TIDMUKW
RNS Number : 2629Q
Greencoat UK Wind PLC
25 February 2021
25 February 2021
GREENCOAT UK WIND PLC (the "Company")
Greencoat UK Wind PLC reports results for the year ended 31
December 2020
Greencoat UK Wind PLC today announces the final results for the
year to 31 December 2020 as below. These results were approved by
the Board of Directors on 24 February 2021.
Greencoat UK Wind PLC is the leading listed renewable
infrastructure fund, invested in UK wind farms. The Company's aim
is to provide investors with an annual dividend increases in line
with RPI inflation while preserving the capital value of its
investment portfolio in the long term on a real basis through
reinvestment of excess cashflow and the prudent use of gearing.
The Company provides investors with the opportunity to
participate directly in the ownership of UK wind farms, so
increasing the resources and capital dedicated to the deployment of
renewable energy and the reduction of greenhouse gas emissions.
2020 Highlights
Generation
-- The Group's investments generated 2,952GWh of zero carbon electricity.
-- Net cash generation (Group and wind farm SPVs) was GBP145.2 million.
High quality acquisitions and oversubscribed equity raises
-- Investments in Slieve Divena II, Walney and Humber Gateway
increased the portfolio to 38 operating wind farm investments and
net generating capacity to 1,173MW as at 31 December 2020.
-- Agreement to acquire Kype Muir Extension and South Kyle
subsidy free wind farm projects, expected to become operational in
2022 and 2023 respectively.
-- Issuance of further shares raising GBP400 million.
Dividends and balance sheet
-- The Company has declared total dividends of 7.1 pence per
share with respect to the year and is targeting a dividend of 7.18
pence per share for 2021 (increased in line with December 2020
RPI).
-- GBP1.1 billion outstanding borrowings as at 31 December 2020,
equivalent to 33 per cent of GAV.
Key Metrics
As at
31 December 2020
------------------------------------------------------ -------------------
Market capitalisation GBP2,448.0 million
Share price 134.2 pence
Dividends with respect to the year GBP118.7 million
Dividends with respect to the year per share 7.10 pence
GAV GBP3,329.9 million
NAV GBP2,229.9 million
NAV per share 122.2 pence
NAV movement per share (adjusting for dividends) 0.7 pence
Total return (NAV) 6.5 per cent
TSR (6.2) per cent
Premium to NAV 9.8 per cent
CO(2) emissions reduced per annum 1.5 million tonnes
Homes powered per annum 1.2 million homes
Funds invested in community funds and social projects GBP3.8 million
------------------------------------------------------ -------------------
Subsequent events
On 19 February 2021, the Company issued 151 million new shares
at a price of 131 pence per share, raising gross proceeds of GBP198
million. Proceeds from the Placing were used to acquire the
remaining 50% of the Braes of Doune wind farm, announced on 23
February 2021, and the remainder will be used to repay or reduce
borrowings under the Company's revolving credit facility to allow
the Company to fund its strong pipeline of acquisition
opportunities, including GBP162 million of previously announced
committed acquisitions over the next 12 months.
Following the Braes of Doune acquisition, the Company has
outstanding net gearing of 28% of Gross Asset Value, of which
GBP700m is fixed rate term debt.
Commenting on today's results, Shonaid Jemmett-Page, Chairman of
Greencoat UK Wind, said:
"We are pleased to report another good performance, building on
the track record we have established since coming to market in
2013. Our simple, low risk and proven strategy has enabled us to
grow the portfolio through the acquisition of high-quality assets
and to increase our dividend in line with RPI, once more.
"With the support of shareholders through equity issuance
carried out during the year, 2020 was an active investment year as
we added three new assets to our portfolio to take our generation
capacity to approximately 1.2GW. Alongside these ROC-accredited
assets, we were also able to secure agreements to acquire two
subsidy free wind farms after they become operational.
"The pipeline of potential acquisitions remains healthy and we
look forward to adding further attractive growth opportunities in
due course as we continue to play our role in helping to
decarbonise the UK economy."
Annual report
A copy of the annual report has been submitted to the National
Storage Mechanism and will shortly be available for inspection at
www.morningstar.co.uk/uk/NSM . The annual report will also shortly
be available on the Company's website at www.greencoat-ukwind.com
where further information on the Company can also be found.
Details of the conference call for analysts and investors:
There will be a conference call at 9.30am today for analysts and
investors. To register for the event please notify Headland, either
by email to ukwind@headlandconsultancy.com or by telephone on +44
(0)20 3805 4822.
Presentation materials will be posted on the Company's website,
www.greencoat-ukwind.com , from 9.30am.
For further information, please contact:
Greencoat UK Wind PLC 020 7832 9425
Stephen Lilley
Laurence Fumagalli
Tom Rayner
Headland Consultancy 020 3805 4822
Stephen Malthouse
Rob Walker
Charlie Twigg
ukwind@headlandconsultancy.com
Defining Characteristics
Greencoat UK Wind PLC was designed for investors from first
principles to be simple, transparent and low risk.
-- The Group is invested solely in UK wind farms.
-- Wind is the most mature and largest scale renewable technology.
-- The UK has a long established regulatory regime, high wind
resource and GBP70 billion worth of wind farms in operation.
-- The Group is wholly independent and thus avoids conflicts of
interests in its investment decisions.
-- The independent Board is actively involved in key investment
decisions and in monitoring the efficient operation of the assets,
and works in conjunction with the most experienced investment
management team in the sector.
-- Low gearing is important to ensure a high level of cashflow
stability and higher tolerance to downside sensitivities.
-- The Group invests in sterling assets and thus does not incur material currency risk.
All capitalised terms are defined in the list of defined terms
unless separately defined.
Chairman's Statement
I am pleased to present the Annual Report of Greencoat UK Wind
PLC for the year ended 31 December 2020.
Performance
2020 was a significant year of growth for the Company with
GBP914 million invested and GBP400 million of new equity
raised.
During the year, portfolio generation was 3 per cent below
budget at 2,952GWh. Power prices were also below budget, primarily
reflecting low gas prices and low power demand as a result of the
COVID-19 pandemic and associated lockdown, especially in the first
half of the year. Despite both of these adverse aspects, dividend
cover remained robust: net cash generated by the Group and wind
farm SPVs was GBP145 million, providing cover of 1.3x on GBP113
million of dividends paid in the year, demonstrating the resilience
of our operating model.
By the end of 2020, the portfolio was generating sufficient
electricity to power 1.2 million homes and reducing carbon dioxide
emissions by approximately 1.5 million tonnes per annum through the
displacement of thermal generation.
Dividends and Returns
Declared dividends for the year total 7.1 pence per share, with
the fourth and final quarterly dividend of 1.775 pence per share to
be paid on 26 February 2021. With our continuing strong cashflow
and robust dividend cover we can confidently target a dividend of
7.18 pence per share with respect to 2021, increased in line with
December's RPI.
NAV per share increased from 119.7 pence per share (ex dividend)
on 31 December 2019 to 120.4 pence per share (ex dividend) on 31
December 2020, an increase of 0.7 pence (0.6 per cent) during the
year. Since listing, NAV has increased by more than RPI, meaning
that we have continued to meet this key objective of the Group as
well as continuing to increase the dividend by RPI.
The Total Shareholder Return for the year was negative 6.2 per
cent, driven largely by economic uncertainty throughout the year,
but since listing, the TSR has been 101.8 per cent.
Acquisitions
2020 has been an active investment year for us. In March, we
invested GBP51 million into Slieve Divena II wind farm and in
September, we invested GBP349 million into Walney offshore wind
farm. In December, we invested GBP500 million into Humber Gateway
offshore wind farm. All of these investments were acquired from
either SSE or RWE, both long term co-investment partners of the
Group, and both vendors intend to use the sale proceeds to
construct additional offshore capacity. All 3 are accredited under
the ROC regime, taking our total of such ROC investments to 37 and
our total operating wind farm investments to 38. After the Humber
Gateway acquisition, the Group's offshore fleet accounts for 30 per
cent of assets by value.
In April, we also made a commitment to acquire South Kyle wind
farm for GBP320 million from Vattenfall on commencement of
commercial operations (target Q1 2023) and, in December, we made a
commitment to acquire 49.9 per cent of Kype Muir Extension wind
farm for GBP51 million from Banks Renewables on commencement of
commercial operations (target Q4 2022).
Post year end, we acquired the remaining 50% shareholding in
Braes of Doune wind farm in February 2021 for GBP48 million.
During 2021, we expect to bring our Douglas West subsidy free
project into commercial operation and complete the acquisitions of
3 more subsidy free projects, Windy Rig, Twentyshilling and Glen
Kyllachy, once they have been constructed and operations
started.
Equity Issuance
In order to finance our continuing growth and pursue value
creating opportunities, we issued 305 million new shares on 1
October 2020 at a price of 131 pence per share, raising gross
proceeds of GBP400 million. The equity raising was oversubscribed
and again issued at a price significantly higher than NAV per share
and was therefore NAV per share accretive.
Post year end, on 19 February 2021, the Company issued 151
million new shares at a price of 131 pence per share, raising gross
proceeds of GBP198 million.
Gearing
As at 31 December 2020, the Group had GBP1.1 billion of debt
outstanding, equating to 33 per cent of GAV with average gearing
during the year of 26 per cent. In December 2020, we arranged a
further GBP100 million of term debt, taking total fixed rate term
debt to GBP700 million. In August 2020, we also increased the size
of the Company's revolving credit facility to GBP400 million.
Longer term borrowing consists of various maturities to November
2026, thus reducing financing risk. The weighted average cost of
borrowing is 2.26 per cent.
Following the equity raise and investment in Braes of Doune in
February 2021, the Group's gearing was 28 per cent of GAV.
The Group will generally avoid using non-recourse debt at wind
farm level and aims to keep overall Group level borrowings at a
prudent level (the maximum is 40 per cent of GAV). Over the medium
term we would expect gearing to be between 20 and 30 per cent of
GAV.
Strategy and Outlook
Wind continues to be the most mature and widely deployed
renewable energy technology in the UK. In November 2020, in advance
of the delayed COP26 conference scheduled for the Autumn of 2021 in
Glasgow, the Prime Minister announced a 10 point plan for the
delivery of the 2050 net zero emissions target. A key part of that
plan is a 40GW offshore wind target for 2030.
Our Investment Objective has remained unchanged over the last 8
years since listing: to provide shareholders with an annual
dividend that increases in line with RPI inflation while preserving
the capital value of the investment portfolio in real terms. This
is achieved through a focused strategy of investing only in wind
farms and only in the UK. Our intention remains to adhere strictly
to this core strategy.
Growth by acquisition brings benefits to shareholders as:
-- a larger scale brings economies and enables better terms to be obtained from suppliers;
-- equity raisings following acquisitions provide additional
opportunity for shareholders to increase their investment in the
Company. Although not pre-emptive, preference is given to existing
shareholders when allocating shares in our equity raisings;
-- these equity raisings are priced at a premium to NAV per
share thus enhancing overall NAV per share for existing
shareholders; and
-- equity raisings increase the liquidity of shares in the
market (during 2020 on average 12.4 million of the Company's shares
were traded weekly on the London Stock Exchange).
During 2020 we made investments and commitments totalling GBP1.3
billion, of which approximately 70 per cent are in ROC accredited
wind farms. Although we are starting to see attractive CFD and
subsidy free assets within our significant acquisition pipeline, we
expect that significant future investment will continue to be made
in UK wind farms accredited under the ROC regime.
The executive management continues to maintain a disciplined
acquisition strategy: if a potential investment is not in line with
the Company's investment objectives, or is otherwise not in the
interests of shareholders, then we will not invest.
Through strong cashflow and robust dividend cover, coupled with
our disciplined approach, we are confident in our ability to
continue to meet the objectives of dividend growth in line with RPI
and capital preservation in real terms.
We have examined the potential impact of the UK's departure from
the EU and concluded that there is unlikely to be any material
change to the Company's business.
Health, Safety and the Environment
As a responsible investor in operating wind farms, the Company
takes its Health and Safety responsibilities very seriously. It
works with its Investment Manager to promote the highest standard
of health, safety and environmental management practices in
managing its portfolio of investments. Detailed key performance
indicators and the results of audits are regularly reviewed by the
Board and action taken where necessary. Following a serious health
and safety incident on one of our wind farm investments in June, an
independent review was carried out and the findings actioned. As a
result, the operating contractor reviewed and revised their health
and safety policies and procedures. We continue to monitor the
standards maintained by the operators of our wind farm investments
to seek assurance that high standards of health and safety
performance are achieved and maintained.
Climate Change
As a Company investing in UK wind farms, our strategy and
activities naturally make a positive contribution toward the
worldwide goal of achieving a net-zero carbon emissions economy and
limiting global warming to 1.5C degrees. We welcome the opportunity
to make appropriate climate related financial disclosures as
recommended by the Task Force on Climate-Related Financial
Disclosures (TCFD) in this year's Annual Report, which may be
developed further in future reports. Detailed disclosures can be
read in the Strategic Report below.
The Board and Governance
At the AGM on 30 April 2020, Tim Ingram retired from the Board
and I, on behalf of the whole Board, would like to thank him for
the fine job he has done chairing the Company since its IPO in
2013. He led the Company from its pioneering start to the mature,
proven entity it is today. I am delighted to have taken over as
Chairman, and look forward to continuing to deliver shareholder
value.
The annual internal evaluation of the Board raised no
significant issues.
The Group's governance is further described in the Corporate
Governance Report below.
Annual General Meeting
Our AGM will take place at 2.00 pm on Wednesday 28 April 2021.
In 2020, following the advice of the government on social
distancing, travel and measures to prohibit public gathering in
order to minimise the spread of COVID-19, the Company decided to
change the location of its AGM from the offices of the Investment
Manager and hold it with the minimum necessary quorum of 2
shareholders present. A recording of the AGM was made and is
available for shareholders on the Company's website
(www.greencoat-ukwind.com). It is possible that such an arrangement
might also be necessary for the AGM at the end of April 2021. The
Company realises that this is not ideal and will try to provide the
opportunity for investors to meet with the Board and executive
management, if possible, later in the year, if the AGM has to be
carried out in this manner.
Details of the formal business of the meeting are set out in a
separate circular which is sent to shareholders with the Annual
Report.
Shonaid Jemmett-Page
Chairman
24 February 2021
Strategic Report
Introduction
The Directors present their Strategic Report for the year ended
31 December 2020. Details of the Directors who held office during
the year and as at the date of this report are given below.
Investment Objective
The Company's aim is to provide investors with an annual
dividend that increases in line with RPI inflation while preserving
the capital value of its investment portfolio in the long term on a
real basis through reinvestment of excess cashflow and the prudent
use of gearing.
The Company provides investors with the opportunity to
participate directly in the ownership of UK wind farms, so
increasing the resources and capital dedicated to the deployment of
renewable energy and the reduction of greenhouse gas emissions.
The target return to investors is an IRR net of fees and
expenses of 8 per cent to 9 per cent. The 2020 dividend of 7.1
pence per annum is targeted to increase in line with December 2020
RPI to 7.18 pence for 2021. Progress on the objectives is measured
by reference to the key metrics above.
Investment Policy
The Group invests in UK wind farms predominantly with a capacity
of over 10MW, which sell the power produced and associated green
benefits to creditworthy UK offtakers.
As the Group has no borrowings at wind farm level, and only
limited borrowing at the Group level, the annual dividend is
sufficiently protected against lower power prices. At the same
time, it has the ability to benefit from higher power prices as the
Group is not required to be locked into long term fixed price
contracts.
The Group has used debt facilities to make additional
investments in the year. This has enhanced the Group's
attractiveness to sellers since execution risk is greatly
diminished, with the Group effectively being a cash buyer. The
Group will continue to use short term debt facilities to make
further investments.
The Group will look to repay its short term debt facilities by
refinancing them with longer term debt facilities or in the equity
markets in order to refresh its debt capacity. While debt
facilities are drawn, the Group benefits from an increase in
investor returns because borrowing costs are below the underlying
return on investments.
The Group invests in both onshore and offshore wind farms with
the amount invested in offshore wind farms being capped at 40 per
cent of GAV at acquisition.
The Board believes that there is a significant market in which
the Group can continue to grow over the next few years.
Structure
The Company is a UK registered investment company with a premium
listing on the London Stock Exchange. The Group comprises the
Company and Holdco. Holdco invests in SPVs which hold the
underlying wind farm assets. The Group employs Greencoat Capital
LLP as its Investment Manager.
Discount Control
The Articles of Association require a continuation vote by
shareholders if the share price were to trade at an average
discount to NAV of 10 per cent or more over a 12 month period.
Notwithstanding this, it is the intention of the Board for the
Company to buy back its own shares in the market if the share price
is trading at a material discount to NAV, providing of course that
it is in the interests of shareholders to do so.
Review of Business and Future Outlook
A detailed discussion of individual asset performance and a
review of the business in the year together with future outlook are
covered in the Investment Manager's Report.
Key Performance Indicators
The Board believes that the key metrics detailed above, which
are typical for investment entities, will provide shareholders with
sufficient information to assess how effectively the Group is
meeting its objectives.
Ongoing Charges
The ongoing charges ratio of the Company is 1.03 per cent of the
weighted average NAV for the year to 31 December 2020. This is made
up as follows and has been calculated using the AIC recommended
methodology.
31 December 2020 31 December 2019
----------------------
GBP'000 % GBP'000 %
---------------------- -------------------- ------ -------------------- ------
Total management fee 18,400 0.96% 16,491 0.98%
Directors' fees 258 0.01% 268 0.02%
Ongoing expenses (1) 1,214 0.06% 1,231 0.07%
---------------------- ------
Total 19,872 1.03% 17,990 1.07%
---------------------- -------------------- ------ -------------------- ------
Weighted average NAV 1,925,549 1,687,939
(1) Ongoing expenses do not include GBP 1,043 k of management
and administration fees relating to the wind farm SPVs that is
recharged to them, GBP 25 k of broken deal costs and GBP 50 k of
additional discretionary Directors' fees for work incurred in
connection with share placings.
Following the equity raise in February 2021 and assuming no
further changes in NAV, the 2021 ongoing charges ratio is expected
to be 0.98 per cent.
The Investment Manager is not paid any performance or
acquisition fees.
Environmental, Social and Governance Matters
The Group invests in wind farms and the environmental benefits
of renewable energy are proven and key to delivering the
Government's and society's climate change objectives.
Although the non-executive Board has overall responsibility for
the activities of the Company and its investments, the day-to-day
management of the business is delegated to the Investment Manager.
This includes responsibility for ESG matters. The Investment
Manager assesses how ESG should be managed and the Company has
developed its ESG policy in accordance with the Investment
Manager's ESG Framework Policy, and the approach has 2 streams:
pre-investment and ongoing management. The full ESG policy of the
Company and the ESG report are available on the Company's website:
www.greencoat-ukwind.com .
Responsible investing principles have been applied to each of
the investments made. These policies require the Group to make
reasonable endeavours to procure the ongoing compliance of its
investee companies with its policies on responsible investment.
Climate Change
The Board is aware of the Company's responsibility to provide
transparent and comparable climate related information to
shareholders. These initial disclosures are categorised between the
4 thematic areas as recommended by the TCFD.
