7m
gain). The net foreign exchange gain in the period is hence
GBP21.7m (2019: GBP21.6m loss).
Finance costs relate to the interest and fees incurred relating
to the Group's revolving credit facility. The finance costs in the
period are higher than the comparative period reflecting the full
amortisation of remaining capitalised arrangement fees in relation
to the previous revolving credit facility as a result of the
Company's increased and extended facility signed at the end of the
year to 31 December 2020.
Acquisition costs relate to wind farm investments in the year,
mostly attributable to the investments in Blary Hill, Merkur, and
East Anglia.
Year to Year to
31 December 31 December
2020 2019
(GBP'million) (GBP'million)
Acquisition costs 0.8 2.1
Total Acquisition commitments made in the year 516.8 612.1
Acquisition costs as % of investments 0.1% 0.3%
------------------------------------------------ -------------- --------------
The company has future commitments relating to Blary Hill,
Beatrice ([41]) and Grönhult ([42]) as follows.
H1 2021 H2 2021 2022 Total
(GBP'm) (GBP'm) (GBP'm) (GBP'm)
Outstanding Commitments 313 26 53 392
------------------------- -------- -------- -------- --------
Ongoing charges
Ongoing Charges (Expanded Basis) Year to Year to
31 December 31 December
2020 2019
GBP'000s GBP'000s
Investment and Operations Managers' fees 16,945 14,263
Audit fees 185 164
Directors' fees and expenses 286 237
Other ongoing expenses 1,521 1,161
------------ ------------
Total expenses(3) 18,937 15,825
------------ ------------
Average net asset value 2,014,672 1,610,883
Ongoing Charges Percentage (OCP) 0.94% 0.98%
------------------------------------------ ------------ ------------
3. Total expenses excludes GBP1.1m (2019: GBPnil) of lost bid
costs incurred during the year.
The Ongoing Charges Percentage is 0.94% (2019: 0.98%). 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 year. 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 level includes the benefit of growth in net
assets: as the fixed costs of the Company are being spread over a
larger capital base and the reduction in Manager fees charged on
incremental acquisitions as the portfolio has become larger.
Managers' fees for incremental assets are charged at a lower rate
of 0.80% in respect of asset value above GBP1bn and 0.75% for
incremental value above GBP2bn. The management fee will further
reduce (to 0.70%) for incremental acquisitions should the portfolio
value grow beyond GBP3bn. There is no performance fee paid to
either of the Managers.
Balance sheet
Summary balance As at 31 December 2020 As at 31 December 2019
sheet GBP'million GBP'million
Statutory Expanded Statutory Expanded
IFRS Basis Adjustments Basis IFRS Basis Adjustments Basis
Portfolio value 2,160.9 52.1 2,213.0 1,741.5 3.7 1,745.2
Working capital 12.3 (12.9) (0.6) 1.7 (3.9) (2.2)
----------- ----------- -------- ----------- ----------- --------
Hedging Liability/Asset (1.4) - (1.4) 12.6 - 12.6
Debt - (40.0) (40.0) - - -
Cash 23.1 0.8 23.9 127.6 0.2 127.8
----------- ----------- -------- ----------- ----------- --------
Net assets(1) 2,194.9 - 2,194.9 1,883.4 - 1,883.4
----------- ----------- -------- ----------- ----------- --------
Net asset value
per share 115.3p - 115.3p 115.0p - 115.0p
Analysis of Expanded Basis financial results
Portfolio value grew by GBP467.8m in the year to GBP2,213.0m,
primarily as a result of the investments made in the year to 31
December 2020 as described more fully in the "Valuation Movements"
section of this Strategic Report.
Hedging assets and liabilities represent the value of
outstanding foreign exchange derivatives used to manage the
Company's risk to movements in the foreign exchange rate between
Sterling and Euro. Working capital amounts include debtors,
liabilities and capitalised financing costs.
Group cash at 31 December 2020 was GBP23.9m (2019: GBP127.8m)
and acquisition facility debt drawn at 31 December 2020 was
GBP40.0m (2019: GBPnil). The 2019 year end cash balance included
equity capital raise proceeds subsequently deployed in 2020 of
around GBP100m.
Net assets grew by GBP311.5m in the year to GBP2,194.9m. The
Company raised GBP317.3m (after issue expenses) of new equity
during the year and produced a GBP100.2m profit in the year, with
net assets being stated after accounting for dividends paid in the
year (net of scrip take up) of GBP107.0m. Other movements in net
assets totalled GBP1.0m, being the Managers' shares accrued at 31
December 2020 and to be issued on or around 30 March 2021.
Net asset value ("NAV") per share as at 31 December 2020 was
115.3p compared to 115.0p at 31 December 2019.
Net asset value ("NAV") and Earnings per share ("EPS")
reconciliation
NAV per share Shares in Net assets
issue (m) (GBPm)
Net assets at 31 December 2019 115.0p 1,637.5 1,883.4
Profit/EPS to 31 December 2020 5.9p(1) - 100.2
Shares issued (net of costs)(2) 1.1p(3) 260.9 317.3
Dividends paid in 2020 (6.7)p (113.7)
Scrip dividend take-up(4) - 5.0 6.6
H2 2020 Managers' shares to be issued - 0.9 1.0
--------------------------------------- ------------- ---------- ----------
Net assets at 31 December 2020 115.3p 1,904.3 2,194.9
--------------------------------------- ------------- ---------- ----------
1. Calculated based on the weighted average number of shares
during the year being 1,712.0m shares
2. Includes shares issued to managers (less costs) during the
year.
3 The increase in net assets per share of 1.1p was the result of
accretive share issues where shares were issued above the Company's
net asset value per share.
4. Scrip dividend take-up comprises nil shares in March 2020 due
to Scrip Dividend Alternative cancellation, 1.0 million shares in
June 2020, equating to GBP1.2m, 2.6m shares in September 2020,
equating to GBP3.5m, and 1.5m shares in December 2020, equating to
GBP2.0m issued in lieu of dividends paid.
Cash flow statement
Summary cash Year to 31 December 2020 Year to 31 December 2019
flow statement GBP'million GBP'million
Statutory Expanded Statutory Expanded
IFRS Basis Adjustments Basis IFRS Basis Adjustments Basis
Cash received
from investments 120.6 27.4 148.1 84.8 44.0 128.8
Operating
and finance
costs (1.7) (17.5) (19.3) (1.1) (13.8) (14.9)
--------------------- ----------- ----------- -------- ----------- ----------- --------
Cash flow
from operations 118.9 9.9 128.8 83.7 30.2 113.9
Debt arrangement
costs - (4.3) (4.3) - - -
Foreign exchange
gains/ (losses) (3.4) (3.5) (6.9) 3.4 3.2 6.6
Issue of
share capital
(net of costs) 318.3 (1.9) 316.4 523.8 (1.9) 521.9
Acquisition
facility
drawn/(repaid) - 40.0 40.0 - - -
Portfolio
refinancing
and exit
proceeds 68.2 49.8 118.0 - 64.6 64.6
Purchase
of new investments
(including
acquisition
costs) (499.5) (88.8) (588.9) (413.8) (96.0) (509.8)
Distributions
paid (107.0) - (107.0) (86.3) - (86.3)
--------------------- ----------- ----------- -------- ----------- ----------- --------
Cash movement
in year (104.5) 0.5 (103.9) 110.8 0.1 110.9
Opening
cash balance 127.6 0.2 127.8 16.8 0.1 16.9
--------------------- ----------- ----------- -------- ----------- ----------- --------
Net cash
at end of
year 23.1 0.7 23.9 127.6 0.2 127.8
--------------------- ----------- ----------- -------- ----------- ----------- --------
Analysis of Expanded Basis financial results
Cash received from investments in the year was GBP148.1m (2019:
GBP128.8m). The increase in cash received compared with the
previous year reflects the increase in the size of the portfolio.
The adjustment reflects working capital movements and cash flow
available for reinvestment and proceeds in the year.
Dividends paid in the year totalled GBP107.0m (net of GBP6.6m
scrip dividends). Dividends paid in the prior year totalled
GBP86.3m (net of GBP8.0m scrip dividends).
Cash flow from operations in the year was GBP128.8m (2019:
GBP113.9m) and covers dividends paid of GBP107.0m in the year
(2019: GBP86.3m) by 1.2 times (or 1.13 times without the benefit of
scrip take up), or 2.0 times before factoring in amounts invested
in the repayment in project-level debt. The Group repaid GBP98m of
project-level debt (pro-rata to the Company's equity interest) in
the year.
Share issue proceeds (net of costs) totalled GBP316.4m (2019:
GBP521.9m) reflecting the net proceeds of the 260m shares issued
during the year through the proceeds of two tap issues.
In the year, GBP588.9m was invested in acquisitions. These were
funded through surplus cash at 31 December 2019 of around GBP100m,
the May and December tap issues (net proceeds of GBP316.4m),
drawings on the Company's acquisition facility of GBP40.0m,
GBP118.0m raised through the exit of Ersträsk and sell-down of
Merkur, as well as the reinvestment of surplus cash flows.
The Company's acquisition facility was drawn in the year to fund
the investments in in Merkur. The facility was fully repaid in Q3
as the Company sold down part of the Merkur investment and exited
its investment in Ersträsk. The facility was drawn again at year
end to fund the acquisition of East Anglia 1.
At the date of this report following the completion of Grönhult,
the Company is GBP65m drawn on its revolving credit facility.
Blary Hill and Grönhult wind farms are projects in construction
with investments commitments outstanding and construction activity
to be carried out over 2021 and 2022.
Beatrice wind farm is operational, and TRIG and its other
shareholders have exchanged contracts to acquire the investment.
Completion of the investment is expected to complete shortly
following receipt of regulatory and lender consents.
Going Concern
The Group has the necessary financial resources to meet its
obligations. The Group benefits from a range of long-term contracts
with various major UK and European utilities and well-established
suppliers across a range of infrastructure projects. In addition,
it maintains a working capital component of GBP30m as part of its
revolving credit facility (recently increased from GBP340m to
GBP500m and limited to 30% of Portfolio Value). The Group's
project-level external debt is non-recourse to the Company and is
limited to 50% of Gross Portfolio Value. As a consequence, the
Directors believe that the Group is well placed to manage its
business risks successfully.
The directors do not believe that there is a significant risk to
the business as a result of the Covid-19 pandemic but will continue
to monitor any future developments. Thus they continue to adopt the
going concern basis of accounting in preparing the annual financial
statements.
Related Parties
Related party transactions are disclosed in note 18 to the
condensed set of financial statements.
2.10 Financial KPIs and Review of the Year
(Year to) (Year to) (Year to) (Year to) (Year to) (Year to) (Year to)
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2020 2019 2018 2017 2016 2015 2014
Dividend
per share
(declared) 6.76p 6.64p 6.50p 6.40p 6.25p 6.19p 6.08p
------------------- -------------- ----------- ----------- ------------ ------------ ------------ -------------
Share price 127.8p 138.4p 113.2p 108.6p 109.6p 102.3p 104.00p
------------------- -------------- ----------- ----------- ------------ ------------ ------------ -------------
Net Asset
Value per
share 115.3p 115.0p 108.9p 103.6p 100.1p(2) 99.0p(2) 102.4p
------------------- -------------- ----------- ----------- ------------ ------------ ------------ -------------
+29.3% +10.7% + 5.11% + 15.8% + 4.4% + 7.5%
Total Shareholder (FTSE All (FTSE All (FTSE (FTSE (FTSE (FTSE
Return(3) -2.9% Share: Share: All Share: All Share: All Share: All Share:
for the
year (share (FTSE All
price basis) Share: -9.8%) +19.2%) -9.5%) +13.1%) + 16.8%) + 1.0%) + 1.2%)
------------------- -------------- ----------- ----------- ------------ ------------ ------------ -------------
Portfolio
Value GBP2,213m GBP1,745m GBP1,269m GBP1,081m GBP819m GBP712m GBP473m
Year-on-year
growth +27% +38% +17% +32% +15% +51% +57%
Number
of projects 77(1) 74 62 57 53 36 29
Aggregate
capacity 1,820MW(1) 1,664MW 1,110MW 821MW 710MW 658MW 439MW
------------------- -------------- ----------- ----------- ------------ ------------ ------------ -------------
Market
capitalisation
Year-on-year
growth GBP2,432.6m GBP2,265.0m GBP1,333.9m GBP1028.8m GBP912.9m GBP749.7m GBP432.1m
Number
of shares +7.4% +70% +30% +13% +28% +73% +36%
in issue
at year
end 1,904.4m 1,636.5m 1,178.4m 947.3m 833.0m 732.8m 415.5m
------------------- -------------- ----------- ----------- ------------ ------------ ------------ -------------
Ongoing
Charges
Percentage 0.94% 0.98% 1.12% 1.11% 1.10% 1.20% 1.25%
------------------- -------------- ----------- ----------- ------------ ------------ ------------ -------------
1 Including investment commitments as at 31 December 2020 in
Beatrice offshore wind farm.
2 NAV per share in 2015 was in particular affected by the
removal, in the UK's 2015 Summer Budget, of the benefit to
renewables generators of selling Levy Exemption Certificates,
effective 1 August 2015. NAV per share in 2016 is expressed after
the payment of an additional quarter's worth of dividends as a
result of the switch to quarterly dividends from semi-annual
dividends. In aggregate, 7.7975p per share of dividends were paid
in 2016.
3 Total Shareholder Return ("TSR") measures the internal rate of
return based on the share price at the beginning and end of the
financial year together with dividends per share reinvested in the
Company.
The weighted average portfolio discount rate is 6.7%. Adjusted
to take account of fund-level costs, the weighted average portfolio
discount rate implies the expected level of return to investors
from a theoretical investment in the Company made at NAV per
share.
Financing
The Group's GBP500m revolving credit facility is with Royal Bank
of Scotland International, National Australia Bank, ING Bank NV,
Sumitomo Mitsui Banking Corporation, Santander and Barclays. The
facility expiry date is 31 December 2023 with an option to extend
for up to an additional 24 months. Margins on the facility when
drawn are 1.85%. The facility can be drawn in Sterling or
Euros.
The revolving credit facility enables the Group to fund new
acquisitions and to provide letters of credit for future investment
obligations should they be required. The facility includes a GBP30m
working capital element.
The short-term financing provided by the revolving credit
facility is limited to 30% of the portfolio value. It is intended
that any facility used to finance acquisitions is repaid, in normal
market conditions, within a year through equity fundraisings.
The acquisition facility was drawn down in the year to fund
investments and subsequently repaid following capital raises.
In addition to the revolving credit facility, the projects may
have underlying project level debt. There is an additional gearing
limit in respect of such debt, which is non-recourse to TRIG, of
50% of the Gross Portfolio Value (being the total enterprise value
of such 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 at 31 December 2020 across the
portfolio was 43% (2019: 36%). Principal repayments in the year
totalled GBP98m, as the debt is retired over the project's subsidy
periods. Notwithstanding this repayment, the overall gearing has
increased mainly due to the mix of the acquisitions. Notably, TRIG
made sizable investments in 2020 in Merkur and East Anglia 1 which
are younger and have greater subsidy revenues (giving lower power
price sensitivity) than the portfolio average but consequently
carry greater leverage. The inclusion of Beatrice and Grönhult in
the portfolio (which were not invested at 31 December) has a
limited impact on portfolio gearing, as while Beatrice is geared at
a level above the portfolio average, Grönhult is ungeared, with the
resulting gearing level unchanged at 43%.
The vast majority of the debt is fixed and has an average cost
of 3.4% (including margin). The project level debt is fully
amortising and repaid in each case over the period of the subsidy
term. The portfolio weighted average subsidy life remaining is 12
years.
Foreign Exchange Hedging
At the year-end, 40% of the portfolio was located within France,
the Republic of Ireland, Sweden ([43]) and Germany and hence is
invested in euro-denominated assets. Once the committed investments
in Beatrice, Blary Hill and Grönhult wind farms are fully
subscribed the proportion of euro-denominated investments based on
the current portfolio and valuation will decrease to 37%.
The Group enters into forward hedging contracts against expected
income from the euro-denominated investments' distributions up to
four years ahead. In addition, the Group aims to enter 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 at least 50% of their aggregate value.
The group may also make drawings under the revolving credit
facility in euros which provides further foreign exchange
hedging.
During the majority of 2020 the Group targeted hedging of
approximately 60% to 80% of the overall euro portfolio value. The
Group has been maintaining this increased hedging level since H2
2019 in light of the increased exchange rate volatility.
The Investment Manager keeps under review the level of euros
hedged, with the objective of minimising variability in
shorter-term cash flows and reducing NAV volatility. It seeks to
maintain a balance between managing the sterling value of cash flow
receipts and mark-to-market cash outflows.
As well as addressing foreign exchange uncertainty on the
conversion of the expected euro distributions from investments, the
hedge also provides a partial offset to foreign exchange movements
in the portion of the portfolio value relating to the
euro-denominated assets.
The impact on NAV per share of a 10% movement in the euro
exchange rate after the impact of hedges held by the Group outside
of the investment portfolio is 1.4p assuming an effective euro
foreign exchange hedge of 60% - this is explained in more detail in
Section 2.7 and Note 4 in the Notes to the Financial Statements
(Valuation Sensitivities - euro/sterling exchange rate).
2.11 Risks and Risk Management
Risk Management
The Company has a risk management framework in place covering
all aspects of the Group's business. Given the nature of the
Company (being an Investment Company where the Company outsources
key services to the Investment Manager, Operations Manager and
other service providers), reliance is placed on the Group service
providers' own systems and controls.
The identification, assessment and management of risk are
integral elements of the Investment Manager's and the Operations
Manager's work in both managing the existing portfolio and in
transacting new investment opportunities.
The Managers and Board discuss and consider what emerging risks
there are to the Company at the board meetings. The Company has a
range of advisers in addition to its Managers. These advisers
report on key topics and potential events which may present
potential risks that the Board and the Manager need to monitor and,
where possible, mitigate. In addition, the Company and its Managers
are registered with various industry bodies which alert both the
Board and the Managers of emerging risks as key events and news
items unfold.
The inherent risk of each existing and emerging risk is assessed
based on their likelihood of occurring and their potential impact
should they manifest. Where necessary and possible, mitigation
plans are developed to reduce the residual risk.
The Managers utilise their systems, their policies, oversight of
the supply chain and third-party input to manage these risks. The
strength of mitigants and controls is applied to the inherent risk
to determine the residual risk, which is classified as 'high',
'medium', 'low' or 'insignificant'. If a new risk arises or the
likelihood of a risk occurring increases, a mitigation strategy is,
where appropriate, developed and implemented together with enhanced
monitoring by the Investment Manager and / or Operations
Manager.
The Managers review and consider the Group's key and emerging
risks with the Board on a quarterly basis. Given the stability of
the Company's investment policy and focus of its strategy (i.e.
investments in renewable energy infrastructure projects in the UK
or Europe), the risks in the Group are not expected to change
materially from quarter to quarter. Nonetheless, risks relating to
the Covid-19 pandemic have emerged in the year and risks relating
to the UK's exit from the EU have manifested at year-end. More
detail in respect of each of these is set out below.
Detailed reporting in line with the recommendations of the Task
Force on Climate-related Financial Disclosures ("TCFD") is set out
later in this Risks and Risk Management section. This reporting
includes linking the potential risks associated with climate change
to the Company's principal risks.
The Board's Management Engagement Committee also reviews the
performance of the Investment Manager and Operations Manager (as
well as all key service providers) annually, which includes a
consideration of the Managers' internal controls and their
effectiveness and the maintenance of a risk control matrix.
Risks and Uncertainties
The Board and the Managers have considered and reviewed the key
risks. Risks relating to the Covid-19 pandemic have emerged in the
year and risks relating to the UK's exit from the EU ("Brexit")
have manifested at year-end. Both have the potential to affect the
Company in 2021. The risks arising from these two events are
embedded in the risk framework and the risk factors already
identified by the Board and the Managers, and are extracted in the
tables below. As such, the Board and the Managers have concluded
that there has been no material change to the key risks or their
residual risk classifications in the year.
Risks relating to the Covid-19 pandemic:
Risk factor Key mitigants
Health and Enhanced Covid-19 site practices were promptly
safety implemented for the supply chain to adhere to,
and remain under on-going review, including testing
crew boarding vessels, temperature checking on-site
and when entering buildings, segregation of work
teams, dedicating work vehicles to specified individuals
and working from home. Operationally, this has
meant we have maintained our strong record of
a low accident frequency rate in our supply chain
-------------------------------------------------------------
Energy yield Maintaining asset availability through enhanced
asset condition monitoring and undertaking proactive
works when government restrictions allow
-------------------------------------------------------------
Electricity The power price in much of 2020 was dampened
pricing by reduced demand following the Covid-19 outbreak.
The impact was reduced through a significant portion
of revenues being linked to fixed electricity
pricing or subsidies in the year
The potential impact of grid curtailments at
periods of high renewables generation was principally
reduced by the portfolio's diversification across
energy markets. In the UK, compensation was obtained
for some of the portfolio through participation
in the Optional Downward Flexibility Management
scheme
-------------------------------------------------------------
Political Pressures on government budgets resulting from
/ regulatory their response to the Covid-19 pandemic may result
in fiscal action
France, a proposal has been voted in to reduce
certain historical tariffs. Further detail is
provided in Section 2.8 - Valuation of the Portfolio.
This affects assets representing less than 1%
of TRIG's portfolio, by value, and is not expected
to have a significant financial impact on the
overall portfolio
Further retrospective action in Europe to existing
subsidy arrangements is mitigated as governments
look to maintain investor confidence to support
decarbonisation
-------------------------------------------------------------
Taxation Increased risk across the portfolio arising from
governments' response to the economic and social
consequences of the Covid-19 pandemic, which may
result in an increase in tax rates to fund their
expenditure
The sensitivity of the Company's NAV to changes
in taxation rates is provided in Section 2.8 -
Valuation of the Portfolio
-------------------------------------------------------------
Risks relating to Brexit:
Risk factor Key mitigants
Political Brexit may affect the relationship between Scotland
/ regulatory and the UK as a whole. An independent Scotland's
energy policies may impact the renewables market,
potentially including future new capacity deployment,
the treatment of historical subsidies or the trajectory
of power prices. The relationship between the
Scottish devolved government and the UK's government
at Westminster is monitored
Changes to UK fiscal policy may arise following
Brexit. The UK government's policy agenda is monitored
Additional administration has been introduced
for goods, including parts, crossing the UK border.
It is expected that this will become integrated
into 'business as normal' as familiarity with
new processes and procedures increases
------------------------------------------------------------
Electricity Power prices in GB's two day-ahead auctions were
pricing previously linked to a European-wide algorithm.
These are now de-coupled from each other resulting
in market inefficiencies. The risk of additional
price volatility is reduced through a significant
portion of TRIG's near-term portfolio-level revenue
benefits from government-backed subsidies. The
auctions may be re-coupled as part of new market
mechanisms by 2022
As noted in the UK Government's Energy White
Paper, their intention is to establish a new net
zero carbon cap and trade Emissions Trading Scheme
("ETS"). This will replace the UK's current ETS,
which replaced the UK's participation in the EU
ETS on 1 January 2021. Government policy will
continue to be monitored
------------------------------------------------------------
Sub-contractor The risk of sub-contractor delivery failure or
delivery delay arising from Brexit related border controls
is mitigated through a dedicated programme by
the Operations Manager of ensuring the assets
in TRIG's portfolio and their sub-contractors
hold critical spares and that proactive monitoring
and maintenance was being undertaken to reduce
risk of failure
------------------------------------------------------------
Macroeconomic Foreign exchange risk continues to be managed
factors through the Investment Manager's application of
the Company's hedging policy
------------------------------------------------------------
Risks identified in the Company's risk management framework
This section sets out the key risks faced by the Group
categorised by their residual risk rating.
The table below sets out the Company's principal risks with a
'high' residual risk categorisation. They relate to macro factors
driven by externalities where the common mitigant is the
diversification within TRIG's portfolio.
RESIDUAL RISK - 'HIGH'
---------------------------------------------------------------------------------------------
Risk factor Key mitigants
----------------------------------------------------------------
Energy yield Diversification of the portfolio across a variety
Portfolio electricity of geographies, therefore weather systems, and
production falling renewables technologies, including the complimentary
short of expectations seasonal bias of solar production
Established nature of wind and solar technologies;
typical levels of availability in a given year
are around 96% to 99%
Experience of Operations Manager in monitoring
portfolio production and delivering asset availability
Utilisation of the Operations Manager's and
third-parties' expertise when assessing energy
yield estimates during acquisition due diligence
Improvements in technology providing future
opportunities for enhancement, life extensions
and repowering
The sensitivity of the Company's NAV to deviations
from energy yield expectations is provided in
Section 2.8 - Valuation of the Portfolio
----------------------------------------------------------------
Electricity A significant portion of TRIG's near-term portfolio-level
pricing revenue benefits from a government-backed subsidies
Electricity (e.g. renewable obligation certificates, feed
prices moving in tariffs and contracts for difference) or
adversely, including power price fixes
as a result Diversification of the portfolio across a variety
of renewables of geographies means that electricity is sold
build-out exceeding into distinct electricity markets (GB, Irish
the growth in SEM [44] , France, Nordics and Germany), each
electricity with different factors influencing the regional
demand, the electricity price
volume of renewables Long-term nature of revenues and forward pricing
in the energy mechanisms, including through offtake agreements
mix increasing with utility or corporate counterparties and
resulting in hedging instruments with financial institutions,
greater power provides some protection against short-term
price 'cannibalisation', fluctuations
and lower natural The weighted average power price forecast used
gas and carbon to determine the Directors' valuation is comprised
prices of a blend of the forecasts for each of the
A summary of power markets in which TRIG is invested after
the impact of applying expected power purchase agreement sales
market development discounts and reflecting cannibalisation
on electricity In the longer term, transition risks associated
pricing is provided with climate change, including the impact of
in Section 2.4 greater or faster renewables build-out assumptions,
- Market Development may be mitigated through:
* Storage technologies enabling renewables to become
partly dispatchable and able to capture higher
prevailing prices at times of higher demand
* The increasing electrification of the transport and
heating sector and the commercial development of
renewables-generated 'green' hydrogen could support
long-term demand for power
* Detailed reporting in line with the recommendations
of the Task Force on Climate-related Financial
Disclosures ("TCFD") is set out later in this Risks
and Risk Management section
The sensitivity of the Company's NAV to changes
in power price forecast assumptions is provided
in Section 2.8 - Valuation of the Portfolio
----------------------------------------------------------------
Political / UK and European economies where opportunities
regulatory fall within TRIG's acquisition focus are expected
Government or to continue to demonstrate a robust approach
regulatory support to grandfathering commitments [45] to existing
for renewables installed capacity
changes adversely, Future subsidies generally track the fall in
including retrospective development costs of maturing technologies,
changes to contracted providing appropriate public value-for-money
tariffs or established With the reductions in costs of deploying renewables
cost frameworks driving renewable energy to grid parity, unsubsidised
A summary of assets are being developed, particularly in
public policy the Nordic (onshore wind) and Iberian (solar
frameworks is PV) regions
set out in Section Emphasis on energy security as a key item on
2.4 - Market the public agenda, in light of both dwindling
Development North Sea fossil fuel production and broader
geopolitical concerns
Strong public and political momentum in TRIG's
markets of focus towards meeting long-term United
Nations, European Union and national decarbonisation
efforts (e.g. the EU's New Green Deal and the
UK's Energy White Paper)
----------------------------------------------------------------
RESIDUAL RISK - 'MEDIUM'
------------------------------------------------------------------------------------
Risk factor Key mitigants
------------------------------------------------------------
Liquidity / The Investment Manager's policies and controls
treasury management in relation to cash management
Regular cash monitoring by the Board and Investment
Manager
Regular cash flow forecasting and stress testing
prepared by the Investment Manager and considered
by the Board in setting dividend targets and
declaring dividends
Revolving credit facility provides liquidity
to finance acquisitions between equity capital
markets fundraising
------------------------------------------------------------
Counterparty Diversification of counterparty exposure through
credit several component suppliers and service sub-contractors
The Managers have dedicated credit monitoring
functions. Their analysis is reported to the
Board quarterly
Managers prepare contingency plans when credit
quality deteriorates to prepare for an event
of counterparty failure
Credit quality of project counterparties is
assessed as part of the acquisition due diligence
process
Further detail on the portfolio's counterparty
exposure is provided below
------------------------------------------------------------
Taxation Corporation and local tax rates are changed
by governments and local authorities from time
to time. Some mitigation is achieved as a result
of the diversification across geographies and
therefore different government policies
Relevant tax rules are closely monitored, utilising
third-party advisers where necessary
The sensitivity of the Company's NAV to changes
in taxation rates is provided in Section 2.8
- Valuation of the Portfolio
------------------------------------------------------------
Sub-contractor The Operations Manager, RES, typically sits
delivery on the boards of the project companies. Through
this role, and reporting information provided,
the Operations Manager reviews projects and
their sub-contractors' performance
Where RES is a sub-contractor to a project
or in other specific circumstances, representatives
of the Investment Manager, InfraRed, will sit
on the board of the project company
The Operations Manager maintains a regular
dialogue with major sub-contractors to ensure
challenges and issues are resolved proactively
In extremis, sub-contractors can be terminated
for poor performance. Replacement sub-contractors
are generally readily available
------------------------------------------------------------
Macroeconomic Foreign exchange: hedging policy established
factors and adhered to
Inflation: the income from the portfolio has
a correlation with inflation. Most of the subsidy
regimes and some costs are linked to inflation.