Governance
As discussed in the Corporate Governance Report below, the Board
and the Investment Manager meet regularly and discuss risk
management. Climate related risks are covered during these
discussions, as they naturally arise from the Group's underlying
investments and the Company's significant role in the
decarbonisation of the UK economy. A formal risk matrix is
maintained by the Investment Manager and reviewed and approved by
the Board on an annual basis.
In addition, the Investment Manager has its own ESG committee
that meets regularly to discuss ESG and climate related risks
relating to the Group and other funds it manages. This committee
has implemented an ESG Framework Policy that looks to establish
best practice in climate related risk management, reporting and
transparency. Representatives from the Investment Manager also sit
on the boards of the SPV companies, which meet quarterly and
discuss ESG and climate related risk management.
Strategy
As the leading renewable infrastructure fund, invested in UK
wind farms, the Company plays a significant role in the UK
renewables industry. The Company's strategy and Investment Policy
of acquiring operating capacity in the secondary market, enables
developers and utilities to recycle capital, facilitating further
renewable build-out and thus plays a significant role in increasing
operating wind generating capacity.
The Company considers that the decarbonisation of the economy
will present a significant investment opportunity and the size of
the Company's growth will be related to the success of the sector
and the engagement of its stakeholders.
The Board and the Investment Manager monitor climate related
risks and appreciate their impact on the Group. More extreme
weather patterns arising from global warming have the capacity to
damage infrastructure in general, including above ground grid
infrastructure, but it is considered unlikely that damage will be
caused to generating equipment that is designed to take advantage
of weather systems. Appropriate insurance against property damage
and business interruption is held for any such eventuality,
nonetheless.
It is possible that the deployment of new renewable generating
capacity, required to meet future targets, could reduce the power
price captured by the Group's portfolio investments. The Group's
dividend policy however has been designed to withstand significant
short term variability in generation or power price capture.
Risk Management
As a full scope UK AIFM, the Investment Manager has established
a Risk Management Committee that meets on a quarterly basis to
discuss, amongst other matters, the risk framework of the Group and
investee companies including processes for identifying, assessing
and managing climate related risks.
The Investment Manager's Investment Committee comprises
experienced members of the Investment Manager. Whilst making
investment decisions, due consideration is given to climate related
risks as well as to opportunities identified during due diligence.
The formal ESG checklist used is also considered by the Board in
the approval process of any new investment.
Metrics
Renewable energy generators reduce carbon dioxide emissions on a
net basis at a rate of approximately 0.4t CO(2) per MWh. Given the
size of the Group's investment portfolio on 31 December 2020, the
portfolio's CO(2) emission reductions are approximately 1.5 million
tonnes per annum. The portfolio is also generating sufficient
electricity to power 1.2 million homes per annum, at 3.1MWh per
home.
Further ESG and climate related metrics can be found in the
Company's ESG report, available on Company's website:
www.greencoat-ukwind.com .
Employees and Officers of the Company
The Company does not have any employees and therefore employee
policies are not required. The Directors of the Company are listed
below.
Diversity
The Group's policy on diversity is detailed in the Corporate
Governance Report.
Principal Risks and Uncertainties
In the normal course of business, each investee company has a
rigorous risk management framework with a comprehensive risk
register that is reviewed and updated regularly and approved by its
board. The principal risks identified by the Board to the
performance of the Group are detailed below. The Board do not
consider the likelihood or impact of these risks to have changed in
the year.
The Board maintains a risk matrix setting out the risks
affecting both the Group and the investee companies. This risk
matrix is reviewed and updated at least annually to ensure that
procedures are in place to identify principal risks and to mitigate
and minimise the impact of those risks should they crystallise.
This risk matrix is also reviewed and updated to identify emerging
risks, such as climate related risks, and to determine whether any
actions are required. This enables the Board to carry out a robust
assessment of the risks facing the Group, including those risks
that would threaten its business model, future performance,
solvency or liquidity.
The risk appetite of the Group is considered in light of the
principal risks and their alignment with the Company's Investment
Objective. The Board considers the risk appetite of the Group and
the Company's adherence to the Investment Policy in the context of
the regulatory environment taking into account, inter alia, gearing
and financing risk, wind resource risk, the level of exposure to
power prices and environmental and health and safety risks.
As it is not possible to eliminate risks completely, the purpose
of the Group's risk management policies and procedures is not to
eliminate risks, but to reduce them and to ensure that the Group is
adequately prepared to respond to such risks and to minimise any
impact if the risk materialises.
The spread of assets within the portfolio ensures that the
portfolio benefits from a diversified wind resource and spreads the
exposure to a number of potential technical risks associated with
grid connections and with local distribution and national
transmission networks. In addition, the portfolio includes 6
different turbine manufacturers, which diversifies technology and
maintenance risks. Finally, each site contains a number of
individual turbines, the performance of which is largely
independent of other turbines.
Risks Affecting the Group
Investment Manager
The ability of the Group to achieve the Company's Investment
Objective depends heavily on the experience of the management team
within the Investment Manager and more generally on the Investment
Manager's ability to attract and retain suitable staff. The
sustained growth of the Group depends upon the ability of the
Investment Manager to identify, select and execute further
investments which offer the potential for satisfactory returns.
The Investment Management Agreement includes key man provisions
which would require the Investment Manager to employ alternative
staff with similar experience relating to investment, ownership,
financing and management of wind farms should for any reason any
key man cease to be employed by the Investment Manager. The
Investment Management Agreement ensures that no investments are
made following the loss of key men until suitable replacements are
found and there are provisions for a reduction in the investment
management fee during the loss period. It also outlines the process
for their replacement with the Board's approval. In addition, the
key men are shareholders in the Company.
Financing Risk
The Group will finance further investments either by borrowing
or by issuing further shares. The ability of the Group to deliver
expected real NAV growth is dependent on access to debt facilities
and equity capital markets. There can be no assurance that the
Group will be able to borrow additional amounts or refinance on
reasonable terms or that there will be a market for further raising
of equity.
Investment Returns Become Unattractive
A significantly strengthening economy may lead to higher future
interest rates which could make the listed infrastructure asset
class relatively less attractive to investors. In such
circumstances, it is likely that there will be an increase in
inflation (to which the revenues and costs of the investee
companies are either indexed or significantly correlated) or an
increase in power prices (due to greater consumption of power) or
both. Both would increase the investment return and thus would
provide a degree of mitigation against higher future interest
rates.
Risks Affecting Investee Companies
Regulation
If a change in Government renewable energy policy were applied
retrospectively to current operating projects including those in
the Group's portfolio, this could adversely impact the market price
for renewable energy or the value of the green benefits earned from
generating renewable energy. The Government has evolved the
regulatory framework for new projects being developed but has
consistently stood behind the framework that supports operating
projects as it understands the need to ensure investors can trust
regulation.
Electricity Prices
Other things being equal, a decline in the market price of
electricity would reduce the investee companies' revenues.
The Group's dividend policy has been designed to withstand
significant short term variability in power prices. A longer period
of power price decline would materially affect the revenues of
investee companies. In general, independent forecasters expect UK
wholesale power prices to rise in real terms from current levels,
driven by higher gas and carbon prices.
Wind Resource
The investee companies' revenues are dependent upon wind
conditions, which will vary across seasons and years within
statistical parameters. The standard deviation of energy production
is 10 per cent over a 12 month period (less than 2 per cent over 30
years). Since long term variability is low, there is no significant
diversification benefit to be gained from geographical
diversification across weather systems.
The Group does not have any control over the wind resource but
has no debt at wind farm level and has designed its dividend policy
such that it can withstand significant short term variability in
production relating to wind. Before investment, the Group carries
out extensive due diligence and relevant historical wind data is
available over a substantial period of time. The other component of
wind energy generation, a wind farm's ability to turn wind into
electricity, is mitigated by purchasing wind farms, where possible,
with a proven operating track record.
When acquiring wind farms that have only recently entered into
operation, only limited operational data is available. In these
instances, the acquisition agreements with the vendors of these
wind farms will include a "wind energy true-up" or an appropriate
discount to the purchase price.
Asset Life
In the event that the wind turbines do not operate for the
period of time assumed by the Group or require higher than expected
maintenance expenditure to do so, it could have a material adverse
effect on investment returns.
The Group performs regular reviews and ensures that maintenance
is performed on all wind turbines across the wind farm portfolio.
Regular maintenance ensures the wind turbines are in good working
order, consistent with their expected life-spans.
Health and Safety and the Environment
The physical location, operation and maintenance of wind farms
may, if inadequately assessed and managed, pose health and safety
risks to those involved. Inappropriate wind farm operation and
maintenance may result in bodily injury, particularly if an
individual were to fall from height, fall or be crushed in transit
from a vessel to an offshore installation or be electrocuted. If an
accident were to occur in relation to one or more of the Group's
investments and if the Group were deemed to be at fault, the Group
could be liable for damages or compensation to the extent such loss
is not covered by insurance policies. In addition, adverse
publicity or reputational damage could follow.
The Board reviews health and safety at each of its scheduled
Board meetings and Martin McAdam serves as the appointed Health and
Safety Director. The Group also engages an independent health and
safety consultant to ensure the ongoing appropriateness of its
health and safety policies.
The investee companies comply with all regulatory and planning
conditions relating to the environment, including in relation to
noise emissions, habitat management and waste disposal.
Going Concern
As further detailed in note 1 to the financial statements, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for at least 12 months from the date of approval of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
Longer Term Viability
The Company is a member of the AIC and complies with the AIC
Code. In accordance with the AIC Code, the Directors are required
to assess the prospects of the Group over a period longer than the
12 months associated with going concern. The Directors conducted
this review for a period of 10 years, which is deemed appropriate,
given the long term nature of the Group's investments which are
modelled over 30 years, coupled with its long term strategic
planning horizon.
In considering the prospects of the Group, the Directors looked
at the key risks facing both the Group and the investee companies,
focusing on the likelihood and impact of each risk as well as any
key contracts, future events or timescales that may be assigned to
each key risk. The Directors also tested and are comfortable that
the Company would continue to remain viable under several robust
downside scenarios, including loss of government subsidies and a
significant decline in long term power price forecasts.
As a sector-focused infrastructure fund, the Group aims to
produce stable and inflating dividends while preserving the capital
value of its investment portfolio on a real basis. The Directors
believe that the Group is well placed to manage its business risks
successfully over both the short and long term and accordingly, the
Board has a reasonable expectation that the Group will be able to
continue in operation and to meet its liabilities as they fall due
for a period of at least 10 years.
While the Directors have no reason to believe that the Group
will not be viable over a longer period, they are of the opinion
that it would be difficult to foresee the economic viability of any
company with any degree of certainty for a period of time greater
than 10 years.
Directors' Responsibilities Pursuant to Section 172 of the
Companies Act 2006
The Directors are responsible for acting in a way that they
consider, in good faith, is the most likely to promote the success
of the Company for the benefit of its members. In doing so, they
should have regard for the needs of stakeholders and the wider
society. The Company's objective is to provide investors with an
annual dividend that increases in line with RPI inflation while
preserving the capital value of its investment portfolio in the
long term on a real basis through reinvestment of excess cashflow
and the prudent use of gearing.
The Company provides investors with the opportunity to
participate directly in the ownership of UK wind farms, so
increasing the resources and capital dedicated to the deployment of
renewable energy and the reduction of greenhouse gas emissions. The
Board is also aware of its responsibility for the risk management
of the Group's climate related risks and for transparent disclosure
of these risks, appreciating how this is integral to the success of
the Company.
Key decisions are those that are either material to the Company
or are significant to any of the Company's key stakeholders, as
defined in the Corporate Governance Report. The Company's
engagement with its key stakeholders, including the Investment
Manager, is discussed further in the Corporate Governance Report.
The key decisions detailed below were made or approved by the
Directors during the year, with the overall aim of promoting the
success of the Company while considering the impact on its members
and wider stakeholders.
Dividends
The Board has approved total dividends of 7.1 pence per share
with respect to the year and shareholders voted 99.99 per cent in
favour to approve the Company's dividend policy at the AGM on 30
April 2020. The Board are confident that with the Group's
continuing strong cashflow and robust dividend cover, the Company
can target a dividend of 7.18 pence per share for 2021, which the
Board expect to contribute to the Company's target return to
investors of an IRR of 8 per cent to 9 per cent, net of fees and
expenses.
Acquisitions
During the year, the Company invested in 3 wind farms accredited
to receive ROCs and agreed to acquire 2 further subsidy free wind
farms, which are expected to become operational in Q4 2022 and Q1
2023. Following recommendation from the Investment Manager, the
Directors considered each investment in the context of the
Company's Investment Policy, availability of financing and the
potential returns to investors. They also considered each
investment in the context of sustainability and its impact on the
surrounding community.
Share Issues
During the year, the Company issued 305 million further shares,
raising GBP400 million, through an oversubscribed equity raising.
The Company issued a prospectus in September 2020 and the
Investment Manager engaged with analysts and investors throughout
the equity raising process.
Board Composition
During the year, Tim Ingram retired as Chairman of the Company
and was succeeded by Shonaid Jemmett-Page, following the 2020
Annual General Meeting. Caoimhe Giblin subsequently replaced Ms
Jemmett-Page, as Chairman of the Audit Committee.
The Board undertakes a formal and rigorous internal evaluation
of its performance each financial year to determine effectiveness
and performance in various areas, as well as the Directors'
continued independence and tenure. The reviews concluded that the
overall performance of the Board and Audit Committee was
satisfactory and the Board was confident in its ability to continue
to govern the Company well.
On behalf of the Board
Shonaid Jemmett-Page
Chairman
24 February 2021
Investment Manager's Report
The Investment Manager
The investment management team's experience covers wind farm
investment, ownership, finance and operation. All the skills and
experience required to manage the Group's investments lie within a
single investment manager. The Investment Manager is authorised and
regulated by the Financial Conduct Authority and is a full scope UK
AIFM.
Since listing in March 2013, the team has been led by Stephen
Lilley and Laurence Fumagalli.
Stephen has 24 years of investment management and financing
experience in addition to 6 years in the nuclear industry. Prior to
joining the Investment Manager in March 2012, Stephen led the
renewable energy infrastructure team at Climate Change Capital
(CCC) from May 2010. Prior to CCC, he was a senior director of
Infracapital Partners LP, M&G's European Infrastructure fund.
During this time, Stephen led the acquisitions of stakes in Kelda
Group (Yorkshire Water), Zephyr (wind farms) and Meter Fit
(gas/electricity metering) and also sat on the boards of these
companies after acquisition. Prior to this, he was a director at
Financial Security Assurance, where he led over GBP2 billion of
underwritings in the infrastructure and utility sectors. He also
worked for the investment companies of the Serco and Kvaerner
Groups.
Laurence also has 24 years of investment management and
financing experience. Prior to joining the Investment Manager in
March 2012, Laurence held a number of senior roles within CCC from
2006 to 2011. Initially he co-headed CCC's advisory team before
transferring in 2007 to the carbon finance team. Laurence joined
Stephen in the renewable energy infrastructure team in early 2011.
From 2003-2006, Laurence headed the Bank of Tokyo-Mitsubishi's
London-based renewables team, where he financed and advised on over
1GW of UK wind. Prior to the Bank of Tokyo-Mitsubishi, Laurence
worked in the power project finance team at NatWest.
Investment Portfolio
Operating portfolio as at 31 December 2020:
Wind Farm Turbines Operator PPA Total MW Ownership Stake Net MW
---------------------- ---------- --------------- ------------- --------- ---------------- --------
Bicker Fen Senvion EDF EDF 26.7 80% 21.3
Bin Mountain GE SSE SSE 9.0 100% 9.0
Bishopthorpe Senvion BayWa Axpo 16.4 100% 16.4
Braes of Doune Vestas DNV-GL Centrica 72.0 50% 36.0
Brockaghboy Nordex SSE SSE 47.5 100% 47.5
Carcant Siemens DNV-GL Axpo 6.0 100% 6.0
Church Hill Enercon Energia Energia 18.4 100% 18.4
Clyde Siemens SSE SSE 522.4 28.2% 147.3
Corriegarth Enercon BayWa Centrica 69.5 100% 69.5
Cotton Farm Senvion BayWa Sainsbury's 16.4 100% 16.4
Crighshane Enercon Energia Energia 32.2 100% 32.2
Deeping St. Nicholas Senvion EDF EDF 16.4 80% 13.1
Drone Hill Nordex BayWa Statkraft 28.6 51.6% 14.8
Dunmaglass GE SSE SSE 94.0 35.5% 33.4
Earl's Hall Farm Senvion BayWa Sainsbury's 10.3 100% 10.3
Glass Moor Senvion EDF EDF 16.4 80% 13.1
Humber Gateway Vestas RWE RWE 219.0 37.8% 82.8
Kildrummy Enercon BayWa Sainsbury's 18.4 100% 18.4
Langhope Rig GE Natural Power Centrica 16.0 100% 16.0
Lindhurst Vestas RWE RWE 9.0 49% 4.4
Little Cheyne Court Nordex RWE RWE 59.8 41% 24.5
Maerdy Siemens DNV-GL Statkraft 24.0 100% 24.0
Middlemoor Vestas RWE RWE 54.0 49% 26.5
North Hoyle Vestas RWE RWE 60.0 100% 60.0
North Rhins Vestas DNV-GL E.ON 22.0 51.6% 11.4
Red House Senvion EDF EDF 12.3 80% 9.8
Red Tile Senvion EDF EDF 24.6 80% 19.7
Rhyl Flats Siemens RWE RWE 90.0 24.95% 22.5
Screggagh Nordex SSE Energia 20.0 100% 20.0
Sixpenny Wood Senvion BayWa Statkraft 20.5 51.6% 10.6
Slieve Divena Nordex SSE SSE 30.0 100% 30.0
Slieve Divena II Enercon SSE SSE 18.8 100% 18.8
Stronelairg Vestas SSE SSE 227.7 35.5% 80.9
Stroupster Enercon BayWa BT 29.9 100% 29.9
Tappaghan GE SSE SSE 28.5 100% 28.5
Tom nan Clach Vestas Natural Power CFD 39.1 75% 29.3
Walney Siemens Orsted SSE 367.2 25.1% 92.2
Yelvertoft Senvion BayWa Statkraft 16.4 51.6% 8.5
Total (1) 1,173.2
------------------------------------------------------------------ --------- ---------------- --------
(1) Numbers do not cast owing to rounding of ( 0.2) MW.
Portfolio Performance
Portfolio generation for the year was 2,952 GWh, 3 per cent
below budget.
The following table shows wind speed and portfolio generation
relative to budget since listing:
UK weighted average wind Generation
speed (variation to budget)
(variation to long term
mean)
2013 (adjusted) +3% +8%
------------------------- -----------------------
2014 -2% -3%
------------------------- -----------------------
2015 +5% +8%
------------------------- -----------------------
2016 -6% -6%
------------------------- -----------------------
2017 -1% 0%
------------------------- -----------------------
2018 -4% -6%
------------------------- -----------------------
2019 -8% -11%
------------------------- -----------------------
2020 +2% -3%
------------------------- -----------------------
Variation to budget lies within reasonable statistical
parameters. The annual standard deviation of wind speed is 6 per
cent and the annual standard deviation of generation is 10 per cent
(less than 2 per cent over 30 years).