It is expected that power prices have some positive
correlation with inflation in the longer term
Interest rates: fixed-rate debt or interest
rate swaps to reduce interest rate exposure
at project level; limited exposure at Company
level
The sensitivity of the Company's NAV to changes
in macroeconomic factors is provided in Section
2.8 - Valuation of the Portfolio
------------------------------------------------------------
Construction Through the acquisition process, the Investment
projects Manager, with input from the Operations Manager,
undertakes risk allocation and counterparty
due diligence when determining the appropriate
valuation for, and whether to proceed with,
the opportunity, utilising input from third-party
legal and technical advisers where necessary
The Operations Manager sits on the boards of
the project companies. Through this role, and
with reporting information provided, the Operations
Manager reviews construction progress and is
able to intervene where necessary
The Operations Manager provides quarterly updates
to the Board on each project in construction
------------------------------------------------------------
Physical single Some infrastructure that is important to the
points of failure performance of TRIG's portfolio exists outside
the direct control of individual projects, such
as grid connections. Exposure to single points
of failure is reduced through portfolio diversification
and TRIG's balanced portfolio manages single
asset concentration
Acquisition due diligence considers the contractual
provisions and protections for individual projects,
factoring the conclusions into investment valuations
and decisions
Actively monitored by the Operations Manager
through project company risk matrices and analysis
of shared exposure between projects
------------------------------------------------------------
RESIDUAL RISK - 'LOW' OR 'INSIGNIFICANT' GROUPED BY AIFMD CATEGORY
------------------------------------------------------------------------
AIFMD category Risks
-------------------------------------------------------
Operational Energy yield
Political / regulatory
Sub-contractor delivery
Construction projects
Physical single points of failure
Health & safety
Climate change - see later in this section
for TRIG's reporting against the recommendations
of the Task force on Climate-related Financial
Disclosures
('TCFD')
Stakeholders: communities and investment partners
Asset-level regulatory compliance Insurance
Cybersecurity
Fraud and management override
Breach of Company-level regulations or contractual
covenants
Transaction due diligence and structuring
Key person and Company-level service provider
failure
Conflicts of interest
Portfolio valuation error
-------------------------------------------------------
Liquidity Liquidity / treasury management
Asset-level liquidity and gearing
-------------------------------------------------------
Counterparty Counterparty concentration
-------------------------------------------------------
Credit Risk of counterparty failure
-------------------------------------------------------
Market Electricity pricing
Macroeconomic factors, including interest rates,
inflation and foreign exchange
Equity capital markets
Deal flow and transaction pricing
Breach of company policies
-------------------------------------------------------
Taxation Changes in corporation tax rates, limitations
on tax relief on interest deductions and other
tax risks
-------------------------------------------------------
Climate change related risks and opportunities
The recommendations of the Task Force on Climate-Related
Financial Disclosures, of which TRIG is a supporter, is the
established framework for consistent, comparable and clear
reporting on a company's approach to climate change and assessing
its potential impact on the company.
TRIG began voluntarily reporting against the TCFD
recommendations in its 2019 Annual Report & Financial
Statements, acknowledging that compliance with all 11 disclosure
recommendations would be progressed over time. Where TRIG will add
to these disclosures in future periods, we set out the steps being
taken to achieve compliance for the 2021 Annual Report &
Financial Statements.
TRIG's climate-related reporting follows the four core elements
defined by the TCFD.
1. Governance
Board oversight Managers' role
The Board has overall responsibility TRIG's Sustainability Policy,
for the oversight of TRIG's including climate change considerations,
sustainability risks and opportunities, applies to both making new investments
of which climate change is an (throughout the deal screening
important subset. Its approach and due diligence processes)
is set out in TRIG's Sustainability and the running of the current
Policy, which is available on portfolio (asset management
TRIG's website. activities, monitoring and reporting).
The Board and Managers meet Day-to-day management of TRIG's
on a quarterly basis, during portfolio is delegated to its
which they review the risks Investment Manager, InfraRed,
facing the Company, including and its Operations Manager,
risks related to climate change. RES.
TRIG's investment strategy is The Managers monitor climate-related
intertwined with progress towards government policy, engaging
a net zero carbon future. As with policy makers where appropriate,
such, consideration of the transition and physical changes in the
and physical consequences of climate, to inform the application
climate change features in the of TRIG's strategy and the Managers'
Board's discussions. The Board assessment of the risks faced
considers climate-related opportunities by the Company.
through its discussions with Quarterly, TRIG's Advisory Committee,
the Managers of TRIG's strategy comprised of representatives
and risks through its risk management from both Managers, considers
framework. TRIG's strategy and risks, the
The Board's Management Engagement output of which is reported
Committee reviews the Managers' to and discussed with the Board.
performance annually, including InfraRed and RES each report
their adherence to the Company's on their sustainability-related
Sustainability Policy. activities, including relating
The Board's Audit Committee to climate change. Their reporting
considers the Company's climate-related is available on their respective
disclosures. websites.
Representatives of RES and InfraRed
typically sit on the board of
each project company. Through
this role, they ensure that
climate change related risks
are considered by project company
management teams and reflected
in project company risk registers.
-------------------------------------------
2. Strategy
TRIG's business model is specifically designed to take advantage
of the investment opportunities arising from the decarbonisation of
energy usage. The pace of the transition to a net-zero carbon
future will dictate the size of the investment opportunity for
TRIG. Under current plans for renewables deployment spread over the
range of European countries in which TRIG invests, coupled with the
expected need for the replacement of existing installations in due
course, the Managers expect there to be significant investment
opportunities for the Company over the long term. Notwithstanding
this, TRIG recognises that risks relating to climate change could
have an impact on the Company.
The table below set out a selection of key climate-related
opportunities and risks as they apply to TRIG. Risks arising from
climate change overlap with the Company's principal risks: energy
yield, energy pricing and government / regulations. A broader
description of opportunities is set out in Section 2.2 - Business
Model and Strategy and risks are set out earlier in Section 2.11 -
Risk and Risk Management. The table includes a qualitative
assessment of the impact of climate-related opportunities and risks
on:
TRIG's investments, strategy and financial planning;
Incorporating the expected timeframes.
Impact Opportunities Risks
Portfolio In the medium term, government In the near and medium
investments policy stemming from the term, transition risks
transition to a net-zero to portfolio investments
carbon economy may present arise from unexpected changes
opportunities for follow-on to government policies.
investments in the existing Increase in renewables
portfolio such as: build-out ambition without
The co-location of storage, sufficient demand side
which may enhance the action can reduce power
asset and provide access price forecasts.
to a new revenue stream; In the medium and long
Repowering existing sites term, if adverse climate
to extend asset life and change is not arrested,
enhance investment performance. portfolio investments will
In France, for example, likely be exposed to more
repowered sites are able frequent extreme weather
to bid for new subsidies; events, increasing the
Expanding sites to efficiently risk of physical damage
increase investment scale to on-site infrastructure
whilst utilising existing and off-site transmission
site knowledge and, potentially, and distribution systems,
grid infrastructure. alongside additional safety
risks and operational considerations.
Such events may acute,
including:
Forest, grassland or peat
fires;
Flooding; or
Storms and high speed
wind gusts.
Or chronic, including:
Increased temperatures
such that the thermal capacity
of equipment could be exceeded;
Changes to ground conditions
from increased rain; or
Changes to cloud cover
impacting ground-level
solar irradiation.
Risks also include potential
long-term changes to weather
patterns causing material
increase or decrease in
an asset's energy yield
from that expected at the
time of investment.
Mitigation comes from portfolio
diversification across
geographies and technologies,
to reduce the overall impact
of action taken by an individual
government, any local extreme
weather event or single
asset failure.
--------------------------------------- ----------------------------------------
Strategy Government policies across In the near and medium
Europe have shown renewable term, projects are likely
energy has a central role to grow in scale, which
to play in decarbonising may result in fewer opportunities
our energy usage. This by number. This means that
has resulted in significant with an increasing volume
growth in markets where of capital looking to deploy
TRIG has an acquisition into sustainable investment
focus. In the near term, themes, renewable energy
the greatest investment projects can be highly
activity in TRIG's key sought after, and investment
markets is expected from discipline is key. "Off-market"
subsidised offshore wind transactions sourced by
in the North Sea and onshore the Investment Manager,
wind in France, and unsubsidised InfraRed, remain an important
onshore wind in the UK route to attractive opportunities.
and Nordics and solar In the long term, as portfolios
in Iberia. mature and subsidy periods
In the medium term, the come to an end, the power
development of renewables price exposure of renewable
frameworks across Europe investment portfolios will
(if they are demonstrated naturally increase. The
to be credible, stable power price exposure of
and robust) could result projects exposed to merchant
in broadening TRIG's diversification power price is typically
to further geographies. managed through offtake
In the long term, as newer agreements or hedging instruments.
storage technologies mature,
investment opportunities
may arise in such projects.
This may include the production
and storage of 'green'
hydrogen and its subsequent
use to generate electricity.
--------------------------------------- ----------------------------------------
Financial In 2020, TRIG entered Increasing penetration
planning into a new ESG-linked of intermittent renewable
revolving credit facility. electricity generators
This provides the opportunity in the energy system risks
to reduce the margin and increasing the volatility
commitment fees under in the prevailing and forecast
the facility should TRIG power price.
meet certain targets, In the near term, exposure
including increasing the is reduced through increasing
number of homes powered the proportion of revenues
by clean energy from TRIG's with fixed power prices,
portfolio. achieved through acquisition
The strength of the renewables of investments with subsidised
investment theme is underpinned revenues, fixing under
by both its strong ESG offtake agreements and
credentials, including the use of hedging instruments.
the positive impact on In the medium term, the
climate change, and investors' build-out of long-term
desire for long-term sustainable storage infrastructure,
income. This provides charging infrastructure
the opportunity for TRIG for electric vehicles and
to continue to grow. For grid upgrades will help
existing shareholders provide flexibility to
this means greater diversification the energy system. This
through further acquisitions, will support the power
increased economies of price at times when renewables
scale, and accretion through generation may exceed electricity
raising capital at a share demand, thereby reducing
price in excess of the periods of low or negative
Company's net asset value pricing.
per share.
--------------------------------------- ----------------------------------------
Impact of different climate related scenarios
TRIG's portfolio returns and potential to grow the portfolio are
subject to both transition risks and physical risks.
Transition Risks: Risks related to the transition to a
lower-carbon economy. The risks can be grouped into four
categories: policy and legal risk; technological risk; market risk;
and reputational risk.
Physical Risks: Risks associated with physical impacts from
climate change that could affect carbon assets and operating
companies. These impacts may include "acute" physical damage from
variations in weather patterns (such as severe storms, floods, and
drought) and "chronic" impacts such as sea level rise, and
desertification.
The Board and the Managers have identified three key factors
that will be impacted by the transition and physical risks of
climate change:
Power price forecasts, which are impacted by renewables
build-out assumptions and the extent to which renewable electricity
can be utilised when it is generated. This risk is most likely to
manifest in a 2 degrees Celsius or lower scenario, where transition
risks are greatest. The Investment Manager's analysis, having taken
input from a leading third-party power forecaster, is set out
below.
Energy yield, which could be impacted by changes to weather
patterns. Weather models are not able to forecast the impact of
climate change scenarios on site-by-site weather patterns.
Asset availability, maintenance costs and replacement costs will
be impacted by changes in weather patterns that result in more
severe events such as storms, floods and wildfire. This risk is
most likely to manifest in a higher temperature scenario, where
physical risks are greatest.
High transition risk scenario (typically associated with a 1.5-2
degrees Celsius temperature change)
Under this scenario, we assume that policy measures are put in
place that accelerate the decarbonisation of energy production,
including higher than expected levels of renewables deployment, and
the contribution of each country where TRIG invests to net-zero
carbon is achieved by 2050. Physical risks from extreme weather
events are less frequent and effective insurance coverage remains
generally available.
In a high transition risk scenario:
There is downward pressure on forecast power prices for
renewables generators due to greater decarbonisation of the energy
mix from that assumed in the Company's valuation power price
forecasts.
This is, in part, offset by an increase in electricity demand as
transport, industry and heating move away from fossil fuels.
An increase in carbon prices is expected; however, this is
likely to be offset by lower gas prices and greater periods of time
when non-emitting generation is setting the prevailing power
price.
Although these scenarios are very difficult to formulate,
modelling undertaken suggests a possible impact of this scenario is
a c. 11% reduction in the forecast portfolio power curve. If no
mitigating action is taken then there could be a potential GBP120m
to GBP220m (or 5p/share to 10p/share) reduction of NAV. This impact
could be reduced as a result of industry efficiencies, such as
lower operating costs arising from greater competition between
sub-contractors as the sector continues to scale up.
One of the challenges to achieving more renewables build-out
than assumed in current power price forecasts, and therefore
decarbonisation, is that as long-term power price falls, this
creates a feedback loop of making fewer new projects financially
viable, which in turn reduces the rollout rate and therefore
reduces the downward pressure on forecast power prices. As noted
the in Chairman's Statement, governments across TRIG's target
markets are beginning to set out detailed policies in relation to
both supply and demand for renewable electricity, which may address
this feedback loop, provide support to the power price and achieve
the levels of renewables rollout required for net-zero carbon by
2050.
High physical risk scenario (typically associated with a 3-4
degrees Celsius temperature change)
This is a climate change scenario that results in temperature
change of greater than 3 degrees Celsius, resulting in extreme
weather events that could threaten the successful operation of
assets within the portfolio. We assume that under this scenario,
renewables build-out lags expectations and energy is not
decarbonised to an extent consistent with a lower impact from
climate change and that insurance for damages may become
unavailable or very expensive.
Whilst current power price forecasts are not prepared on the
basis of an overall temperature change, the underlying assumptions,
particularly relating to renewables build-out, are consistent with
a 3 degrees Celsius scenario.
The Operations Manager is undertaking a review of the portfolio
for assets that may be at greater risk of extreme weather events
such as storms, floods and wildfire. Projects at higher risk will
be examined to identify the potential cost associated with these
events and to mitigate their impact. We expect to provide an
estimated financial impact in the 2021 Annual Report &
Financial Statements.
A key mitigant to the portfolio as a whole suffering from a
material event at any one asset is the portfolio's asset
diversification including the geographic spread across five
European countries, which helps to reduce the impact of localised
weather events.
Sustainability considerations, including those relating to
climate change, are integrated throughout InfraRed's investment
process. Scenario and sensitivity analysis is also undertaken as
part of due diligence and examined by the Investment Committee when
considering investment approval.
3. Risk Management
Overall, as previously noted, TRIG's business model is
specifically designed to take advantage of the investment
opportunities arising from the decarbonisation of energy usage.
Nonetheless, climate-related risks exist and are identified and
discussed through the Managers' wider risk management processes.
They are identified and assessed by the Managers when making new
investments (throughout the deal screening and due diligence
processes) and in the running of the current portfolio (asset
management activities, monitoring and reporting).
Climate-related risks identified through the acquisition process
are managed through the acquisition business plan and investment
pricing. The appropriateness of mitigating action is considered by
the Investment Committee as part of the investment process.
Representatives of RES and InfraRed sit on the board of each
project company. Through this role, they ensure that climate change
related risks are considered by project company management teams,
reflected in project company risk registers, and appropriate
mitigation plans are put in place.
Those identified in the running of the current portfolio are
managed through mitigating action, where possible. Management
activities are discussed by the Advisory Committee through their
quarterly review of portfolio performance.
These risks are integrated into TRIG's risk management framework
through the investment process and reported quarterly to the Board.
The Board considers the completeness of the risks recognised and
the sufficiency of controls and mitigation, identifying where it is
felt further action is required.
4. Metrics and Targets
Metrics
The Company utilises a range of metrics to monitor the
contribution of the portfolio to mitigating climate change. These
can be found in the Section 2.5 - Sustainability, and include the
following:
Renewable energy generation
Tonnes of carbon emissions avoided
Homes powered by clean energy, which impacts the margin and
commitment fee paid under TRIG's ESG-linked revolving credit
facility
Proportion of portfolio sourcing electricity under renewable
energy tariffs
Number of Active Environmental Management projects
The Board and Managers consider a number of metrics that relate
to climate-related opportunities and risks:
Renewables build-out assumptions in TRIG's investment and target
acquisition markets, which impacts long-term power price forecast
assumptions
Percentage of revenues with fixed power prices, which impacts
the extent to which fluctuations in power price forecasts affects
the portfolio valuation and forecast cash flows
Energy yield, where deviations from expectations are examined
for climate-related risk factors, including those arising from
asset availability
Greenhouse Gas (GHG) emissions
TRIG's Scope 1 and Scope 2 greenhouse gas emissions are
disclosed below. TRIG has adopted the operational control boundary
approach for the measurement of energy emissions for TRIG projects,
as the Directors believe this reflects the level of emissions that
can be actively controlled and reduced.
In 2020, the portfolio generated 3,953GWh of electricity,
including compensated curtailments (2019: 3,036GWh), which was
enough renewable power for 1.1m homes and displaced 1.2m tonnes of
carbon emissions.
The Board and the Managers remain committed to reducing carbon
emissions where possible, and continue to focus on energy saving
opportunities in the Company's activities and underlying projects
where appropriate.
TRIG will provide reporting on Scope 3 emissions, and other
greenhouse gases where relevant, from the 2021 Annual Report &
Financial Statements.
Emissions have been calculated in accordance with the GHG
Protocol Corporate Accounting and Reporting Standard. UK Government
Conversion Factors have been utilised for UK investments and the
latest EU RE-DISS values to calculate emissions for non UK
investments.
Disclosure Year ended 31 December Year ended 31 December
2020 2019
Scope 1 - direct
emissions (tCO2e) 0 0
------------------------ ------------------------
Scope 2 - indirect
emissions, location
based (tCO2e) 1489 1481
------------------------ ------------------------
Total Scope 1 and
2 emissions (tCO2e) 1489 1481
------------------------ ------------------------
Intensity ratio (tCO(2)
e per MWh) 0.06% 0.07%
------------------------ ------------------------
Scope 2 - indirect
emissions, market
based (tCO2e) 666 646
------------------------ ------------------------
Targets
The Company's annual budgeting and semi-annual valuation process
includes forecasts that may be influenced by the transition and
physical impacts of climate change. These include expectations in
respect of variables, in particular:
Percentage of revenues with fixed power prices, which impacts
the extent to which fluctuations in power price forecasts affects
the portfolio valuation and forecast cash flows
Energy yield, where deviations from expectations are examined
for climate-related risk factors, including those arising from
asset availability
Deviations of these variables from budgets and changes to the
variables in forecasts may serve as leading indicators of changes
to climate-related opportunities, risks and performance.
As noted above, further scenario analysis is underway, which may
lead to further relevant metrics and targets being identified.
Counterparty Exposures
Given the importance of state subsidies for investment in
renewables, TRIG has exposure to the creditworthiness of and policy
commitments by national governments and is reliant on the
consistency of government policy, for example "grandfathering"
within the UK whereby renewables generators continue to receive the
same level of subsidy, set upon commissioning, for the duration of
the incentive. In addition, each project company enters into a
commercial PPA [46] with a utility or energy trading company to
enable them to sell the electricity generated and to receive the
FiT [47] or ROC [48] subsidy payments. The project companies have
entered into PPA's with a range of providers. Each project company
enters into a contract for the maintenance of the plant. In the
case of wind, this is often with the turbine manufacturer. There
are also contracts with construction companies who may be building
or maintaining plant and/or have defect guarantees for past works.
For both wind and solar sectors, projects may also benefit from
equipment provider warranties. Failure of any of these
counterparties represents a risk for the group.
There are significant exposures to counterparties, for example,
Statkraft (as PPA provider), Siemens and Vestas (as turbine
suppliers and maintainers) and Natural Power Services and RES (as
service providers). In the event that a counterparty or guarantor
enters insolvency, then there is a risk of disruption while
counterparties are replaced and a risk of distribution lock-up for
the assets that are project financed.
Given the Covid-19 global pandemic, and financial difficulties
faced by some other turbine suppliers, there is concern around the
future of turbine suppliers in the sector. Whilst TRIG has the
largest exposures to Siemen and Vestas, the largest turbine
suppliers in Europe, the Company does use a wide range a suppliers
to help mitigate concentration risk. The fundamentals behind the
industry, policies supporting wind energy globally, remain in place
and we believe that although certain turbine suppliers may be
facing difficulty, the risk is not systemic.
2.12 Stakeholders and Corporate Culture
Stakeholder Management: The Board believes in the importance of
conducting business responsibly. That means behaving ethically,
respecting people and respecting the environment.
TRIG aims to maintain high standard of business conduct and
stakeholder engagement and to ensure a positive impact on the
community and environment in which it operates. This requires
monitoring and consideration of its stakeholders by building strong
relationships with suppliers, customers, communities and
authorities among others.
TRIG's relationships with its stakeholders and its dedication to
maintaining a responsible approach to investment, is essential to
position TRIG well for the longer term - and is expected by its
shareholders.
TRIG and its appointees work with many stakeholders in the
management of the business in the following categories:
Shareholders & the Board: The Board of Directors is
ultimately accountable to the Shareholders for the running of the
business and the making of key strategic decisions and all key
appointments of service providers. The Board delegates certain
activities including day-to-day investment management and
operations management and works closely with all the key service
providers. Shareholder interaction is regarded as a critical
component of the management of TRIG and the Board works closely
with the Managers, InfraRed and RES, with the Company Secretary,
Aztec, and with the Company's brokers, Investec and Liberum, in
order to keep abreast of the needs and concerns of shareholders.
The Chairman offers to meet with major shareholders on a regular
basis and many continue to benefit from the opportunity to speak
with her impartially without TRIG's Managers present on a variety
of matters, including governance.
Corporate-level suppliers: As well as the critical day-to-day
oversight of the portfolio provided by InfraRed and RES, TRIG has a
set of corporate providers which ensure the smooth running of the
Company. In administration, Aztec provides consistent support for
corporate and company secretarial activities, while Investec and
Liberum act as key intermediaries between the Company and our
shareholder base, working with the Managers to arrange meetings
with current and prospective investors, monitoring equity market
conditions and advising on capital raising activities, which have
been regular given the growth of our business. TRIG benefits from
the commitment and flexibility of six corporate lenders for the
Company's revolving credit facility, namely Royal Bank of Scotland,
National Australia Ban, ING, Sumitomo Mitsui Banking Corporation,
Barclays and Santander. Carey Olsen and Norton Rose Fulbright
provide corporate legal support for the business in Guernsey and
London respectively and tax services are provided by KPMG. Our
registrar, Link Market Services maintains the shareholder register
and manages the processing of shareholder communications with our
other advisers. On the public relations side TRIG receives advice
and practical coordination from Maitland/AMO Strategic Advisers.
TRIG also accesses a number of key data providers, including
technical reports in relation to acquisitions and regular power
price forecasts and commentary from several specialised providers.
The Company's auditor is Deloitte. Additional valuation services
are provided by independent valuers from time to time. The Company
also receives a range of other services including shareholder list
analysis, webhosting, design and remuneration consulting.
Operational partners: TRIG benefits from co-investing alongside
a number of joint venture partners, some being developers and
vendors, such as Equinor, Orsted, SSE and Akuo Energy and others
being financial co-investment partners, for example APG and
Equitix. In each case, the Managers build on the relationship with
the co-investor, providing representatives to attend project board
meetings to coordinate and monitor the investment, with the
additional potential to share best practices.
Vendors: TRIG's reputation for reliability and efficiency in
transaction management with a variety of vendor counterparties
(having now transacted with 18 counterparties) helps the Company to
continue to derive value in origination by accessing projects
off-market (including from RES itself under the right of first
offer agreement).
Portfolio Customers: As an energy provider, TRIG's key customers
are PPA counterparties. These offtakers pay for and receive TRIG's
portfolio companies' output - with revenues being payments for the
renewables benefits as well as commercial power for those projects
permitted to receive power market revenues.
Portfolio Suppliers: TRIG's key operational suppliers include
Original Equipment Manufacturer's ("OEMs"), spare part O&M
providers and increasingly Independent Service Providers ("ISPs").
On construction projects the key suppliers are the EPC Contractors,
turbine suppliers and balance of plant contractors. Utilities also
provide certain site-specific services such as meter readings. The
operations teams maintain relationships with the site landowners
who receive rental payments. Lenders to the project companies
include many leading domestic and international banking groups,
TRIG's Managers maintain discussions with key lenders as there are
opportunities to refinance projects as market conditions allow and
this has been done selectively within the portfolio to date.
Local Communities: TRIG is conscious of its role in the local
communities in which its projects operate. Close consultation with
local planning authorities is an important feature of renewables
whether in construction, during operations or preparing for the
potential repowering or dismantling of a project. Socially, TRIG
seeks to provide educational events at its larger sites, while also
contributing via community funds to local projects ranging from
playgroups to cultural events. In 2020, TRIG allocated an
additional GBP0.5m to help address the Covid-19 impact on the local
communities where TRIG's sites are located.
Economic activities around the sites provide additional demand
for local goods and services as well as local employment
opportunities for example in the maintenance of the sites and
access. These are particularly valued in areas where a long-term
urbanisation trend has resulted in reduction in the local rural
economies.
TRIG seeks to promote best practices across the portfolio, in
areas as diverse as noise monitoring, shadow flicker, ice throw,
landscaping, the provision of community events and liaison with the
local media.
We discuss how TRIG interacts with the local community further
in Section 2.5, Sustainability.
Other External Stakeholders: The Company maintains a close
dialogue, through its Managers, with key regulators as well as with
the regulated networks, such as National Grid and the relevant
network operators in the UK. At a policy level, TRIG's Managers
monitor requirements and engage with key government departments and
regulatory bodies. At the network level, TRIG's Managers and
O&M providers communicate in several areas for example on grid
outage issues, on the role of renewables assets as locally embedded
suppliers of energy as well as on technical or contractual issues.
In the investment company space, the Association of Investment
Companies (AIC) plays a key role in shaping the influence of this
growing segment of the London market and TRIG seeks to apply AIC
guidelines where relevant to its business and maintains an active
dialogue as one of the leading companies in its sub-sector. The
Managers also keep market financial analysts appraised of TRIG's
strategy, performance and outlook.
Section 172(1) Statement: The Company provides disclosure
relevant to the requirements of Section 172(1) a)-f) throughout the
Strategic Report, in line with Association of Investment Companies
(AIC) guidance. Please see the table below for a reference to where
this information can be found:
Section 172(1) statement Reference
area
The issues, factors and During the Board's quarterly meetings,
stakeholders the Directors both Investment Manager and Operations
consider relevant in Manager are required to provide updates
complying with section on items that relate to section (a)-(f).
172 (1) (a) to (f) and The chief way this is done is through a
how they have formed quarterly Investment Manager and Operations
that opinion. Manager reports.
The Company's relationships with suppliers,
customers and contractors is a key part
of the operations report, whilst items
relating to shareholders, Company reputation
and investment decisions are contained
within the Investment Manager report.
The Board challenges the Managers to be
alert to the concerns of stakeholders and
how best to address these concerns to ensure
continuing positive stakeholder engagement.
The Company's risk review framework also
facilitates the identification of items
relevant to the Section 172 (1) statement.
The annual review of the Strategy by the
Board encompasses the longer-term factors
relating to the Company's decisions and
the implications for the communities and
environments in which our investments are
made.
As part of the Annual Strategic Review
process, key stakeholders such as partners,
suppliers, customers and local communities
are also discussed. The Board's approach
to engaging with these stakeholders are
outlined above.
--------------------------------------------------
(a) the likely consequences The Board considers the likely consequences
of any decision in the on all stakeholders of decisions taken
long-term as part of the Annual Review process. For
further information please see sections
2.2 Business Model and Strategy and 2.3
Investment Approach and Policy
--------------------------------------------------
(b) the interests of The Company does not have any employees.
the Company's employees For information on the Managers please
see section 2.12 Stakeholders and Corporate
Culture
--------------------------------------------------
(c) the need to foster Please see section 2.12 Stakeholders and
the Company's business Corporate Culture
relationships with suppliers,
customers and others
--------------------------------------------------
(d) the impact of the The risk framework of the Company overseen
Company's operations by the Board specifically consider environmental
on the community and and social factors, as detailed in section
the environment 2.11 Risks and Risk Management. Please
see sections 2.5 Sustainability and 2.12
Stakeholders and Corporate Culture for
further information.
--------------------------------------------------
(e) the desirability An example of this would the Company's
of the Company maintaining signing of an ESG-linked credit facility
a reputation for high as explained elsewhere in this report.
standards of business This facility is the first of its nature
conduct in the listed infrastructure sector and
enhances the Company's reputation for high
standards of business conduct. Please also
see sections 2.5 Sustainability and 2.12
Stakeholders and Corporate Culture
--------------------------------------------------
(f) the need to act fairly Please see sections 2.5 Sustainability
as between members of and 2.12 Stakeholders and Corporate Culture
the Company and 6 Corporate Governance Statement
--------------------------------------------------
Corporate Culture
The Company's approach to corporate culture, including
sustainability and diversity and inclusion, includes:
Considering that the risk appetite of the Company is consistent
with the risk appetite of the Company on a regular basis;
Embedding and improving on good practices in the day-to-day
management processes - which are assessed by the Board in the
course of the quarterly Board meetings as well as in a wide range
of ad hoc interactions during the year;
Ensuring both Managers and the Board maintain specific
initiatives to promote diversity and inclusion;
Promoting an appropriate culture of stewardship, responsibility,
accountability and openness; and
A focus by the Board and Managers on appropriate interaction
with key stakeholders, including shareholders, lenders, regulators,
vendors, co-investors and suppliers.
The Chairman, Helen Mahy, sets a strong example in maintaining
an effective corporate culture, for example, by her active advocacy
of equal opportunities. Outside TRIG, Helen is a member of the
steering committee of the Parker Review into the Ethnic Diversity
of UK boards which was published in October 2017 and updated in
February 2020. In addition, she is a patron of a charity, the
Social Mobility Business Partnership, she is co-chair of the
Employers Social Mobility Alliance and an Equality and Human Rights
Commissioner.
The Board has been at least 50% female since launch and
following the appointment of Tove Feld in March 2020, three of the
five Directors are female. Its members are drawn from the British
Isles, Germany and Scandinavia, which are each a key market for
TRIG's assets.
As TRIG has no employees beyond the non-executive Board. The
Directors look through to the culture of TRIG's key service
providers in annual review processes as well as on an ongoing
basis. The executive management of TRIG is provided by its
Managers, InfraRed and RES. Both are global businesses with broad
representation across its employees reflecting the international
nature of their activities.
Both Managers support equal opportunities for recruitment and
when managing existing employees, regardless of age, race, gender
or personal beliefs and preferences. Both Managers prioritise work
force engagement and have implemented a range of initiatives to
improve employee wellbeing, including fitness and mental health
schemes, mentorship programs, promoting charity work and organising
social activities. Both companies have HR systems in place which
allow employees to raise any concerns in confidence. InfraRed and
RES recognise that when their employees are engaged they will
benefit from higher staff retention, better productivity and
increased employee loyalty.
At InfraRed there are over 25 nationalities represented with an
average age of 38 across the InfraRed business comprising over 190
professionals. In order to support diverse recruitment of
candidates on merit and not on background, race or gender, InfraRed
staff may undergo "unconscious bias" training and new staff are
often recruited via a carefully considered process which is "name
blind".
The Board interacts regularly with staff of the Managers both at
senior and operational levels, in both formal and informal
settings. This promotes greater openness and trust between the key
individuals engaged in delivering against the Company's objectives
and ensures the Managers remain fully aligned with the Company's
corporate culture and approach to sustainability. The Board also
engages closely throughout the year with the Company's
administrator, brokers, and legal and public relations advisers to
gauge the broader positioning and direction of the business.
In addition to the Board Meetings being attended by the core
senior InfraRed and RES teams, other more junior members from
InfraRed and RES are encouraged to join. Not only does this aid
their development, but it also allows the Board to gain insight
into how senior management are supported and how prepared the
Managers are in relation to key person risk and long-term
succession planning.
The Investment Manager, InfraRed Capital Partners, has a strong
and clear set of Values - which it promotes and monitors both
group-wide and at the individual level (through assessments) -
focusing on the principles of Passion, Curiosity, Trust,
Partnership and Fulfilment.
InfraRed also adopts and implements the Principles for
Responsible Investment ("PRI") (an investor initiative in
partnership with UNEP Finance Initiative and UN Global Compact)
which are widely recognised and highly regarded around the world.
In the annual assessment by PRI, InfraRed has achieved excellent
ratings, standing well above industry standards for the last six
consecutive years. The PRI can be summarised as follows:
to showcase leadership in responsible investment;
to incorporate sustainability issues into investment analysis
and decision-making;
to be active owners and incorporate sustainability issues into
ownership policies and practices;
to seek appropriate disclosures on sustainability issues by the
entities in which the investments are made;
to promote acceptance and implementation of PRI within the
investment industry; and
to report on activities and progress towards implementing the
PRI.
Culture is very important for the Operations Manager, RES, from
both a business perspective and to RES people. The RES culture is
what enables its strategy and what motivates its people to perform.
RES's senior leadership are of the view that empowering employees
and a strong safety culture is necessary to make a positive impact
in the communities it works in.
RES' leadership maintains that as the organisation grows and
adapts, it remains true to its culture, heritage and vision to
create a future where everyone has access to affordable low carbon
energy. RES' core values are most simply reflected in their values
of Passion, Accountability, Collaboration and Excellence.
RES supervises a range of activities at a corporate level, to
support staff in their own volunteering and charitable fundraising
endeavours. At a portfolio level, activities are designed to
enhance the interaction with the local communities as well as to
make a difference to the amenities available in often remote
locations where TRIG's projects are sited.
Anti-Bribery and Corruption
Although TRIG has no employees, TRIG is committed to respecting
human rights in its broader relationships.
TRIG does not tolerate corruption, fraud, the receiving of
bribes or breaches in human rights. Both InfraRed and RES have
anti-corruption and bribery policies in place in order to maintain
high standards of business integrity, a commitment to truth and
fair dealing and a commitment to complying with all applicable laws
and regulations.
Both Managers have training for anti-bribery and corruption
which all employees are required to complete annually.
All counterparties undergo a process to mitigate against bribery
and corruption. When InfraRed completes acquisitions on behalf of
TRIG, there is vendor due diligence and all sales and purchase
agreements are required to have anti bribery and corruption
protection clauses.
Disclosure
On the basis of the Managers' recommendations, the Directors
have considered the existing sustainability and corporate culture
policies relative to good industry practice as applicable to an
infrastructure investment company and believe them to be current
and appropriate.
The Board remains committed to high standards of corporate
governance and keeps the Company's practices under review with
respect to current best practice. Further details of how the
Company complies with the various corporate governance standards
are set out in the section on Corporate Governance and Regulatory
Matters.
The Board wishes to be at the forefront of disclosure and
reporting of the Company's performance and strategic intentions.
The Board believes this is achieved by the communications as
follows:
annual report and accounts;
interim statement and accounts;
detailed presentations to accompany the results;
announcements of all material acquisitions; and
meetings with shareholders held by the Investment Manager and
the Operations Manager.
TRIG is a supporter of the Task Force on Climate-related
Financial Disclosures ("TCFD"). Disclosure aligned to TCFD guidance
in consistent with the Company's approach to promoting best
practice disclosure. Climate change is a live topic and expertise
on the subject continues to evolve. Section 2.11 Risk and Risk
Management covers TRIG's approach to governance and risk management
around climate change scenario analysis.
The Company's website (www.TRIG-Ltd.com) which includes the
Company's prospectuses, financial disclosures and other
announcements since launch provides further information on TRIG and
its investments.
Disclosure of key sensitivities and risks has been developed by
the Board working with the Managers. The level and type of
disclosure has been developed and refined in order to assist in a
full and fair analysis of the Company and its investments.
This Strategic Report is approved by the Board of Directors of
The Renewables Infrastructure Group Limited.
Helen Mahy
16 February 2021
Registered Office:
East Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey
GY1 3PP
03 Board of Directors
Stakeholders and Corporate Culture
Members of TRIG's Board of Directors, all of whom are
non-executive and independent of the Managers, are listed
below.
Helen Mahy CBE
Chairman
Appointed 14 June 2013, Helen is an experienced chairman and
non-executive Director. In addition to being Chairman of the
Company, Helen serves as a non-executive Director for SSE plc and
is an Equality and Human Rights Commissioner as well as co-chair of
the Employers Social Mobility Alliance. Previous Directorships
include SVG Capital plc, Stagecoach Group plc, Aga Rangemaster
Group plc, Primary Health Properties plc, Bonheur ASA and she was
also Chairman of MedicX Fund Ltd. Helen was Group Company Secretary
and General Counsel of National Grid plc and was a member of its
Executive Committee from September 2003 to January 2013 when she
retired from National Grid plc. Helen qualified as a barrister and
was an Associate of the Chartered Insurance Institute. In 2015 she
was awarded a CBE for services to business, particularly relating
to diversity in the workplace. Helen is a resident of the UK.
Shelagh Mason
Director and Senior Independent Director
Appointed 14 June 2013, Shelagh is an English property
solicitor. She was Senior Partner of Spicer and Partners Guernsey
LLP until November 2014 and retired at the end of October 2020 as a
consultant with Collas Crill LLP, specialising in English
commercial property. She is also non-executive Chairman of the
Channel Islands Property Fund Limited which is listed on the The
International Stock Exchange Authority Limited and Chairman of
Riverside Capital PCC, recently appointed to the Board of Skipton
International Limited. Shealgh is also on the Board of Starwood
European Real Estate Finance Limited and Ruffer Investment Company,
both London listed. Previously Shelagh was a member of the board of
Directors of Standard Life Investments Property Income Trust, a
property fund listed on the London Stock Exchange for 10 years
until December 2014. She retired from the board of MedicX Fund
Limited, a main market listed investment company investing in
primary healthcare facilities in 2017 after 10 years on the board.
She is a past Chairman of the Guernsey Branch of the Institute of
Directors and a member of the Chamber of Commerce, the Guernsey
International Legal Association and she also holds the IOD Company
Direction Certificate and Diploma with distinction. Shelagh is a
resident of Guernsey.
Jon Bridel
Director and Audit Committee Chair
Appointed 14 June 2013, Jon currently serves across various
listed and unlisted companies as a Director or non-executive
Chairman. These include Sequoia Economic Infrastructure Income Fund
Limited and SME Credit Realisation Fund Limited, as well as DP
Aircraft I Limited and Fair Oaks Income Limited which are listed on
the Specialist Fund Segment. Jon previously worked as Managing
Director of Royal Bank of Canada's investment businesses in the
Channel Islands and in senior management positions in the British
Isles and Australia in banking, specialising in corporate finance
and commercial credit and in private multi-national businesses as
Chief Financial Officer. Graduating from the University of Durham
with a degree of Master of Business Administration in 1988, Jon
also holds qualifications from the Institute of Chartered
Accountants in England and Wales where he is a Fellow, the
Australian Institute of Company Directors and is a Chartered
Marketer. Jon is a Member of the Chartered Institute of Marketing,
a Chartered Director and Fellow of the Institute of Directors and a
Chartered Fellow of the Chartered Institute for Securities and
Investment. Jon is a resident of Guernsey.
Klaus Hammer
Director and Management Engagement Committee Chair
Appointed 1 March 2014, Klaus is a graduate of the University of
Hamburg and gained an MBA at IMD Lausanne. He was previously Chief
Operating Officer of the global combined-cycle gas turbine power
plant business of EON, and also served on a variety of boards
including EON Värmekraft Sverige AB, Horizon Nuclear Power Ltd. and
the UK Association of Electricity Producers. Prior to E.On, which
he joined in 2005, he spent 20 years with Royal Dutch Shell in a
variety of roles in both Europe and Africa. Among his other recent
roles, he was a public member of Network Rail until mid-2014. Klaus
also advises investors in energy-related businesses. In 2018, he
supported the setting-up of a major defence contractor on an
interim basis as Executive Finance Director in Australia. Klaus is
a resident of Germany.
Tove Feld
Director
Appointed 1 March 2020. Tove is a Danish national and has more
than 25 years' experience in the renewables sector, with a focus on
offshore wind. Her previous roles include the Chief Technical
Officer at DONG Energy Wind Power (now Orsted) where she had a
prominent role in preparing the company for IPO, as well Head of
Engineering Solutions for Offshore Wind at Siemens Wind Power. Ms
Feld also currently serves on the Board of Representatives of the
Danish Technical University, and the Boards of FORCE Technology, a
leading technological service company, and CEKO Sensors ApS, an
industrial monitoring and optimisation sensor technology business.
Ms Feld has a Ph.D from Aalborg University (Denmark) and Executive
MBA from IMD (Switzerland). Tove is a resident of Denmark.
4.0 Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations. The Companies (Guernsey) Law, 2008, as
amended, requires the Directors to prepare financial statements for
each financial year. Under that law they have elected to prepare
the financial statements in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU and Article 4 of
the IAS Regulation and applicable law.
Under company law the Directors must not approve the accounts
unless they are satisfied that they give a true and fair view of
the state of affairs of the company and of the profit or loss of
the company for that period. In preparing these financial
statements, International Accounting Standard 1 requires that
Directors:
Properly select and apply accounting policies;
Present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
Provide additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
Make an assessment of the company's ability to continue as a
going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with the Companies (Guernsey) Law,
2008. They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Directors' Report and Corporate
Governance Statement. The Directors are responsible for the
maintenance and integrity of the corporate and financial
information included on the Company's website. Legislation in
Guernsey and the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Directors' responsibility statement
We confirm that to the best of our knowledge:
The financial statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company;
The Chairman's Statement, Strategic Report and Report of the
Directors include a fair review of the development and performance
of the business and the position of the Company and Group taken as
a whole together with a description of the principal risks and
uncertainties that it faces; and
The annual report and financial statements when taken as a whole
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position,
performance, business model and strategy.
Disclosure of information to the Auditor
The Directors who held office at the date of approval of this
Directors' report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company's
auditor is unaware and that each Director has taken all the steps
that he or she ought to have taken as a Director to make himself or
herself aware of any relevant audit information and to establish
that the Company's auditor is aware of that information.
Auditor
Deloitte LLP have expressed their willingness to continue in
office as auditor and a resolution proposing their re-appointment
will be submitted at the Annual General Meeting.
On behalf of the Board of Directors of The Renewables
Infrastructure Group Limited
Helen Mahy
16 February 2021
Registered Office:
East Wing, Trafalgar Court, Les Banques, St Peter Port,
Guernsey, Channel Islands, GY1 3PP
5.0 Report of the Directors
The Directors present their report and accounts of the Company
for the year to 31 December 2020.
Principal Activity
The Company is a closed-ended Guernsey incorporated investment
company, investing in and managing a portfolio of investments in
renewable energy infrastructure project companies. Its shares have
a premium listing on the Official List of the UK Listing Authority
and are traded on the main market for listed securities of the
London Stock Exchange.
Results and Distributions
The results for the year are summarised in the Operational and
Financial Review and Valuation of the Portfolio section of the
Strategic Report (Sections 2.7 and 2.8) and set out in detail in
the audited financial statements.
Distributions and Share Capital
The Company has declared four quarterly interim dividends for
the year ended 31 December 2020 for an aggregate annual dividend of
6.76p (2019: 6.64p) per share as follows:
1.69p per share was declared on 6 May 2020, to shareholders on
the register as at 14 May 2020, paid on 30 June 2020,
1.69p per share was declared on 3 August 2020, to shareholders
on the register as at 13 August 2020, paid on 30 September
2020,
1.69p per share paid on 5 November 2020, to shareholders on the
register as at 12 November 2020, paid on 31 December 2020, and
1.69p share was declared on 4 February 2021, to shareholders on
the register on 11 February 2021, to be paid on 31 March 2021.
The Company had one class of share capital, Ordinary Shares, in
issue as at 31 December 2020.
Shares in Issue
Ordinary Shares in issue have increased during the year from
1,636,563,717 to 1,903,402,338 as a result of further share issues,
issues of shares to the Managers in lieu of fees pursuant to the
Investment Management Agreement (in relation to InfraRed Capital
Partners Limited) and the Operations Management Agreement (in
relation to Renewable Energy Systems Limited) and take up of scrip
shares in lieu of dividends.
Date Description New Ordinary Number of
Shares Issued Shares in
Issue
31 December
2019 Opening Position - 1,636,563,717
----------------------------------- -------------- -------------
Issue of shares to the Managers
in lieu of fees relating H2
31 March 2020 2019 889,550 1,637,453,267
----------------------------------- -------------- -------------
21 May 2020 Share issue 100,000,000 1,737,453,267
----------------------------------- -------------- -------------
Issue of scrip dividend shares
in lieu of 2020 1st (Q1) interim
30 June 2020 dividend 977,776 1,738,431,043
----------------------------------- -------------- -------------
Issue of scrip dividend shares
30 September in lieu of 2020 2nd (Q2) interim
2020 dividend 2,601,332 1,741,032,375
----------------------------------- -------------- -------------
Issue of shares to the Managers
30 September in lieu of fees relating to
2020 H1 2020 893,480 1,741,925,855
----------------------------------- -------------- -------------
15 December
2020 Share issue 160,000,000 1,901,925,855
----------------------------------- -------------- -------------
Issue of scrip dividend shares
31 December in lieu of 2020 3rd (Q3) interim
2020 dividend 1,476,483 1,903,402,338
----------------------------------- -------------- -------------
31 December
2020 Closing Position - 1,903,402,338
----------------------------------- -------------- -------------
Share Issues in the Year
Over 2020, the Company issued 260m shares over two tap equity
issues (excluding the issuance of Managers' shares and scrip
issues). These issues raised gross proceeds of GBP320m at a premium
to NAV.
These issues took place in May and December. The May fundraise
resulted in the issue of 100m shares at 120.0p each. The December
fundraise resulted in the issue of 160m shares at 125.0p each.
The net proceeds of these raisings have been used to acquire
assets over the year for the TRIG portfolio and to pay down the
Company's revolving credit facility. At the 31 December 2020, the
Company's acquisition facility was GBP40m drawn.
Shares Issued to the Managers
The Managers are paid 20% of their annual management fee (up to
an adjusted portfolio value of GBP1bn) and advisory fees in shares.
In relation to this, 889,550 shares were issued in March 2020
(578,208 to the Investment Manager and 311,343 to the Operations
Manager) relating to fees for the second six months of 2019. A
further 893,480 shares were issued in September 2020 (580,762 to
the Investment Manager and 312,718 to the Operations Manager)
relating to fees for the first 6 months of 2020. Shares in lieu of
fees relating to the second six months of 2020 (expected to be
885,012 shares in total - comprised of 575,258 to the Investment
Manager and 309,754 to the Operations Manager) are to be issued in
March 2021. (See Note 18 to the financial statements for further
detail).
For the calculation of Net Asset Value ("NAV") per share as at
31 December 2020, the shares earned by the Managers but not yet
issued at that date have been included in the number of shares
meaning that the Net Assets are divided by 1,904,287,350 shares to
arrive at the NAV per share.
For the calculation of Earnings per Share ("EPS"), the shares
earned by the Managers but not yet issued have been included in the
calculation of the weighted average number of shares based upon
them being issued at the end of the quarter in which the management
fees were earned. The resulting weighted average shares in issue
used to calculate EPS is 1,711,999,406.
In addition, senior representatives and connected individuals of
the Managers hold approximately two million shares.
As a result of the share issues during the year and the expected
issuance to the Managers in March 2021, the number of shares in the
Company held by the Investment Manager is expected to be 2,359,503
and the number of shares held by the Operations Manager is expected
to be 1,240,080.
Scrip Shares
An annual ordinary resolution to authorise the Directors to
offer the shareholders the right to receive further Ordinary Shares
("Scrip Shares") instead of cash in respect of all or part of any
dividend that may be declared will be proposed at the forthcoming
Annual General Meeting in 2021.
The Board believes that it would be in the general interest of
shareholders, who may be able to treat distributions of Scrip
Shares as capital for tax purposes or who may otherwise wish to
roll over their dividend entitlement into further investment in the
Company, to have the option of electing to receive part or all of
their dividends in the form of Scrip Shares. Shareholders who elect
to take Scrip Shares instead of receiving cash dividends will
increase their holdings without incurring dealing costs or stamp
duty. The Company benefits from the retention of cash for further
investment which would otherwise be paid out as dividend.
The scrip dividend alternative was offered to shareholders in
relation to the interim dividends declared for the year ended 31
December 2020, other than the 31 March 2020 dividend relating to
the final quarter of 2019 which was cancelled on basis that the
market volatility and movements in the Company's share at the time
due to the impact on markets of the Covid-19 pandemic could have
resulted in the Reference Price being materially in excess of the
prevailing market price. This dividend was paid as cash. A scrip
alternative will again be offered to shareholders for the dividend
to be paid on 30 March 2021 relating to the final quarter of 2020
and a scrip dividend circular will be published separately in May
2021 with details of the scrip dividend alternative for 2021. The
Scrip Shares issued do not have any entitlement to the dividends
paid in the same month and declared in the month before they are
issued. The average take-up of scrip dividends over the year was
8.3%, and relates to the three quarters of the year where scrip
dividends were available.
Guernsey regulatory environment
As a Guernsey-registered closed-ended investment company, TRIG
is subject to certain ongoing obligations to the Guernsey Financial
Services Commission.
Directors
The Directors who held office during the year to 31 December
2020 were:
Helen Mahy CBE
Jon Bridel
Shelagh Mason
Klaus Hammer
Tove Feld (appointed 1 March 2020)
Biographical details of each of the Directors are shown in
Section 3.
Investment Manager
InfraRed Capital Partners Limited (the "Investment Manager" or
"InfraRed") acts as Investment Manager to the Group. A summary of
the contract between the Company, its subsidiaries and InfraRed in
respect of services provided is set out in Note 18 to the
accounts.
Operations Manager
Renewable Energy Systems Limited (the "Operations Manager" or
"RES") acts as Operations Manager to the Group. A summary of the
contract between the Company, its subsidiaries and RES in respect
of services provided is set out in Note 18 to the accounts.
Further details of the Managers are provided in Section 2.2 of
the Strategic Report.
Broker, Administrator and Company Secretary
The Company's joint brokers during the year to 31 December 2020
were Investec Bank PLC and Liberum Capital Limited.
The Company's Administrator during the year to 31 December 2020
is Aztec Financial Services (Guernsey) Limited.
Substantial Interests in Share Capital
As at 16 February 2021, the Company has received notification in
accordance with the Financial Conduct Authority's Disclosure and
Transparency Rule 5 of the following interests in 5% or more of the
Company's Ordinary Shares to which voting rights are attached:
Number of Ordinary Shares Held Percentage
Held
Newton Investment Management Ltd 153,727,491 8.08
------------------------------ ----------
Rathbone Investment Management Ltd 123,694,606 6.50
------------------------------ ----------
M&G Investment Management Ltd 113,684,892 5.97
------------------------------ ----------
Investec Wealth & Investment 99,352,684 5.22
------------------------------ ----------
Donations
The Company made no political donations during the year or the
preceding year.
Payment of Suppliers
It is the policy of the Company to settle all suppliers in
accordance with the terms and conditions of the relevant market in
which it operates. Although no specific code or standard is
followed, suppliers of goods and services are generally paid within
30 days of the date of any invoice. The Company has no trade
creditors.
Criminal Finances Act
The Board of The Renewable Infrastructure Company Limited has a
zero-tolerance commitment to preventing persons associated with it
from engaging in criminal facilitation of tax evasion. The Board
has satisfied itself in relation to its key service providers that
they have reasonable provisions in place to prevent the criminal
facilitation of tax evasion by their own associated persons and
will not work with service providers who do not demonstrate the
same zero tolerance commitment to preventing persons associated
with it from engaging in criminal facilitation of tax evasion.
Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Strategic Report. The financial position of the
Group, its cash flows, liquidity position and borrowing facilities
are described in Section 2.9, Analysis of Financial Results of the
Strategic Report. In addition, Notes 1 to 4 to the financial
statements include the Group's objectives, policies and processes
for managing its capital; its financial risk management objectives;
details of its financial instruments and hedging activities; and
its exposures to credit risk and liquidity risk.
The Group has the necessary financial resources to meet its
obligations. The Group benefits from a range of long-term contracts
with various major UK and European utilities and well-established
suppliers across a range of infrastructure projects. In addition,
it maintains a working capital component of GBP30m as part of its
revolving credit facility (recently increased from GBP340m to
GBP500m and limited to 30% of Portfolio Value) ([49]) . The Group's
project-level financing is non-recourse to the Company and is
limited to 50% of Gross Portfolio Value. As a consequence, the
Directors believe that the Group is well placed to manage its
business risks successfully.