2020 was a slightly unusual year, with strong winds in Q1
leading to portfolio generation that was 15 per cent above budget
over the quarter. However, the weighted average wind speed across
the UK in Q1 was 19 per cent above the long term mean, which might
suggest generation of 32 per cent above budget (applying the
typical ratio of 1 per cent more wind leading to 1.7 per cent more
generation). Extremely high winds in February lay outside the
boundaries of the typical wind-to-generation ratio and not all of
the higher wind resource was converted into generation. This Q1
divergence contributed to the annual average, such that the Group's
portfolio performed slightly below budget (over the whole year)
versus the weighted average wind speed being slightly above the
long term mean.
The following table provides a breakdown of generation by wind
farm:
2020 2020 2021
Ownership Budget Actual Budget
Wind Farm Stake Period (GWh) (GWh) Variance (GWh)
---------------------- ---------- ---------- ----------- ----------- --------- -----------
Bicker Fen 80% Jan - Dec 44.9 50.5 13% 44.4
Bin Mountain 100% Jan - Dec 25.0 22.8 -9% 24.7
Bishopthorpe 100% Jan - Dec 51.1 55.0 8% 50.9
Braes of Doune 50% Jan - Dec 85.7 92.2(1) 8% 84.8
Brockaghboy 100% Jan - Dec 167.0 146.4 -12% 165.5
Carcant 100% Jan - Dec 17.4 20.5 18% 17.3
Church Hill 100% Jan - Dec 40.0 38.1 -5% 39.5
Clyde 28.2% Jan - Dec 458.6 432.5(1) -6% 460.7
Corriegarth 100% Jan - Dec 220.8 217.9(1) -1% 218.5
Cotton Farm 100% Jan - Dec 52.1 52.9 1% 51.6
Crighshane 100% Jan - Dec 64.4 61.2 -5% 63.7
Deeping St. Nicholas 80% Jan - Dec 29.8 33.6 13% 29.9
Drone Hill 51.6% Jan - Dec 31.0 32.7 6% 30.7
Dunmaglass 35.5% Jan - Dec 128.0 115.8(1) -10% 131.3
Earl's Hall Farm 100% Jan - Dec 32.5 32.7 1% 32.2
Glass Moor 80% Jan - Dec 29.4 29.9 2% 29.1
Humber Gateway 37.8% Nov - Dec 64.8 63.8 -1% 323.8
Kildrummy 100% Jan - Dec 56.7 54.5 -4% 56.2
Langhope Rig 100% Jan - Dec 47.6 50.2 5% 47.1
Lindhurst 49% Jan - Dec 11.6 11.8 2% 11.6
Little Cheyne Court 41% Jan - Dec 59.2 69.2 17% 61.6
Maerdy 100% Jan - Dec 64.4 63.6 -1% 63.7
Middlemoor 49% Jan - Dec 69.7 73.9 6% 69.0
North Hoyle 100% Jan - Dec 180.4 189.8 5% 185.8
North Rhins 51.6% Jan - Dec 38.6 40.0(1) 4% 38.2
Red House 80% Jan - Dec 22.3 23.6 6% 22.0
Red Tile 80% Jan - Dec 42.5 46.9 10% 42.5
Rhyl Flats 24.95% Jan - Dec 70.3 75.8 8% 70.3
Screggagh 100% Jan - Dec 47.7 42.5 -11% 47.2
Sixpenny Wood 51.6% Jan - Dec 29.0 29.4 1% 28.7
Slieve Divena 100% Jan - Dec 58.6 53.1 -9% 58.1
Slieve Divena II 100% Apr - Dec 36.1 31.3 -13% 51.0
Stronelairg 35.5% Jan - Dec 228.9 220.2(1) -4% 305.8
Stroupster 100% Jan - Dec 96.8 59.1 -39% 95.9
Tappaghan 100% Jan - Dec 73.2 64.6 -12% 72.5
Tom nan Clach 75% Jan - Dec 122.4 104.6 -15% 121.1
Walney 25.1% Sep - Dec 131.6 126.2 -4% 355.6
Yelvertoft 51.6% Jan - Dec 21.9 23.1 6% 21.8
Total 3,051.7(2) 2,952.4(3) -3% 3,624.1(4)
---------------------- ---------- ---------- ----------- ----------- --------- -----------
(1) Includes curtailed generation.
(2) Numbers do not cast owing to rounding of (0.3)GWh .
(3) Numbers do not cast owing to rounding of 0.5GWh .
(4) Numbers do not cast owing to rounding of (0.2)GWh.
Notable issues affecting portfolio generation were:
-- various unplanned outages at Stroupster, including in
relation to the Thurso substation (January) and the grid connection
cable (December);
-- a shortage of operation and maintenance resources at
Dunmaglass, which delayed the resolution of certain turbine
faults;
-- a health and safety incident at Tom nan Clach on 23 June
resulting in the site being de-energised;
-- a planned 3 month grid outage at Stronelairg (September to
November) to enable upgrade works at Melgrave substation; and
-- relatively high levels of curtailment in Northern Ireland
reflecting low power demand as a result of the COVID-19 pandemic
and associated lockdown.
Changes to work procedures and certain work restrictions were
applied across the portfolio, following government guidelines in
response to the COVID-19 pandemic. Some maintenance works were
delayed as a result, but portfolio performance was not materially
impacted.
National Grid introduced a new balancing service, Optional
Downward Flexibility Management (ODFM), which was developed in
response to the reduction in demand caused by the COVID-19 pandemic
and associated lockdown, in order to enable National Grid to access
flexibility that was not previously accessible in real time. It is
applicable to distribution connected assets and is equivalent to
the Balancing Mechanism in place for transmission connected assets.
Several assets in the Group's portfolio were able to provide the
ODFM service in May and June.
Continuing from previous years, the Investment Manager
progressed various initiatives under its ongoing portfolio
optimisation programme in the 3 main areas of generation, revenue
and operational expenditure. Upgrades and enhancements worth GBP19
million in present value terms were implemented during the year.
Significant further opportunities have been identified and are
planned for delivery over the next 3 years.
Following Senvion entering self-administration in April 2019,
and the subsequent acquisition of the Senvion turbine operation and
maintenance business by Siemens, responsibility for turbine
operation and maintenance has been transferred to Vestas at Cotton
Farm and Earl's Hall Farm. Siemens continues to provide turbine
operation and maintenance at Bishopthorpe, Sixpenny Wood and
Yelvertoft.
Health and Safety
Health and safety is of key importance to both the Company and
the Investment Manager.
A representative of the Investment Manager sits on the health
and safety forum of Renewable UK, the UK's leading wind energy
trade association. The Investment Manager also has its own health
and safety forum, chaired by Stephen Lilley, where best practice is
discussed and key learnings from incidents from across the industry
are shared.
On 23 June, a serious health and safety incident occurred at Tom
nan Clach. A piece of high voltage equipment was not properly
isolated before work started on it. As a result, one of our
maintenance contractors was seriously injured. The incident was
reported to and investigated by the Health and Safety Executive,
and an independent review of the incident was conducted. A number
of recommendations were made, which have been implemented.
During the year, routine health and safety audits were conducted
across 9 sites by an independent consultant. 3 additional audits
were conducted by a second independent consultant following the Tom
nan Clach incident. 11 sites have also already been audited as part
of a portfolio-wide HV audit. In addition, the Investment Manager
undertook 12 safety walks. No material areas of concern were
identified from all audits and safety walks performed in the
year.
Acquisitions
During the year, the Investment Manager priced 20 wind farms
totalling 1,598MW. Of the 20 wind farms priced, 5 investments and
commitments were made by the Group (Slieve Divena II, South Kyle,
Walney, Humber Gateway and Kype Muir Extension), 3 were acquired by
other buyers, 9 are no longer being pursued by the Group, and 3 are
subject to continuing discussions. In total, there were 13 relevant
secondary market transactions in the UK wind sector in 2020.
The following table lists investments in the year to 31 December
2020:
GBPm
Douglas West 14.0
------
Slieve Divena II 50.9
------
Walney 349.2
------
Humber Gateway 500.0
------
Total 914.1
------
During the year, the Group funded incremental investment of
GBP14 million in the 45MW Douglas West subsidy free wind farm
project, with operations targeted to commence in July 2021. A total
of GBP28 million was invested as at 31 December 2020 (in line with
the total investment budget of GBP50 million).
On 30 March 2020, the Group completed its acquisition of the
18.8MW Slieve Divena II wind farm from SSE. The wind farm receives
0.9 ROCs per MWh.
On 2 September 2020, the Group acquired SSE's 25.1 per cent
interest in the 367.2MW Walney offshore wind farm, which it owns in
partnership with Orsted (50.1 per cent) and PGGM (24.8 per cent).
The wind farm receives 2 ROCs per MWh.
On 15 December 2020, the Group acquired a 37.8 per cent interest
in the 219MW Humber Gateway offshore wind farm, which it owns in
partnership with RWE (51 per cent) and a number of pension funds
investing through a fund also managed by the Investment Manager
(11.2 per cent). The wind farm receives 2 ROCs per MWh.
In addition, on 27 April 2020, the Group announced that it has
agreed to acquire the 235MW South Kyle subsidy free wind farm from
Vattenfall for a headline consideration of GBP320 million, to be
paid once the wind farm is fully operational (target Q1 2023).
Furthermore, on 18 December 2020, the Group entered into an
agreement to acquire 49.9 per cent of the 67.2MW Kype Muir
Extension subsidy free wind farm from Banks Renewables for a
headline consideration of GBP51.4 million, to be paid once the wind
farm is fully operational (target Q4 2022). The wind farm will
benefit from a 15 year fixed power price agreement with a utility.
The Group will also provide construction finance of up to GBP47
million, with first utilisation expected in July 2021.
And finally, on 23 February 2021, the Group acquired the
remaining 50 per cent interest in Braes of Doune wind farm from
Hermes for a consideration of GBP48.1 million. The Group has been
invested in this wind farm since listing and the wind farm receives
1 ROC per MWh.
Equity Issuance
On 1 October 2020, the Company issued 305 million new shares at
a price of 131 pence per share, raising gross proceeds of GBP400
million.
Post year end, on 19 February 2021, the Company issued 151
million new shares at a price of 131 pence per share, raising gross
proceeds of GBP198 million.
Gearing
As at 31 December 2020, the Group had GBP 1,100 million of debt
outstanding, equating to 33 per cent of GAV (limit 40 per cent).
Average gearing in the year was 26 per cent of GAV (guidance 20-30
per cent).
Debt outstanding as at 31 December 2020 comprised term debt of
GBP700 million (together with associated interest rate swaps) plus
GBP 400 million drawn under the Group's GBP400 million revolving
credit facility.
The proceeds of the February 2021 equity raise have been used to
invest in Braes of Doune wind farm and will shortly be used repay
the Group's drawn revolving credit facility, leaving this GBP240
million drawn and the Group's gearing at 28 per cent of GAV.
All borrowing is at Company level (no debt at wind farm
level).
More detail in relation to the Group's debt facilities can be
found in note 13 to the financial statements.
Financial Performance
Power prices during the year were below budget. The average N2EX
Day Ahead auction price was GBP35.23/MWh (2019: GBP42.98/MWh). The
H1 2020 average price of GBP28.48/MWh (H1 2019: GBP46.66/MWh) was
particularly low, primarily reflecting low gas prices and low power
demand as a result of the COVID-19 pandemic and associated
lockdown. Power prices recovered significantly from their low point
in May, with an average price in H2 2020 of GBP41.98/MWh (H2 2019:
GBP39.30/MWh).
Despite below budget generation and below budget power prices,
dividend cover remained robust: net cash generated by the Group and
wind farm SPVs was GBP 145.2 million, providing cover of 1.3 x
dividends paid during the year.
The Group's target dividend cover is 1.7x. 1.3x thus represents
a 0.4x shortfall relative to target, comprising 0.1x from below
budget generation and 0.3x from below budget power prices.
Cash balances (Group and wind farm SPVs) increased by GBP 7.6
million to GBP 93.8 million over the year.
For the year ended
Group and wind farm SPV cashflows 31 December 2020
------------------------------------------------- -------------------
GBP'000
Net cash generation(1) 145,170
Dividends paid (112,613)
Acquisitions (914,106)
Acquisition costs (3,541)
Equity issuance 400,000
Equity issuance costs (6,175)
Net drawdown under debt facilities 500,000
Upfront finance costs (1,173)
Movement in cash (Group and wind farm SPVs) 7,562
Opening cash balance (Group and wind farm SPVs) 86,258
------------------------------------------------- -------------------
Closing cash balance (Group and wind farm SPVs) 93,820
Net cash generation 145,170
Dividends 112,613
Dividend cover 1.3 x
------------------------------------------------- -------------------
(1) Alternative Performance Measure as defined below.
The following 2 tables provide further detail in relation to net
cash generation of GBP 145.2 million:
For the year ended
Net Cash Generation - Breakdown 31 December 2020
--------------------------------- -------------------
GBP'000
Revenue 280,813
Operating expenses (92,673)
Tax (11,993)
Other 6,791
--------------------------------- -------------------
Wind farm cashflow 182,938
Management fee (17,112)
Operating expenses (2,180)
Ongoing finance costs (19,611)
Other 329
--------------------------------- -------------------
Group cashflow (38,574)
VAT (Group and wind farm SPVs) 806
Net cash generation 145,170
--------------------------------- -------------------
For the year ended
Net Cash Generation - Reconciliation to Net Cash Flows from Operating Activities 31 December 2020
---------------------------------------------------------------------------------- -------------------
GBP'000
Net cash flows from operating activities (1) 123,083
Movement in cash balances of wind farm SPVs (2) 24,391
Repayment of shareholder loan investment (1) 17,307
Finance costs (1) (20,784)
Upfront finance costs (cash) (3) 1,173
---------------------------------------------------------------------------------- -------------------
Net cash generation 145,170
---------------------------------------------------------------------------------- -------------------
(1) Consolidated Statement of Cash Flows.
(2) Note 9 to the financial statements.
(3) GBP1,100k facility arrangement fees plus GBP91k professional
fees (note 13 to the financial statements) plus GBP25k other
finance costs payable brought forward less GBP43k other finance
costs payable carried forward (note 12 to the financial
statements).
Investment Performance
GBP'm
--------------------------------
NAV at 31 December 2019 1,842.8
Investment 914.1
Movement in portfolio valuation (31.9)
Movement in cash (Group and wind farm SPVs) 7.6
Movement in other relevant assets / liabilities (2.6)
Movement in Aggregate Group Debt (500.0)
NAV at 31 December 2020 (1) 2,229.9
------------------------------------------------- --------------------------------
(1) Numbers do not cast owing to rounding of GBP(0.1)
million.
The decrease in the portfolio valuation of GBP 31.9 million
equates to approximately 2 pence per share, which can be further
broken down as follows: -1 pence from changes to macroeconomic
assumptions, -5 pence from a reduction in the long term power price
forecast (primarily reflecting greater renewable generation), +4
pence from a reduction in the portfolio discount rate, +1 pence
from portfolio optimisation initiatives and -1p other .
Total dividends of GBP 112.6 million were paid in 2020. Total
dividends of GBP 118.7 million have been paid or declared with
respect to 2020 (7.1 pence per share). The target dividend with
respect to 2021 is 7.18 pence per share (increased in line with
December 2020 RPI).
pence per share per cent
--------------------------------------- ---------------- ---------
NAV at 31 December 2019 121.4
Less February 2020 dividend (1.7)
NAV at 31 December 2019 (ex dividend) 119.7
NAV at 31 December 2020 122.2
Less February 2021 dividend (1.8)
NAV at 31 December 2020 (ex dividend) 120.4
Movement in NAV (ex dividend) 0.7 0.6
Dividends with respect to the year 7.1 5.9
Total return on NAV 7.8 6.5
--------------------------------------- ---------------- ---------
The share price as at 31 December 2020 was 134.2 pence,
representing a 9.8 per cent premium to NAV.
Reconciliation of Statutory Net Assets to Reported NAV
As at As at
31 December 2020 31 December 2019
GBP'000 GBP'000
---------------------------- ------------------ ------------------
Operating portfolio 3,216,563 2,347,694
Construction portfolio 27,273 13,971
Cash (wind farm SPVs) 85,932 61,541
---------------------------- ------------------ ------------------
Fair value of investments 3,329,768 2,423,206
Cash (Group) 7,888 24,717
Other relevant liabilities (7,783) (5,157)
---------------------------- ------------------ ------------------
GAV 3,329,873 2,442,766
Aggregate Group Debt (1,100,000) (600,000)
---------------------------- ------------------ ------------------
NAV 2,229,873 1,842,766
Reconciling items - -
---------------------------- ------------------ ------------------
Statutory net assets 2,229,873 1,842,766
Shares in issue 1,824,129,348 1,517,537,310
NAV per share (pence) 122.2 121.4
---------------------------- ------------------ ------------------
NAV Sensitivities
NAV is equal to GAV less Aggregate Group Debt.
GAV is the sum of:
-- DCF valuations of the Group's investments;
-- cash (at Group and wind farm SPV level); and
-- other relevant assets and liabilities of the Group.
The DCF valuation of the Group's investments represents the
largest component of GAV and the key sensitivities are considered
to be the discount rate used in the DCF valuation and assumptions
in relation to inflation, energy yield, power price and asset
life.
The base case discount rate is a blend of a lower discount rate
for fixed cash flows and a higher discount rate for merchant cash
flows. The blended portfolio discount rate as at 31 December 2019
was 7.5 per cent. As reported in June 2020, the Investment Manager
considered that it was appropriate to reduce the underlying
discount rates to reflect market conditions such that the blended
portfolio discount rate as at 30 June 2020 was 7.2 per cent. The
blended portfolio discount rate as at 31 December 2020 is 6.9 per
cent, primarily reflecting the addition of Walney and Humber
Gateway to the portfolio with their higher proportion of fixed cash
flows (2 ROCs per MWh). The underlying discount rates that are
applied to fixed and merchant cash flows have not changed since
June 2020.
As there is no debt at wind farm level, the DCF valuation is
produced by discounting the individual wind farm cash flows on an
unlevered basis. The equivalent levered discount rate would be
approximately 2 per cent higher than the unlevered discount
rate.
Base case long term inflation assumptions are 3.3 per cent to
2030 and 2.3 per cent thereafter for RPI and 2.3 per cent (all
years) for CPI. These assumptions reflect an update from the
previous assumptions of 3 per cent for RPI and 2 per cent for CPI
in light of the government announcement on 25 November 2020
confirming that RPI would be aligned with CPIH after 2030. The
update was NAV neutral.
Base case energy yield assumptions are P50 (50 per cent
probability of exceedance) forecasts based on long term wind data
and operational history. The P90 (90 per cent probability of
exceedance over a 10 year period) and P10 (10 per cent probability
of exceedance over a 10 year period) sensitivities reflect the
future variability of wind and the uncertainty associated with the
long term data source being representative of the long term
mean.
Long term power price forecasts are provided by a leading market
consultant, updated quarterly, and may be adjusted by the
Investment Manager where more conservative assumptions are
considered appropriate. The 30 year average real power price is
GBP44.53/MWh.