Following the financial period the company exchanged contracts
to acquire an equity interest of 17.5% in Beatrice offshore wind
farm and also exchanged contracts to acquire the Grönhult onshore
wind farm which is in construction. The Company has sufficient
headroom in its revolving credit facility to finance these
transactions.
The directors do not believe that there is a significant risk to
the business as a result of the Covid-19 pandemic but will continue
to monitor any future developments.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for a
period of at least 12 months from the date of these financial
statements. Thus, they adopt the going concern basis of accounting
in preparing the annual financial statements.
This conclusion is based on a review of the Company's cash flow
projections including reasonably expected downside sensitivities
together with cash and committed borrowing facilities available to
it.
Viability Statement
The Directors have assessed the viability of the Group over a
five-year period to December 2025.
The Directors have determined that the five-year period to
December 2025 is an appropriate period over which to provide this
viability statement as this period accords with the Group's
business planning exercises.
In making this statement the Directors have considered the
resilience of the Group, which includes the sustainability of its
business model and strategy, taking account of its current
position, the principal risks facing the business (being the level
of electricity production, the level of future energy prices and
continued government support for renewable subsidy payments), in
severe but plausible downside scenarios typically focussed on
negative changes to the level of electricity production and future
energy prices, and the effectiveness of any mitigating actions.
Scenarios can be built up from the key sensitivities of the
portfolio valuation, which are presented in Section 2.8 (Valuation
of the Portfolio).
As explained in the Chairman's Statement and in Section 2.11
(Risks and Risk Management), the Directors do not consider the
risks to the Company from Brexit, Covid-19 or Climate Change to
significantly affect the principal risks set out in Section 2.11
(Risks and Risk Management).
As part of being a self-managed Alternative Investment Fund, the
Directors, together with the Managers, rigorously assess the risks
facing the Group and consider sensitivity analysis against the
principal risks identified.
The Company's risk management processes (described in Section
2.11 (Risks and Risk Management)) consider the key risks during
this five-year period and beyond. These include risks relating to
sustainability, including those arising from environmental, social
and governance ("ESG") matters. An input to the risk management
process is a key element of InfraRed's investment process, in which
sustainability and ESG considerations are fully integrated both
before projects are acquired and whilst under TRIG's ownership, and
RES's approach to asset management (both described in Section 2.5
(Sustainability)).
Climate change related risks are set out in line with the
recommendations of the Task Force for Climate-related Financial
Disclosures ("TCFD") in Section 2.11 (Risks and Risk Management)
and the consideration of these are integrated into the investment
process, as described in Section 2.5 (Sustainability), and can be
mapped over to the portfolio valuation sensitivity analysis,
presented in Section 2.8 (Valuation of the Portfolio).
A key climate change transition risk is the impact of greater
penetration of intermittent renewable electricity generators in the
energy system lowering the forecast power price and increasing its
day-to-day volatility. Exposure to this risk is reduced
through:
Factoring renewables build out assumptions into the forecast
wholesale and captured power price assumptions; and
Increasing the proportion of revenues with fixed power prices,
achieved through acquisition of investments with subsidised
revenues, fixing under offtake agreements and the use of hedging
instruments.
TRIG is the owner of a portfolio of project companies whose
underlying assets are predominately fully constructed and operating
renewable electricity generating facilities. As a result, TRIG
benefits from predictable long term cash flows and a set of risks
that can be identified and assessed. The projects are each
supported by detailed financial models. The Directors believe that
the diversification within the portfolio of projects helps to
withstand and mitigate for the risks it is most likely to meet.
The Investment Manager prepares and the Directors review summary
five-year cash flow projections each year as part of business
planning and dividend approval processes. The projections consider
cash balances, key covenants and limits, dividend cover, investment
policy compliance and other key financial indicators over the
period. Sensitivity analysis considers the potential impact of the
Group's principal risks actually occurring (individually, and
together). These projections are based on the Managers'
expectations of future asset performance, income and costs, and are
consistent with the methodology applied to provide the valuation of
the investments. The Directors review significant changes to the
Company's cash projections each quarter with the Managers as part
of the quarterly Board meetings. The viability assessment assumes
continued government support for existing subsidy arrangements for
the projects within the portfolio that are spread across five
jurisdictions (UK, Ireland, Sweden, Germany and France). Where
governments change subsidy arrangements applying to renewables
projects these changes are expected to apply only to projects not
yet operating.
The Directors believe that whilst the risk to the value of the
Company's investments, its ability to operate its projects and
generate revenue presented by the ongoing Covid-19 pandemic remains
significant, there has been minor disruption to the business to
date and the risk mitigating activities have served to reduce the
impact and highlight the Company's resilience. Throughout, the
health, safety and welfare of the workforce of our Managers and
supply chain has remained paramount. Covid-aware practices were
quickly implemented as the pandemic took hold. Operationally, this
meant we maintained, and expect to continue, our strong record of a
low accident frequency rate and good asset availability. Further
detail on the risk factors arising from the Covid-19 pandemic and
the key mitigants is set out in Section 2.11 (Risks and Risk
Management).
The Directors continue to work with the Managers to ensure that
the portfolio of investments is able to operate as effectively as
possible. The Managers have performed downside risk scenario
planning encompassing a range of potential outcomes and these
demonstrate that whilst profitability may be adversely affected,
the Company and its investments are expected to remain viable.
Based on this review, the Directors confirm that they have a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period
to December 2025.
Internal Controls Review
Taking into account the information on emerging and principal
risks and uncertainties provided in Section 2.11 of the Strategic
Report and the ongoing work of the Audit Committee in monitoring
the risk management and internal control systems on behalf of the
Board (see Section 8, the Audit Committee Report), the
Directors:
are satisfied that they have carried out a robust assessment of
the Company's emerging and principal risks facing the company,
including those that would threaten its business model, future
performance, solvency or liquidity;
are satisfied the Company has adequate safeguards and procedures
in place to continue during the Covid-19 pandemic and can continue
to function effectively; and
have reviewed the effectiveness of the risk management and
internal control systems and no significant failings were
identified.
The internal controls review covers material controls including
financial, operational and compliance controls.
To enable the Directors to provide this statement in relation to
risks and controls the Directors have worked with the Managers
to:
review the Company's risk matrix each quarter;
consider each Manager's compliance with their own internal
controls each quarter:
to receive presentations from each Manager on the effectiveness
of these controls and their internal controls environment;
consider the Company's risk appetite, agree this with the
Managers and document this;
assess the impact Covid-19 has had on the Company; and
consider the risk culture of the Company and within the Managers
and confirm these are appropriate and expected to support the
sustainability of the company and consistent with the risk
appetite
Share repurchases
No shares have been bought back in the period. The latest
authority for the Company to make market purchases of Ordinary
Shares was granted to the Directors on 6 May 2020 and expires on
the date of the next Annual General Meeting. The Directors are
proposing that their authority to buy back shares be renewed at the
forthcoming Annual General Meeting.
Treasury Shares
Section 315 of the Companies (Guernsey) Law, 2008 allows
companies to hold shares acquired by market purchase as treasury
shares, rather than having to cancel them. Up to 14.99% of the
number of shares in issue at the date of the last AGM (6 May 2020)
may be held in treasury and may be subsequently cancelled or sold
for cash in the market. This gives the Company the ability to
reissue shares quickly and cost efficiently, thereby improving
liquidity and providing the Company with additional flexibility in
the management of its capital base.
There are currently no shares held in treasury. The Board would
only authorise the sale of shares from treasury at prices at or
above the prevailing net asset value per share (plus costs of the
relevant sale). If such a measure were to be implemented, this
would result in a positive overall effect on the Company's net
asset value. In the interests of all shareholders, the Board will
keep the matter of treasury shares under review.
On behalf of the Board of Directors of The Renewables
Infrastructure Group Limited
Helen Mahy
16 February 2021
Registered Office:
East Wing, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, Channel Islands, GY1 3PP
6.0 Corporate Governance Statement
Introduction
The Board recognises the importance of a strong corporate
governance culture that meets the listing requirements. The Board
has put in place a framework for corporate governance which it
believes is appropriate for an investment company in line with the
best practices in relation to matters affecting shareholders,
communities, regulators and other stakeholders of the Company. With
a range of relevant skills and experience, all Directors contribute
to the Board discussions and debates on corporate governance. In
particular, the Board believes in providing as much transparency
for investors as is reasonably possible to ensure investors can
clearly understand the prospects of the business and enhance
liquidity of its shares while also preserving an appropriate level
of commercial confidentiality.
AIFM Directive
The Alternative Investment Fund Managers Directive seeks to
regulate alternative investment fund managers (in this paragraph,
"AIFM") and imposes obligations on managers who manage alternative
investment funds (in this paragraph, "AIF") in the EU or who market
shares in such funds to EU investors. The Company is categorised as
a self-managed Non-EEA AIF for the purposes of the AIFM Directive.
In order to maintain compliance with the AIFM Directive, the
Company needs to comply with various organisational, operational
and transparency obligations.
The Board of TRIG has considered the Principles and Provisions
of the AIC Code of Corporate Governance (AIC Code). The AIC Code
addresses the Principles and Provisions set out in the UK Corporate
Governance Code (the UK Code), as well as setting out additional
Provisions on issues that are of specific relevance to investment
companies. The Board considers that reporting against the
Principles and Provisions of the AIC Code, which has been endorsed
by the Financial Reporting Council and the Guernsey Financial
Services Commission, provides more relevant information to
shareholders. The company has complied with the Provisions and
applied the Principles of the AIC Code. The AIC Code is available
on the AIC website (www.theaic.co.uk). It includes an explanation
of how the AIC Code adapts the Principles and Provisions set out in
the UK Code to make them relevant for investment companies.
Guernsey Regulatory Environment
The Guernsey Financial Services Commission (the "Commission")
issued a Finance Sector Code of Corporate Governance. The Code
comprises Principles and Guidance, and provides a formal expression
of good corporate practice against which shareholders, boards and
the Commission can better assess the governance exercised over
companies in Guernsey's finance sector.
The Commission recognises that the different nature, scale and
complexity of specific businesses will lead to differing approaches
to meeting the Code. Companies which report against the UK
Corporate Governance Code or the AIC Code are also deemed to meet
this code. The Directors have determined that the Company will
continue as a Guernsey-registered closed-ended investment
company.
Non-Mainstream Pooled Investments
On 1 January 2014, certain changes to the FCA rules relating to
restrictions on the retail distribution of unregulated collective
investment schemes and close substitutes came into effect.
As announced by the Company on 7 January 2014, following the
receipt of legal advice the Board confirms that it conducts the
Company's affairs, and intends to continue to conduct the Company's
affairs, such that the Company would qualify for approval as an
investment trust if it were resident in the United Kingdom. It is
the Board's intention that the Company will continue to conduct its
affairs in such a manner and that Independent Financial Advisers
should therefore be able to recommend its Ordinary Shares to
ordinary retail investors in accordance with the FCA's rules
relating to non-mainstream investment products.
The Board
The Board consists of five non-executive Directors. In
accordance with Provision 10 of the AIC Code all of the
non-executives are independent of the Investment Manager. The
Chairman, Helen Mahy, met the independence criteria of the AIC Code
Provision 11 upon appointment and has continued to meet this
condition throughout her term of service. Although not a
requirement of the AIC Code, in accordance with guidance in
Provision 11, the Board has a Senior Independent Director, Shelagh
Mason, who was appointed as Senior Independent Director in 2013.
Being non-executive Directors, none of the Directors has a service
contract with the Company.
The Articles of Incorporation provide that each of the Directors
shall retire at each annual general meeting in accordance with
Provision 23 of the AIC Code. All five Directors intend to retire
and offer themselves for re-election at the forthcoming Annual
General Meeting on 5 May 2021.
The Board believes that the balance of skills, gender,
experience ethnicity, and knowledge of the current Board provides
for a sound base from which the interests of investors will be
served to a high standard. Following the growth of the Company in
recent years and as those Directors nearing their ninth anniversary
of appointment retire, the Board has an active succession plan and
expect to appoint new Directors over the next 2 years. The number
of Directors may increase to 7 for some periods in order to aid
succession planning and to ensure an orderly transition. In light
of this, the Board will in 2021 initiate the recruitment of further
non-executive Directors. The Board has chosen to adopt a definitive
policy with quantitative targets for Board diversity. The Company
aspires to equal representation of men and women on the Board and
from 1 March 2014 this was achieved, with the Board now 60%
female.
The Board appoints all directors on merit. When the Nominations
Committee considers Board succession planning and recommends
appointments to the Board, it takes into account a variety of
factors. Knowledge, experience, skills, personal qualities,
residency and governance credentials play an important part.
Consideration is also given to the gender, ethnicity, colour,
national origin, sexual orientation, age, religion and disability
of individuals. The Nominations Committee recognises that a diverse
Board enhances its performance. The Nominations Committee is also
cognisant of the role it can play in promoting social mobility. In
making recommendations to the Board the Nominations Committee will
also seek to follow the recommendations of the Hampton Alexander
and Parker Reviews.
The Board recommends the re-election of each Director and
supporting biographies are disclosed in Section 3 of this annual
report.
The Board is scheduled to meet at least four times a year and
between these formal meetings there is regular contact with the
Investment Manager and Operations Manager, the Secretary and the
Company's Joint Brokers. The Directors are kept fully informed of
investment and financial controls, and other matters that are
relevant to the business of the Company that should be brought to
the attention of the Directors. The Directors also have access,
where necessary in the furtherance of their duties, to independent
professional advice at the expense of the Company.
The attendance record of Directors for the period to 31 December
2020 is set out below:
Quarterly Management
Board Engagement Remuneration Nomination Market Disclosure
meetings Audit Committee Committee Committee Committee Committee
Number of meetings 4 4 3 4 4 4
-------------------- --------- --------------- ----------- ------------ ---------- -----------------
Meetings Attended:
H Mahy 4 N/A* 3 4 4 2
J Bridel 4 4 3 4 4 4
S Mason 4 4 3 4 4 4
K Hammer 4 4 3 4 4 4
T Feld* 3 3 3 3 3 3
-------------------- --------- --------------- ----------- ------------ ---------- -----------------
* Helen Mahy is not a member of the Audit Committee and attends
at the invitation of the Committee and Tove Feld only joined in
March 2020 so missed the first Board meeting in 2020.
During the period, a further 19 ad hoc Board/Committee meetings
were held in Guernsey to deal with matters substantially of an
administrative nature and these were attended by those Directors
available.
The Board considers agenda items laid out in the notice and
agenda of meeting which are circulated to the Board in advance of
the meeting as part of the Board papers. Directors may request any
agenda items to be added that they consider appropriate for Board
discussion. Each Director is required to inform the Board of any
potential or actual conflicts of interest prior to Board
discussion.
The Board constantly considers the Company's strategy with
regard to market conditions and feedback from shareholders received
directly or from the Managers. The investment strategy is reviewed
regularly with the Investment Manager. Board meetings include a
review of investment performance and associated matters such as
health and safety, marketing/investor relations, risk management,
gearing, general administration and compliance, peer group
information and industry issues.
The Board and the governance arrangements continued to operate
effectively during 2020 despite restrictions preventing face to
face meetings for much of the year. The Board and Managers and
other service providers were able to utilise digital tools to
conduct virtual board meetings and other ad-hoc meetings.
Performance Evaluation
The Board evaluates its performance and considers the tenure and
independence of each Director on an annual basis. The annual
evaluation for the period ended 31 December 2020 has been completed
by the Chairman and took the form of a questionnaire completed by
all of the Directors and additionally by the Managers and the
Company Secretary, including one to one interviews with each
Director holding office as at 31 December 2020. The questionnaire
covered Board effectiveness including areas such as inclusion and
diversity in accordance with the recommendations of the Parker
Review ([50]) . For the evaluation of the Chairman, the Senior
Independent Director discussed the results of a questionnaire with
the Chairman following consultation with the other Directors. The
exercise confirmed that the Board runs well and effectively with an
appropriate level of balance and challenge.
The Board continues to monitor training for Directors. The
Directors consider and report regularly their training needs and
their continuing professional development and training carried out.
For example, during the year, the Directors attended courses on
relevant subjects including cyber security, tax, corporate culture
and the new corporate governance code. The Board has asked the
Managers, Company Secretary and advisers to provide technical
training recognising the ongoing recruitment of new Directors.
Examples of such technical training requested are with respect to
Market Abuse Regulations and GDPR.
Due to the Covid-19 pandemic, no site visits were possible
however the Directors believe that visiting TRIG's assets enable
them to gain a deeper understanding of the Company's operations and
the challenges faced on a day-to-day basis by the projects' asset
managers and will resume site visits when appropriate in line with
government guidance. A key element of the Board's role is to
provide investors with reassurance as to the robustness of their
oversight of the business. To this end the TRIG Chairman met a
number of institutional investors in the Company and answered
questions on the Company's governance. The Chairman will continue
to proactively offer meetings with shareholders facilitated by the
Managers and Corporate Brokers. The Directors would like the
Company to have the broadest possible shareholders base and for the
Company's shares to be held as widely as possible. The Directors
have asked the Managers to continue to work towards this
objective.
The Board asks the leadership teams at both Managers to
regularly provide business updates. In particular, the Board have
requested the Managers to provide further detailed sector insight
into topics pertinent to the running of the Company, for example on
technological developments specific to offshore windfarms.
The independence of each Director has been considered and each
has been confirmed as being independent of the Company and its
Managers. The Board believes that the composition of the Board and
its Committees reflect a suitable mix of skills and experience, and
that the Board, as a whole, and its Committees functioned
effectively during 2020 and since the launch of the Company in
2013. The Board has employed the use of a skills matrix to identify
if there are missing competences and confirmed that the existing
Directors held the appropriate range of skills. The skills matrix
tool also informs the selection process during the appointment of
new directors.
Going forward, the Board intends to retain certain aspects of
the practises adopted during the Covid-19 pandemic. For example,
where previously phone calls were commonly utilised for ad-hoc
meetings it has been decided that virtual meetings, where possible,
should be arranged as they facilitate better interaction. Also with
the induction of a new Director having to take place remotely, the
Board and Managers are refining the on-boarding process,
incorporating the learnings from this year.
The Board is diverse in its composition and thought processes.
The Directors have a breadth of experience relevant to the Company.
The Directors believe that any changes to the Board's composition
can be managed without undue disruption. The members of the Board
strive to challenge each other constructively to make sure all
issues are examined from different angles and the Board holds the
Managers properly to account on their progress on sustainability,
responsible investment and diversity.
Delegation of Responsibilities
The Board has delegated the following areas of
responsibility:
The day-to-day administration of the Company has been delegated
to Aztec Financial Services (Guernsey) Limited in its capacity as
Company Secretary and Administrator.
The Investment Manager has full discretion (within agreed
parameters) to make investments in accordance with the Company's
Investment Policy and has responsibility for financial
administration and investor relations, in addition to advising the
Board in relation to further capital raisings and the payment of
dividends amongst other matters, subject to the overall supervision
and oversight of the Board. Among the specific tasks of the
Investment Manager are the overall financial management of the
Company and existing portfolio as a whole, including the deployment
of capital, management of the Group's debt facilities, hedging
arrangements, the sourcing of new investments, preparing the
semi-annual valuations, the statutory accounts, the management
accounts, business plans, presenting results and information to
shareholders, coordinating all corporate service providers to the
Group and giving the Board general advice.
The Operations Manager is responsible for monitoring, evaluating
and optimising technical and financial performance across the
portfolio. The services provided by the Operations Manager include
maintaining an overview of project operations and reporting on key
performance measures, recommending and implementing strategy on
management of the portfolio including energy sales agreements,
insurance, maintenance and other areas requiring portfolio-level
decisions, maintaining and monitoring health and safety and
operating risk management policies. The Operations Manager also
works jointly with the Investment Manager on sourcing and
transacting new business, providing assistance in due diligence of
potential new acquisitions, refinancing of existing assets and
investor relations. The Operations Manager does not participate in
any investment decisions taken by or on behalf of the Company or
undertake any other regulated activities for the purposes of the
UK's Financial Services and Markets Act 2000.
Members of the Investment Manager's and/or the Operations
Manager's teams are also appointed as Directors of the Group's
project companies and/or intermediate holding companies and as part
of their role in managing the portfolio, they attend Board meetings
of these companies and make appropriate decisions. Material
decisions are referred back to the TRIG's investment committee
and/or advisory committee for consideration and determination, and
the TRIG Board is consulted on key matters relevant to TRIG's
strategy, policies or overall performance, both on an ad hoc basis
where required and during formal reporting sessions, including all
matters outside the Managers' delegated authority.
Committees of the Board
The committees of the Board are the Audit Committee, the
Remuneration Committee, the Nomination Committee, the Management
Engagement Committee, and the Market Disclosure Committee. Terms of
reference for each Committee have been approved by the Board.
The Chairman and members of each committee as at 31 December
2020 are as follows:
Management Market
Audit Remuneration Nomination Engagement Disclosure
Committee Committee Committee Committee Committee
Chairman J Bridel S Mason H Mahy K Hammer H Mahy
Members S Mason H Mahy J Bridel J Bridel J Bridel
K Hammer J Bridel S Mason S Mason S Mason
T Feld K Hammer K Hammer H Mahy K Hammer
T Feld T Feld T Feld T Feld
--------- ---------- ------------ ---------- ----------- -----------
Nomination Committee
The main terms of reference of the Committee are:
regularly review the structure, size and composition required of
the Board and make recommendations to the Board with regard to any
changes (including skills, knowledge and experience in accordance
with Principle K of the AIC Code);
give full consideration to succession planning for Directors
taking into account the challenges and opportunities facing the
Company; and
be responsible for identifying and nominating for the approval
of the Board, candidates to fill Board vacancies as and when they
arise.
ensure plans are in place for orderly succession to the Board
and oversee the development of a diverse pipeline for
succession.
The Nomination Committee met four times during 2020. The Board
is currently composed of 40% male and 60% female Directors. The
Board is commencing a process to appoint further non-executive
Directors in order to ensure an orderly succession process.
Management Engagement Committee
The terms of reference of this committee are to review the
relationships between the Company and its main service providers,
including their performance, compliance with their contracts, and
levels of fees paid. Recommendations from the Committee's review
are given to the Board for consideration and action.
The Management Engagement Committee met four times in 2020 in
accordance with its plan to review the performance of the key
service providers to the Group and the Company. No material
weaknesses were identified, some recommendations were conveyed to
certain providers, and the recommendation to the Board was that the
current arrangements are appropriate and provide good quality
services and advice to the Company and the Group. The Committee
convenes a planning meeting in August each year followed by a
meeting in November of each year to review the Investment Manager
and Operations Manager, and a meeting in February of each year to
review the other service providers. The Managers were duly
considered at the meeting of the Management Engagement Committee in
November 2020 and no material issues were identified in connection
with their respective appointments.
Details of the activities of the Remuneration Committee and the
Audit Committee are set out in Section 7 and Section 8
respectively. All terms of reference for committees are available
from the Company's website or the Company Secretary upon
request.
Market Disclosure Committee
The Committee has responsibility for overseeing the disclosure
of information by the Company to meet its obligations under the
Market Abuse Regulation and the Financial Conduct Authority's
Listing Rules and Disclosure Guidance and Transparency Rules.
The main terms of reference for the Committee are:
To consider and decide whether information meets the definition
of inside information and whether the Company should announce
immediately or whether it is permissible to delay the
announcement.
When disclosure of inside information is delayed, to maintain
all required records, monitor the conditions permitting delay and
to provide any required notifications to the Financial Conduct
Authority
The committee should also consider the requirement for an
announcement in the case of leaks of inside information.
To ensure that effective arrangements are in place to prevent
access to inside information.
The Market Disclosure Committee met four times during 2020.
Relations with Shareholders - AIC Code Principle D
The Company welcomes the views of shareholders and places great
importance on communication with its shareholders. The Investment
Manager produces a regular factsheet which is available on the
Company's website. Senior members of the Investment Manager and
Operations Manager make themselves available, as practicable, to
meet with principal shareholders and key sector analysts. Feedback
from these meetings is provided to the Board on a regular basis.
The Board is also kept fully informed of all relevant market
commentary on the Company by the Company's Financial PR agency, as
well as receiving relevant updates from the Managers and the
Company's brokers. During the period, the Chairman of the Board met
several separate institutional shareholders of the Company,
providing the chance for Shareholders to have a dialogue directly
with the Board.
The Company reports formally to shareholders twice a year and
will hold an Annual General Meeting in Guernsey on 5 May 2021, at
which members of the Board will be available to answer shareholder
questions. In May 2020, Covid-19 restrictions resulted in the
Annual General Meeting being conducted virtually, to which
shareholders were invited to join. If restrictions are still in
force in May 2021, we will be offering the same access to
shareholders again via another virtual Annual General Meeting. In
addition, shareholders receive written communications from the
Company either with documents enclosed or to notify them of new
information available to view on the Company's website.
Results of Extraordinary and Annual General Meetings are
announced by the Company promptly after the relevant meeting.
Additionally, other notices and information are provided to
shareholders on an ongoing basis through the Company's website in
order to assist in keeping shareholders informed. The Secretary and
Registrar monitor the voting of the shareholders and proxy voting
is taken into consideration when votes are cast at the Annual
General Meeting.
Shareholders may contact the Board via the Company Secretary,
whose contact details are found in Section 11, Directors and
Advisers of this report.
7.0 Directors' Remuneration Report
Directors' Remuneration Report
The Remuneration Committee, chaired by Shelagh Mason and
comprising all the Directors, operates within clearly defined terms
of reference.
The terms of reference of the Committee are to determine and
agree the Board policy for the remuneration of the Directors of the
Company, including the approval of any ad-hoc payments in respect
of additional corporate work required (e.g. for the work involved
with the issue of prospectuses and equity fund raises).
Statement of the Chairman of the Remuneration Committee
As all Directors of the Company are non-executive, they receive
an annual fee appropriate for their responsibilities and time
commitment but there are no other incentive programmes or
performance-related emoluments.
During the year the Committee commissioned Trust Associates to
conduct a formal review of Directors' remuneration. Trust
Associates are independent of the Company and its Directors. In
performing their work, Trust Associates considered:
The increase in the net assets of TRIG (approximately double, by
value, since the previous formal review in 2017), the number of
assets in the portfolio, the size of individual assets, and
co-investing and partnering activities;
The time commitment required to appropriately perform each
Director's role and their responsibilities in respect of TRIG;
Additional fees where a Director's duties extend beyond those
normally expected as part of the Director's appointment (e.g.
Chairmanship of the Board or one of its Committees); and
Market remuneration levels to attract and retain high-calibre
directors.
The recommendations of Trust Associates were evaluated by the
Committee, which proposes and the Board has, subject to
Shareholders' approval, agreed to implement increases set out in
the table below, which, other than in respect of the Chairman of
the Board, are consistent with the guidance provided by Trust
Associates. The Remuneration Committee received a recommendation
from the Chairman of the Board and proposes to shareholders that
the increase in the Chairman of the Board's remuneration be less
than that proposed by Trust Associates. The Chairman of the Board's
recommendation balances the increase in time commitment to perform
the role and the appropriate level to attract a high-calibre
successor, with the on-going challenging economic conditions
resulting from the Covid-19 pandemic notwithstanding that the
operations of the Company are continuing with no material adverse
effect.
Remuneration Policy
All Directors of the Company are non-executive and as such there
are:
no service contracts with the Company;
no long-term incentive schemes;
no options or similar performance incentives; and
no payments for loss of office unless approved by shareholder
resolution.
The Directors' remuneration shall:
reflect the responsibility, experience, time commitment and
position on the Board;
allow the Chairman of the Board and the Chairmen of each of the
Board's committees to be remunerated in excess of the remaining
Board members to reflect their increased roles of responsibility
and accountability;
be paid quarterly in arrears;
include remuneration for additional, specific corporate work
which shall be carefully considered and only become due and payable
on completion of that work; and
be reviewed by an independent professional consultant with
experience of investment companies and their fee structures, at
least every three years.
The maximum annual limit of aggregate fees payable to the
Directors as set in the Articles of Association is GBP450,000.
Remuneration Committee
The Remuneration Committee met four times during 2020 to
consider the remuneration of the Directors. Its membership
comprised of all Directors of the Company, which was deemed
appropriate as they are each independent and have the requisite
knowledge of the Company and experience to appropriately determine
remuneration.
The Committee reviewed the advice from its independent
remuneration consultant, Trust Associates, on appropriate fee
increases to apply and the Committee's recommendation is set out
below. This includes an increase in the annual supplement for the
additional responsibility borne by the Senior Independent Director
(Shelagh Mason) and the Chairman of the Management Engagement
Committee (Klaus Hammer) to GBP3,500 (2019: GBP3,000) for each
director.
The table below sets out the Directors' remuneration approved
and actually paid for the year to 31 December 2020 as well as that
proposed for the year ending 31 December 2021.
Supplement
for additional
Base remuneration responsibilities Remuneration Total
proposed proposed rate proposed Remuneration remuneration
Director Role for 2021 for 2021 for 2021 rate in 2020 paid in 2020
Helen Chairman GBP81,000 - GBP81,000 GBP75,000 GBP75,000
Mahy
Jon Bridel Audit Committee GBP65,000 - GBP65,000 GBP60,000 GBP60,000
Chairman
Klaus Chairman GBP53,000 GBP3,500 GBP56,500 GBP53,000 GBP53,000
Hammer of the
Management
Engagement
Committee
Shelagh Senior GBP53,000 GBP3,500 GBP56,500 GBP53,000 GBP53,000
Mason Independent
Director
Tove Feld Director GBP53,000 - GBP53,000 GBP50,000 GBP41,667
([51])
Total GBP305,000 GBP7,000 GBP312,000 GBP291,000 GBP282,667
----------- ----------------- ----------------- ----------------- -------------- ------------- -----------------
No additional fees were payable to the Directors in 2020. Where
the Company requires Directors to work on specific corporate
actions, such as the raising of further equity, an additional fee
will be appropriately determined.
Directors are entitled to claim reasonable expenses which they
incur attending meetings or otherwise in performance of their
duties relating to the Company. The total amount of Directors'
expenses paid for 2020 was GBP2,906.
The Board also considered the availability of time of each
Director, taking into account their other commitments, and
concluded that adequate time was in each case available for the
appropriate discharge of the Company's affairs.
The Board will seek approval at the AGM in May 2021 for the
Remuneration Policy and the annual Directors' fees for routine
business for 2021, as set out above, with a view to implementing
the proposed increases back dated to 1 January 2021.
Directors' Interests
The Directors of the Company at 31 December 2020, and their
interests in the Ordinary Shares of the Company, are shown in the
table below.
31 December 2020 31 December 2019
Ordinary Shares Ordinary Shares
Helen Mahy 116,472 113,320
Jon Bridel 27,466 26,423
Klaus Hammer 27,620 26,571
Shelagh Mason 118,697 115,975
Tove Feld 20,255 n/a
--------------- ---------------- ----------------
Some of the Directors' shares may be held jointly with their
spouse. All holdings of the Directors and their families are
beneficial. No changes to these holdings had been notified up to
the date of this report.
Other Disclosures
At the last AGM, held on 6 May 2020, the following resolution
including Directors Remuneration was approved:
Ordinary Resolution 9 - To approve the Directors' remuneration
report, including the proposed annual remuneration for routine
business for each Director, as set out in the Report and Financial
Statements, for the year ending 31 December 2020:
Shares voted Percentage
In Favour 995,518,478 98.13
Against 18,979,897 1.87
Withheld 13,284,562 N/A
----------- ------------ ----------
Performance
In setting the Directors' remuneration, consideration is given
to the size and performance of the Company. In 2020, the Total
Shareholder Return (on a share price basis) for the Company was
(2.9)% (2019: 29.3%) versus (9.8)% for the FTSE-All Share Index
(2019: 19.2%). Over the period from the IPO in July 2013 to 31
December 2020 the annualised Total Shareholder Return for the
Company was 9.3% and for the FTSE-All Share it was 4.5%.
8.0 Audit Committee Report
The Audit Committee has been in operation since the inception of
the Company. Chaired by Jon Bridel, it operates within clearly
defined terms of reference and comprises all of the Directors other
than the Chairman (who is not a member in accordance with provision
24 of the UK Corporate Governance Code). It is also the formal
forum through which the auditor reports to the Board of Directors
and they met four times in 2020 (it meets at least three times
annually).
The main duties of the Audit Committee are:
giving full consideration of, and recommending to the Board for
approval, the contents of the half year and annual financial
statements and reviewing the external auditor's report thereon
including consideration of whether the financial statements are
overall fair, balanced and understandable;
agreeing with the auditor the external audit plan including
discussing with the external auditor the key risk areas within the
financial statements;
considering and understanding the key risks of misstatement of
the financial statements and formulating an appropriate plan to
review these and agreeing with the Managers their processes to
manage these risk areas;
reviewing the Viability and Going Concern Statements and
reviewing the work prepared by the Investment Manager supporting
these statements
reviewing the draft valuation of the Company's investments
prepared by the Investment Manager and making a recommendation to
the Board on the valuation;
monitoring ESG performance in line with the Company's ESG goals
and ensuring appropriate disclosures with respect to these targets
are reported and reviewed;
reviewing the scope, results, cost effectiveness, independence
and objectivity of the external auditor as well as reviewing the
effectiveness of the external audit process and making any
recommendations to the Board for improvement of the audit
process;
reviewing and recommending to the Board for approval the audit,
audit related and non-audit fees payable to the external auditor or
their affiliated firms overseas and the terms of their
engagement;
reviewing the appropriateness of the Company's accounting
policies;
ensuring the standards and adequacy of the internal control
systems;
to consider any reports or information received in respect of
whistleblowing; and
reporting to the Board on how it has discharged its duties.
None of the members of the Audit Committee have any involvement
in the preparation of the financial statements of the Company, as
this has been contracted to the Investment Manager.
The Audit Committee meets the external auditor before and after
their audit and has discussed with the auditor the scope of their
annual audit work and also their audit findings. The auditor
attends the Audit Committee meetings at which the annual and
interim accounts are considered, and at which they have the
opportunity to meet with the Committee without representatives of
the Managers being present. The Audit Committee has direct access
to the auditor and to key senior staff of the Investment Manager,
and it reports its findings and recommendations to the Board which
retains the ultimate responsibility for the financial statements of
the Company.
Membership
The Chair of the Audit Committee, Jon Bridel, is a fellow of the
Institute of Chartered Accountants in England and Wales and in
addition serves as chairman of the audit committee for other listed
investment companies. Previously Jon worked in senior positions in
investment, corporate finance and commercial banking and was CFO of
two private multinational businesses. The Board is satisfied that
Jon has recent and relevant financial experience as required under
the UK Corporate Governance Code. The other members of the Audit
Committee are Shelagh Mason, Klaus Hammer and Tove Feld. Shelagh
has extensive experience of investment companies and Klaus and Tove
have extensive experience of the renewables sector. The
qualifications of the Audit Committee members are outlined in the
Director's Biographies in Section 3.
Significant Issues Considered
After discussion with both the Managers and the external
auditor, the Audit Committee determined that the key risks of
misstatement of the Company's financial statements related to the
valuation of the investments.
Valuation of Investments
As outlined in Note 13 to the financial statements, the total
carrying value of the investments at fair value (excluding the fair
value of TRIG UK and TRIG UK I) at 31 December 2020 was GBP2,160.9m
(2019: GBP1,741.5m). Market quotations are not available for these
financial assets, and as such, their valuation is undertaken using
a discounted cash flow methodology. This requires a series of
material judgements to be made as further explained in Note 4 to
the financial statements.
The valuation process and methodology were discussed by the
Audit Committee with the Investment Manager at the time of the
interim review, in November 2020 prior to the year-end valuation
process and again in February 2021 as part of the year-end sign off
process. The Committee met with the auditor when it reviewed and
agreed the auditor's Group audit plan and also at the conclusion of
the audit of the financial statements, in particular discussing the
valuation process. The Investment Manager carries out a valuation
semi-annually and provides a detailed valuation report to the
Company. The Company also engaged a third-party valuation expert to
provide an independent valuation at June 2020 and also to review
the valuation discount rates at December 2020. In July 2020, the
expert provided a report to the Audit Committee that corroborated
the valuation of the portfolio at June 2020. The expert also
provided a report to the Audit Committee in February 2021 that
confirmed that the discount rates at 31 December 2020 adopted at
were reasonable.
Valuation of Investments - key forecast assumptions
The Audit Committee considered in detail those assumptions that
are subject to judgement that have a material impact on the
valuation. The key assumptions are:
Power Price Assumptions
A significant proportion of the wind and solar projects' income
streams are contracted subsidy streams and power income under
long-term PPAs; some of which have fixed price mechanisms. However,
over time the proportion of power income that is fixed reduces and
the proportion where the Company has exposure to wholesale
electricity prices increases. The Investment Manager considers the
forecasts provided by expert energy advisors and adopts a profile
of assumed future power prices by jurisdiction. Further detail on
the assumptions made in relation to power prices and other
variables that may be expected to affect these are included in the
Valuation section of the Strategic Report.
Macroeconomic Assumptions
Macroeconomic assumptions include inflation, foreign exchange,
interest and tax rate assumptions. The Investment Manager's
assumptions in this area are set out and explained in the Valuation
section of the Strategic Report.
Other Key Income and Costs Assumptions
Other key assumptions include operating costs, facility energy
generation levels and facility remaining operating life
assumptions.
The Audit Committee considers the remaining operating life
assumptions in light of public information provided by the
Company's peer group and reports provided by the Operations Manager
during the year considering the remaining operational lives for
investments and considering any potential extension of those lives
and the recognition of additional value resulting to be
appropriate. The independent valuation carried out in June 2020
also supported the assumed operating lives.
The Investment Manager has discussed and agreed the valuation
assumptions with the Audit Committee. In relation to the key
estimates and judgements underpinning the valuation, the Investment
Manager has provided sensitivities showing the impact of changing
these assumptions and these have been reviewed by the Investment
Manager and the Audit Committee to assist in forming an opinion on
the fairness and balance of the annual report together with their
conclusion on the overall valuation.
Valuation Discount Rates
The discount rates adopted to determine the valuation are
selected and recommended by the Investment Manager. The discount
rate is applied to the expected future cash flows for each
investment's financial forecasts derived adopting the assumptions
explained above, amongst others, to arrive at a valuation
(discounted cash flow valuation). The resulting valuation is
sensitive to the discount rate selected. The Investment Manager is
experienced and active in the area of valuing these investments and
adopts discount rates reflecting its current extensive experience
of the market. It is noted however that this requires subjective
judgement and that there is a range of discount rates which could
be applied. The discount rate assumptions and the sensitivity of
the valuation of the investments to this discount rate are set out
in the Valuation section of the Strategic Report.
The Audit Committee discussed with the Investment Manager the
process adopted to arrive at the selected valuation discount rates
(which includes comparison with other market transactions and an
independent review of valuation discount rates by a third-party
valuation expert both at December 2019 and at December 2020) and
satisfied itself that the rates applied were appropriate.
Auditor Interaction
The external auditor explained the results of their review of
the valuation, including their consideration of the Company's
underlying cash flow projections, the economic assumptions and
discount rates to the Audit Committee. On the basis of their audit
work there were no adjustments proposed that were material in the
context of the financial statements as a whole.
Internal Controls and Risk Management
The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness and has therefore
established an ongoing process designed to meet the particular
needs of the Company in managing the risks to which it is
exposed.
The process is based on a risk-based approach to internal
control through a matrix which identifies the key functions carried
out by the Investment Manager, Operations Manager and other service
providers; the various activities undertaken within those
functions; the risks associated with each activity; and the
controls employed to minimise and mitigate those risks. A scoring
based on 1 to 5 for Likelihood and 1 to 5 for Impact is used and
these are multiplied together to give a total score. Mitigation is
considered on a scale of 1 to 5 and this leads to a residual risk
rating being derived. The matrix is updated on an on-going basis
and reviewed quarterly and the Board considers all material changes
to the risk ratings and the action which has been, or is being,
taken. By their nature, these procedures will provide a reasonable,
but not absolute, assurance against material misstatement or
loss.
At each Board meeting, the Board also monitors the Group's
investment performance and it reviews the Group's activities since
the last Board meeting to ensure that the Investment Manager is
adhering to the Company's Investment Policy and approved investment
guidelines. The pipeline of new potential opportunities is
considered and the prices paid for new investments during the
quarter are also reviewed.
Further, at each Board meeting, the Board receives reports from
the Company Secretary and Administrator in respect of compliance
matters and duties they have performed on behalf of the
Company.
The Board has considered the need for an internal audit function
and it has decided that the systems and procedures employed by the
Investment Manager, the Operations Manager and the Administrator,
including their own internal review processes and processes in
place in relation to the Company, provide sufficient assurance that
a sound system of internal control, which safeguards the Company's
assets, is maintained. An internal audit function specific to the
Group is therefore considered unnecessary.
The Board recognises that these control systems can only be
designed to manage rather than eliminate the risk of failure to
achieve business objectives, and to provide reasonable, but not
absolute, assurance against material misstatement or loss, and
relies on the operating controls established by the Company's
Administrator, the Investment Manager and the Operations Manager.
The Board considers on a periodic basis whether further third party
assurance is appropriate, and reviews annually the proficiency of
such controls in light of changes in the business and its
environment.
The Investment Manager prepares management accounts and updates
business forecasts on a quarterly basis, which allow the Board to
assess the Company's activities and review its performance. The
Board and the Investment Manager have agreed clearly defined
investment criteria, return targets, risk appetite, and exposure
limits. Reports on these performance measures, coupled with cash
projections and investment valuations, are submitted to the Board
at each quarterly meeting.
The Operations Manager prepares quarterly project performance
and project financial analysis, and highlights the key activities
performed and any specific new risks identified relating to the
operating portfolio for consideration by the Board.
Appointment of the external auditor
Deloitte LLP was appointed to be external auditor for the TRIG
Group on 19 September 2013, following a competitive tendering
process. This process involved a review of the audit proposals and
interviewing and challenging of each firm.
The objectivity of the external auditor is reviewed by the Audit
Committee which also reviews the terms under which the external
auditor may be appointed to perform non-audit services. The Audit
Committee reviews the scope and results of the audit, its cost
effectiveness and the independence and objectivity of the auditor,
with particular regard to any non-audit work that the auditor may
undertake. In order to safeguard auditor independence and
objectivity, the Audit Committee ensures that any audit-related
and/or other assurance services provided by the external auditor
does not conflict with their statutory audit responsibilities.
Audit-related and/or other assurance services generally relate
to the review of the interim financial statements and other
assurance work generally completed by the auditor. Limited tax
compliance work and capital raising work associated with the
auditor is also allowed in certain circumstances. Any non-audit
services conducted by the external auditor outside of these areas
which are above GBP20,000 in aggregate in any period require the
consent of the Audit Committee. The external auditor may not
undertake any work for the Company in respect of the following
matters - preparation of the financial statements, valuations used
in financial statements, provision of investment advice, taking
management decisions or advocacy work in adversarial situations. In
general the Company seeks to avoid using Deloitte for non-audit
services and the Audit Committee will only approve their
appointment for these where they are convinced that that Deloitte
are best placed to carry out this work and that the appointment
could not be expected to impair their audit independence.
Total fees paid amounted to GBP637,935 for the year ended 31
December 2020 of which GBP151,626 related to audit and audit
related services to the Company and its subsidiaries, TRIG UK and
TRIG UK Investments, and GBP433,194 related to audit of the Group's
project subsidiaries. In addition, audit fees of GBP15,000 for the
company and GBP33,000 for the project subsidiaries were agreed in
the current year in respect to the prior year. The non-audit
services provided by Deloitte in the year to the Company and its
subsidiaries are in relation to the review of the interim financial
statements at the half year totalling GBP39,000, and minor other
services totalling GBP14,115.
European Union (EU) statutory audit legislation stipulates that
fees for permissible non-audit services should not exceed 70% of
the average audit fees paid by the group in the last three
consecutive financial years following its implementation in 2016.
In accordance with Crown Dependencies' Audit Rules and the FRC
Revised Ethical Standard, this policy is adopted by the Audit
Committee. Although it is not applicable to this reporting period
as it only applies in the year ending 31 December 2021, the Audit
Committee must monitor auditor independence and will consider these
criteria as part of this role.
Notwithstanding such services the Audit Committee considers
Deloitte LLP to be independent of the Company and that the
provision of such non-audit services is not a threat to the
objectivity and independence of the conduct of the audit.
To fulfil its responsibility regarding the independence of the
external auditor, the Audit Committee considered:
changes in audit personnel in the audit plan for the current
period;
a report from the external auditor describing their arrangements
to identify, report and manage any conflicts of interest; and
the extent of non-audit services provided by the external
auditor.
To assess the effectiveness of the external audit process, the
Audit Committee reviewed:
the external auditor's fulfilment of the agreed audit plan and
variations from it;
reports highlighting the major issues that arose during the
course of the audit; and
the effectiveness and independence of the external auditor
having considered the degree of diligence and professional
scepticism demonstrated by them.
The Audit Committee notes the requirements of the UK Corporate
Governance Code and in particular the requirement to put the
external audit out to tender at least every 10 years. This is the
eighth year of Deloitte's appointment as the Company's auditor and
the Company intends to commence a competitive tender exercise for
the Company's audit work during 2021 and to conclude that exercise
with sufficient time such that any potential new audit firm
appointed could allow a cooling off period before their appointment
(should they already be providing services to the Company and/or
Group that require such a cooling off period).
It is intended that any potential new audit firm appointment or
reappointment of Deloitte following the competitive tender exercise
would apply for either the year ending 31 December 2022 or 31
December 2023 and years thereafter. The Audit Committee plans to
report the results of that exercise via the Audit Committee report
in the 2021 Annual Report and seek shareholder approval of that
appointment in the Annual General Meeting in May 2022.
The Audit Committee remains satisfied with Deloitte's
effectiveness and independence as auditor having considered the
degree of diligence and professional scepticism demonstrated by
them.
As such, the Committee has not considered it necessary during
this period to conduct a tender process for the appointment of its
auditors for the year ending 31 December 2021.
The Audit Partner for the Company is John Clacy. Deloitte rotate
the Audit Partner every five years and the most recent rotation
took place during 2019.
The Audit Committee confirms that TRIG has complied with the
requirements of The Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of Competitive Tender Processes
and Audit Committee Responsibilities) Order 2014 since it became a
member of the FTSE 250 Index on 18 December 2015 and up to 31
December 2020. Deloitte were appointed as external auditor in 2013
following a competitive process and the Audit Committee terms of
reference are in line with the Order.
The Committee conducts a formal review of Deloitte following the
issue of these financial statements as it did in 2020 to ensure
that the Committee considers all aspects of the auditor's service
and performance. The outcome of the review in May 2020 was positive
and led to no material concerns over the performance of the
auditor.
Having satisfied itself that the external auditor remains
independent and effective, the Audit Committee has recommended to
the Board that Deloitte LLP be reappointed as auditor for the year
ending 31 December 2021.
Audit Committee Performance Evaluation
During the year the Committee evaluated its performance
considering checklists provided by leading audit firms. All of the
Directors and the Managers completed the form and the results were
discussed at an Audit Committee meeting. A few items of a minor
nature arose and led to recommendations that have been adopted.
Overall the finding of the evaluation was that the Audit Committee
is sufficiently skilled and experienced and effective in carrying
out its role.
09 Financial Statements
Income Statement
For the year ended 31 December 2020
Year ended Year ended
31 December 31 December
2020 2019
Note GBP'000's GBP'000's
Net Gains on Investments 6 41,010 82,190
Investment Income from Investments 6 78,165 63,440
------------------------------------- ---- ------------- -------------
Total operating income 119,175 145,630
Fund expenses 7 (1,794) (1,610)
------------------------------------- ---- ------------- -------------
Operating profit 117,381 144,020
Finance and other (expense)/ income 8 (17,215) 18,009
------------------------------------- ---- ------------- -------------
Profit before tax 100,166 162,029
Income tax credit/(expense) 9 - -
------------------------------------- ---- ------------- -------------
Profit after tax 10 100,166 162,029
------------------------------------- ---- ------------- -------------
Attributable to:
Equity holders of the parent 100,166 162,029
------------------------------------- ---- ------------- -------------
100,166 162,029
------------------------------------- ---- ------------- -------------
Earnings per share (pence) 10 5.9 11.4
------------------------------------- ---- ------------- -------------
All results are derived from continuing operations. The
accompanying notes are an integral part of these financial
statements.
There is no other comprehensive income or expense apart from
those disclosed above and consequently a separate statement of
comprehensive income has not been prepared.
Balance Sheet
For the year ended 31 December 2020
As at As at
31 December 31 December
2020 2019
Note GBP'000's GBP'000's
Non-current assets
Investments at fair value through profit or
loss 13 2,160,946 1,741,457
--------------------------------------------- ---- ------------- -------------
Total non-current assets 2,160,946 1,741,457
--------------------------------------------- ---- ------------- -------------
Current assets
Other receivables 14 12,501 14,730
Cash and cash equivalents 15 23,116 127,589
--------------------------------------------- ---- ------------- -------------
Total current assets 35,617 142,319
--------------------------------------------- ---- ------------- -------------
Total assets 2,196,563 1,883,776
--------------------------------------------- ---- ------------- -------------
Current liabilities
Other payables 16 (1,692) (339)
--------------------------------------------- ---- ------------- -------------
Total current liabilities (1,692) (339)
--------------------------------------------- ---- ------------- -------------
Total liabilities (1,692) (339)
--------------------------------------------- ---- ------------- -------------
Net assets 12 2,194,871 1,883,437
--------------------------------------------- ---- ------------- -------------
Equity
Share capital and share premium 17 2,046,237 1,721,309
Other reserves 17 1,005 1,008
Retained reserves 17 147,629 161,120
--------------------------------------------- ---- ------------- -------------
Total equity attributable to owners of the
parent 12 2,194,871 1,883,437
--------------------------------------------- ---- ------------- -------------
Net assets per Ordinary Share (pence) 12 115.3 115.0
--------------------------------------------- ---- ------------- -------------
The accompanying notes are an integral part of these financial
statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 16 February 2021, and signed on its
behalf by Jon Bridel and Helen Mahy.
Statement of Changes in Shareholders' Equity
As at 31 December 2020
Share
capital
and share Other Retained Total
premium reserves reserves equity
GBP'000's GBP'000's GBP'000's GBP'000's
Shareholders' equity at beginning of
year 1,721,309 1,008 161,120 1,883,437
------------------------------------------- ----------- ----------- ----------- -----------
Profit for the year - - 100,166 100,166
Dividends paid - - (107,028) (107,028)
Scrip shares issued in lieu of dividend 6,629 - (6,629) -
Ordinary Shares issued 320,000 - - 320,000
Costs of Ordinary Shares issued (3,704) - - (3,704)
Ordinary Shares issued in year in lieu
of Management Fees, earned in H2 2019(1) 1,008 (1,008) - -
Ordinary Shares issued in year in lieu
of Management Fees, earned in H1 2020(2) 995 - - 995
Ordinary Shares to be issued in lieu
of Management Fees, earned in H2 2020(3) - 1,005 - 1,005
------------------------------------------- ----------- ----------- ----------- -----------
Shareholders' equity at end of year 2,046,237 1,005 147,629 2,194,871
------------------------------------------- ----------- ----------- ----------- -----------
For the year ended 31 December 2019
Share
capital Other Retained Total
and premium reserves reserves equity
GBP'000's GBP'000's GBP'000's GBP'000's
Shareholders' equity at beginning of
year 1,189,542 1,008 93,352 1,283,902
------------------------------------------- ------------- ----------- ----------- -----------
Profit for the year - - 162,029 162,029
Dividends paid - - (86,285) (86,285)
Scrip shares issued in lieu of dividend 7,976 - (7,976) -
Ordinary Shares issued 529,650 - - 529,650
Costs of Ordinary Shares issued (7,859) - - (7,859)
Ordinary Shares issued in year in lieu
of Management Fees, earned in H2 2018(4) 1,008 (1,008) - -
Ordinary Shares issued in year in lieu
of Management Fees, earned in H1 2019(5) 992 - - 992
Ordinary Shares to be issued in lieu
of Management Fees, earned in H2 2019(1) - 1,008 - 1,008
------------------------------------------- ------------- ----------- ----------- -----------
Shareholders' equity at end of year 1,721,309 1,008 161,120 1,883,437
------------------------------------------- ------------- ----------- ----------- -----------
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 up to an Adjusted
Portfolio Value of GBP1 billion.
1 The GBP1,008,216 transfer between reserves represents the
889,550 shares that relate to management fees earned in the six
months to 31 December 2019 and were recognised in other reserves at
31 December 2019, and were issued to the Managers during the year,
with the balance being transferred to share premium reserves on 31
March 2020.
2 The GBP994,533 addition to the share premium reserve
represents the 893,480 shares that relate to management fees earned
in the six months to 30 June 2020 and were issued to the Managers
on 30 September 2020.
3 As at 31 December 2020, 885,012 shares equating to
GBP1,005,464, based on a Net Asset Value ex dividend of 113.61
pence per share (the Net Asset Value at 31 December 2020 of 115.3
pence per share less the interim dividend of 1.69 pence per share)
were due but had not been issued. The Company intends to issue
these shares to the Managers around 31 March 2021.
4 The GBP1,008,218 transfer between reserves represents the
939,844 shares that relate to management fees earned in the six
months to 31 December 2018 and were recognised in other reserves at
31 December 2018, and were issued to the Managers during the year,
with the balance being transferred to share premium reserves on 31
March 2019.
5 The GBP991,778 addition to the share premium reserve
represents the 875,047 shares that relate to management fees earned
in the six months to 30 June 2019 and were issued to the Managers
on 30 September 2019.
The accompanying notes are an integral part of these financial
statements.