Outlook
There are currently over 25GW of operating UK wind farms (14GW
onshore plus 11GW offshore). In monetary terms, the secondary
market for operating UK wind farms is approximately GBP70 billion.
The Group currently has a market share of approximately 5 per cent.
As at 31 December 2020, the average age of the portfolio was 6
years (versus 5 years at listing in March 2013).
In November 2020, in advance of the delayed COP26 conference
scheduled for November 2021 in Glasgow, the Prime Minister
announced a 10 point plan for the delivery of the 2050 net zero
emissions target. A key part of that plan is a 40GW offshore wind
target for 2030, supported by the CFD regime. New build onshore
wind and solar are also expected to contribute, both on a subsidy
free basis and supported by the CFD regime. We do not expect any
material change to the Company's business as a result of the UK
exiting the European Union.
It is anticipated that the Group will continue to invest in ROC
wind farms, with CFD wind farms and subsidy free wind farms
continuing to provide further diversified pipeline opportunities.
At all times, the Group will maintain a balanced portfolio, in line
with the Company's investment objective.
Power prices in 2020 were extremely volatile as a result of the
COVID-19 pandemic and associated lockdown. The Group's cash flows
have remained robust despite of this. Fixed cash flows represent 61
per cent of total cash flows on a DCF basis over the life of the
portfolio (39 per cent merchant).
In general, the outlook for the Group is very encouraging, with
proven operational and financial performance from the existing
portfolio, combined with a healthy pipeline of attractive further
investment opportunities.
Board of Directors
As at the date of this report, the Board comprises 5 individuals
from relevant and complementary backgrounds.
During the year and with effect from the conclusion of the 2020
AGM on 30 April 2020, Tim Ingram retired from the Board and Shonaid
Jemmett-Page was appointed as Chairman. Caoimhe Giblin subsequently
replaced Ms Jemmett-Page, as Chairman of the Audit Committee.
The Directors are of the opinion that the Board as a whole
comprises an appropriate balance of skills, experience and
diversity.
Shonaid Jemmett-Page, Chairman (appointed 5 December 2012)
Shonaid Jemmett-Page, FCA, aged 60, is an experienced
non-executive director in the energy and financial sectors. Shonaid
spent the first 20 years of her career at KPMG in London and Tokyo,
rising to the position of Partner, Financial Services. In 2001, she
moved to Unilever, where she was Senior Vice President, Finance and
Information for Asia, based in Singapore, before returning to the
UK as Finance Director for Unilever's global non-food business. In
2009, Shonaid joined CDC Group as Chief Operating Officer, a
position she held until 2012.
Since then, Shonaid has focused on non-executive appointments
and is currently Chairman of Cordiant Digital Infrastructure
Limited as well as Chairman of the nominations and management
engagement committees, a non-executive Director of Caledonia
Investments plc and Chairman of the remuneration committee and a
member of the governance, nomination and audit committees, Senior
Independent Director and Chairman of the audit and remuneration
committees and a member of the nomination and risk committees at
ClearBank Ltd, and non-executive Director of QinetiQ Group plc and
Chairman of the audit committee and a member of the risk &
security, remuneration, nomination and security committees. Until
January 2016 she was a non-executive Director of APR Energy Limited
where she served as Chairman of the audit committee and a member of
the remuneration committee, until October 2017 she was
non-executive Chairman of Origo Partners plc, until April 2018 she
was non-executive Director of GKN plc where she served as Chairman
of the audit committee and was a member of the remuneration and
nominations committees, until November 2019 she was non-executive
Director of MS Amlin plc where she served as Chairman and was also
the Chairman of the remuneration and nominations committees and a
member of the risk & solvency committee, and until March 2020
she served as non-executive Chairman and then non-executive
Director of MS Amlin Insurance SE (a Belgian subsidiary of MS Amlin
plc). She is also the examiner of the UK branch of an Indian
children's cancer charity.
Caoimhe Giblin, Chairman of the Audit Committee (appointed 1
September 2019)
Caoimhe Giblin, aged 44, has extensive experience in the
electricity industry sector and is currently Commercial Director at
ElectroRoute, an energy trading company which is part of the
Mitsubishi Corporation group of companies.
Prior to that, Caoimhe was Director of Finance for SSE
Renewables where she had responsibility for the financial
activities of SSE's significant on and offshore wind development
and construction portfolio. Prior to this, Caoimhe held various
roles in the Corporate Finance department at Airtricity where she
gained significant experience of corporate acquisitions and
disposals, equity fundraising, project finance, debt financing and
managed the company's corporate valuation process. Caoimhe was
appointed Head of Corporate Finance of SSE Renewables in 2008
following the acquisition of Airtricity by SSE plc.
Caoimhe qualified as a Chartered Accountant with KPMG and spent
the early part of her career focusing on providing corporate
finance due diligence, internal audit and risk management services
in both Dublin and New Zealand. Caoimhe is a Fellow of Chartered
Accountants of Ireland and has a BA in Accounting & Finance and
an MBS in Accounting from Dublin City University. In 2018, Caoimhe
was elected to sit on the Irish Wind Energy Association
Council.
William Rickett C.B., Senior Independent Director (appointed 4
December 2012)
William Rickett C.B., aged 68, is a former Director General of
the Department of Energy & Climate Change within the UK
Government (2006-2009) with considerable experience as
non-executive director of private sector companies. William is
Chairman of Cambridge Economic Policy Associates Ltd, an economic,
financial and public policy consultancy with a strong energy
practice and was Chairman of the governing board of the
International Energy Agency from 2007 to 2009. He is currently a
non-executive Director of Impax Environmental Markets plc, a listed
investment trust specialising in the alternative energy, waste and
water sectors. William was previously a non-executive Director of
Eggborough Power Ltd, an electricity generating company, Helius
Energy plc, an AIM listed developer of new dedicated biomass power
stations, the National Renewable Energy Centre Limited, which helps
to develop renewable energy technologies, and Smart DCC Ltd, the
company procuring the shared infrastructure needed for the roll out
of smart gas and electricity meters across the country.
William's Whitehall career included 15 years of board-level
experience in 5 government departments focusing on energy and
transport. In the late 1980s he led the privatisation of the
electricity industry creating the first competitive electricity
market in the world. Later as Director General of Energy he drove
the transformation of the UK energy policy to re-establish a
nuclear power programme as well as developing strategies for the
deployment of renewable energy.
Martin McAdam (appointed 1 March 2015)
Martin McAdam, aged 59, is an accomplished executive with
significant experience in the energy and renewables sector. He was
formerly Chief Executive Officer of Aquamarine Power. Prior to
that, Martin was President and Chief Executive Officer of the US
subsidiary of Airtricity, a role in which he constructed over 400MW
of wind farm capacity.
Martin spent his early career at ESB, the Irish utility,
involved in a number of activities including power station
construction and generation planning. After a number of years in
information services, he returned to the power industry and joined
Airtricity, a significant developer and constructor of wind farms
throughout the UK and Ireland, managing construction of new wind
farms. Martin's role expanded into operations and ultimately to
take responsibility for the growing US business. He led the
integration of the Airtricity generation business unit into the SSE
Renewables Division after its sale.
Martin is a Chartered Engineer and a Fellow of Engineers Ireland
and a Fellow of the Royal Society for the Encouragement of Arts,
Manufactures and Commerce.
Lucinda Riches C.B.E., (appointed 1 May 2019)
Lucinda Riches C.B.E., aged 59, brings significant capital
markets experience, having advised public companies on strategy,
fundraising and investor relations for many years. She also brings
extensive experience as a public company non-executive Director
across a variety of businesses, including 2 FTSE 100 companies.
Lucinda worked at UBS and its predecessor firms for 21 years
until 2007 where she was a Managing Director, Global Head of Equity
Capital Markets and a member of the board of the investment bank.
She is Senior Independent Director of ICG Enterprise Trust plc. She
is a non-executive Director of Ashtead Group plc and CRH plc. Until
July 2018 she was a non-executive Director of UK Financial
Investments Limited, until January 2019 she was a non-executive
Director of The Diverse Income Trust plc and until May 2020 she was
Senior Independent Director of The British Standards Institution.
She was awarded a CBE in 2017 for her services to financial
services, British industry and to charity.
Tim Ingram (appointed 4 December 2012 and retired 30 April
2020)
Tim Ingram, aged 73, is an experienced chairman and chief
executive, with a long executive career in financial services and a
non-executive portfolio spanning a variety of sectors, including
business management software and services, real estate,
manufacturing, investment trusts, insurance and commercial and
investment banking.
Tim's early executive career was in international banking with
Grindlays Bank and ANZ Banking Group. He was an executive Director
of Abbey National plc (now part of Santander) from 1996 to 2002.
After leaving Abbey National, he became Chief Executive of
Caledonia Investments plc from 2002 until his retirement in July
2010.
He was Chairman of Collins Stewart Hawkpoint plc from 2010 until
it was acquired by Canaccord Financial Inc. in March 2012. From
October 2012 until July 2017 he was Chairman of the Wealth
Management Association and from April 2011 to September 2017 he was
Chairman of Fulham Palace Trust. He was Chairman of RSM Tenon plc
from May 2012 to August 2013. He was a non-executive Director, and
later Senior Independent Director, of Sage plc from 2002 to 2011, a
non-executive Director, and later Senior Independent Director, of
Savills plc from 2002 to 2012, a non-executive Director of Alliance
Trust plc from 2010 to 2012, a non-executive Director of Alok
Industries Ltd, an Indian quoted company, from 2005 to 2015 and a
non-executive Director of Fastjet plc from September 2015 to March
2016. He has also been a non-executive Director of the board of the
European subsidiaries of QBE Insurance Group Ltd since March 2014
and is now its Chairman. He has been a trustee of the London
Community Foundation since September 2017.
Tim retired from the Board with effect from 30 April 2020.
Other UK Listed Public Company Directorships
In addition to their directorships of the Company, the below
Directors currently hold the following UK listed public company
directorships:
Shonaid Jemmett-Page
Caledonia Investments plc
QinetiQ Group plc
Cordiant Digital Infrastructure Limited
William Rickett C.B.
Impax Environmental Markets plc
Lucinda Riches C.B.E.
Ashtead Group plc
CRH plc
ICG Enterprise Trust plc
The Directors have all offered themselves for re-election and
resolutions concerning this will be proposed at the 2021 AGM.
Conflicts of Interest
The Directors have declared any conflicts or potential conflicts
of interest to the Board of Directors which has the authority to
approve such situations. The Company Secretary maintains the
Register of Directors' Conflicts of Interests which is reviewed
quarterly by the Board and when changes are notified. The Directors
advise the Company Secretary and the Board as soon as they become
aware of any conflicts of interest. Directors who have conflicts of
interest do not take part in discussions which relate to any of
their conflicts.
In accordance with Provision 9 of the AIC Code, the appointment
of any Director has included consideration of the time they have
available to the role. Any additional external appointments will be
submitted by Directors to the Board for approval before the
appointment is accepted.
Report of the Directors
The Directors present their Annual Report, together with the
consolidated financial statements of Greencoat UK Wind PLC for the
year to 31 December 2020. The Corporate Governance Report forms
part of this report.
Details of the Directors who held office during the year and as
at the date of this report are given above.
Capital Structure
The Company has one class of ordinary shares which carry no
rights to fixed income. Shareholders are entitled to all dividends
paid by the Company and, on a winding up, provided the Company has
satisfied all of its liabilities, the shareholders are entitled to
all of the surplus assets of the Company.
Shareholders will be entitled to attend and vote at all general
meetings of the Company and, on a poll, to one vote for each
ordinary share held.
Authority to Purchase Own Shares
The current authority of the Company to make market purchases of
up to 14.99 per cent of its issued share capital expires at the
conclusion of the 2021 AGM. Special resolution 14 will be proposed
at the forthcoming AGM seeking renewal of such authority until the
next AGM (or 30 June 2022, whichever is earlier). The price paid
for the shares will not be less than the nominal value or more than
the maximum amount permitted to be paid in accordance with the
rules of the UK Listing Authority in force at the date of purchase.
This power will be exercised only if, in the opinion of the
Directors, a repurchase would be in the best interests of
shareholders as a whole. Any shares repurchased under this
authority will either be cancelled or held in treasury at the
discretion of the Board for future resale in appropriate market
conditions.
The Directors believe that the renewal of the Company's
authority to purchase shares, as detailed above, is in the best
interests of shareholders as a whole and therefore recommend
shareholders to vote in favour of special resolution 14.
The Directors also recommend shareholders to vote in favour of
resolutions 12 and 13, which renew their authority to allot equity
securities for the purpose of satisfying the Company's obligations
to pay the equity element of the Investment Manager's fee, and also
their authority to allot equity securities for cash either pursuant
to the authority conferred by resolution 12 or by way of a sale of
treasury shares.
Major Interests in Shares
Significant shareholdings as at 12 February 2021 are detailed
below.
Shareholder Ordinary shares held %
---------------------------------------
12 February 2021
--------------------------------------- -----------------------
Newton Investment Management 7.82
Rathbone Investment Management 5.60
Investec Wealth & Investment 4.94
Legal & General Investment Management 4.35
FIL Investment International 4.23
M&G Investments 3.91
Tilney Investment Management 3.24
Charles Stanley 3.15
Baillie Gifford 3.03
Insight Investment Management 3.02
--------------------------------------- -----------------------
Significant shareholdings as at 31 December 2020 are detailed
below.
Shareholder Ordinary shares held %
---------------------------------------
31 December 2020
--------------------------------------- -----------------------
Newton Investment Management 7.84
Rathbone Investment Management 5.43
Investec Wealth & Investment 4.90
Legal & General Investment Management 4.38
FIL Investment International 4.20
M&G Investments 4.17
Tilney Investment Management 3.19
Charles Stanley 3.11
--------------------------------------- -----------------------
Companies Act 2006 Disclosures
In accordance with Schedule 7 of the Large and Medium Sized
Companies and Groups (Accounts and Reports) Regulations 2008 the
Directors disclose the following information:
-- the Company's capital structure is detailed in note 15 to the
financial statements and all shareholders have the same voting
rights in respect of the share capital of the Company. There are no
restrictions on voting rights that the Company is aware of, nor any
agreement between holders of securities that result in restrictions
on the transfer of securities or on voting rights;
-- there exist no securities carrying special rights with regard to the control of the Company;
-- the Company does not have an employees' share scheme;
-- the rules concerning the appointment and replacement of
Directors are contained in the Company's Articles of Association
and the Companies Act 2006;
-- there exist no agreements to which the Company is party that
may affect its control following a takeover bid;
-- there exist no agreements between the Company and its
Directors providing for compensation for loss of office that may
occur because of a takeover bid; and
-- the Directors' responsibilities pursuant to Section 172 of
the Companies Act 2006, as detailed in the Strategic Report.
I nvestment Trust Status
The Company has been approved as an investment trust under
sections 1158 and 1159 of the Corporation Taxes Act 2010. As an
investment trust, the Company is required to meet relevant
eligibility conditions and ongoing requirements. In particular, the
Company must not retain more than 15 per cent of its eligible
investment income. The Company has conducted and monitored its
affairs so as to enable it to comply with these requirements.
Diversity and Business Review
A business review is detailed in the Investment Manager's Report
and the Group's policy on diversity is detailed in the Corporate
Governance Report.
Directors' Indemnity
Directors' and Officers' liability insurance cover is in place
in respect of the Directors. The Company's Articles of Association
provide, subject to the provisions of UK legislation, an indemnity
for Directors in respect of costs which they may incur relating to
the defence of any proceedings brought against them arising out of
their positions as Directors, in which they are acquitted or
judgement is given in their favour by the Court.
Except for such indemnity provisions in the Company's Articles
of Association and in the Directors' letters of appointment, there
are no qualifying third party indemnity provisions in force.
Streamlined Energy Carbon Reporting
As the Group has outsourced operations to third parties, there
are no significant greenhouse gas emissions to report from the
operations of the Group. The Group qualifies as a low energy user
and is therefore exempt from disclosures on greenhouse gas
emissions and energy consumption.
The underlying assets of the Group's investee companies are
renewable energy generators which reduce carbon dioxide emissions
on a net basis (at a rate of approximately 0.4t CO(2) per MWh).
Risks and Risk Management
The Group is exposed to financial risks such as price risk,
interest rate risk, credit risk and liquidity risk and the
management and monitoring of these risks are detailed in note 18 to
the financial statements.
Independent Auditor
The Directors will propose the reappointment of BDO LLP as the
Company's Auditor and resolutions concerning this and the
remuneration of the Company's Auditor will be proposed at the 2021
AGM.
So far as each of the Directors at the time that this report was
approved are aware:
-- there is no relevant audit information of which the Auditor is unaware; and
-- they have taken all the steps they ought to have taken to
make themselves aware of any audit information and to establish
that the Auditor is aware of that information.
Annual Accounts
The Board is of the opinion that the Annual Report, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the position,
performance, strategy and business model of the Company.
The Board recommends that the Annual Report, the Report of the
Directors and the Independent Auditor's Report for the year ended
31 December 2020 are received and adopted by the shareholders and a
resolution concerning this will be proposed at the 2021 AGM.
Dividend
The Board recommended an interim dividend of GBP 32.4 million ,
equivalent to 1.775 pence per share with respect to the 3 month
period ended 31 December 2020, bringing total dividends with
respect to the year to GBP 118.7 million , equivalent to 7.1 pence
per share as disclosed in note 8 to the financial statements.
Subsequent Events
Significant subsequent events have been disclosed in note 21 to
the financial statements.
Strategic Report
A review of the business and future outlook, going concern
statement and the principal risks and uncertainties of the Group
have not been included in this report as they are disclosed in the
Strategic Report.
On behalf of the Board
Shonaid Jemmett-Page
Chairman
24 February 2021
Directors' Remuneration Report
This report has been prepared by the Directors in accordance
with the requirements of the Companies Act 2006 and the Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008. A resolution to approve the Directors'
Remuneration Report will be proposed at the 2021 AGM. At the AGM on
30 April 2020, shareholders voted 98.26 per cent in favour to
approve the Directors' Remuneration Report for the year ended 31
December 2019.
The Company's Auditor is required to give their opinion on the
information provided on Directors' remuneration in this report and
this is explained further in its report to shareholders. The
remainder of this report is outside the scope of the external
audit.
Annual Statement from the Chairman of the Board
The Board, which is profiled on above, consists solely of
non-executive Directors and is considered to be entirely
independent. The Board considers at least annually the level of the
Board's fees, in accordance with the AIC Code. This review resulted
in no change to the basic fee for non-executive Directors for the
current financial year and it was agreed the Directors would remain
eligible for a discretionary payment of up to GBP10,000, where
significant additional work is incurred by Directors in the raising
of further equity, as disclosed in the Annual Report on
Remuneration below.
Remuneration Policy
As at the date of this report, the Board comprised 5 Directors,
all of whom are non-executive. The Board does not have a separate
Remuneration Committee as, being wholly comprised of non-executive
Directors, the whole Board considers these matters.
At the AGM on 30 April 2020, shareholders voted 98.25 per cent
in favour to approve the Company's Remuneration Policy. The details
of the Company's Remuneration Policy are set out in full below and
no changes are expected for 2021.