Cash Flow Statement
As at 31 December 2020
Year ended Year ended
31 December 31 December
2020 2019
Note GBP'000's GBP'000's
Cash flows from operating activities
Profit before tax 10 100,166 162,029
Adjustments for:
Net gain on investments 6, 13 (41,010) (82,190)
Investment income from investments 6 (78,165) (63,440)
Acquisition costs 20 -
Movement in other reserves relating to Manager
shares (3) -
Realised (loss)/gain on settlement of FX forwards (3,122) 4,165
Finance and other expense/ (income) 8 17,215 (18,009)
--------------------------------------------------- ----- ------------- -------------
Operating cash flow before changes in working
capital (4,899) 2,555
Changes in working capital:
Decrease/ (increase) in receivables 831 (540)
Decrease in payables (1,245) (47)
--------------------------------------------------- ----- ------------- -------------
Cash flow from operations (5,313) 1,968
Distributions from investments 13 120,654 84,757
Interest on bank deposits 155 379
--------------------------------------------------- ----- ------------- -------------
Net cash from operating activities 115,496 87,104
--------------------------------------------------- ----- ------------- -------------
Cash flows from investing activities
Purchases of investments 13 (499,466) (413,844)
Amounts realised from exit proceeds 68,125 -
Acquisition costs (20) -
--------------------------------------------------- ----- ------------- -------------
Net cash used in investing activities (431,361) (413,844)
--------------------------------------------------- ----- ------------- -------------
Cash flows from financing activities
Proceeds from issue of share capital during
year 322,003 531,650
Costs in relation to issue of shares 17 (3,704) (7,859)
Dividends paid to shareholders 11 (107,028) (86,285)
--------------------------------------------------- ----- ------------- -------------
Net cash from financing activities 211,271 437,506
--------------------------------------------------- ----- ------------- -------------
Net (decrease)/ increase in cash and cash
equivalents (104,594) 110,766
--------------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at beginning of year 15 127,589 16,760
Exchange gains on cash 121 63
--------------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at end of year 15 23,116 127,589
--------------------------------------------------- ----- ------------- -------------
The accompanying notes are an integral part of these financial
statements.
Notes to the Financial Statements
As at 31 December 2020
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 mainly operational renewable energy generation projects,
predominantly in onshore wind and solar PV segments, across the UK
and Europe. The Company, TRIG UK, TRIG UK I and its portfolio of
investments are known as the "Group".
These financial statements are for the year ended 31 December
2020 and comprise only the results of the Company as all of its
subsidiaries are measured at fair value as explained below in Note
2 (a).
2. Key accounting policies
(a) Basis of preparation
The financial statements were approved and authorised for issue
by the Board of Directors on 16 February 2021.
The financial statements, which give a true and fair view, have
been prepared in compliance with the Companies (Guernsey) Law, 2008
and in accordance with International Financial Reporting Standards
("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. All accounting policies have been applied consistently
in these financial statements.
The financial statements are presented in pounds sterling, which
is the Company's functional currency. Foreign operations are
included in accordance with the policies set out in this note.
The preparation of financial statements in conformity with IFRS
as adopted by the EU requires the Directors to make judgements,
estimates and assumptions that affect the application of policies
and the reported amounts of assets and liabilities, income and
expense. The estimates and associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the year in which the estimate is revised if the revision affects
only that year or in the year of the revision and future years if
the revision affects both current and future years. Note 3 shows
critical accounting judgements, estimates and assumptions.
(b) Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Strategic Report and also commented on in the
Viability Statement contained in the Directors' Report . The
financial position of the Group, its cash flows, liquidity position
and borrowing facilities are described in the Financial Results
section in 2.9. In addition, Notes 1 to 4 of the financial
statements include the Group's objectives, policies and processes
for managing its capital, its financial risk management objectives,
details of its financial instruments and hedging activities; and
its exposures to credit risk and liquidity risk.
The Group has a range of long-term contracts with various major
UK and European utilities and well-established suppliers across a
range of infrastructure projects. In addition, the Company
maintains a prudent level of leverage, limited to 30% of portfolio
value for fund level financing, and limited to 50% of gross
portfolio value for the Group's project-level financing. The
project level financing is non-recourse to the Company.
At 31 December 2020, the Company's leverage was 2% for fund
level financing (2019: 0%) and 43% for project level financing
(2019: 36%).
The Group has the necessary financial resources to meet its
obligations. The Group benefits from a range of long-term contracts
with various major UK and European utilities and well-established
suppliers across a range of infrastructure projects. In addition,
it maintains a working capital component of GBP30m as part of its
revolving credit facility (currently sized at GBP500m and limited
to 30% of Portfolio Value). The facility was renegotiated and
extended from GBP340m to GBP500m in December 2020 at lower rates to
support the Company's investments in new acquisitions. The facility
is available for a 3-year term and the larger size of the facility
reflects the increased scale of acquisitions being made by the
Company, it was GBP40m drawn at 31 December 2020.
The Company has sufficient headroom on its revolving credit
facility covenants. These covenants have been tested and relate to
interest cover ratios and group gearing limits and the Company does
not expect these covenants to breached. The Company and its direct
subsidiaries have a number of Guarantees, detailed in Note 19.
These guarantees relate to certain obligations that may become due
by the underlying investments over their useful economic lives. We
do not anticipate these guarantees to be called in the next 12
months and in many cases the potential obligations are insured by
the underlying investments.
The Group's project-level financing is non-recourse to the
Company and is limited to 50% of Gross Portfolio Value.
A cash balance of GBP23.1m at 31 December 2020 is held by the
Company, with further amounts held in the Company's direct and
indirect subsidiaries. In addition, the Company has a working
capital facility on its revolving credit facility of GBP30m.
As at the date of this report, The Group has commitments of
GBP392m relating to Blary Hill wind farm (in construction),
Beatrice offshore wind farm and Grönhult onshore wind farm. The
investments in Beatrice and Grönhult were announced after the year
end. The investment in Beatrice is expected to complete later in Q1
2021, whilst the investment in Grönhult, a construction asset, will
occur over the period of construction. Further to the above, the
Company has a number of outstanding commitments which are detailed
in section 2.6 of this Annual Report. These commitments can be
fully covered by the Company's revolving credit facility.
Since the start of 2020 an outbreak of coronavirus (which causes
Covid-19) has spread to become a global pandemic, which in
conjunction with the public health responses of various
governments, has led to uncertainty in the market. The directors of
the Company continue to follow advice given by the national and
international agencies (including the World Health Organisation and
Public Health England) to ensure best practices are followed.
To date there has not been a material impact on the ability of
the Company to carry out its operations. Restrictions imposed by
governments on public health grounds have impacted the consumption
of electricity, and consequently electricity prices, however these
measures are currently expected to be transitory and in place for
the shortest period practicable, ultimately with a recovery to
previous levels expected at this time. Consequently, the directors
do not believe that there is a significant risk to the value of the
Company's investments, operations or its overall business as a
result of the Covid-19 pandemic but will continue to monitor any
future developments.
As a consequence, the Directors believe that the Group is well
placed to manage its business risks successfully. The directors do
not believe that there is a significant risk to the business as a
result of the Covid-19 pandemic but will continue to monitor any
future developments.
Having performed the assessment of going concern, the Directors
considered it appropriate to prepare the financial statements of
the Company on a going concern basis. The Company has sufficient
financial resources and liquidity and is well placed to manage
business risks in the current economic environment and can continue
operations for a period of at least 12 months from the date of
these financial statements.
(c) Basis of consolidation
The Company applies IFRS 10 'Consolidated Financial Statements',
and as an investment entity is required to measure all of its
subsidiaries at fair value. The financial statements therefore
comprise the results of the Company only. Subsidiaries are those
entities owned by the Company. The Company has ownership of an
investee, when it is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to
affect those returns through its power over the investee as defined
in IFRS 10 'Consolidated Financial Statements'.
The Directors believe it is appropriate and relevant to the
investor to account for the investment portfolio at fair value,
where consolidating it would not be.
The Company's subsidiaries, TRIG UK and TRIG UK I, carry out
investment activities and incur overheads and borrowings on behalf
of the Group. The Directors therefore provide an alternative
presentation of the Company's results in the Strategic Report in
Section 2.9 prepared under the "Expanded basis", which includes the
consolidation of TRIG UK and TRIG UK I.
An entity shall consider all facts and circumstances when
assessing whether it is an investment entity, including its purpose
and design. Under the definition of an investment entity, as set
out in paragraph 27 in the standard, the entity must satisfy all
three of the following tests:
Obtains funds from one or more investors for the purpose of
providing those investors with investment management services;
and
Commits to its investors that its business purpose is to invest
funds solely for returns from capital appreciation, investment
income, or both (including having an exit strategy for
investments); and
Measure and evaluate the performance of substantially all of its
investments on a fair value basis.
In respect of the first criterion, TRIG is an investment company
which enables shareholders to gain exposure to a diversified
portfolio of renewable energy and related infrastructure
investments coupled with the management of these investments.
In respect of the second criterion, the Company's purpose is to
invest funds for returns from capital appreciation and investment
income. The Company's exit of its investments in project companies
may be at the time the existing turbines or other generation assets
get to the end of their economic lives or planning or leasehold
land interests expire at which point the project companies may be
considering redevelopment (referred to as a "repowering") of the
site. The Company may remain invested in the event there is the
opportunity to repower and undertake the repowering, subject to its
investment limits on construction activity being met and depending
on economic considerations at the time. The Company may also exit
investments earlier for reasons of portfolio balance or profit as
there is an active secondary market for renewables projects in the
countries in which we operate.
In respect of the third criterion, the board evaluates the
performance of the assets on a fair market value basis throughout
the year as part of the management accounts review, and the company
undertakes a fair market valuation of its portfolio twice a year
for inclusion in its report and accounts with the movement in the
valuation taken to the Income Statement and thus measured within
its earnings.
Taking these factors into consideration, the Directors are of
the opinion that the Company has all the typical characteristics of
an investment entity and meets the definition in the standard.
(d) Financial instruments
Financial assets and liabilities are recognised on the balance
sheet when the Company becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised
when the contractual rights to the cash flows from the instrument
expire or the asset is transferred, and the transfer qualifies for
derecognition in accordance with IFRS 9 'Financial
Instruments'.
Financial derivatives are valued using a Mark to Market
valuation based on the underlying derivative contracts that are
executed with the banks.
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in
equity and debt securities, trade and other receivables, cash and
cash equivalents, loans and borrowings, and trade and other
payables.
Non-derivative financial instruments are recognised initially at
fair value including directly attributable transaction costs.
Subsequent to initial recognition, non-derivative financial
instruments are measured as described below.
Investments in equity and debt securities
Investments in the equity, loan stock and mezzanine debt of
entities engaged in renewable energy activities are designated upon
initial recognition as held at fair value through profit or loss.
Gains or losses resulting from the movement in fair value are
recognised in Income Statement at each valuation point.
Financial assets are recognised/derecognised at fair value at
the date of the purchase/disposal. A financial asset (in whole or
part) is derecognised either:
When the group has transferred substantially all of the risk and
rewards of ownership; or
When it has neither transferred or retained substantially all of
the risks and rewards when it no longer has control over the asset
or a portion of the asset; or
When the contractual rights to receive cash flow has
expired.
The initial difference between the transaction price and the
fair value, derived from using the discounted cash flows
methodology at the date of acquisition, is recognised only when
observable market data indicates there is a change in a factor that
market participants would consider in setting the price of that
investment. For the years ended 31 December 2020 and 31 December
2019, there were no such differences. In addition, there was no
material change on applying fair values between the date of
acquisition and the reporting date for acquisitions in the years
ended 31 December 2020 and 31 December 2019.
The Group manages these investments and makes purchase and sale
decisions based on their fair value.
The Directors consider the equity and loan stock to share the
same investment characteristics and risks and they are therefore
treated as a single unit of account for valuation purposes and a
single class for disclosure purposes.
(e) Impairment
Financial assets
Financial assets, other than those at fair value through profit
or loss, are assessed for indicators of impairment at each balance
sheet date. A financial asset is considered to be impaired if
objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount, and the present value of the estimated future cash flows
discounted at the original effective interest rate. Significant
financial assets are tested for impairment on an individual basis.
The remaining financial assets are assessed collectively in groups
that share similar credit risk characteristics. All impairment
losses are recognised in the income statement. An impairment loss
is reversed if the reversal can be related objectively to an event
occurring after the impairment loss was recognised. For financial
assets measured at amortised cost the reversal is recognised in the
income statement.
(f) Share capital and share premium
Ordinary Shares are classified as equity. Costs directly
attributable to the issue of new shares or associated with the
establishment of the Company that would otherwise have been avoided
are written off against the value of the ordinary share
premium.
(g) Cash and cash equivalents
Cash and cash equivalents comprises of cash balances, deposits
held on call with banks and other short-term, highly liquid
investments with original maturities of three months or less. Bank
overdrafts that are repayable on demand are included as a component
of cash and cash equivalents for the purpose of the cash flow
statement.
(h) Investment income
Income from investments relates solely to returns from the
Company's subsidiaries, TRIG UK and TRIG UK I. This is recognised
as it accrues by reference to the principal outstanding and the
effective interest rate applicable and dividends when these are
received.
(i) Income tax
Under the current system of taxation in Guernsey, the Company is
exempt from paying taxes on non-Guernsey source income or capital
gains.
(j) Foreign exchange gains and losses
Transactions entered into by the Company in a currency other
than its functional currency are recorded at the rates ruling when
the transactions occur. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the balance sheet
date. Exchange differences arising on the retranslation of
unsettled monetary assets and liabilities are recognised
immediately in the income statement.
(k) Segmental reporting
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.
(l) Fund expenses
All expenses are accounted for on an accruals basis. The
Company's investment management and administration fees (refer to
Note 7), finance costs and all other expenses are charged through
the income statement.
(m) Acquisition costs
In line with IFRS 3 (Revised), acquisition costs are expensed to
the income statement as incurred.
(n) Dividends
Dividends are recognised when they become legally payable. In
the case of interim dividends, this is when they are paid. For
scrip dividends, where the Company issues shares with an equal
value to the cash dividend amount as an alternative to the cash
dividend, a credit to equity is recognised when the shares are
issued.
(o) Statement of compliance
Pursuant to the Protection of Investors (Bailiwick of Guernsey)
Law, 1987 the Company is a Registered Closed-Ended Investment
Scheme. As an authorised scheme, the Company is subject to certain
ongoing obligations to the Guernsey Financial Services Commission
and meets its compliance requirements.
(p) Share-based payments
Equity-settled share-based payment transactions with parties
other than employees are measured at the fair value of the goods or
services received, except where the fair value cannot be estimated
reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at that date the entity
obtains the goods or the counterparty renders the service.
(q) New and revised standards
At the date of authorisation of these financial statements, The
Group has applied the following new and revised IFRS that has been
issued:
Amendments to IAS 1 and IAS 8 Definition of Material effective
for periods beginning on or after 1 January 2020)
Amendments to References to the Conceptual Framework in IFRS
Standards (effective for periods beginning on or after 1 January
2020)
Definition of a Business (Amendments to IFRS 3 Business
Combinations) (effective for periods beginning on or after 1
January 2020
The directors have determined that the adoption of the Standards
listed above have not had a material impact on the financial
statements of the Company.
3. Critical accounting judgements, estimates and assumptions
The preparation of financial statements in accordance with IFRS
requires management to make judgements, estimates and assumptions
in certain circumstances that affect reported amounts. The
judgements, estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are outlined
below.
Key source of estimation uncertainty: Investments at fair value
through profit or loss
IFRS 13 establishes a single source of guidance for fair value
measurements and disclosures about fair value measurements. Fair
value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The Board base
the fair value of the investments on information received from the
Investment Manager. Fair value is calculated on a discounted cash
flow basis.
Fair values for those investments for which a market quote is
not available, in this instance being all investments, are
determined using the income approach, which discounts the expected
cash flows at the appropriate rate. In determining the discount
rates applied, several factors are considered including, relevant
long-term government bond yields, specific risks associated with
the technology (onshore wind, offshore wind, battery storage and
solar) and geographic location of the underlying investment, and
the evidence of recent transactions. The investments at fair value
through profit or loss, whose fair values include the use of level
3 inputs, are valued by discounting future cash flows from
investments in both equity (dividends and equity redemptions) and
subordinated loans (interest and repayments) to the Group at an
appropriate discount rate.
The weighted average discount rate applied in the December 2020
valuation was 6.7% (2019: 7.25%). The discount rate is considered
one of the most significant unobservable inputs through which an
increase or decrease would have a material impact on the fair value
of the investments at fair value through profit or loss which are
further discussed in Note 4 under sensitivities.
The other material impacts on the measurement of fair value are
the forward-looking power price curve, energy yields, operating
costs and macro-economic assumptions (including rates of inflation)
which are further discussed in Note 4 under sensitivities.
The Investment Manager, when considering the assumptions to
apply to the valuation of the investments at 31 December 2020 takes
into account several key assumptions.
Key Judgements
By virtue of the Company's status as an investment fund, and in
conjunction with IFRS 10 for investment entities, investments are
designated upon initial recognition to be accounted for at fair
value through profit or loss.
The Directors consider that the carrying value amounts of
financial assets and financial liabilities recorded at amortised
cost in the financial statement are approximately equal to their
fair values.
4. Financial instruments
Financial risk management
The objective of the Group's financial risk management is to
manage and control the risk exposures of its investment portfolio.
The Board of Directors has overall responsibility for overseeing
the management of financial risks, however the review and
management of financial risks are delegated to the Investment
Manager, which has documented procedures designed to identify,
monitor and manage the financial risks to which the Group is
exposed. Note 4 presents information about the Group's exposure to
financial risks, its objectives, policies and processes for
managing risk and the Group's management of its financial
resources.
Through its subsidiaries, TRIG UK and TRIG UK I, the Company
invests in a portfolio of investments predominantly in the
subordinated loan stock and ordinary equity of renewable energy
project companies. These companies are structured at the outset to
minimise financial risks where possible, and the Investment Manager
primarily focuses their risk management on the direct financial
risks of acquiring and holding the portfolio but continues to
monitor the indirect financial risks of the underlying projects
through representation, where appropriate, on the Boards of the
project companies, and the receipt of regular financial and
operational performance reports.
The Company has a diversified portfolio of assets which include
investments with both higher and lower risks and returns. These
risks and return differences relate, but are not limited to,
qualification to receive government subsidies, exposure to
fluctuations in future energy prices and levels of project finance
debt.
Interest rate risk
The Group invests in subordinated loan stock of project
companies, usually with fixed interest rate coupons. The
portfolio's cash flows are continually monitored and reforecast,
both over the near future and the long-term, to analyse the cash
flow returns from investments. The Group may use borrowings to
finance the acquisition of investments and the forecasts are used
to monitor the impact of changes in borrowing rates against cash
flow returns from investments as increases in borrowing rates will
reduce net interest margins.
The Group's policy is to ensure that interest rates are
sufficiently hedged to protect the Group's net interest margins
from significant fluctuations when entering into material
medium/long-term borrowings. This includes engaging in interest
rate swaps or other interest rate derivative contracts.
The Company has an indirect exposure to changes in interest
rates through its investment in project companies, many of which
are financed by senior debt. Senior debt financing of project
companies is generally either through floating rate debt, fixed
rate bonds or index linked bonds. Where senior debt is floating
rate, the projects typically have similar length hedging
arrangements in place, which are monitored by the project
companies' managers, finance parties and boards of directors.
Inflation risk
The Group's project companies are generally structured so that
contractual income and costs are either wholly or partially linked
to specific inflation, where possible, to minimise the risks of
mismatch between income and costs due to movements in inflation
indexes. The Group's overall cash flows vary with inflation,
although they are not directly correlated as not all flows are
indexed. The effects of these inflation changes do not always
immediately flow through to the Group's cash flows, particularly
where a project's loan stock debt carries a fixed coupon and the
inflation changes flow through by way of changes to dividends in
future years. The sensitivity of the portfolio valuation is shown
further on in Note 4.
Market risk
Returns from the Group's investments are affected by the price
at which the investments are acquired. The value of these
investments will be a function of the discounted value of their
expected future cash flows, and as such will vary with, inter alia,
movements in interest rates, market prices and the competition for
such assets. The Investment Manager carries out a full valuation
semi-annually and this valuation exercise takes into account
changes described above.
Currency risk
The projects, in which the Group invests, all conduct their
business and pay interest, dividends and principal in sterling,
with the exception of the euro-denominated investments which at 31
December 2020 comprised 40% (2019: 39%) of the portfolio by value
on an invested basis and 37% (2019: 45%) of the portfolio by value
on a committed basis. The sensitivity of the portfolio valuation is
shown in this note.
The Group monitors its foreign exchange exposures using its
near-term and long-term cash flow forecasts. Its policy is to use
foreign exchange hedging to provide protection to the level of
sterling distributions that the Company aims to pay over the
medium-term, where considered appropriate. This may involve the use
of forward exchange.
Credit risk
Credit risk is the risk that a counterparty of the Group will be
unable or unwilling to meet a commitment that it has entered into
with the Group. Key credit ratings for the Company's counterparties
are detailed in note 16.
The credit standing of subcontractors is reviewed, and the risk
of default estimated for each significant counterparty position.
Monitoring is on-going, and year end positions are reported to the
Board on a quarterly basis. The Group's largest credit risk
exposure to a project at 31 December 2020 was to the East Anglia
One project, representing 9% (2019: Jadraas project, representing
11%) of the portfolio by value, and the largest subcontractor
counterparty risk exposure was to Siemens who provided turbine
maintenance services in respect of 39% (2019: Siemens 36%) of the
invested portfolio by value.
The Group's investments enter into Power Price Agreements
("PPA") with a range of providers through which electricity is
sold, the PPAs are priced into the fair value of the investments.
The largest PPA provider to the portfolio at 31 December 2020 was
Statkraft who provided PPAs to projects in respect of 22% (2019:
Statkraft 29%) of the portfolio by value.
At 31 December 2020, there were no loans and other receivables
considered impaired for the Group.
The Group's maximum exposure to credit risk over financial
assets is the carrying value of those assets in the balance sheet.
The Group does not hold any collateral as security.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure, as far as possible,
that it will have sufficient financial resources and liquidity to
meets its liabilities when due. The Group ensures it maintains
adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and
liabilities. The Group's investments are predominantly funded by
share capital and medium-term debt funding.
The Group's investments are generally in private companies, in
which there is no listed market and therefore such investment would
take time to realise, and there is no assurance that the valuations
placed on the investments would be achieved from any such sale
process.
The Group's investments have borrowings which rank senior and
have priority over the Group's own investments into the companies.
This senior debt is structured such that, under normal operating
conditions, it will be repaid within the expected life of the
projects. Debt raised by the investment companies from third
parties is without recourse to the Group.
The Group's revolving credit facility, which was GBP40m drawn at
31 December 2020 (2019: GBPnil), is held by TRIG UK and TRIG UK I,
and is guaranteed by the Company. The facility was increased and
extended on 17 December 2020 and is in place until December
2023.
Capital management
TRIG UK and TRIG UK I, the Company's subsidiaries, have a
GBP500m revolving credit facility with Royal Bank of Scotland
International Limited, National Australia Bank Limited, ING Bank
N.V, Barclays Bank PLC, Banco Santander S.A. London Branch and
Sumitomo Mitsui Banking Corporation. The Facility expires on 31
December 2023. The facility was GBP40m drawn at 31 December
2020.
The Group makes prudent use of its leverage. Under the
investment policy, borrowings, including any financial guarantees
to support outstanding subscription obligations but excluding
internal Group borrowings of the Group's underlying investments,
are limited to 30% of the portfolio value.
From time to time, the Company issues its own shares to the
market; the timing of these purchases depends on market prices.
In order to assist in the narrowing of any discount to the Net
Asset Value at which the Ordinary Shares may trade, from time to
time the Company may at the sole discretion of the Directors:
make market purchases of up to 14.99% per annum of its issued
Ordinary Shares; and
make tender offers for the Ordinary Shares.
There were no changes in the Group's approach to capital
management during the year.
Fair value estimation
The following summarises the significant methods and assumptions
used in estimating the fair values of financial instruments:
Non-derivative financial instruments
The fair value of financial instruments traded in active markets
is based on quoted market prices at the balance sheet date.
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
Group uses the income approach, which discounts the expected cash
flows attributable to each asset at an appropriate rate to arrive
at fair values. In determining the discount rate, regard is had to
relevant long-term government bond yields, the specific risks of
each investment and the evidence of recent transactions.
Derivative financial instruments
The fair value of financial instruments inputs other than quoted
prices traded in active markets is based on quoted market prices at
the balance sheet date. The quoted market price used for financial
assets held by the Group is the current bid price. Note 2 discloses
the methods used in determining fair values on a specific
asset/liability basis. Where applicable, further information about
the assumptions used in determining fair value is disclosed in the
notes specific to that asset or liability.
Classification of financial instruments
31 December 31 December
2020 2019
GBP'000s GBP'000s
Financial assets
Designated at fair value through profit or loss:
Investments 2,160,946 1,741,457
Other financial assets - 12,621
-------------------------------------------------- ----------- -----------
Financial assets at fair value 2,160,946 1,754,078
-------------------------------------------------- ----------- -----------
At amortised cost:
Other receivables 12,501 2,109
Cash and cash equivalents 23,116 127,589
-------------------------------------------------- ----------- -----------
Financial assets at amortised cost 35,617 129,698
-------------------------------------------------- ----------- -----------
Financial liabilities
Designated at fair value through profit or loss:
Other financial liabilities 1,399 -
-------------------------------------------------- ----------- -----------
Financial liabilities at fair value 1,399 -
-------------------------------------------------- ----------- -----------
At amortised cost:
Other payables 293 339
-------------------------------------------------- ----------- -----------
Financial liabilities at amortised cost 293 339
-------------------------------------------------- ----------- -----------
The Directors believe that the carrying values of all financial
instruments are not materially different to their fair values.
Other financial assets/liabilities represent the fair value of
foreign exchange forward agreements in place at the year 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 31 December 2020
Level 1 Level 2 Level 3 Total
GBP'000's GBP'000's GBP'000's GBP'000's
Investments at fair value through profit
or loss - - 2,160,946 2,160,946
------------------------------------------ ---------- ---------- ---------- ----------
- - 2,160,946 2,160,946
------------------------------------------ ---------- ---------- ---------- ----------
Other financial liabilities - 1,399 - 1,399
------------------------------------------ ---------- ---------- ---------- ----------
- 1,399 - 1,399
------------------------------------------ ---------- ---------- ---------- ----------
As at 31 December 2019
Level 1 Level 2 Level 3 Total
GBP'000's GBP'000's GBP'000's GBP'000's
Investments at fair value through profit
or loss - - 1,741,457 1,741,457
------------------------------------------ ---------- ---------- ---------- ----------
- - 1,741,457 1,741,457
------------------------------------------ ---------- ---------- ---------- ----------
Other financial assets - 12,621 - 12,621
------------------------------------------ ---------- ---------- ---------- ----------
- 12,621 - 12,621
------------------------------------------ ---------- ---------- ---------- ----------
Other financial liabilities/assets represent the fair value of
foreign exchange forward agreements in place at the year end.
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 value of TRIG UK and TRIG UK
I, the Company's subsidiaries being its cash, working capital and
debt balances.
31 December 31 December
2020 2019
GBP'000's GBP'000's
Portfolio value 2,213,030 1,745,186
TRIG UK and TRIG UK I
Cash 737 216
Working capital (17,211) (5,550)
Debt(1) (35,610) 1,605
-------------------------------------------------- ----------- -----------
(52,084) (3,729)
Investments at fair value through profit or loss 2,160,946 1,741,457
-------------------------------------------------- ----------- -----------
1 Debt arrangement costs of GBP4,390k (2019: GBP1,605k) have
been netted off the GBP40m (2019: 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 market valuations of
the investments as at 31 December 2020 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 fair value of investments has been calculated using a
bifurcated methodology whereby cash flows are discounted on the
basis of the risk and return profile of the underlying cash
flows.
The following economic assumptions were used in the discounted
cash flow valuations at:
31 December 2020 31 December 2019
UK inflation rates (other
than ROC's) 2.75% 2.75%
Inflation applied to UK
ROC Income 2.75% 3.0% 2020, 2.75% thereafter
Ireland, France, Sweden
and Germany inflation 1.75% 2019-2020, 2.00%
rates 2.00% thereafter thereafter
------------------------------- ------------------------ -----------------------------
0.25% to March 2023, 1.00% to 31 December
UK deposit interest rates 1.0% thereafter 2021, 2.00% thereafter
------------------------------- ------------------------ -----------------------------
Ireland, France, Sweden
and Germany deposit interest 0.0% to March 2023, 0.5% 1.00% to 31 December
rates thereafter 2021, 2.00% thereafter
------------------------------- ------------------------ -----------------------------
UK corporation tax rate 19.00% 19.00%
------------------------------- ------------------------ -----------------------------
33.3% + 1.1% above EUR763,000
France corporation tax 28%; reducing to 25% threshold; reducing to
rate by 2022 25% by 2022
------------------------------- ------------------------ -----------------------------
Ireland corporation tax 12.5% active rate, 25% 12.5% active rate, 25%
rate passive rate passive rate
------------------------------- ------------------------ -----------------------------
Swedish corporation tax 21.4% for 2020, 20.6% 21.4% for 2020, 20.6%
rate thereafter thereafter
------------------------------- ------------------------ -----------------------------
Germany corporation tax
rate 15.8% 15.8%
------------------------------- ------------------------ -----------------------------
Euro/sterling exchange
rate 1.1191 1.1827
------------------------------- ------------------------ -----------------------------
Energy yield assumptions P50 case P50 case
------------------------------- ------------------------ -----------------------------
Valuation Sensitivities
Sensitivity analysis is produced 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 number of investments in the portfolio
remains static throughout the modelled life.
The sensitivities assume the portfolio is fully invested and
hence the Portfolio Value for the sensitivity analysis is the sum
of the Portfolio Valuation at 31 December 2020 (GBP2,213.0m), the
initial investment in Grönhult made in February 2021 (GBP25m) and
the outstanding investment commitments as set out in Section 2.8
(GBP391.8m), i.e. GBP2,629.8m.
Accordingly, the NAV per share impacts shown below assume the
issue of further shares to fund these commitments.
The analysis below shows the sensitivity of the portfolio value
(and its impact on NAV) to changes in key assumptions as
follows:
Discount rates
The discount rates used for valuing each investment are based on
market information and the current bidding experience of the Group
and its Managers.
The weighted average valuation discount rate applied to
calculate the portfolio valuation is 6.7% at 31 December 2020
(2019: 7.25%). An increase or decrease in this rate by 0.5% points
has the following effect on valuation.
NAV/ share Total Portfolio NAV/ share
Discount rate impact -0.5% change Value +0.5% change impact
Directors' valuation - December
2020 +4.7p +GBP107.3m GBP2,629.8m -GBP100.5m -4.4p
--------------------------------- ---------- ------------ --------------- ------------ ----------
Directors' valuation - December
2019 +4.4p +GBP81.1m GBP2,095.6m -GBP75.9m -4.1p
--------------------------------- ---------- ------------ --------------- ------------ ----------
Power Price
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.
A change in the forecast electricity price assumptions by plus
or minus 10% has the following effect.
NAV/ share Total Portfolio NAV/ share
Power Price impact -10% change Value +10% change impact
Directors' valuation - Dec
2020 -7.6p -GBP173.6m GBP2,629.8m +GBP172.7m 7.6p
---------------------------- ---------- ----------- --------------- ----------- ----------
Directors' valuation - Dec
2019 -8.5p -GBP156.0m GBP2,095.6m +GBP156.4m 8.5p
---------------------------- ---------- ----------- --------------- ----------- ----------
Energy Yield
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. A P90 10-year downside case assumes the
average annual level of electricity 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 electricity
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 includes the portfolio effect which reduces the
variability because of the diversification of the portfolio. The
sensitivity is applied throughout the life of each asset in the
portfolio (even where this exceeds 10 years).
The table below shows the sensitivity of the portfolio value to
changes in the energy yield applied to cash flows from project
companies in the portfolio as per the terms P90, P50 and P10
explained above.
NAV/ share P90 10 Total Portfolio P10 10 NAV/ share
Energy Yield impact year exceedance Value year exceedance impact
Directors' valuation - Dec
2020 -14.3p -GBP324.4m GBP2,629.8m +GBP349.3m 15.3p
---------------------------- ---------- ---------------- --------------- ---------------- ----------
Directors' valuation - Dec
2019 -11.5p -GBP211.3m GBP2,095.6m +GBP195.4m 10.7p
---------------------------- ---------- ---------------- --------------- ---------------- ----------
Inflation rates
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 fixed. This results in the
portfolio returns and valuation being positively correlated to
inflation.
The portfolio valuation assumes 2.75% p.a. inflation for the UK
and 2.0% p.a. for each of Sweden, France, Germany and Ireland over
the long term.
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.
NAV/ share Total Portfolio NAV/ share
Inflation assumption impact -0.5% change Value +0.5% change impact
Directors' valuation - December
2020 -4.8p -GBP110.1m GBP2,629.8m +GBP120.0m 5.3p
--------------------------------- ---------- ------------ --------------- ------------ ----------
Directors' valuation - December
2019 -4.7p -GBP85.4m GBP2,095.6m +GBP92.6m 5.1p
--------------------------------- ---------- ------------ --------------- ------------ ----------
Operating costs
The sensitivity shows the effect of a 10% decrease and a 10%
increase to the base case for annual operating costs for the
portfolio, in each case assuming that the change to the base case
for operating costs occurs with effect from 1 January 2021 and that
change to the base case remains reflected consistently thereafter
during the life of the projects.
NAV/ share Total Portfolio NAV/ share
Operating costs impact -10% change Value +10% change impact
Directors' valuation - December
2020 5.8p +GBP131.5m GBP2,629.8m -GBP132.6m -5.8p
--------------------------------- ---------- ----------- --------------- ----------- ----------
Directors' valuation - December
2019 4.5p +GBP83.2m GBP2,095.6m -GBP82.8m -4.5p
--------------------------------- ---------- ----------- --------------- ----------- ----------
Taxation rates
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 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. The
sensitivities incorporate the impact of portfolio level
reliefs.
NAV/ share Total Portfolio NAV/ share
Taxation rates impact -2% change Value +2% change impact
Directors' valuation - December
2020 1.6p +GBP37.2m GBP2,629.8m -GBP37.4m -1.6p
--------------------------------- ---------- ---------- --------------- ---------- ----------
Directors' valuation - December
2019 1.1p +GBP19.4m GBP2,095.6m -GBP18.9m -1.0p
--------------------------------- ---------- ---------- --------------- ---------- ----------
Interest rates
This shows the sensitivity of the portfolio valuation to the
effects of a reduction of 1% and an increase of 2% in interest
rates. The change is assumed with effect from 1 January 2021 and
continues unchanged throughout the life of the assets.
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.
The portfolio sensitivity to interest rates is assessed
asymmetrically, noting that there is limited capacity for further
interest rate reductions.
NAV/ share Total Portfolio NAV/ share
Interest rates impact -1% change Value +2% change impact
Directors' valuation - December
2020 -0.0p -GBP0.9m GBP2,629.8m +GBP0.2m 0.0p
--------------------------------- ---------- ---------- --------------- ---------- ----------
Directors' valuation - December
2019 -0.0p -GBP0.0m GBP2,095.6m +GBP0.6m 0.0p
--------------------------------- ---------- ---------- --------------- ---------- ----------
Currency rates
The sensitivity shows the effect of a 10% decrease and a 10%
increase in the value of the euro relative to sterling used for the
31 December 2020 valuation (based on a 31 December 2020 exchange
rate of EUR1.1191 to GBP1). In each case it is assumed that the
change in exchange rate occurs from 1 January 2021 and thereafter
remains constant at the new level throughout the life of the
projects.
At the year-end, 35% of the committed portfolio was located in
Sweden, France, Germany and Ireland comprising euro-denominated
assets.
The Group has entered into forward hedging of the expected euro
distributions for up to 48 months ahead and in addition placed
further hedges to reach a position where at least 50% of the
valuation of euro-denominated assets is hedged. The hedge 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. The value of the outstanding
commitments on Grönhult are included in this sensitivity. A 60%
hedge is assumed for the sensitivity below and during 2020 typical
hedge levels have been between approximately 60-80%.
NAV/ share Total Portfolio NAV/ share
Currency rates impact -10% change Value +10% change impact
Directors' valuation - December
2020 -1.4p -GBP31.9m GBP2,629.8m +GBP31.9m 1.4p
--------------------------------- ---------- ----------- --------------- ----------- ----------
Directors' valuation - December
2019 -1.8p -GBP33.8m GBP2,095.6m +GBP33.8m 1.8p
--------------------------------- ---------- ----------- --------------- ----------- ----------
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.
Asset Lives
Assumptions adopted in the year-end valuation typically range
from 25 to 40 years from the date of commissioning, with an average
29 years for the wind portfolio and 37 years for solar portfolio.
The overall average across the portfolio at 31 December 2020 is 30
years (31 December 2019: 29 years).
The sensitivity below shows the impact on the valuation of
assuming all assets within the portfolio have a year longer and a
year shorter asset life assumed.
NAV/ share -1 year Total Portfolio +1 year NAV/ share
Asset Lives impact change Value change impact
Directors' valuation - December
2020 -1.2p -GBP27.0m GBP2,629.8m +GBP23.4m 1.0p
--------------------------------- ---------- ---------- --------------- --------- ----------
Directors' valuation - December
2019 -1.3p (GBP23.9m) GBP2,095.6m +GBP22.1m 1.2p
--------------------------------- ---------- ---------- --------------- --------- ----------
5. Segment reporting
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.
6. Total operating income
For year For year
ended ended
31 December 31 December
2020 2019
GBP'000s GBP'000s
Interest income from investments 78,165 63,440
Gain on investments 41,010 82,190
---------------------------------- ------------- -------------
Total operating income 119,175 145,630
---------------------------------- ------------- -------------
The gains on investment are unrealised. 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, total operating income is GBP145,826k (2019:
GBP162,316k). The reconciliation from the IFRS basis to the
expanded basis is shown in Section 2.9 of the Strategic Report.
7. Fund expenses
For year For year
ended ended
31 December 31 December
2020 2019
GBP'000s GBP'000s
Fees payable to the Company's Auditor:
For audit of the Company's financial statements 140 124
For the other audit-related assurance services 39 29
For additional fees in respect to the prior year 15 -
Investment and management fees (Note 18) 200 200
Directors' fees (Note 18) 283 228
Other costs 1,117 1,028
----------------------------------------------------- ------------- -------------
Fund expenses 1,794 1,029
----------------------------------------------------- ------------- -------------
The fees to the Company's Auditor include GBP39k (2019: GBP29k)
payable in relation to audit-related assurance services in respect
of the interim review of the half yearly financial statements.
In addition to the above, GBP445k (2019: GBP371k) was paid to
Deloitte LLP (the Company's auditor) in respect of audit services
provided for 2020 audit to unconsolidated subsidiaries.
Additionally there were GBP33k of audit services provided to
unconsolidated subsidiaries related to the prior year, but agreed
in the current year. These amounts are therefore not included
within fund expenses above.
On the Expanded basis, fund expenses are GBP19,987k (2019:
GBP17,936k); the difference being the costs incurred within TRIG UK
and TRIG UK I, the Company's subsidiaries. The reconciliation from
the IFRS basis to the Expanded basis is shown in Section 2.9 of the
Strategic Report.
The Company had no employees during the current or prior year.
The Company has appointed the Investment Manager and the Operations
Manager to manage the portfolio, the Company and its subsidiaries,
on its behalf.
8. Finance and other (expense)/ income
For year For year
ended ended
31 December 31 December
2020 2019
GBP'000s GBP'000s
Interest income:
Interest on bank deposits 155 379
---------------------------------------------------- ------------- -------------
Total finance income 155 379
---------------------------------------------------- ------------- -------------
(Loss)/ gain on foreign exchange:
Realised (loss)/ gain on settlement of FX forwards (3,122) 4,165
Fair value (loss)/ gain of FX forward contracts (14,020) 14,058
Other foreign exchange losses (228) (593)
---------------------------------------------------- ------------- -------------
Total (loss)/ gain on foreign exchange (17,370) 17,630
---------------------------------------------------- ------------- -------------
Finance and other (expense)/ income (17,215) 18,009
---------------------------------------------------- ------------- -------------
On the Expanded basis, finance income is GBP155k (2019: GBP379k)
and finance costs are GBP4,036k (2019: GBP3,384k); 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 shown in Section 2.9 of the Strategic Report.
9. Income tax
Under the current system of taxation in Guernsey, the Company is
exempt from paying taxes on income, profits or capital gains.
Therefore, income from investments is not subject to any further
tax in Guernsey, although these investments will bear tax in the
individual jurisdictions in which they operate.
10. Earnings per share
Earnings per share 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 year.
31 December 31 December
2020 2019
Profit attributable to equity holders of the Company
(GBP'000) GBP100,166 GBP162,029
Weighted average number of Ordinary Shares in issue
('000) 1,711,999 1,422,876
Earnings per Ordinary Share (Pence) 5.9p 11.4p
------------------------------------------------------ ------------ ------------
Further details of shares issued in the year are set out in Note
17.
11. Dividends
31 December 31 December
2020 2019
GBP'000s GBP'000s
Amounts recognised as distributions to equity holders
during the year:
Interim dividend for the 3 month year ended 31 December
2018 of 1.625p 19,148
Interim dividend for the 3 month year ended 31 March
2019 of 1.66p 23,986
Interim dividend for the 3 month year ended 30 June
2019 of 1.66p 24,008
Interim dividend for the 3 month year ended 30 September
2019 of 1.66p 27,119
Interim dividend for the 3 month year ended 31 December
2019 of 1.66p 27,167
Interim dividend for the 3 month year ended 31 March
2020 of 1.69p 27,673
Interim dividend for the 3 month year ended 30 June
2020 of 1.69p 29,379
Interim dividend for the 3 month year ended 30 September
2020 of 1.69p 29,439
---------------------------------------------------------- ----------- ------------
113,658 94,261
---------------------------------------------------------- ----------- ------------
Dividends settled as a scrip dividend alternative 6,629 7,976
Dividends settled in cash 107,028 86,285
--------------------------------------------------- ------- ------
113,657 94,261
--------------------------------------------------- ------- ------
On 4 February 2021, the Company declared an interim dividend of
1.69 pence per share for the period 1 October 2020 to 31 December
2020. The total dividend, GBP32,167,500, payable on 31 March 2021,
is based on a record date of 12 February 2021 and the number of
shares in issue at that time being 1,903,402,338.
31 December 31 December
2020 2019
Pence Pence
Amounts recognised as distributions to equity holders
during the year:
Interim dividend for the quarter ended December 2018 1.625
Interim dividend for the quarter ended March 2019 1.66
Interim dividend for the quarter ended June 2019 1.66
Interim dividend for the quarter ended September 2019 1.66
Interim dividend for the quarter ended December 2019 1.66
Interim dividend for the quarter ended March 2020 1.69
Interim dividend for the quarter ended June 2020 1.69
Interim dividend for the quarter ended September 2020 1.69
------------------------------------------------------- ----------- -----------
Total dividend per share 6.73 6.605
------------------------------------------------------- ----------- -----------
12. Net assets per Ordinary Share
31 December 31 December
2020 2019
GBP'000s GBP'000s
Shareholders' equity at balance sheet date GBP2,194,871 GBP1,883,437
----------------------------------------------------- ------------ ------------
Number of shares at balance sheet date, including
management shares accrued but not yet issued 1,904,287 1,637,453
----------------------------------------------------- ------------ ------------
Net Assets per Ordinary Share at balance sheet date
(Pence) 115.3p 115.0p
----------------------------------------------------- ------------ ------------
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 31 December 2020, 885,012 shares equating to GBP1,005,464,
based on a Net Asset Value ex dividend of 113.61 pence per share
(the Net Asset Value at 31 December 2020 of 115.3 pence per share
less the interim dividend of 1.69 pence per share) were due but had
not been issued. The Company intends to issue these shares around
31 March 2021.
In view of this, the denominator in the above Net assets per
Ordinary Share calculation is as follows:
31 December 31 December
2020 2019
000s 000s
Ordinary Shares in issue at balance sheet date 1,903,402 1,636,564
Number of shares to be issued in lieu of Management
fees 885 890
-------------------------------------------------------- ------------- -------------
Total number of shares used in Net Assets per Ordinary
Share calculation 1,904,287 1,637,453
-------------------------------------------------------- ------------- -------------
13. 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 31 December
2020 2019
GBP'000s GBP'000s
Brought forward 1,741,457 1,267,255
Investments in the year 499,466 413,844
Distributions paid to the Company (188,779) (84,757)
Interest income from investments 67,792 62,925
Gain on valuation 41,010 82,190
----------------------------------- ------------ ------------
Carried forward 2,160,946 1,741,457
----------------------------------- ------------ ------------
The following information is non-statutory. It provides
additional information to users of the financial statements,
splitting the fair value movements between the investment portfolio
and TRIG UK and TRIG UK I, the Company's subsidiaries that were
previously consolidated.
31 December 31 December
2020 2019
GBP'000s GBP'000s
Fair value of investment portfolio
Brought forward value of investment portfolio 1,745,185 1,268,681
Investments in the year 588,249 507,786
Project refinancing and exit proceeds(2) (117,950) (64,577)
Distributions paid to the Company (147,958) (128,804)
Interest income 69,869 49,649
Dividend income 23,506 -
Gain on valuation 52,130 112,449
--------------------------------------------------- ------------ -----------
Carried forward value of investment portfolio 2,213,030 1,745,185
--------------------------------------------------- ------------ -----------
Fair value of TRIG UK & TRIG UK I
Brought forward value of TRIG UK & TRIG UK I (3,728) (1,426)
Cash movement 521 72
Working capital movement (11,661) (1,572)
Debt movement(1) (37,215) (802)
--------------------------------------------------- ------------ -----------
Carried forward value of TRIG UK & TRIG UK I (52,083) (3,728)
--------------------------------------------------- ------------ -----------
Total investments at fair value through profit or
loss 2,160,947 1,741,457
--------------------------------------------------- ------------ -----------
1 Debt arrangement costs of GBP4,390k (2019: GBP1,605k) have
been netted off the GBP40m (2019: GBPnil) debt drawn by TRIG UK and
TRIG UK I.
2 In the current year this related to the exit of Erstrask and
the sell down of Merkur. In the prior year this related to proceeds
from project refinancings.
The gains on investment are unrealised.
The SPV's (Project companies) in which the company invests are
generally restricted on their ability to transfer funds to the
Company under the terms of their individual senior funding
arrangements. 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;
- The 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:
31 December 2020 31 December 2019
-------------------- --------------------
Subordinated Subordinated
Investments (project name) Country Equity loan stock Equity loan stock
TRIG UK UK 100% 100% 100% 100%
TRIG UK I UK 100% 100% 100% 100%
Roos UK 100% 100% 100% 100%
The Grange UK 100% 100% 100% 100%
Hill of Towie UK 100% 100% 100% 100%
Green Hill UK 100% 100% 100% 100%
Forss UK 100% 100% 100% 100%
Altahullion UK 100% 100% 100% 100%
Lendrums Bridge UK 100% 100% 100% 100%
Lough Hill UK 100% 100% 100% 100%
Republic
Milane Hill of Ireland 100% 100% 100% 100%
Republic
Beennageeha of Ireland 100% 100% 100% 100%
Haut Languedoc France 100% 100% 100% 100%
Haut Cabardes France 100% 100% 100% 100%
Cuxac Cabardes France 100% 100% 100% 100%
Roussas-Claves France 100% 100% 100% 100%
Puits Castan France 100% 100% 100% 100%
Churchtown UK 100% 100% 100% 100%
East Langford UK 100% 100% 100% 100%
Manor Farm UK 100% 100% 100% 100%
Parsonage UK 100% 100% 100% 100%
Marvel Farms UK 100% 100% 100% 100%
Tamar Heights UK 100% 100% 100% 100%
Stour Fields UK 100% 100% 100% 100%
Meikle Carewe UK 100% 100% 100% 100%
Tallentire UK 100% 100% 100% 100%
Parley UK 100% 100% 100% 100%
Egmere UK 100% 100% 100% 100%
Penare UK 100% 100% 100% 100%
Earlseat UK 100% 100% 100% 100%
Republic
Taurbeg of Ireland 100% 100% 100% 100%
Four Burrows UK 100% 100% 100% 100%
Rothes 2 UK 49% 49% 49% 49%
Mid Hill UK 49% 49% 49% 49%
Paul's Hill UK 49% 49% 49% 49%
Rothes 1 UK 49% 49% 49% 49%
Crystal Rig 1 UK 49% 49% 49% 49%
Crystal Rig 2 UK 49% 49% 49% 49%
Broussan France 48.9% 100% 48.9% 100%
Plateau France 48.9% 100% 48.9% 100%
Borgo France 48.9% 100% 48.9% 100%
Olmo 2 France 48.9% 100% 48.9% 100%
Chateau France 48.9% 100% 48.9% 100%
Pascialone France 48.9% 100% 48.9% 100%
Santa Lucia France 48.9% 100% 48.9% 100%
Agrinergie 1&3 France 48.9% 100% 48.9% 100%
Agrinergie 5 France 48.9% 100% 48.9% 100%
Agrisol France 48.9% 100% 48.9% 100%
Chemin Canal France 48.9% 100% 48.9% 100%
Ligne des 400 France 48.9% 100% 48.9% 100%
Logistisud France 48.9% 100% 48.9% 100%
Marie Galante France 48.9% 100% 48.9% 100%
Sainte Marguerite France 48.9% 100% 48.9% 100%
Freasdail UK 100% 100% 100% 100%
FVP du Midi France 51.0% 100% 51.0% 100%
Neilston UK 100% 100% 100% 100%
Garreg Lwyd UK 100% 100% 100% 100%
Broxburn UK 100% 100% 100% 100%
Sheringham Shoal UK 14.7% 14.7% 14.7% 14.7%
Republic
Pallas of Ireland 100% 100% 100% 100%
Solwaybank UK 100% 100% 100% 100%
Montigny France 100% 100% 100% 100%
Rosieres France 100% 100% 100% 100%
Ersträsk Sweden - - 75% 75%
Jadraas Sweden 100% 100% 100% 100%
Venelle France 100% 100% 100% 100%
Fujin France 41.9% 100% 34.6% 100%
Epine France 100% 100% 100% 100%
Little Raith UK 100% 100% 100% 100%
Gode Wind 1 Germany 25% 25% 25% 25%
Blary Hill UK 100% 100% - -
Merkur Germany 24.6% 24.6% - -
Haut Vannier France 100% 100% - -
East Anglia 1 UK 14.3% 14.3% - -
31 December 2020 31 December 2019
-------------------- --------------------
Mezzanine Mezzanine
Investments (project name) Country Ownership debt Ownership debt
Phoenix France - 100% - -
On 8 April 2020, TRIG acquired 100% shareholder loan interest
and 100% equity interest in Blary Hill Energy Limited with the
rights to construct a 35MW wind farm in West Scotland. The project
was developed by RES and will be constructed by RES under a fixed
price EPC Contract.
On 24 April 2020, TRIG made an additional investment into Fujin
SAS, a holding company which owns a portfolio of five operational
windfarms in France. TRIG made the initial investment in June 2019;
the additional investment brings TRIG's holding from 34.6% to
41.9%.
On 12 May 2020, TRIG completed the acquisition of a 35.7%
shareholder loan interest and 35.7% equity interest in Merkur
following receipt of German foreign investment approvals and EU
merger clearances. TRIG partnered with the Dutch pension investor,
APG, who acquired the remaining 64.3% in the Project. This is
consistent with TRIG's strategy of partnering with aligned
co-investors on larger transactions.
Merkur was acquired from a consortium of Partners Group (on
behalf of its clients), DEME Concessions, GE Energy Financial
Services, ADEME and a private fund separately managed by InfraRed,
TRIG's Investment Manager. The transaction process included the
procedures set out in the Company's investment policy and recent
prospectuses, these include the conduct of independent due
diligence by a specially constituted buy-side committee and an
independent third-party valuation and approval by TRIG's Board of
Directors, all of whom are independent of the Investment
Manager.
On 3 July 2020, TRIG sold down a share of its investment in
Merkur to minority co-investors managed by InfraRed, leaving TRIG
with a 24.6% equity interest in the Project. The amount which was
owed by the co-investment party was recognised in the fair value of
investments at 30 June 2020, using a discounted cash flow
methodology. The amount has been paid to a subsidiary of the
Company.
On 29 July 2020, the Company exercised its put option to sell
back its 75% interest in Ersträsk to its developer, Enercon, due to
construction delays. On this date the exit was completed and
transferred. TRIG has not suffered any financial loss. Under the
terms of the sale and purchase agreement for Ersträsk, the Company
was protected. Payment would only have been due if the turbines
became operational by the key milestones. The Company did not take
construction or delay risks.
On 19 October 2020, TRIG acquired 100% shareholder loan and 100%
equity interest in Haut Vannier SAS with the rights to construct a
43MW wind farm in France. The project has been developed by
Envision and Velocita, who will continue to carry out the
construction which is already in progress and is expected to
complete in 2022.
On 22 December 2020, TRIG exchanged contracts to invest in
Phoenix SAS, a holding company consisting of 5 operational onshore
wind farms in northern France and 4 operational solar parks with
battery storage in Corsica and La Réunion. TRIG has invested in the
project in form of mezzanine level bonds which gives information
and management rights similar to those of a minority equity
investor. The project was developed by Akuo Energy, TRIG has
partnered with other investors in France to invest in this
project.
On 31 December 2020, TRIG completed the acquisition of 14.3%
indirect equity interest in East Anglia One, a newly constructed
operational offshore wind farm located off the coast of Suffolk in
the North Sea from Green Investment Group. TRIG partnered with
InfraRed European Infrastructure Fund 4, a fund managed by
InfraRed, who acquired a 5.7% indirect equity interest in the
project alongside TRIG.
In the year, TRIG made an additional investment in Solwaybank
and Blary Hill to fund their construction timetable, in line with
outstanding commitments.
Further detail of acquisitions made in the year can be found in
Section 2.6 of the Strategic Report.
14. Other receivables
31 December 31 December
2020 2019
GBP'000's GBP'000's
Other receivables 12,501 2,110
Fair value of FX forward contracts - 12,620
------------------------------------ ------------ -----------
12,501 14,730
------------------------------------ ------------ -----------
15. Cash and cash equivalents
31 December 31 December
2020 2019
GBP'000's GBP'000's
Bank balances 23,116 127,589
--------------------------- ------------ -----------
Cash and cash equivalents 23,116 127,589
--------------------------- ------------ -----------
On the Expanded basis, which includes balances carried in TRIG
UK and TRIG UK I, cash is GBP23,853k (2019: GBP127,804k). The
reconciliation from the IFRS basis to the Expanded basis is shown
in Section 2.9 of the Strategic Report.
As at the year end, cash and cash equivalents on the Expanded
basis consisted of GBP20,000k held with Sumitomo Mitsui Banking
Corporation Europe Limited and GBP3,853k held with Royal Bank of
Scotland International Limited. At 31 December 2020 Sumitomo Mitsui
Banking Corporation Europe Limited had an S&P credit rating of
A/ Stable and Royal Bank of Scotland International Limited had an
S&P credit rating of A-/ Negative.
16. Other payables
31 December 31 December
2020 2019
GBP'000's GBP'000's
Management fees(1) 50 50
Fair value of forward FX contracts 1,399 -
Other payables 243 289
------------------------------------ ------------ -----------
1,692 339
------------------------------------ ------------ -----------
1 For related party and key advisor transactions see note
18.