Each Director receives a fixed fee per annum based on their
roles and responsibility within the Company and the time commitment
required. It is not considered appropriate that Directors'
remuneration should be performance related and none of the
Directors are eligible for pension benefits, share options, long
term incentive schemes or other benefits in respect of their
services as non-executive Directors of the Company.
The Company's Articles of Association empower the Board to award
a discretionary bonus where any Director has been engaged in
exceptional work on a time spent basis to compensate for the
additional time spent over their expected time commitment.
The Articles of Association provide that Directors retire and
offer themselves for re-election at the first AGM after their
appointment and at least every 3 years thereafter. However, in
accordance with AIC Code, the Directors are required to be
re-elected annually. All of the Directors have been provided with
letters of appointment for an initial term of 3 years and for each
3 year term thereafter, which are subject to annual re-election in
accordance with the AIC Code. The following table outlines the date
and expiry of each of the Directors' current letters of
appointment:
Date of expiry
Date of current appointment letter of current appointment letter
---------------------- ----------------------------------- -------------------------------
Shonaid Jemmett-Page February 2019 February 2022
William Rickett C.B. February 2019 February 2022
Martin McAdam March 2018 March 2021
Lucinda Riches C.B.E. May 2019 May 2022
Caoimhe Giblin September 2019 September 2022
---------------------- ----------------------------------- -------------------------------
A Director's appointment may at any time be terminated by and at
the discretion of either party upon 6 months' written notice. A
Director's appointment will automatically end without any right to
compensation whatsoever if they are not re-elected by the
shareholders. A Director's appointment may also be terminated with
immediate effect and without compensation in certain other
circumstances. Being non-executive Directors, none of the Directors
have a service contract with the Company.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company's
registered office.
Annual Report on Remuneration
With effect from 1 January 2020, the basic fee of non-executive
Directors was GBP40,000 per annum with the Senior Independent
Director and the Audit Committee Chair receiving an additional
GBP5,000 and GBP10,000 per annum respectively. The Chairman's basic
fee was GBP70,000 per annum.
In addition, and in line with the practice of some other
companies in the sector, where significant additional work and
responsibility is incurred by Directors in the raising of further
equity, appropriate additional fees of no more than GBP10,000 per
annum per Director will be paid.
The level of fees for Directors were benchmarked in the prior
year by independent consultants, Heidrick & Struggles, as in
line with the market. The Company is now the largest independent
generator of renewable electricity in the UK. Its GAV has grown to
GBP3.3 billion through acquisitions and equity raisings and, in the
last 3 years, the Board and its committees have held 101
meetings.
The Board takes the view that making discretionary payments to
Directors for the extra work involved when equity raisings are
required is better for shareholders than a permanent increase in
the level of Directors' base fees.
The table below (audited information) shows the total
remuneration earned by each individual Director during the current
year:
Paid in the year to Fixed % change from Discretionary % change from Total
31 December 2020 remuneration prior year (4) remuneration (5) prior year remuneration
--------------------- ------------------ ----------------- ----------------- ----------------- ------------------
Shonaid Jemmett-Page
(Chairman) (1) GBP63,333 40% GBP10,000 0% GBP73,333
Caoimhe Giblin GBP46,667 25% GBP10,000 n/a GBP56,667
(Audit Committee
Chairman) (2)
William Rickett C.B.
(Senior Independent
Director) GBP45,000 0% GBP10,000 0% GBP55,000
Martin McAdam GBP40,000 0% GBP10,000 0% GBP50,000
Lucinda Riches
C.B.E. GBP40,000 0% GBP10,000 100% GBP50,000
Tim Ingram (3) GBP23,333 0% - n/a GBP23,333
Total GBP258,333 GBP50,000 GBP308,333
--------------------- ------------------ ----------------- ----------------- ----------------- ------------------
(1) Appointed as Chairman of the Board with effect from 30 April
2020. The basic remuneration for the role of Chairman has remained
unchanged at GBP70,000 per annum.
(2) Appointed as Audit Committee Chairman with effect from 30
April 2020.
(3) Retired with effect from 30 April 2020.
(4) Movement in Individual Director's salary based on annualised
figures.
(5) The Directors received an additional discretionary payment
from the Company in relation to work incurred in connection with
the October 2020 share placing.
The table below (audited information) shows the total
remuneration earned by each individual Director during the prior
year:
Paid in the year to 31 December 2019 Fixed remuneration Discretionary remuneration Total remuneration
----------------------------------------------- ------------------- --------------------------- -------------------
Tim Ingram (Chairman) GBP70,000 GBP10,000 GBP80,000
Shonaid Jemmett-Page (Audit Committee GBP50,000 GBP10,000 GBP60,000
Chairman)
William Rickett C.B. (Senior Independent GBP45,000 GBP10,000 GBP55,000
Director)
Martin McAdam GBP40,000 GBP10,000 GBP50,000
Lucinda Riches C.B.E. (1) GBP26,667 GBP5,000 GBP31,667
Caoimhe Giblin (2) GBP13,333 - GBP13,333
Dan Badger (3) GBP23,333 GBP10,000 GBP33,333
Total GBP268,333 GBP55,000 GBP323,333
----------------------------------------------- ------------------- --------------------------- -------------------
(1) Appointed with effect from 1 May 2019 .
(2) Appointed with effect from 1 September 2019.
(3) Resigned with effect from 31 July 2019.
Directors' Interests (audited information)
Directors who held office and had interests in the shares of the
Company as at 31 December 2020 are given in the table below. There
were no changes to the interests of each Director as at the date of
this report.
Ordinary shares of 1p each held at 31 Ordinary shares of 1p each held at 31
December 2020 December 2019
-------------------------- ------------------------------------------- -------------------------------------------
Shonaid Jemmett-Page (1) 116,450 85,916
William Rickett C.B. (2) 37,500 37,500
Martin McAdam 98,689 86,189
Lucinda Riches C.B.E. 70,000 20,000
Caoimhe Giblin 20,000 -
-------------------------- ------------------------------------------- -------------------------------------------
(1) includes 44,418 ordinary shares legally and beneficially owned by her spouse.
(2) includes 30,000 ordinary shares legally and beneficially owned by members of his family .
Relative Importance of Spend on Pay
The remuneration of the Directors with respect to the year
totalled GBP 308,333 (2019: GBP 323,333 ) in comparison to
dividends paid or declared to shareholders with respect to the year
of GBP 118,662,399 (2019: GBP 100,414,786 ).
Company Performance
Due to the positioning of the Company in the market as a
sector-focused infrastructure fund investing in UK wind farms to
produce stable and inflating dividends for investors while aiming
to preserve capital value, the Directors consider that a listed
infrastructure fund has characteristics of both an equity index and
a bond index. As the Company listed on 27 March 2013, historical
data for the past 10 years is not yet available. The graph in the
Annual Report shows the TSR of the Company compared to the FTSE 250
index and the Bloomberg Barclays Sterling Corporate Bond Index:
On behalf of the Board
Shonaid Jemmett-Page
Chairman
24 February 2021
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group's financial statements, and have
elected to prepare the Company's financial statements, in
accordance with IAS in conformity with the requirements of the
Companies Act 2006 and in accordance with IFRS adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the EU. Under company
law the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Group and Company and of the profit or loss for
the Group for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with IAS
in conformity with the requirements of the Companies Act 2006 and
in accordance with IFRS adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the EU, subject to any material
departures disclosed and explained in the financial statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business; and
-- prepare a Report of the Directors, a Strategic Report and
Directors' Remuneration Report which comply with the requirements
of the Companies Act 2006.
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 Act 2006 and, as
regards the Group's financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities. The
Directors are responsible for ensuring that the Annual Report,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group's
performance, business model and strategy.
The Directors are also responsible under section 172 of the
Companies Act 2006 to promote the success of the Company for the
benefit of its members as a whole and in doing so have regard for
the needs of wider society and other stakeholders.
Website Publication
The Directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the UK governing the preparation and
dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibilities also extend to the ongoing
integrity of the financial statements contained therein.
Directors' Responsibilities Pursuant to DTR4
The Directors confirm to the best of their knowledge that:
-- the Group's financial statements have been prepared in
accordance with IAS in conformity with the requirements of the
Companies Act 2006, IFRS adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the EU and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the Group;
and
-- the Annual Report includes a fair review of the development
and performance of the business and the financial position of the
Group and the Parent Company, together with a description of the
principal risks and uncertainties that they face.
On behalf of the Board
Shonaid Jemmett-Page
Chairman
24 February 2021
Corporate Governance Report
This Corporate Governance Report forms part of the Report of the
Directors. The Board operates under a framework for corporate
governance which is appropriate for an investment company. All
companies with a premium listing of equity shares in the UK are
required under the UK Listing Rules to report on how they have
applied the UK Code in their Annual Report and financial
statements.
The Company became a member of the AIC with effect from 27 March
2013 and has therefore put in place arrangements to comply with the
AIC Code and, in accordance with the AIC Code, complies with the UK
Code.
The AIC Code, as explained by the AIC Guide, addresses all the
principles set out in the UK Code, as well as setting out
additional principles and recommendations on issues that are of
specific relevance to investment companies such as the Company.
The AIC Code and the AIC Guide are available on the AIC's
website, www.theaic.co.uk . The UK Code is available on the FRC's
website, www.frc.org.uk .
The Company has complied with the recommendations of the AIC
Code throughout the year.
Purpose, Culture and Values
The Company's purpose remains clear; to provide shareholders
with an annual dividend that increases in line with RPI inflation
while preserving the capital value of its investment portfolio in
the long term on a real basis through reinvestment of excess cash
flow and the prudent use of gearing.
The Company provides investors with the opportunity to
participate directly in the ownership of UK wind farms, so
increasing the resources and capital dedicated to the deployment of
renewable energy and the reduction of greenhouse gas emissions.
As an investment trust with no employees, the Board have agreed
that its culture and values should be aligned with those of the
Investment Manager and centred on long term relationships with the
Company's key stakeholders and sustainable investment as
follows:
-- Integrity is at the heart of every activity, with importance
being placed on transparency, trustworthiness and
dependability.
-- The trust of stakeholders is very important to maintain the
Company's reputation, particularly for execution certainty for
asset sellers and delivery of investment promises to investors.
-- Respect for differing opinions is to be shown across all interaction and communication.
-- Individual empowerment is sought with growth in
responsibility and autonomy being actively encouraged.
-- Collaboration and effectively utilising the collective skills
of all participants is important to ensure ideas and information
are best shared.
The Board
As at the date of this report, the Board consists of 5
non-executive Directors and represents a range of investment,
financial and business skills and experience. During the year, Tim
Ingram retired as Director and Chairman of the Company with effect
from 30 April 2020.
The Chairman of the Board is Shonaid Jemmett-Page, who was
selected to succeed Mr Ingram following the 2020 AGM. In
considering the independence of the Chairman, the Board took note
of the provisions of the AIC Code relating to independence, and has
determined that Ms Jemmett-Page is an independent director. The
Senior Independent Director is William Rickett C.B.. The Company
has no employees and therefore there is no requirement for a chief
executive.
The Articles of Association provide that Directors shall retire
and offer themselves for re-election at the first AGM after their
appointment and at least every 3 years thereafter. However, the AIC
Code requires that Directors be subject to an annual election by
shareholders, and the Directors comply with this requirement. All
of the Directors shall offer themselves for re-election at the
forthcoming AGM. Having considered their effectiveness,
demonstration of commitment to the role, length of service,
attendance at meetings and contribution to the Board's
deliberations, the Board approves the nomination for re-election of
the Directors.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company's
registered office.
Chair Tenure Policy
The Company's policy on Chair tenure is available on the Company
website. The Chairman will normally serve no more than 9 years as a
Director and Chair. However, the Company recognises that where it
is in the best interests of the Company, its shareholders and its
stakeholders, the Chairman may serve for a limited time in excess
of 9 years. In such circumstances the independence of the other
Directors will ensure that the Board as a whole remains
independent. The Company believes that this limited flexibility
regarding Chair tenure will enable it to manage succession planning
more effectively.
Diversity Policy
The Board has a policy to base appointments on merit and against
objective criteria, with due regard for the benefits of diversity,
including gender diversity. Its objective is to attract and
maintain a Board that, as a whole, comprises an appropriate balance
of skills and experience.
The Board consists of individuals from relevant and
complementary backgrounds offering experience in the investment
management of listed funds, as well as in the energy sector from
both a public policy and a commercial perspective. As at the date
of this report, the Board comprised 2 men and 3 women, all
non-executive Directors who are considered to be independent of the
Investment Manager and free from any business or other relationship
that could materially interfere with the exercise of their
independent judgement.
The Investment Manager operates an equal opportunities policy
and its partners and employees comprise 40 men and 17 women.
Performance and Evaluation
Pursuant to Provision 26 of the AIC Code, the Board undertakes a
formal and rigorous evaluation of its performance each financial
year. As a FTSE 250 company, in keeping with the provisions of the
AIC Code, it is the Company's policy that every 3 years an external
consultant, who has no connection with the Company, carries out a
formal review of the Board's performance. This was last conducted
in 2019.
An internal evaluation of the Board, the Audit Committee and
individual Directors was conducted during 2020 in the form of
annual performance appraisals, questionnaires and discussions to
determine effectiveness and performance in various areas, as well
as the Directors' continued independence and tenure. This process
was facilitated by the Company Secretary. The reviews concluded
that the overall performance of the Board and Audit Committee was
satisfactory and the Board was confident in its ability to continue
to govern the Company well.
Each individual Directors' training and development needs are
reviewed annually. All new Directors receive an induction from the
Investment Manager, which includes the provision of information
about the Company and their responsibilities. In addition, site
visits and specific Board training sessions are arranged involving
presentations on relevant topics.
Board Responsibilities
The Board will meet, on average, 5 times in each calendar year
for scheduled Board meetings and on an ad hoc basis as and when
necessary. At each meeting the Board follows a formal agenda that
will cover the business to be discussed. Between meetings there is
regular contact with the Investment Manager and the Administrator.
The Board requires to be supplied with information by the
Investment Manager, the Administrator and other advisers in a form
appropriate to enable it to discharge its duties.
The Board has responsibility for ensuring that the Company keeps
proper accounting records which disclose with reasonable accuracy
at any time the financial position of the Company and which enable
it to ensure that the financial statements comply with applicable
regulation. It is the Board's responsibility to present a fair,
balanced and understandable Annual Report, which provides the
information necessary for shareholders to assess the performance,
strategy and business model of the Company. This responsibility
extends to the half year and other price-sensitive public
reports.
Committees of the Board
The Company's Audit Committee is chaired by Caoimhe Giblin, who
replaced Shonaid Jemmett-Page following the 2020 AGM and consists
of a minimum of 3 members. In accordance with best practice, the
Company's Chairman is not a member of the Audit Committee however
she does attend Audit Committee meetings as and when deemed
appropriate. The Audit Committee Report below describes the work of
the Audit Committee.
The Company's Management Engagement Committee comprises all of
the Directors and is required to meet at least once per year. The
Chairman of the Management Engagement Committee is Shonaid
Jemmett-Page, who replaced Tim Ingram following his retirement from
the Board, with effect from the conclusion of the 2020 AGM. The
Management Engagement Committee's main function is to keep under
review the performance of the Investment Manager and make
recommendations on any proposed amendment to the Investment
Management Agreement.
Terms of reference for the Management Engagement Committee have
been approved by the Board and are available on the Company's
website.
The Management Engagement Committee met once during the year to
review the performance of the Investment Manager and to consider
the structure of the Investment Manager's fee.
The Company's Nominations Committee comprises all of the
Directors and is required to meet at least once per year. The
Chairman of the Nominations Committee is Shonaid Jemmett-Page, who
replaced Tim Ingram following his retirement from the Board, with
effect from the conclusion of the 2020 AGM. The Nominations
Committee's main function is to plan for Board succession and to
review annually the structure, size and composition of the Board
and make recommendation to the Board with regard to any changes
that are deemed necessary. Terms of reference for the Nominations
Committee have been approved by the Board and are available on the
Company's website.
The Nominations Committee met 2 times during the year to
consider Board succession planning and the Director recruitment
process.
As Senior Independent Director, William Rickett C.B. led the
Chairman succession process. The skills of the candidates were
considered and following a number of discussions, it was resolved
that Shonaid Jemmett-Page would succeed Tim Ingram as Chairman of
the Company with effect from the conclusion of the 2020 AGM.
The Company has established a Communications and Disclosure
Committee which is required to meet at least once a year. The
committee has responsibility for, amongst other things, determining
on a timely basis the disclosure treatment of material information,
and assisting in the design, implementation and periodic evaluation
of disclosure controls and procedures. The committee also has
responsibility for the identification of inside information for the
purpose of maintaining the Company's insider list.
Terms of reference for the Communications and Disclosure
Committee have been approved by the Board and are available on the
Company's website. Membership consists of the Chairman (or one
other Director) and one of Stephen Lilley and Laurence Fumagalli.
Additional members of the committee may be appointed and existing
members removed by the committee. The membership of the committee
is reviewed by the Board on a periodic basis and at least once a
year.
The AIC Code recommends that companies appoint a Remuneration
Committee, however the Board has not deemed this necessary, as
being wholly comprised of non-executive Directors, the whole Board
considers these matters.
The Investment Manager
The Board has entered into the Investment Management Agreement
with the Investment Manager under which the Investment Manager is
responsible for developing strategy and the day-to-day management
of the Group's investment portfolio, in accordance with the Group's
investment objective and Investment Policy, subject to the overall
supervision of the Board. A summary of the fees paid to the
Investment Manager are given in note 3 to the financial
statements.
The Investment Manager's appointment is terminable by the
Investment Manager or the Company on not less than 12 months'
notice. The Investment Management Agreement may be terminated with
immediate effect and without compensation, by either the Investment
Manager or the Company if the other party has gone into
liquidation, administration or receivership or has committed a
material breach of the Investment Management Agreement.
The Board as a whole reviewed the Company's compliance with the
UK Corporate Governance Code, the Listing Rules, the Disclosure
Guidance and Transparency Rules and the AIC Code. In accordance
with the Listing Rules, the Directors confirm that the continued
appointment of the Investment Manager under the current terms of
the Investment Management Agreement is in the interests of
shareholders. The Board also reviewed the performance of other
service providers and examined the effectiveness of the Company's
internal control systems during the year.
Board Meetings, Committee Meetings and Directors' Attendance
The number of meetings of the full Board attended in the year to
31 December 2020 by each Director is set out below:
Scheduled Board Meetings (Total of 5) Additional Board Meetings (Total of 15)
----------------------- -------------------------------------- ----------------------------------------
Shonaid Jemmett-Page 5 15
William Rickett C.B. 5 14
Martin McAdam 5 15
Lucinda Riches C.B.E. 5 14
Caoimhe Giblin 5 15
Tim Ingram(1) 3 4
----------------------- -------------------------------------- ----------------------------------------
(1) Retired with effect from 30 April 2020, at which point 3
scheduled Board meetings and 4 additional Board meetings had taken
place.