The Company has entered into forward foreign currency contracts
to hedge the expected euro distributions up to a maximum of 48
months. In addition, the Company has placed further hedges to reach
a position where approximately 80% of the valuation of euro
denominated assets is hedged, providing a partial offset to foreign
exchange movements in the portfolio value relating to such
assets.
The increase in the foreign exchange hedging level to 80%
occurred during late 2019 and remains under review and the level of
hedges may change in the future.
The following table details the forward foreign currency
contracts outstanding as at 31 December 2020. The total euro
balance hedged at 31 December 2020 was EUR747.5m (2019:
EUR636.5m).
31 December 2020
Average Foreign Notional
exchange currency value Fair value
rate EUR'000's GBP'000's GBP'000's
Less than 3 months - - - -
3 to 6 months 1.1153 151,200 135,572 56
6 to 12 months 1.1037 36,600 33,163 237
12 to 24 months 1.1121 275,700 247,907 (1,218)
Greater than 24 months 1.1042 284,000 257,203 (474)
------------------------ --------- ---------- ---------- ----------
1.1093 747,500 673,844 (1,399)
------------------------ --------- ---------- ---------- ----------
As at the year end, the valuation on the foreign exchange
derivatives consisted of GBP1,989k payable to Natwest Markets Plc
and GBP560k receivable from National Australia Bank Limited. At 31
December 2020 Natwest Markets Plc had an S&P credit rating of
A-/Negative and National Australia Bank Limited had an S&P
credit rating of AA-/Negative.
17. Share capital and reserves
Ordinary Ordinary
Shares Shares
31 December 31 December
2020 2019
'000's '000's
Opening balance 1,636,564 1,178,373
---------------------------------------- ------------- -------------
Issued for cash 260,000 450,000
Issued as a scrip dividend alternative 5,056 6,376
Issued in lieu of management fees 1,783 1,815
---------------------------------------- ------------- -------------
Issued at 31 December - fully paid 1,903,403 1,636,564
---------------------------------------- ------------- -------------
On 21 May 2020, the Company issued 100,000,000 shares raising
GBP120,000,000 before costs.
On 15 December 2020, the Company issued 160,000,000 shares
raising GBP200,000,000 before costs.
In each case the Company used the funds to repay the revolving
credit facility and then fund acquisitions.
The company issued 5,055,591 shares in relation to scrip take-up
as an alternative to dividend payments in relation to the dividends
paid in the year.
The holders of the 1,903,402,338 (2019 1,636,563,717) 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 31 December
2020 2019
GBP'000s GBP'000s
Opening balance 1,721,309 1,189,542
Ordinary Shares issued 328,632 539,627
Cost of Ordinary Shares issued (3,704) (7,859)
-------------------------------- ------------ -----------
Closing balance 2,046,237 1,721,309
-------------------------------- ------------ -----------
Other reserves
31 December 31 December
2020 2019
GBP'000s GBP'000s
Opening balance 1,008 1,008
Shares to be issued in lieu of management fees incurred
in H1 2019 - 991
Shares to be issued in lieu of management fees incurred
in H2 2019 (Note 18) - 1,008
Shares to be issued in lieu of management fees incurred
in H1 2020 (Note 18) 995 -
Shares to be issued in lieu of management fees incurred
in H2 2020 (Note 18) 1,005 -
Shares issued in the year, transferred to share premium (2,002) (2,000)
--------------------------------------------------------- ----------- ------------
Closing balance 1,006 1,008
--------------------------------------------------------- ----------- ------------
Retained reserves
Retained reserves comprise retained earnings, as detailed in the
statement of changes in shareholders' equity.
18. Related party and key advisor transactions
Loans to related parties:
31 December 31 December
2020 2019
'000's '000's
Short-term balance outstanding on accrued interest
receivable 11,423 1,050
Short-term balance outstanding from TRIG UK, in relation
to Management fees to be settled in shares(2) 1,005 1,008
Long-term loan stock to TRIG UK and TRIG UK I(1) 1,312,037 997,255
---------------------------------------------------------- ----------- ------------
1,324,465 999,314
---------------------------------------------------------- ----------- ------------
1 Included within Investments at fair value through profit or
loss on the Balance Sheet
2 Included within Other receivables on the Balance Sheet
During the year, interest totalling GBP78,165k (2019:
GBP63,440k) was earned in respect of the long-term interest-bearing
loan between the Company and its subsidiaries TRIG UK and TRIG UK
I, of which GBP11,423k (2019: GBP1,050k) was receivable at the
balance sheet date.
Key advisor transactions
The Group's Investment Manager (InfraRed Capital Partners
Limited) and Operations Manager (Renewable Energy Systems Limited)
are entitled to 65 per cent and 35 per cent, respectively, 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, 0.80 per cent in respect of the Adjusted Portfolio
Value between GBP1 billion and GBP2 billion, 0.75 per cent in
respect of the Adjusted Portfolio Value between GBP2 billion and
GBP3 billion and 0.70 per cent in respect of the Adjusted Portfolio
Value in excess of GBP3 billion. These fees are payable by TRIG UK,
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 total fee amount charged to the Company and its
subsidiary, TRIG UK as set out above. The Investment Manager
advisory fee charged to the income statement for the year was
GBP130k (2019: GBP130k), of which GBP33k (2019: GBP33k) remained
payable in cash at the balance sheet date. The Operations Manager
advisory fee charged to the income statement for the year was
GBP70k (2019: GBP70k), of which GBP18k (2019: GBP18k) remained
payable in cash at the balance sheet date.
The Investment Manager management fee charged to TRIG UK for the
year was GBP10,884k (2019: GBP9,141k), of which GBP2,484k (2019:
GBP2,289k) remained payable in cash at the balance sheet date. The
Operations Manager management fee charged to TRIG UK for the year
was GBP5,861k (2019: GBP4,922k), of which GBP1,337k (2019:
GBP1,233k) remained payable in cash at the balance sheet date.
In addition, the Operations Manager received GBP9,752k (2019:
GBP7,704k) for services in relation to Asset Management, Operation
and Maintenance and other services provided to project companies
within the investment portfolio, and GBP65k (2019: GBP175k) for
additional advisory services provided to TRIG UK, neither of which
are consolidated in these financial statements.
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent of the Group's
aggregate management fees up to an Adjusted Portfolio Value of GBP1
billion 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.
As at 31 December 2019, 889,550 shares equating to GBP1,008,216,
based on a Net Asset Value ex dividend of 113.34 pence per share
(the Net Asset Value at 31 December 2019 of 115.0 pence per share
less the interim dividend of 1.66 pence per share) were due, in
respect of management fees earned in H2 2019, but had not been
issued. The Company issued these shares on 31 March 2020.
On 30 September 2020, the Company issued 893,480 shares,
equating to GBP994,533, based on a Net Asset Value ex dividend of
111.31 pence per share (the Net Asset Value at 30 June 2020 of
113.0 pence per share less the interim dividend of 1.69 pence per
share), in respect of management fees earned in H1 2020.
As at 31 December 2020, 885,012 shares equating to GBP1,005,464,
based on a Net Asset Value ex dividend of 113.61 pence per share
(the Net Asset Value at 31 December 2020 of 115.3 pence per share
less the interim dividend of 1.69 pence per share) were due, in
respect of management fees earned in H2 2020, but had not been
issued. The Company intends to issue these shares on 31 March
2021.
The Directors of the Company received fees for their services.
Further details are provided in the Directors' Remuneration Report.
Total fees for the Directors for the year were GBP282,667 (2019:
GBP227,700). Directors' expenses of GBP3,042 (2019: GBP9,448) were
also paid in the year.
All of the above transactions were undertaken on an arm's length
basis.
19. Guarantees and other commitments
As at 31 December 2020, the Company and its subsidiaries, had
provided GBP58.9m (2019: GBP36.7m) in guarantees in relation to
projects in the TRIG portfolio.
The Company also guarantees the revolving credit facility,
entered into by TRIG UK and TRIG UK I, which it may use to acquire
further investments.
As at 31 December 2020 the Company has GBP392m of future
investment obligations relating to four wind farms (2019: GBP350.4m
relating to four wind farms).
More details on timing and amounts can be found in section 2.9
of the Strategic Report.
The Company and its subsidiaries have issued decommissioning and
other similar guarantee bonds with a total value of GBP22.9m.
On 12 February 2021, the Company announced that it had exchanged
contracts to acquire an equity interest of 100% of Grönhult. The
Project is a construction onshore wind farm in Sweden with
investment commitments outstanding and construction to be carried
out over 2021 and 2022.
20. Contingent consideration
The Group has performance-related contingent consideration
obligations of up to GBP0.4m (2019: GBP32.3m) relating to
acquisitions completed prior to 31 December 2020. These payments
depend on the performance of certain wind farms and other
contracted enhancements. The payments, if triggered, would be due
between 2021 and 2026. 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 improvement in investment. The arrangements are generally two
way in that if performance is below base case levels some refund of
consideration may become due.
21. Events after the balance sheet date
On 15 January 2021, the Company announced that it had exchanged
contracts to acquire an equity interest of 17.5% in Beatrice
offshore wind farm, located off the north east coast of Scotland.
The wind farm will be purchased from Copenhagen Infrastructure
Partners and has been developed by SSE plc. Regulatory and lender
consents are expected to be received in the coming weeks and TRIG
has partnered with other investors to invest in this project which
is in line with its strategy of partnering with aligned
co-investors on larger transactions.
On 4 February 2021, the Company declared an interim dividend of
1.69 pence per share for the quarter 1 October 2020 to 31 December
2020. The total dividend, GBP32,167,500 payable on 31 March 2021,
is based on a record date of 12 February 2021 and the number of
shares in issue at that time being 1,903,402,338.
On 12 February 2021, the Company announced that it had exchanged
contracts to acquire Grönhult, a ready-to-build onshore wind farm
located in the southwest of Sweden. The Project is being acquired
from Vattenfall, the leading Swedish utility and a major developer
of renewables, who will also manage the construction process and
will provide ongoing asset management services. Construction will
begin in Q2 2021 and become operation at the end of Q4 2022. On
completion, the Project is expected to represent approximately 3%
of TRIG's portfolio value on a fully committed basis and
investments in Sweden will account for 10% of TRIG's portfolio.
There are no other events after the balance sheet date, which
are required to be disclosed.
22. Subsidiaries
As a result of applying Investment Entities (Amendments to IFRS
10, IFRS 12 and IAS 27) and Investment Entities: Applying the
Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS
28), all subsidiaries (including Associates and Joint Ventures) are
held at fair value based on the Company's ownership interest as
opposed to being consolidated on a line-by-line basis. The
following subsidiaries have not been consolidated in these
Financial Statements;
Ownership
Name Country Interest
The Renewables Infrastructure Group (UK) Limited UK 100%
The Renewables Infrastructure Group (UK) Investments
Limited UK 100%
Roos Energy Limited UK 100%
Grange Renewable Energy Limited UK 100%
Hill of Towie Limited UK 100%
Green Hill Energy Limited UK 100%
Wind Farm Holdings Limited UK 100%
Forss Wind Farm Limited UK 100%
Altahullion Wind Farm Limited UK 100%
Lendrum's Bridge Wind Farm Limited UK 100%
Lendrum's Bridge (Holdings) Limited UK 100%
Lough Hill Wind Farm Limited UK 100%
Republic of
MHB Wind Farms Limited Ireland 100%
Republic of
MHB Wind Farms (Holdings) Limited Ireland 100%
The Renewables Infrastructure Group (France) SAS France 100%
CEPE de Haut Languedoc SARL France 100%
CEPE du Haut Cabardes SARL France 100%
CEPE de Cuxac SARL France 100%
CEPE des Claves SARL France 100%
CEPE de Puits Castan SARL France 100%
European Investments (SCEL) Limited UK 100%
European Investments (Cornwall) Limited UK 100%
Churchtown Farm Solar Limited UK 100%
East Langford Solar Limited UK 100%
Manor Farm Solar Limited UK 100%
European Investments Solar Holdings Limited UK 100%
Sunsave 12 (Derriton Fields) Limited UK 100%
Sunsave 25 (Wix Lodge Farm) Limited UK 100%
Parley Court Solar Park Limited UK 100%
Egmere Airfield Solar Park Limited UK 100%
Penare Farm Solar Park Limited UK 100%
European Investments (Earlseat) Limited UK 100%
Earlseat Wind Farm Limited UK 100%
European Investments Solar Holdings 2 Limited UK 100%
BKS Energy Limited UK 100%
Hazel Renewables Limited UK 100%
Kenwyn Solar Limited UK 100%
MC Power Limited UK 100%
Tallentire Energy Limited UK 100%
Republic of
Taurbeg Limited Ireland 100%
Fred. Olsen Wind Limited UK 49%
Fred. Olsen Wind Holdings Limited UK 49%
Crystal Rig Windfarm Limited UK 49%
Rothes Wind Limited UK 49%
Paul's Hill Wind Limited UK 49%
Crystal Rig II Limited UK 49%
Rothes II Limited UK 49%
Mid Hill Wind Limited UK 49%
Freasdail Energy Limited UK 100.0%
FVP Broussan France 48.9%
FVP Chateau France 48.9%
FPV du Plateau France 48.9%
SECP Borgo France 48.9%
Sole e Aria 1 France 48.9%
SECP Olmo 2 France 48.9%
Sole e Aria 2 France 48.9%
FPV Pascialone France 48.9%
Sole e Aria 3 France 48.9%
FPV Santa Lucia France 48.9%
FPV Agrinergie France 48.9%
FPV d'Export France 48.9%
Agrisol 1A Services France 48.9%
SECP Chemin Canal France 48.9%
FPV Ligne des Quatre Cents France 48.9%
FPV Ligne des Bambous France 48.9%
Heliade Bellevue France 48.9%
SECP Creuilly France 48.9%
Akuo Tulip Assets SAS France 48.9%
Verrerie Photovoltaique SAS France 100.0%
FPV du Midi France 51.0%
Neilston Community Wind Farm LLP UK 100%
Garreg Lwyd Energy Limited UK 100%
UK Energy Storage Services Limited UK 100%
Scira Offshore Energy Limited UK 14.7%
Republic of
Pallas Energy Supply Limited Ireland 100%
Republic of
Pallas Windfarm Limited Ireland 100%
CEPE Rosieres SARL France 100%
CEPE Montigny SARL France 100%
Solwaybank Energy Limited UK 100%
European Wind Investments Group Limited UK 100%
European Wind Investments Group 2 Limited UK 100%
Irish Wind Investments Group Limited UK 100%
Offshore Wind Investments Group Limited UK 100%
Scandinavian Wind Investments Group Limited UK 100%
European Storage Investments Group Limited UK 100%
Trafalgar Wind Holdings Limited UK 100%
European Investments Tulip Limited UK 100%
Sirocco Wind Holding AB Sweden 100%
Jadraas Vindkraft AB Sweden 100%
Hallasen Kraft AB Sweden 100%
Parc Eollen Nordex XXI SAS (Epine) France 100%
Fujin SAS France 34.6%
Energie du Porcin France 27.7%
Eolienne de Rully France 34.6%
Parc Eollen de Fontaine Macon France 34.6%
Parc Eollen de Vignes France 34.6%
Energie Eollenne Somme II France 30.8%
C.E.P.E. Rosieres France 100%
C.E.P.E. Montigny La Cour SARL France 100%
Energies TIlle et Venelle Holdings SAS France 100%
Energies Entre Tille et Venelle SAS France 100%
German Offshore Wind Invstments Group (Holdings)
Limited Germany 100%
German Offshore Wind Investments Group Limited Germany 100%
GOW01 Investor LuxCo SARL Luxembourg 50%
Gode Wind 1 Investor Holding GmbH Germany 50%
Gode Wind 1 Offshore Wind Farm GmbH Germany 25%
Little Raith Wind Farm Limited UK 100%
Blary Hill Energy Limited UK 100%
Merkur Offshore Wind Farm Holdings Limited UK 69%
Merkur Offshore GP GmbH Germany 24.6%
Merkur Offshore Investment Holdings GmbH & Co KG Germany 24.6%
Merkur Offshore Holdings GmbH Germany 24.6%
Partners Group Merkur Investments I SARL Luxembourg 24.6%
Partners Group Merkur Investments II SARL Luxembourg 24.6%
PG Merkur Holding GmbH Germany 24.6%
Merkur Offshore GmbH Germany 24.6%
Haut Vannier Holding SAS France 100%
Haut Vannier SAS France 100%
Offshore Wind Investments Group 2 Limited UK 100%
Verneuil Holdings Limited UK 71.7%
Bilbao Offshore Investment Limited UK 35.85%
Bilbao Offshore Holding Limited UK 35.85%
East Anglia One Limited UK 35.85%
Offshore Wind Investments Group 3 Limited UK 100%
Offshore Wind Investments Group 4 Limited UK 100%
10 Directors and Advisers
Directors and Advisers
DIRECTORS
Helen Mahy (Chairman)
Jonathan (Jon) Bridel
Shelagh Mason
Klaus Hammer
Tove Feld (Appointed 1 March 2020)
REGISTRAR
Link Market Services (Guernsey) Limited
PO Box 627
St Peter Port
Guernsey
GY1 4PP
ADMINISTRATOR TO COMPANY, DESIGNATED MANAGER, COMPANY SECRETARY
AND REGISTERED OFFICE
Aztec Financial Services (Guernsey) Limited
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3PP
+44 1481 748 831
INVESTMENT MANAGER
InfraRed Capital Partners Limited
Level 7, One Bartholomew Close
Barts Square
London EC1A 7BL
OPERATIONS MANAGER
Renewable Energy Systems Limited
Beaufort Court
Egg Farm Lane
Kings Langley
Hertfordshire WD4 8LR
FINANCIAL PR
Maitland/AMO
3 Pancras Square
Kings Cross
London N1C 4AG
UK TRANSFER AGENT
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Helpline: 0871 664 0300
AUDITOR
Deloitte LLP
Regency Court
Esplanade
St Peter Port
Guernsey GY1 3HW
BROKERS
Investec Wealth & Investment Limited
30 Gresham Street
London EC2V 7QP
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Key Company Data
Company name The Renewables Infrastructure Group Limited
Registered address East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey
Listing London Stock Exchange - Premium Listing (TRIG)
Ticker symbol TRIG
SEDOL BBHX2H9
Index inclusion FTSE All-Share, FTSE 250, FTSE 350 and FTSE
350 High Yield indices
Company year end 31 December
Dividend payments Quarterly (March, June, September, December)
Investment Manager InfraRed Capital Partners Limited
("IM")
Operations Manager Renewable Energy Systems Limited
("OM")
Company Secretary Aztec Financial Services (Guernsey) Limited
and Administrator
Shareholders' funds GBP2,195m as at 31 December 2020
Market capitalisation GBP2,433m as at 31 December 2020
Management Fees 1.0% per annum of the Adjusted Portfolio Value1
of the investments up to GBP1.0bn (with 0.2%
of this paid in shares), falling to (with no
further elements paid in shares) 0.8% per annum
for the Adjusted Portfolio Value above GBP1.0bn,
0.75% per annum for the Adjusted Portfolio Value
above GBP2.0bn and 0.7% per annum the Adjusted
Portfolio Value above GBP3.0bn. Fees are split
between the Investment Manager (65%) and the
Operations Manager (35%).
No performance or acquisition fees.
ISA, PEP and SIPP The Ordinary Shares are eligible for inclusion
status in PEPs and ISAs (subject to applicable subscription
limits) provided that they have been acquired
by purchase in the market, and they are permissible
assets for SIPPs.
NMPI status Following the receipt of legal advice, the Board
confirms that it conducts the Company's affairs,
and intends to continue to conduct the Company's
affairs, such that the Company would qualify
for approval as an investment trust if it were
resident in the United Kingdom. It is the Board's
intention that the Company will continue to
conduct its affairs in such a manner and that
IFAs should therefore be able to recommend its
Ordinary Shares to ordinary retail investors
in accordance with the FCA's rules relating
to non-mainstream investment products.
FATCA The Company has registered for FATCA and has
a GIIN number J0L1NL.99999.SL.831.
KID The Company's KID can be found on the Company's
website.
Investment policy The Company's Investment Policy is set in Section
2.3 and can also be found on the Company's website.
Website www.TRIG-Ltd.com
Notes:
1 Adjusted Portfolio Value means fair market value, taking into
account any project financing, less any other debt held other than
the acquisition facility.
[1] The NAV per share at 31 December 2020 is calculated on the
basis of the 1,903,402,338 Ordinary Shares in issue at 31 December
2020 plus a further 885,012 Ordinary Shares to be issued to the
Managers in relation to part-payment of Managers' fees for H2 2020
and a NAV of GBP2,194.9m.
[2] On an Expanded Basis. Please refer to Section 2.9 for an
explanation of the Expanded Basis.
[3] Please refer to Section 2.10 for more detail on Company
performance.
[4] Past performance is no guarantee of future returns. There
can be no assurance that targets will be met or that the Company
will make any distributions, or that investors will receive any
return on their capital. Capital and income at risk.
[5] Calculated based on each project's generation capacity
pro-rated for TRIG's share of subordinated debt and equity capital.
Capacity is from both generation and battery output and includes
expected capacity arising from investment commitments as at 16
February 2021.
[6] On a committed basis at the date of this report, and based
on average regional household electricity consumption figures and
the IFI Approach to GHG Accounting for Renewable Energy. The
Portfolio, in 2020, generated electricity capable of powering a
million homes and displaced c. 1.2m tonnes of CO(2) .
[7] Including dividends, interest and loan repayments.
[8] Sale of the Ersträsk windfarm in Sweden back to Enercon
following construction delays and the planned part sell down of
TRIG's stake in Merkur offshore windfarm in Germany to minority
co-investors.
[9] Using the methodology of the Association of Investment Companies ("AIC").
[10] This is a target only and not a profit forecast. There can
be no assurance that this target will be met.
[11] As announced in January 2021 and expected to complete later in Q1 2021.
[12] The AIC Code has been endorsed by the Financial Reporting
Council (FRC) and the Guernsey Financial Services Commission
(GFSC).
[13] Principles for Responsible Investment, a United
Nations-supported international network of investors.
[14] The list maintained by the Financial Conduct Authority
(acting in its capacity as the UK Listing Authority) in accordance
with Section 74(1) of the Financial Services and Markets Act 2000
(the Act) for the purposes of Part VI of the Act.
[15] Net zero refers to achieving a balance between the amount
of greenhouse gas emissions produced and the amount removed from
the atmosphere. There are two different routes to achieving net
zero, which work in tandem: reducing existing emissions and
actively removing greenhouse gases.
[16] According to the Bloomberg New Energy Finance Covid-19 impact tracker
[17] Actual values calculated in accordance with the IFI
Approach to GHG Accounting for Renewable Energy. Portfolio at year
end is capable of mitigating 1.3m tonnes of carbon emissions
p.a.
[18] This relates to electricity used on site.
[19] https://www.un.org/sustainabledevelopment
[20] Number of operational TRIG sites engaged in pro-active
habitat management plans that exceed standard environmental
maintenance.
[21] https://www.un.org/sustainabledevelopment
[22] Including amount distributed so far via additional TRIG
Covid funding.
[23] https://www.un.org/sustainabledevelopment
[24] The LTAFR is calculated on the basis of the number of
accidents which have occurred in the period divided by the number
of hours worked multiplied by 100,000 to give a rate for every
100,000 hours worked. Whilst all accidents are recorded by RES,
only accidents that have resulted in a worker being unable to
perform their normal duties for more than seven days are included
in this calculation in line with reportable accidents as defined by
UK HSE RIDDOR regulation. 'As previously reported, the HSE
considers the central estimate for the 'All Industries' injury
frequency rate to be 1.24 per 100,000 hours (2014 value). The UK
renewables industry is working to create industry specific
benchmarks to compare with moving forward.
[25] https://www.un.org/sustainabledevelopment
[26] This is TRIG's equity share of the nominal capacity of the windfarm
[27] The main revenue type during the subsidy period. Thereafter
all revenues are wholesale power market.
[28] The segmentation above is on a fully committed basis and
includes assets under construction at the time the investment was
committed.
[29] The Phoenix SAS portfolio investment is made in the form of
mezzanine level bonds where the Company does not have an equity
stake. The portfolio comprises five onshore wind farms in Northern
France with a combined capacity of 74MW and four operational solar
parks with battery storage located on the islands of Corsica and La
Réunion with a combined capacity of 29MW ("the Portfolio"). All the
Portfolio assets are backed by the French government's
Feed-in-Tariff subsidy and have an average year of commission of
2015.
[30] This column does not cast due to rounding differences
[31] This column does not cast due to rounding differences
[32] On an invested basis
[33] Irish Wind Energy Association
[34] The percentage of committed Portfolio value for Merkur (net) is 7%
[35] Committed Portfolio Value is GBP2,629.8m and includes
GBP392m of investment commitments outstanding at the Balance Sheet
date.
[36] The percentage of committed Portfolio value for Merkur (net) is 7%
[37] Power price forecasts used in the Directors' valuation for
each market are based on analysis by the Investment Manager using
data from leading power market advisers. In the illustrative
blended price curve, the power price forecasts are weighted by the
P50 estimate of production for each of the projects in the 31
December 2020 portfolio. Forecasts are shown net of assumptions for
PPA discounts and cannibalisation. The average level of reduction
to the baseload forecast power price assumed to renewable
generation across the portfolio is approximately 15%.
[38] Cannibalisation describes the effect that renewables (an
intermittent generator) can have on the overall power prices,
whereby the marginal cost of generation, which in turn drives the
power prices, is lower than the average which would be expected of
a continuous base load generator as a result of the additional
supply when renewables are generating. Rates differ over time and
between markets but all are affected.
[39] The majority of Jädraås wind farm income is from wholesale
power sales which in the Nord Pool are denominated in Euros.
Accordingly, the investment is treated as Euro denominated
notwithstanding that the smaller subsidy element of the revenues
and some operating costs are denominated in Swedish Krona.
[40] Includes Sheringham, Freasdail and Crystal Rig II
[41] TRIG announced in January 2021 that it had exchanged
contracts to purchase a stake in Beatrice offshore wind farm from
Copenhagen Infrastructure Partners alongside other investors.
Completion is expected in the following weeks upon receipt of
regulatory and lender consents.
[42] TRIG announced in February 2021 that it has exchanged
contracts to acquire ready-to-build Grönhult onshore wind farm from
Vattenfall who will also manage the construction process.
Construction will begin in Q2 2021 and is expected to be
operational at the end of Q4 2022.
[43] The majority of the Jädraås wind farm income is from
wholesale power sales which in the Nord Pool are denominated in
Euros. Accordingly, the investment is treated as Euro denominated
notwithstanding that the smaller subsidy element of the revenues
and some operating costs are denominated in Swedish Krona.
[44] SEM refers to the Irish Single Electricity Market
[45] Notwithstanding in France where a proposal has been voted
in to reduce certain historical tariffs. Further detail is provided
in Section 2.8 - Valuation of the Portfolio. This affects assets
representing less than 1% of TRIG's portfolio, by value, and is not
expected to have a significant financial impact on the overall
portfolio
[46] Power Purchase Agreement
[47] Feed-in Tariff
[48] Renewables Obligation Certificates
[49] Please refer to Note 2.b. Going Concern for further details
of the Company's leverage at the end of the year.
[50] The Parker Review into the Ethnic Diversity of UK boards
which was published in October 2017 and updated in February
2020
[51] Tove Feld's remuneration was pro-rated from commencement of
her Directorship on the 1st of March 2020.
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