The number of meetings of the committees of the Board attended
in the year to 31 December 2020 by each committee member is set out
below:
Management Engagement Nominations Committee
Audit Committee Meetings Committee Meetings Meetings
(Total of 4) (Total of 1) (Total of 2)
------------------------- ------------------------- ------------------------------ ------------------------------
Shonaid Jemmett-Page(1) 2 1 2
William Rickett C.B. 4 1 2
Martin McAdam 4 1 2
Lucinda Riches C.B.E. 4 1 2
Caoimhe Giblin(2) 4 1 1
Tim Ingram(3) n/a n/a 1
------------------------- ------------------------- ------------------------------ ------------------------------
(1) R esigned from the Audit Committee with effect from 30 April
2020, at which point 2 Audit Committee meetings had taken
place.
(2) Absent from 1 Nominations Committee meeting due to the nature of discussion.
(3) Retired with effect from 30 April 2020, at which point 1
Nominations Committee meeting had taken place.
Internal Control
The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness. The Board confirms
that it has an ongoing process for identifying, evaluating and
managing the significant risks faced by the Company. This process
has been in place throughout the year and has continued since the
year end.
The Company's principal risks and uncertainties are detailed in
the Strategic Report. As further explained in the Audit Committee
Report, the risks of the Company are outlined in a risk matrix
which was reviewed and updated during the year. The Board
continually reviews its policy setting and updates the risk matrix
at least annually to ensure that procedures are in place with the
intention of identifying, mitigating and minimising the impact of
risks should they crystallise. The Board has a process in place to
identify emerging risks, such as climate related risks, and to
determine whether any actions are required. The Board relies on
reports periodically provided by the Investment Manager and the
Administrator regarding risks that the Company faces. When
required, experts are employed to gather information, including tax
and legal advisers. The Board also regularly monitors the
investment environment and the management of the Company's
portfolio, and applies the principles detailed in the internal
control guidance issued by the FRC.
The Board holds an annual risk and strategy discussion, which
enables the Directors to consider risk outside the scheduled
quarterly Board meetings. This enables emerging risks to be
identified and discussions on horizon scanning to occur, so the
Board can consider how to manage and potentially mitigate any
relevant emerging risks.
The principal features of the internal control systems which the
Investment Manager and the Administrator have in place in respect
of the Group's financial reporting are focussed around the 3 lines
of defence model and include:
-- internal reviews of all financial reports;
-- review by the Board of financial information prior to its publication;
-- authorisation limits over expenditure incurred by the Group;
-- review of valuations; and
-- authorisation of investments.
Whistleblowing
The Board has considered the AIC Code recommendations in respect
of arrangements by which staff of the Investment Manager or
Administrator may, in confidence, raise concerns within their
respective organisations about possible improprieties in matters of
financial reporting or other matters. It has concluded that
adequate arrangements are in place for the proportionate and
independent investigation of such matters and, where necessary, for
appropriate follow-up action to be taken within their
organisation.
Amendment of Articles of Association
The Company's Articles of Association may be amended by the
members of the Company by special resolution (requiring a majority
of at least 75 per cent of the persons voting on the relevant
resolution).
Engagement with Stakeholders
The Company is committed to maintaining good communications and
building positive relationships with all stakeholders, including
shareholders, debt providers, analysts, potential investors,
suppliers and the wider communities in which the Group and its
investee companies operate. This includes regular engagement with
the Company's shareholders and other stakeholders by the Board, the
Investment Manager and the Administrator. Regular feedback is
provided to the Board to ensure they understand the views of
stakeholders.
Relations with Shareholders
The Company welcomes the views of shareholders and places great
importance on communication with its shareholders. The Investment
Manager is available at all reasonable times to meet with principal
shareholders and key sector analysts. The Chairman, the Senior
Independent Director and other Directors are also available to meet
with shareholders, if required.
All shareholders have the opportunity to put questions to the
Company at its registered address. The AGM of the Company should
provide a forum for shareholders to meet and discuss issues with
the Directors and Investment Manager.
The Board receives comprehensive shareholder reports from the
Company's Registrar and regularly monitors the views of
shareholders and the shareholder profile of the Company. The Board
is also kept fully informed of all relevant market commentary on
the Company by the Investment Manager.
Relations with Other Stakeholders
The Company values its relationships with its debt providers.
The Investment Manager ensures the Company continues to meet its
debt covenants and reporting requirements. During the year, the
Company increased its amount of term debt with CBA and NAB and
increased its revolving credit facility with RBS International, RBC
and Santander to GBP400 million, with the addition of GBP100
million from Barclays, as disclosed in note 13 to the financial
statements.
The Investment Manager conducts presentations with analysts and
investors to coincide with the announcement of the Company's full
and half year results, providing an opportunity for discussions and
queries on the Company's activities, performance and key metrics.
In addition to these semi-annual presentations, the Investment
Manager meets regularly with analysts and investors to provide
further updates with how the Company and the investment portfolio
are performing.
The Directors and Investment Manager receive informal feedback
from analysts and investors, which is presented to the Board by the
Company's Joint Brokers. The Company Secretary also receives
informal feedback via queries submitted through the Company's
website and these are addressed by the Board, the Investment
Manager or the Company Secretary, where applicable.
The Company recognises that relationships with suppliers are
enhanced by prompt payment and the Company's Administrator ensures
all payments are processed within the contractual terms agreed with
the individual suppliers.
The Company, via its Investment Manager, has long term and
important relationships with its operational site managers and
turbine operations and maintenance managers and reviews
performance, including health and safety, on a monthly basis. The
Investment Manager also engages with both to integrate operational
best practice and has been in contact to discuss responses to
COVID-19 and business continuity plans. Representatives of the site
manager and SPV board directors, from the Investment Manager, visit
all operational sites on a regular basis and generally carry out
safety walks at least once a year on each site. The Board's Health
and Safety Director also visits sites at regular intervals.
Similarly, environment protection issues are reported on every
month by the site managers and annual habitat management plans are
agreed by each SPV board for all sites to ensure that the
environment in and surrounding each windfarm is carefully
protected.
The Directors recognise that the long term success of the
Company is linked to the success of the communities in which the
Group, and its investee companies, operate. During the year, a
number of community projects were supported by the Group's investee
companies, further details of which can be found in the latest ESG
report, available on the Company's website:
www.greencoat-ukwind.com .
Key decisions made or approved by the Directors during the year
and the impact of those decisions on the Company's members and
wider stakeholders is disclosed further in the Strategic
Report.
Shareholders may also find Company information or contact the Company through its website.
On behalf of the Board
Shonaid Jemmett-Page
Chairman of the Board
24 February 2021
Audit Committee Report
At the date of this report, the Audit Committee comprised
Caoimhe Giblin (Chairman), William Rickett C.B., Martin McAdam and
Lucinda Riches C.B.E.. The AIC Code has a requirement that at least
one member of the Audit Committee should have recent and relevant
financial experience and the Audit Committee as a whole shall have
competence relevant to the sector. The Board is satisfied that the
Audit Committee is properly constituted in these respects. The
qualifications and experience of all Audit Committee members are
disclosed in this Annual Report.
The Audit Committee operates within clearly defined terms of
reference which were reviewed during the financial year and
approved by the Board, and include all matters indicated by
Disclosure Guidance and Transparency Rule 7.1 and the AIC Code and
are available for inspection on the Company's website:
www.greencoat-ukwind.com . The Company's Annual Report complies
with the provisions of the Competition and Markets Authority's
(CMA) Order.
Audit Committee meetings are scheduled at appropriate times in
the reporting and auditing cycle. The Chairman, other Directors and
third parties may be invited to attend meetings as and when deemed
appropriate.
Summary of the Role and Responsibilities of the Audit
Committee
The duties of the Audit Committee include reviewing the
Company's quarterly NAV, half year report, Annual Report and
financial statements and any formal announcements relating to the
Company's financial performance.
The Audit Committee is the forum through which the external
Auditor reports to the Board and is responsible for reviewing the
terms of appointment of the Auditor, together with their
remuneration. On an ongoing basis, the Audit Committee is
responsible for reviewing the objectivity of the Auditor along with
the effectiveness of the audit and the terms under which the
Auditor is engaged to perform non-audit services (restricted to the
limited scope review of the half year report and reporting
accountant services in relation to equity raises). The Audit
Committee is also responsible for reviewing the Company's corporate
governance framework, system of internal controls and risk
management, ensuring they are suitable for an investment
company.
The Audit Committee reports its findings to the Board,
identifying any matters on which it considers that action or
improvement is needed, and make recommendations on the steps to be
taken.
Overview
During the year, the Audit Committee's discussions have been
broad ranging. In addition to the 4 formally convened Audit
Committee meetings during the year, the Audit Committee has had
regular contact and meetings with the Investment Manager, the
Administrator and the Auditor. These meetings and discussions
focused on, but were not limited to:
-- a detailed analysis of the Company's quarterly NAVs;
-- reviewing the updated risk matrix of the Company;
-- reviewing the Company's corporate governance framework;
-- reviewing the internal controls framework for the Company,
the Administrator and the Investment Manager, considering the need
for a separate internal audit function;
-- considering any incidents of internal control failure or fraud and the Company's response;
-- considering the ongoing assessment of the Company as a going concern;
-- considering the principal risks and period of assessment for
the longer term viability of the Company;
-- monitoring the ongoing appropriateness of the Company's
status as an investment entity under IFRS 10, in particular
following an acquisition;
-- monitoring compliance with AIFMD, the AIC code and other regulatory and governance frameworks;
-- reviewing and approving the audit plan in relation to the
audit of the Company's Annual Report and financial statements;
-- monitoring compliance with the Company's policy on the
provision of non-audit services by the Auditor; and
-- reviewing the effectiveness, resources, qualifications and independence of the Auditor.
Financial Reporting
The primary role of the Audit Committee in relation to financial
reporting is to review with the Investment Manager, the
Administrator and the Auditor the appropriateness of the half year
report and Annual Report and financial statements, concentrating
on, amongst other matters:
-- the quality and acceptability of accounting policies and practices;
-- the clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance reporting
requirements;
-- amendments to legislation and corporate governance reporting
requirements and accounting treatment of new transactions in the
year;
-- the impact of new and amended accounting standards on the Company's financial statements;
-- whether the Audit Committee believes that proper and
appropriate processes and procedures have been followed in the
preparation of the half year report and Annual Report and financial
statements;
-- consideration and recommending to the Board for approval of
the contents of the annual financial statements and reviewing the
Auditors' report thereon including consideration of whether the
financial statements are overall fair, balanced and
understandable;
-- material areas in which significant judgements have been
applied or there has been discussion with the Auditor; and
-- any correspondence from regulators in relation to the Company's financial reporting.
BDO LLP attended 2 of the 4 formal Audit Committee meetings held
during the year. The Audit Committee has also held private meetings
with the Auditor to provide additional opportunities for open
dialogue and feedback. Matters typically discussed include the
Auditor's assessment of the transparency and openness of
interactions with the Investment Manager and the Administrator,
confirmation that there has been no restriction in scope placed on
them, the independence of their audit and how they have exercised
professional scepticism.
Significant Issues
The Audit Committee discussed the planning, conduct and
conclusions of the external audit as it proceeded. At the Audit
Committee meeting in advance of the year end, the Audit Committee
discussed and approved the Auditor's audit plan. The Audit
Committee identified the carrying value of investments as a key
area of risk of misstatement in the Company's financial
statements.
Assessment of the Carrying Value of Investments
The Group's accounting policy is to designate investments at
fair value through profit or loss. Therefore, the most significant
risk in the Group's financial statements is whether its investments
are fairly valued due to the uncertainty involved in determining
the investment valuations. There is also an inherent risk of
management override as the Investment Manager's fee is calculated
based on NAV as disclosed in note 3 to the financial statements.
The Investment Manager is responsible for calculating the NAV with
the assistance of the Administrator, prior to approval by the
Board.
On a quarterly basis, the Investment Manager provides a detailed
analysis of the NAV highlighting any movements and assumption
changes from the previous quarter's NAV. This analysis and the
rationale for any changes made is considered and challenged by the
Chairman of the Audit Committee and subsequently considered and
approved by the Board. The Audit Committee has satisfied itself
that the key estimates and assumptions used in the valuation model
are appropriate and that the investments have been fairly valued.
The key estimates and assumptions include the useful life of the
assets, the discount rates, the level of wind resource, the rate of
inflation, the price at which the power and associated benefits can
be sold and the amount of electricity the assets are expected to
produce.
Internal Control
The Audit Committee has established a set of ongoing processes
designed to meet the particular needs of the Company in managing
the risks to which it is exposed.
The process is one whereby the Investment Manager has identified
the principal risks to which the Company is exposed, and recorded
them on a risk matrix together with the controls employed to
mitigate these risks and has a process in place to identify
emerging risks and to determine whether any actions are required. A
residual risk rating has been applied to each risk. The Audit
Committee is responsible for reviewing the risk matrix and
associated controls before recommending to the Board for
consideration and approval, challenging the Investment Manager's
assumptions to ensure a robust internal risk management
process.
The Audit Committee considers risk and strategy regularly, and
formally reviewed the updated risk matrix in Q1 2021 and will
continue to do so at least annually. By their nature, these
procedures provide a reasonable, but not absolute, assurance
against material misstatement or loss. Regular reports are provided
to the Audit Committee highlighting material changes to risk
ratings.
The Audit Committee reviewed the Group's principal risks and
uncertainties as at 30 June 2020, to determine that these were
unchanged from those disclosed in the Company's 2019 Annual Report
and remained the most likely to affect the Group in the second half
of the year. During the year, an additional risk was identified in
relation to the ongoing COVID-19 pandemic, as further disclosed in
the Strategic Report.
During the year, the Audit Committee discussed and reviewed in
depth the internal controls frameworks in place at the Investment
Manager and the Administrator. Discussions were centred around 3
lines of defence: assurances at operational level; internal
oversight; and independent objective assurance. The Administrator
holds the International Standard on Assurance Engagements (ISAE)
3402 Type 2 certification. This entails an independent rigorous
examination and testing of their controls and processes.
The Audit Committee concluded that these frameworks were
appropriate for the identification, assessment, management and
monitoring of financial, regulatory and other risks, with
particular regard to the protection of the interests of the
Company's shareholders.
Internal Audit
The Audit Committee continues to review the need for an internal
audit function and has decided that the systems, processes and
procedures employed by the Company, Investment Manager and
Administrator, including their own internal controls and
procedures, provide sufficient assurance that an appropriate level
of risk management and internal control is maintained. In addition
to this, the Company's external Depositary provides cash
monitoring, asset verification and oversight services to the
Company.
The Audit Committee has therefore concluded that shareholders'
investments and the Company's assets are adequately safeguarded and
an internal audit function specific to the Company is considered
unnecessary.
The Audit Committee is available on request to meet investors in
relation to the Company's financial reporting and internal
controls.
External Auditor
Effectiveness of the Audit Process
The Audit Committee assessed the effectiveness of the audit
process by considering BDO LLP's fulfilment of the agreed audit
plan through the reporting presented to the Audit Committee by BDO
LLP and the discussions at the Audit Committee meeting, which
highlighted the major issues that arose during the course of the
audit. In addition, the Audit Committee also sought feedback from
the Investment Manager and the Administrator on the effectiveness
of the audit process. For this financial year, the Audit Committee
was satisfied that there had been appropriate focus and challenge
on the primary areas of audit risk and assessed the quality of the
audit process to be good.
Non-Audit Services
The Audit Committee has a policy regarding the provision of
non-audit services by the external Auditor which precludes the
external Auditor from providing any of the prohibited non-audit
services as listed in Article 5 of the EU Directive Regulation (EU)
No 537/2014. The Audit Committee monitors the Group's expenditure
on non-audit services provided by the Company's Auditor who should
only be engaged for non-audit services where they are deemed to be
the most commercially viable supplier and prior approval of the
Audit Committee has been sought.
Details of fees paid to BDO LLP during the year are disclosed in
note 5 to the financial statements. The Audit Committee approved
these fees after a review of the level and nature of work to be
performed, and are satisfied that they are appropriate for the
scope of the work required. The Audit Committee seeks to ensure
that any non-audit services provided by the external Auditor do not
conflict with their statutory and regulatory responsibilities, as
well as their independence, before giving written approval prior to
their engagement. The Audit Committee was satisfied that BDO LLP
had adequate safeguards in place and that provision of these
non-audit services did not provide threats to the Auditor's
independence.
Independence
The Audit Committee is required to consider the independence of
the external Auditor. In fulfilling this requirement, the Audit
Committee has considered a report from BDO LLP describing its
arrangements to identify, report and manage any conflict of
interest and the extent of non-audit services provided by them.
The Audit Committee has concluded that it considers BDO LLP to
be independent of the Company and that the provision of the
non-audit services described above is not a threat to the
objectivity and independence of the conduct of the audit.
Re-appointment
BDO LLP has been the Company's Auditor from its incorporation on
4 December 2012. The Auditor is required to rotate the audit
partner responsible for the Group audit every 5 years. During the
year a new lead partner was appointed and therefore the lead
partner will be required to rotate after the completion of the 2024
year end audit.
The external audit contract is required to be put to tender at
least every 10 years. The Audit Committee shall give advance notice
of any retendering plans within the Annual Report. The Audit
Committee has considered the re-appointment of the Auditor and
decided not to put the provision of the external audit out to
tender at this time, however the audit will be put out to tender
prior to the notice of the 2023 AGM. As described above, the Audit
Committee reviewed the effectiveness and independence of the
Auditor and remains satisfied that the Auditor provides effective
independent challenge to the Board, the Investment Manager and the
Administrator. The Audit Committee will continue to monitor the
performance of the Auditor on an annual basis and will consider
their independence and objectivity, taking account of appropriate
guidelines.
The Audit Committee has therefore recommended to the Board that
BDO LLP be proposed for re-appointment as the Company's Auditor at
the 2021 AGM of the Company.
Caoimhe Giblin
Chairman of the Audit Committee
24 February 2021
Non-Statutory Accounts
The financial information set out below does not constitute the
Company's statutory accounts for the years ended 31 December 2020
or 31 December 2019 but is derived from those accounts. Statutory
accounts for the year ended 31 December 2019 have been delivered to
the Registrar of Companies and statutory accounts for the year
ended 31 December 2020 will be delivered to the Registrar of
Companies in due course. The Auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include
a reference to any matters to which the Auditor drew attention by
way of emphasis without qualifying their report and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies
Act 2006. The text of the Auditor's reports can be found in the
Company's full Annual Report and Accounts at
www.greencoat-ukwind.com .
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
For the year ended For the year ended
Note 31 December 2020 31 December 2019
GBP'000 GBP'000
--------------------------------------------------------------------- ----- ------------------- -------------------
Return on investments 4 154,304 88,266
Other income 1,086 970
--------------------------------------------------------------------- ----- ------------------- -------------------
Total income and gains 155,390 89,236
Operating expenses 5 (20,990) (20,063)
Investment acquisition costs (8,025) (2,850)
--------------------------------------------------------------------- ----- ------------------- -------------------
Operating profit 126,375 66,323
Finance expense 13 (21,368) (23,029)
--------------------------------------------------------------------- ----- ------------------- -------------------
Profit for the year before tax 105,007 43,294
Tax charge 6 (612) -
--------------------------------------------------------------------- ----- ------------------- -------------------
Profit for the year after tax 104,395 43,294
Profit and total comprehensive income attributable to:
Equity holders of the Company 104,395 43,294
Earnings per share
--------------------------------------------------------------------- ----- ------------------- -------------------
Basic and diluted earnings from continuing operations in the year
(pence) 7 6.55 3.14
--------------------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the financial
statements.
Consolidated Statement of Financial Position
As at 31 December 2020
Note 31 December 2020 31 December 2019
GBP'000 GBP'000
-------------------------------------------------- ----- ----------------- -----------------
Non current assets
Investments at fair value through profit or loss 9 3,329,768 2,423,206
-------------------------------------------------- ----- ----------------- -----------------
3,329,768 2,423,206
Current assets
Receivables 11 634 604
Cash and cash equivalents 7,888 24,717
-------------------------------------------------- ----- ----------------- -----------------
8,522 25,321
Current liabilities
Payables 12 (8,417) (5,761)
-------------------------------------------------- ----- ----------------- -----------------
Net current assets 105 19,560
Non current liabilities
Loans and borrowings 13 (1,100,000) (600,000)
Net assets 2,229,873 1,842,766
-------------------------------------------------- ----- ----------------- -----------------
Capital and reserves
Called up share capital 15 18,241 15,175
Share premium account 15 1,834,477 1,442,218
Retained earnings 377,155 385,373
-------------------------------------------------- ----- ----------------- -----------------
Total shareholders' funds 2,229,873 1,842,766
-------------------------------------------------- ----- ----------------- -----------------
Net assets per share (pence) 16 122.2 121.4
-------------------------------------------------- ----- ----------------- -----------------
Authorised for issue by the Board on 24 February 2021 and signed
on its behalf by:
Shonaid Jemmett-Page Caoimhe Giblin
Chairman Director
The accompanying notes form an integral part of the financial
statements.
Statement of Financial Position - Company
As at 31 December 2020
Note 31 December 2020 31 December 2019
GBP'000 GBP'000
-------------------------------------------------- ----- ----------------- -----------------
Non current assets
Investments at fair value through profit or loss 9 3,332,430 2,445,450
-------------------------------------------------- ----- ----------------- -----------------
3,332,430 2,445,450
Current assets
Receivables 11 143 82
Cash and cash equivalents 1,212 574
-------------------------------------------------- ----- ----------------- -----------------
1,355 656
Current liabilities
Payables 12 (3,912) (3,340)
-------------------------------------------------- ----- ----------------- -----------------
Net current liabilities (2,557) (2,684)
Non current liabilities
Loans and borrowings 13 (1,100,000) (600,000)
Net assets 2,229,873 1,842,766
-------------------------------------------------- ----- ----------------- -----------------
Capital and reserves
Called up share capital 15 18,241 15,175
Share premium account 15 1,834,477 1,442,218
Retained earnings 377,155 385,373
-------------------------------------------------- ----- ----------------- -----------------
Total shareholders' funds 2,229,873 1,842,766
-------------------------------------------------- ----- ----------------- -----------------
Net assets per share (pence) 16 122.2 121.4
-------------------------------------------------- ----- ----------------- -----------------
The Company has taken advantage of the exemption under section
408 of the Companies Act 2006 and accordingly has not presented a
Statement of Comprehensive Income for the Company alone. The profit
after tax of the Company alone for the year was GBP 104,395,000
(2019: GBP 43,294,000 ).
Authorised for issue by the Board on 24 February 2021 and signed
on its behalf by:
Shonaid Jemmett-Page Caoimhe Giblin
Chairman Director
The accompanying notes form an integral part of the financial
statements.
Consolidated and Company Statement of Changes in Equity
For the year ended 31 December 2020
For the year ended Other distributable
31 December 2020 Note Share capital Share premium reserves Retained earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ----- -------------- -------------- ---------------------- ------------------ ----------
Opening net assets
attributable to
shareholders (1
January 2020) 15,175 1,442,218 - 385,373 1,842,766
Issue of share capital 15 3,066 398,434 - - 401,500
Share issue costs 15 - (6,175) - - (6,175)
Profit and total
comprehensive income
for the year - - - 104,395 104,395
Interim dividends paid
in the year 8 - - - (112,613) (112,613)
Closing net assets
attributable to
shareholders 18,241 1,834,477 - 377,155 2,229,873
----------------------- ----- -------------- -------------- ---------------------- ------------------ ----------
After taking account of cumulative unrealised gains of
GBP111,795,120, the total reserves distributable by way of a
dividend as at 31 December 2020 were GBP265,359,188.
For the year ended Share Share Other distributable Retained
31 December 2019 Note capital premium reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ----- --------- ---------- -------------------- ---------- ----------
Opening net assets attributable
to shareholders (1 January
2019) 11,314 946,211 32,386 402,899 1,392,810
Issue of share capital 15 3,861 503,381 - - 507,242
Share issue costs 15 - (7,374) - - (7,374)
Profit and total comprehensive
income for the year - - - 43,294 43,294
Interim dividends paid
in the year 8 - - (32,386) (60,820) (93,206)
Closing net assets attributable
to shareholders 15,175 1,442,218 - 385,373 1,842,766
--------------------------------- ----- --------- ---------- -------------------- ---------- ----------
After taking account of cumulative unrealised gains of
GBP102,032,448, the total reserves distributable by way of a
dividend as at 31 December 2019 were GBP283,339,740.
The accompanying notes form an integral part of the financial
statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
For the year ended For the year ended
Note 31 December 2020 31 December 2019
GBP'000 GBP'000
--------------------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from operating activities 17 123,083 135,421
Cash flows from investing activities
Acquisition of investments 9 (914,106) (620,903)
Investment acquisition costs (3,541) (3,057)
Repayment of shareholder loan investments 9 17,307 7,232
--------------------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from investing activities (900,340) (616,728)
Cash flows from financing activities
Issue of share capital 15 400,000 505,742
Payment of issue costs (6,175) (7,374)
Amounts drawn down on loan facilities 13 880,000 740,000
Amounts repaid on loan facilities 13 (380,000) (620,000)
Finance costs 17 (20,784) (22,565)
Dividends paid 8 (112,613) (93,206)
--------------------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from financing activities 760,428 502,597
Net (decrease)/increase in cash and cash equivalents during the year (16,829) 21,290
Cash and cash equivalents at the beginning of the year 24,717 3,427
Cash and cash equivalents at the end of the year 7,888 24,717
--------------------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the financial
statements.
Statement of Cash Flows - Company
For the year ended 31 December 2020
For the year ended For the year ended
Note 31 December 2020 31 December 2019
GBP'000 GBP'000
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from operating activities 17 (738) 1,022
Cash flows from investing activities
Loans advanced to Group companies 9 (893,046) (593,895)
Repayment of loans to Group companies 133,994 90,814
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from investing activities (759,052) (503,081)
Cash flows from financing activities
Issue of share capital 15 400,000 505,742
Payment of issue costs (6,175) (7,374)
Amounts drawn down on loan facilities 13 880,000 740,000
Amounts repaid on loan facilities 13 (380,000) (620,000)
Finance costs 17 (20,784) (22,565)
Dividends paid 8 (112,613) (93,206)
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from financing activities 760,428 502,597
Net increase in cash and cash equivalents during the year 638 538
Cash and cash equivalents at the beginning of the year 574 36
Cash and cash equivalents at the end of the year 1,212 574
----------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the financial
statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2020
1. Significant accounting policies
Basis of accounting
The consolidated annual financial statements have been prepared
in accordance with IAS in conformity with the requirements of the
Companies Act 2006 and in accordance with IFRS adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the EU.
The annual financial statements have been prepared on the
historical cost basis, as modified for the measurement of certain
financial instruments at fair value through profit or loss. The
principal accounting policies are set out below.
These consolidated financial statements are presented in pounds
sterling, which is the currency of the primary economic environment
in which the Group operates and are rounded to the nearest
thousand, unless otherwise stated.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Investment Manager's Report. The Group faces a
number of risks and uncertainties, as set out in the Strategic
Report. The financial risk management objectives and policies of
the Group, including exposure to price risk, interest rate risk,
credit risk and liquidity risk are discussed in note 18 to the
financial statements.
The Group continues to meet day-to-day liquidity needs through
its cash resources.
As at 31 December 2020, the Group had net current assets of GBP
0.1 million (2019: GBP19.6 million which reflected an unusually
high level of cash within the Group) and had cash balances of GBP
7.9 million (2019: GBP24.7 million) (excluding cash balances within
investee companies), which are sufficient to meet current
obligations as they fall due. The major cash outflows of the Group
are the payment of dividends and costs relating to the acquisition
of new assets, both of which are discretionary. The Directors are
confident that the Group has sufficient access to both debt and
equity markets in order to fund commitments to acquisitions and
meet the contingent liabilities detailed in note 14 to the
financial statements, should they become payable.
The Company had GBP 1,100 million (2019: GBP600 million) of
outstanding debt as at 31 December 2020. The covenants on the
Company's banking facilities are limited to gearing and interest
cover and the Company is expected to continue to comply with these
covenants going forward.
In the period since early 2020 and up to the date of this
report, the outbreak of COVID-19 has had a negative impact on the
global economy. The Directors and Investment Manager are actively
monitoring this and its potential effect on the Group and its SPVs.
In particular, they have considered the following specific key
potential impacts:
-- Unavailability of key personnel at the Investment Manager or Administrator;
-- Disruptions to maintenance or repair at the investee company level; and
-- Allowance for expected counterparty credit losses.
In considering the above key potential impacts of COVID-19 on
the Group and SPV operations, the Directors have assessed these
with reference to the mitigation measures in place. At the Group
level, the key personnel at the Investment Manager and
Administrator have successfully implemented business continuity
plans to ensure business disruption is minimised, including remote
working, and all staff are continuing to assume their day-to-day
responsibilities.
SPV revenues are derived from the sale of electricity, and
although approximately 44 per cent of the portfolio's revenue in
2021 is exposed to the floating power price, revenue is received
through power purchase agreements in place with large and reputable
providers of electricity to the market and also through government
subsidies. These providers have been contacted by the Investment
Manager to discuss their response to COVID-19 and business
continuity plans. In the period since early 2020 and up to the date
of this report, there has been no significant impact on revenue and
cash flows of the SPVs. The SPVs have contractual operating and
maintenance agreements in place with large and reputable providers.
Therefore the Directors and the Investment Manager do not
anticipate a threat to the Group's revenue.
Wind farm availability has not been significantly affected: wind
farms may be accessed and operated remotely in some instances;
otherwise social distancing has been possible in large part and
personal protective equipment has been used where not possible, for
instance where major component changes have been necessary. The
Investment Manager is confident that there are appropriate
continuity plans in place at each provider to ensure that the
underlying wind farms are maintained appropriately and that any
faults would continue to be addressed in a timely manner.
Based on the assessment outlined above, including the various
risk mitigation measures in place, the Directors do not consider
that the effects of COVID-19 have created a material uncertainty
over the assessment of the Group as a going concern.
The Directors have reviewed Group forecasts and projections
which cover a period of at least 12 months from the date of
approval of this report, taking into account foreseeable changes in
investment and trading performance, which show that the Group has
sufficient financial resources to continue in operation for at
least the next 12 months from the date of approval of this
report.
On the basis of this review, and after making due enquiries, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for at least 12 months from the date of approval of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
Accounting for subsidiaries
The Directors have concluded that the Group has all the elements
of control as prescribed by IFRS 10 "Consolidated Financial
Statements" in relation to all its subsidiaries and that the
Company continues to satisfy the 3 essential criteria to be
regarded as an investment entity as defined in IFRS 10, IFRS 12
"Disclosure of Interests in Other Entities" and IAS 27
"Consolidated and Separate Financial Statements". The 3 essential
criteria are such that the entity must:
1. Obtain funds from one or more investors for the purpose of
providing these investors with professional investment management
services;
2. Commit to its investors that its business purpose is to
invest its funds solely for returns from capital appreciation,
investment income or both; and
3. Measure and evaluate the performance of substantially all of
its investments on a fair value basis.
In satisfying the second essential criteria, the notion of an
investment time frame is critical. An investment entity should not
hold its investments indefinitely but should have an exit strategy
for their realisation. Although the Company has invested in equity
interests in wind farms that have an indefinite life, the
underlying wind farm assets that it invests in have an expected
life of 30 years. The Company intends to hold these wind farms for
the remainder of their useful life to preserve the capital value of
the portfolio. However, as the wind farms are expected to have no
residual value after their 30 year life, the Directors consider
that this demonstrates a clear exit strategy from these
investments.
Subsidiaries are therefore measured at fair value through profit
or loss, in accordance with IFRS 13 "Fair Value Measurement" and
IFRS 9 "Financial Instruments". The financial support provided by
the Company to its unconsolidated subsidiaries is disclosed in note
10.
Notwithstanding this, IFRS 10 requires subsidiaries that provide
services that relate to the investment entity's investment
activities to be consolidated. Accordingly, the annual financial
statements include the consolidated financial statements of
Greencoat UK Wind PLC and Greencoat UK Wind Holdco Limited (a 100
per cent owned UK subsidiary). In respect of these entities,
intra-Group balances and any unrealised gains arising from
intra-Group transactions are eliminated in preparing the
consolidated financial statements. Unrealised losses are eliminated
unless the costs cannot be recovered. The financial statements of
subsidiaries that are included in the consolidated financial
statements are included from the date that control commences until
the dates that control ceases.
In the Parent Company's financial statements, investments in
subsidiaries are measured at fair value through profit or loss in
accordance with IFRS 9, as permitted by IAS 27.
Accounting for associates and joint ventures
The Group has taken the exemption permitted by IAS 28
"Investments in Associates and Joint Ventures" and IFRS 11 "Joint
Arrangements" for entities similar to investment entities and
measures its investments in associates and joint ventures at fair
value. The Directors consider an associate to be an entity over
which the Group has significant influence, through an ownership of
between 20 per cent and 50 per cent. The Group's associates and
joint ventures are disclosed in note 10.
New and amended standards and interpretations applied
There were no new standards or interpretations effective for the
first time for periods beginning on or after 1 January 2020 that
had a significant effect on the Group's or Company's financial
statements. Furthermore, none of the amendments to standards that
are effective from that date had a significant effect on the
financial statements.
New and amended standards and interpretations not applied
"Interest Rate Benchmark Reform - Phase 2" was issued and will
become effective for accounting periods beginning on or after 1
January 2021. The amendments require additional disclosures that
address issues that might affect financial reporting after the
reform of an interest rate benchmark, including its replacement
with alternative benchmark rates. They also provide relief to the
Group in respect of certain loans whose contractual terms are
affected by interest benchmark reform.
Other accounting standards and interpretations have been
published and will be mandatory for the Company's accounting
periods beginning on or after 1 January 2021 or later periods. The
impact of these standards is not expected to be material to the
reported results and financial position of the Group.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's Consolidated Statement of Financial Position when the Group
becomes a party to the contractual provisions of the
instrument.
At 31 December 2020 and 2019 the carrying amounts of cash and
cash equivalents, receivables, payables, accrued expenses and short
term borrowings reflected in the financial statements are
reasonable estimates of fair value in view of the nature of these
instruments or the relatively short period of time between the
original instruments and their expected realisation. The fair value
of advances and other balances with related parties which are
short-term or repayable on demand is equivalent to their carrying
amount.
Financial assets
The classification of financial assets at initial recognition
depends on the purpose for which the financial asset was acquired
and its characteristics.
All financial assets are initially recognised at fair value. All
purchases of financial assets are recorded at the date on which the
Group became party to the contractual requirements of the financial
asset.
The Group's and Company's financial assets principally comprise
of investments held at fair value through profit or loss and loans
and receivables.
Loans and receivables at amortised cost
Impairment provisions for loans and receivables are recognised
based on a forward looking expected credit loss model. All
financial assets assessed under this model are immaterial to the
financial statements.
Investments held at fair value through profit or loss
Investments 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 the Consolidated
Statement of Comprehensive Income at each valuation point. As
shareholder loan investments form part of a managed portfolio of
assets whose performance is evaluated on a fair value basis, loan
investments are designated at fair value in line with equity
investments.
The Company's loan and equity investments in Holdco are held at
fair value through profit or loss. Gains or losses resulting from
the movement in fair value are recognised in the Company's
Statement of Comprehensive Income at each valuation point.
Financial assets are recognised / derecognised at the date of
the purchase / disposal. Investments are initially recognised at
cost, being the fair value of consideration given. Transaction
costs are recognised in the Consolidated Statement of Comprehensive
Income as incurred.
Fair value is defined as the amount for which an asset could be
exchanged between knowledgeable willing parties in an arm's length
transaction. Fair value is calculated on an unlevered, discounted
cashflow basis in accordance with IFRS 13 and IFRS 9.
Derecognition of financial assets
A financial asset (in whole or in part) is derecognised
either:
-- when the Group has transferred substantially all the risks and rewards of ownership; or
-- when it has neither transferred or retained substantially all
the risks and rewards and when it no longer has control over the
assets or a portion of the asset; or
-- when the contractual right to receive cashflow has expired.
Financial liabilities
Financial liabilities are classified according to the substance
of the contractual agreements entered into and are recorded on the
date on which the Group becomes party to the contractual
requirements of the financial liability.
All loans and borrowings are initially recognised at cost, being
fair value of the consideration received, less issue costs where
applicable. After initial recognition, all interest-bearing loans
and borrowings are subsequently measured at amortised cost using
the effective interest rate method. Loan balances as at the year
end have not been discounted to reflect amortised cost, as the
amounts are not materially different from the outstanding
balances.
The Group's other financial liabilities measured at amortised
cost include trade and other payables and other short term monetary
liabilities which are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest rate method.
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
Consolidated Statement of Comprehensive Income.
Finance expenses
Borrowing costs are recognised in the Consolidated Statement of
Comprehensive Income in the period to which they relate on an
accruals basis.
Share capital
Financial instruments issued by the Company are treated as
equity if the holder has only a residual interest in the assets of
the Company after the deduction of all liabilities. The Company's
ordinary shares are classified as equity instruments.
Incremental costs directly attributable to the issue of new
shares are shown in share premium as a deduction from proceeds.
Incremental costs include those incurred in connection with the
placing and admission which include fees payable under a placing
agreement, legal costs and any other applicable expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held
on call with banks and other short-term highly liquid deposits with
original maturities of 3 months or less, that are readily
convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Foreign currencies
Transactions in foreign currencies are translated at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
reporting date are translated at the foreign exchange rate ruling
at that date. Foreign exchange differences arising on translation
are recognised in the Consolidated Statement of Comprehensive
Income.
Dividends
Dividends payable are recognised as distributions in the
financial statements when the Company's obligation to make payment
has been established.
Income recognition
Dividend income and interest income on shareholder loan
investments are recognised when the Group's entitlement to receive
payment is established.
Other income is accounted for on an accruals basis using the
effective interest rate method.
Gains or losses resulting from the movement in fair value of the
Group's and Company's investments held at fair value through profit
or loss are recognised in the Consolidated or Company Statement of
Comprehensive Income at each valuation point.
Expenses
Expenses are accounted for on an accruals basis. Share issue
expenses of the Company directly attributable to the issue and
listing of shares are charged to the share premium account.
The Company issues shares to the Investment Manager in exchange
for receiving investment management services. The fair value of the
investment management services received in exchange for shares is
recognised as an expense at the time at which the investment
management fees are earned, with a corresponding increase in
equity. The fair value of the investment management services is
calculated by reference to the definition of investment management
fees in the Investment Management Agreement.
Taxation
Under the current system of taxation in the UK, the Group is
liable to taxation on its operations in the UK.
Payment received or receivable from the Group or Group-owned
SPVs for losses surrendered are recognised in the financial
statements and form part of the tax credit. In some situations, it
might not be appropriate to recognise the tax credit until the
Group's and Group-owned SPVs' tax affairs have been finalised and
the losses elections have been made.
Current tax is the expected tax payable on the taxable income
for the period, using tax rates that have been enacted or
substantively enacted at the date of the Consolidated Statement of
Financial Position.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.
Deferred tax assets and liabilities are not recognised if the
temporary differences arise from goodwill or from the initial
recognition of other assets and liabilities in a transaction that
affects neither the tax profit or the accounting profit. Deferred
tax liabilities are recognised for taxable temporary differences
arising on investments, except where the Group is able to control
the timing of the reversal of the difference and it is probable
that the temporary difference will not reverse in the foreseeable
future. Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is settled or
the asset is realised. Deferred tax is charged or credited to the
Consolidated Statement of Comprehensive Income except when it
relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off tax assets against tax
liabilities and when they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis. Deferred tax assets and
liabilities are not discounted.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors, as a
whole. The key measure of performance used by the Board to assess
the Group's performance and to allocate resources is the total
return on the Group's net assets, as calculated under IFRS, and
therefore no reconciliation is required between the measure of
profit or loss used by the Board and that contained in the
financial statements.
For management purposes, the Group is organised into one main
operating segment, which invests in wind farm assets.
All of the Group's income is generated within the UK.
All of the Group's non-current assets are located in the UK.
2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires the
application of estimates and assumptions which may affect the
results reported in the financial statements. Estimates, by their
nature, are based on judgement and available information.
As disclosed in note 1, the Directors have concluded that the
Company meets the definition of an investment entity as defined in
IFRS 10, IFRS 12 and IAS 27. This conclusion involved a degree of
judgement and assessment as to whether the Company met the criteria
outlined in the accounting standards.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying value of assets and
liabilities are those used to determine the fair value of the
investments as disclosed in note 9 to the financial statements.
The key assumptions that have a significant impact on the
carrying value of investments that are valued by reference to the
discounted value of future cashflows are the useful life of the
assets, the discount rates, the level of wind resource, the rate of
inflation, the price at which the power and associated benefits can
be sold and the amount of electricity the assets are expected to
produce. The sensitivity analysis of these key assumptions is
outlined in note 9 to the financial statements.
Useful lives are based on the Investment Manager's estimates of
the period over which the assets will generate revenue which are
periodically reviewed for continued appropriateness. The assumption
used for the useful life of the wind farms is 30 years. The actual
useful life may be a shorter or longer period depending on the
actual operating conditions experienced by the asset.
The discount rates are subjective and therefore it is feasible
that a reasonable alternative assumption may be used resulting in a
different value. The discount rates applied to the cashflows are
reviewed annually by the Investment Manager to ensure they are at
the appropriate level. The Investment Manager will take into
consideration market transactions, where of similar nature, when
considering changes to the discount rates used.
The revenues and expenditure of the investee companies are
frequently partly or wholly subject to indexation and an assumption
is made that inflation will increase at a long term rate.
The price at which the output from the generating assets is sold
is a factor of both wholesale electricity prices and the revenue
received from the Government support regimes. Future power prices
are estimated using external third party forecasts which take the
form of specialist consultancy reports, which reflect various
factors including gas prices, carbon prices and renewables
deployment, each of which reflect the UK and global response to
climate change. The future power price assumptions are reviewed as
and when these forecasts are updated. There is an inherent
uncertainty in future wholesale electricity price projection.
Specifically commissioned external reports are used to estimate
the expected electrical output from the wind farm assets taking
into account the expected average wind speed at each location and
generation data from historical operation. The actual electrical
output may differ considerably from that estimated in such a report
mainly due to the variability of actual wind to that modelled in
any one period. Assumptions around electrical output will be
reviewed only if there is good reason to suggest there has been a
material change in this expectation.
3. Investment management fees
Under the terms of the Investment Management Agreement, the
Investment Manager is entitled to a combination of a Cash Fee and
an Equity Element from the Company.
The Cash Fee is based upon the NAV as at the start of the
quarter in question on the following basis:
-- on that part of the then most recently announced NAV up to
and including GBP500 million, an amount equal to 0.25 per cent of
such part of the NAV;
-- on that part of the then most recently announced NAV over
GBP500 million and up to and including GBP1,000 million, an amount
equal to 0.225 per cent of such part of the NAV; and
-- on that part of the then most recently announced NAV over
GBP1,000 million, an amount equal to 0.2 per cent of such part of
the NAV.
The Equity Element is calculated quarterly in advance and has a
value as set out below:
-- on that part of the then most recently announced NAV up to
and including GBP500 million, 0.05 per cent; and
-- on that part of the then most recently announced NAV over
GBP500 million up to and including GBP1,000 million, 0.025 per
cent.
The ordinary shares issued to the Investment Manager under the
Equity Element are subject to a 3 year lock-up starting from the
quarter in which they are due to be paid.
As at 31 December each year, the Cash Fee and Equity Element
shall be subject to a true-up to the value that would have been
deliverable had they been calculated quarterly in arrears.
Investment management fees paid or accrued in the year were as
follows:
For the year ended For the year ended
31 December 2020 31 December 2019
GBP'000 GBP'000
---------------- ------------------- -------------------
Cash Fee 16,900 14,991
Equity Element 1,500 1,500
----------------
18,400 16,491
---------------- ------------------- -------------------
The value of the Equity Element and the Cash Fee detailed in the
table above include the true-up amount for the year calculated in
accordance with the Investment Management Agreement.
4. Return on investments
For the year ended For the year ended
31 December 2020 31 December 2019
GBP'000 GBP'000
------------------------------------------------------------ ------------------- -------------------
Dividends received (note 19) 123,748 139,498
Interest on shareholder loan investment received (note 19) 20,793 10,440
Unrealised movement in fair value of investments (note 9) 9,763 (61,672)
154,304 88,266
------------------------------------------------------------ ------------------- -------------------
5. Operating expenses
For the year For the year
ended ended
31 December 31 December
2020 2019
GBP'000 GBP'000
---------------------------------------- ------------- -------------
Management fees (note 3) 18,400 16,491
Group and SPV administration fees 811 715
Non-executive Directors' fees 308 323
Other expenses 1,357 2,440
Fees to the Company's Auditor:
for audit of the statutory financial
statements 110 90
for other audit related services 4 4
---------------------------------------- ------------- -------------
20,990 20,063
---------------------------------------- ------------- -------------
The fees to the Company's Auditor include GBP3,800 (2019:
GBP3,700) payable in relation to a limited review of the half year
report. In addition to the above, BDO was paid GBP23,000 (2019:
GBP19,000) in relation to capital raises of the Company which was
included in share issue costs. Total fees payable to BDO for
non-audit services during the year were GBP26,800 (2019:
GBP22,700).
6. Taxation
For the year ended For the year ended
31 December 2020 31 December 2019
GBP'000 GBP'000
-------------------------- ------------------- -------------------
UK Corporation Tax charge 612 -
-------------------------- ------------------- -------------------
612 -
-------------------------- ------------------- -------------------
The tax charge for the year shown in the Statement of
Comprehensive Income is lower than the standard rate of corporation
tax of 19 per cent (2019: 19 per cent). The differences are
explained below.
For the year ended For the year ended
31 December 2020 31 December 2019
GBP'000 GBP'000
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year before taxation 105,007 43,294
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year multiplied by the standard rate of corporation tax of
19 per cent (2019:
19 per cent) 19,951 8,226
Fair value movements (not subject to taxation) (1,855) 12,397
Dividends received (not subject to taxation) (23,512) (26,505)
Expenditure not deductible for tax purposes 1,525 2,109
Surrendering of tax losses to unconsolidated subsidiaries for nil
consideration 3,891 3,773
Payments for prior year losses surrendered 612 -
---------------------------------------------------------------------------- ------------------- -------------------
Total tax 612 -
---------------------------------------------------------------------------- ------------------- -------------------
7. Earnings per share
For the year ended For the year ended
31 December 2020 31 December 2019
--------------------------------------------------------------------------- ------------------- -------------------
Profit attributable to equity holders of the Company - GBP'000 104,395 43,294
Weighted average number of ordinary shares in issue 1,594,127,083 1,380,115,557
--------------------------------------------------------------------------- ------------------- -------------------
Basic and diluted earnings from continuing operations in the year (pence) 6.55 3.14
--------------------------------------------------------------------------- ------------------- -------------------
Dilution of the earnings per share as a result of the Equity
Element of the investment management fee as disclosed in note 3
does not have a significant impact on the basic earnings per
share.
8. Dividends declared with respect to the year
Interim dividends paid in the year ended
31 December 2020 Dividend per share Total dividend
pence GBP'000
------------------------------------------------------------------------------ ------------------- -----------------
With respect to the quarter ended 31 December 2019 1.735 26,335
With respect to the quarter ended 31 March 2020 1.775 26,947
With respect to the quarter ended 30 June 2020 1.775 26,953
With respect to the quarter ended 30 September 2020 1.775 32,378
7.060 112,613
------------------------------------------------------------------------------ ------------------- -----------------
Interim dividends declared after 31 December 2020 and not accrued in the
year Dividend per share Total dividend
pence GBP'000
------------------------------------------------------------------------------ ------------------- ---------------
With respect to the quarter ended 31 December 2020 1.775 32,384
1.775 32,384
------------------------------------------------------------------------------ ------------------- ---------------
On 27 January 2021, the Company announced a dividend of 1.775
pence per share with respect to the quarter ended 31 December 2020,
bringing the total dividend declared with respect to the year to 31
December 2020 to 7.1 pence per share. The record date for the
dividend is 12 February 2021 and the payment date is 26 February
2021.
The following table shows dividends paid in the prior year.
Interim dividends paid in the year ended
31 December 2019 Dividend per share Total dividend
pence GBP'000
----------------------------------------------------- ------------------- ---------------
With respect to the quarter ended 31 December 2018 1.690 19,126
With respect to the quarter ended 31 March 2019 1.735 21,427
With respect to the quarter ended 30 June 2019 1.735 26,324
With respect to the quarter ended 30 September 2019 1.735 26,329
6.895 93,206
----------------------------------------------------- ------------------- ---------------
9. Investments at fair value through profit or loss
Group - for the year ended 31 December 2020 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- ---------------- ----------
Opening balance 360,698 2,062,508 2,423,206
Additions 208,952 705,154 914,106
Repayment of shareholder loan investments (note 19) (17,307) - (17,307)
Restructure of shareholder loan investments (1) 50,500 (50,500) -
Unrealised movement in fair value of investments (note 4) 5,113 4,650 9,763
----------------------------------------------------------- --------- ---------------- ----------
607,956 2,721,812 3,329,768
----------------------------------------------------------- --------- ---------------- ----------
(1) The Group's investment in Corriegarth was restructured
during the year. The Group's equity interest decreased by
GBP50,499,818 and its shareholder loan balance increased by an
equivalent amount.
Group - for the year ended 31 December 2019 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- ---------------- ----------
Opening balance 145,105 1,726,102 1,871,207
Additions 251,305 369,598 620,903
Repayment of shareholder loan investments (note 19) (7,232) - (7,232)
Restructure of shareholder loan investments (32,056) 32,056 -
Unrealised movement in fair value of investments (note 4) 3,576 (65,248) (61,672)
----------------------------------------------------------- --------- ---------------- ----------
360,698 2,062,508 2,423,206
----------------------------------------------------------- --------- ---------------- ----------
The unrealised movement in fair value of investments of the
Group during the year and the prior year was made up as
follows:
For the year For the year
ended ended
31 December 31 December
2020 2019
GBP'000 GBP'000
------------------------------------------- ------------- -------------
Decrease in valuation of investments (31,935) (71,857)
Repayment of shareholder loan investments
(note 19) 17,307 7,232
Shareholder loan interest and repayment
from Douglas West - (901)
Movement in cash balances of SPVs 24,391 3,854
9,763 (61,672)
------------------------------------------- ------------- -------------
The movement in investments of the Company during the year and
the prior year was made up as follows:
Company - for the year ended 31 December 2020 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
-------------------------------------------------- ---------- ---------------- ----------
Opening balance 1,392,818 1,052,632 2,445,450
Loan advanced to Holdco (note 19) 893,046 - 893,046
Repayment of loan to Holdco (note 19) (150,908) - (150,908)
Unrealised movement in fair value of investments - 144,842 144,842
-------------------------------------------------- ---------- ---------------- ----------
2,134,956 1,197,474 3,332,430
-------------------------------------------------- ---------- ---------------- ----------
Company - for the year ended 31 December 2019 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
-------------------------------------------------- ---------- ---------------- ----------
Opening balance 906,533 969,176 1,875,709
Loan advanced to Holdco (note 19) 593,895 - 593,895
Repayment of loan to Holdco (note 19) (107,610) - (107,610)
Unrealised movement in fair value of investments - 83,456 83,456
-------------------------------------------------- ---------- ---------------- ----------
1,392,818 1,052,632 2,445,450
-------------------------------------------------- ---------- ---------------- ----------
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level.
The level of fair value hierarchy within the financial assets or
financial liabilities is determined on the basis of the lowest
level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in their
entirety into only one of the following 3 levels:
-- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the assets or liabilities, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
-- Level 3 - inputs for assets or liabilities that are not based
on observable market data (unobservable inputs).
The determination of what constitutes 'observable' requires
significant judgement by the Group. The Group considers observable
data to be market data that is readily available, regularly
distributed or updated, reliable and verifiable, not proprietary,
and provided by independent sources that are actively involved in
the relevant market.
The only financial instruments held at fair value are the
instruments held by the Group in the SPVs, which are fair valued at
each reporting date. The Group's investments have been classified
within level 3 as the investments are not traded and contain
unobservable inputs. The Company's investments are all considered
to be level 3 assets. As the fair value of the Company's equity and
loan investments in Holdco is ultimately determined by the
underlying fair values of the SPV investments, the Company's
sensitivity analysis of reasonably possible alternative input
assumptions is the same as for the Group.
Due to the nature of the investments, they are always expected
to be classified as level 3. There have been no transfers between
levels during the year ended 31 December 2020.
Any transfers between the levels would be accounted for on the
last day of each financial period.
Valuations are derived using a discounted cashflow methodology
in line with IPEV Valuation Guidelines and take into account, inter
alia, the following:
-- due diligence findings where relevant;
-- the terms of any material contracts including PPAs;
-- asset performance;
-- power price forecast from a leading market consultant; and
-- the economic, taxation or regulatory environment.
The DCF valuation of the Group's investments represents the
largest component of GAV and the key sensitivities are considered
to be the discount rate used in the DCF valuation and assumptions
in relation to inflation, energy yield, power price and asset life.
The shareholder loan and equity investments are valued on a unit of
account basis.
The base case discount rate is a blend of a lower discount rate
for fixed cash flows and a higher discount rate for merchant cash
flows. The blended portfolio discount rate as at 31 December 2019
was 7.5 per cent. As reported in June 2020, the Investment Manager
considered that it was appropriate to reduce the underlying
discount rates to reflect market conditions such that the blended
portfolio discount rate as at 30 June 2020 was 7.2 per cent. The
blended portfolio discount rate as at 31 December 2020 is 6.9 per
cent, primarily reflecting the addition of Walney and Humber
Gateway to the portfolio with their higher proportion of fixed cash
flows (2 ROCs per MWh). The underlying discount rates that are
applied to fixed and merchant cash flows have not changed since
June 2020.
As there is no debt at wind farm level, the DCF valuation is
produced by discounting the individual wind farm cash flows on an
unlevered basis. The equivalent levered discount rate would be
approximately 2 per cent higher than the unlevered discount
rate.
Base case long term inflation assumptions are 3.3 per cent to
2030 and 2.3 per cent thereafter for RPI and 2.3 per cent (all
years) for CPI. These assumptions reflect an update from the
previous assumptions of 3 per cent for RPI and 2 per cent for CPI
in light of the government announcement on 25 November 2020
confirming that RPI would be aligned with CPIH after 2030. The
update was NAV neutral.
Base case energy yield assumptions are P50 (50 per cent
probability of exceedance) forecasts based on long term wind data
and operational history. The P90 (90 per cent probability of
exceedance over a 10 year period) and P10 (10 per cent probability
of exceedance over a 10 year period) sensitivities reflect the
future variability of wind and the uncertainty associated with the
long term data source being representative of the long term
mean.
Long term power price forecasts are provided by a leading market
consultant, updated quarterly, and may be adjusted by the
Investment Manager where more conservative assumptions are
considered appropriate. The 30 year average real power price is
GBP44.53/MWh.
The sensitivity below assumes a 10 per cent increase or decrease
in power prices relative to the base case for every year of the
asset life.
The base case asset life is 30 years.
Sensitivity analysis
The fair value of the Group's investments is GBP3,329,768,023
(2019: GBP2,423,206,232). The analysis below is provided to
illustrate the sensitivity of the fair value of investments to an
individual input, while all other variables remain constant. The
Board considers these changes in inputs to be within reasonable
expected ranges. This is not intended to imply the likelihood of
change or that possible changes in value would be restricted to
this range.
Change in Change in
fair value NAV per
Input Base case Change in input of investments share
-------------- --------------------- ----------------- ---------------- ----------
GBP'000 pence
Discount
rate 6.9 per cent + 0.5 per cent (103,827) (5.7)
- 0.5 per cent 109,847 6.0
RPI: 3.3 per cent
Long term to 2030, 2.3 per
inflation cent thereafter
rate CPI: 2.3 per cent - 0.5 per cent (100,060) (5.5)
+ 0.5 per cent 105,534 5.8
Energy yield P50 10 year P90 (196,798) (10.8)
10 year P10 196,749 10.8
Forecast by leading
Power price consultant - 10 per cent (159,624) (8.8)
+ 10 per cent 159,119 8.7
Asset life 30 years - 5 years (116,702) (6.4)
+ 5 years 84,498 4.6
The sensitivities above are assumed to be independent of each
other. Combined sensitivities are not presented. The sensitivity
analysis shown above would be the same for the Company as for the
Group.
10. Unconsolidated subsidiaries, associates and joint
ventures
The following table shows subsidiaries of the Group. As the
Company is regarded as an Investment Entity as referred to in note
1, these subsidiaries have not been consolidated in the preparation
of the financial statements:
Ownership Interest as at Ownership Interest as at
Investment Place of Business 31 December 2020 31 December 2019
------------------------- ---------------------- ------------------------- -------------------------
Bin Mountain Northern Ireland(11) 100% 100%
Bishopthorpe England(12) 100% 100%
Breeze Bidco(1) Scotland(12) 100% 100%
Brockaghboy Northern Ireland(11) 100% 100%
Carcant Scotland(13) 100% 100%
Church Hill Northern Ireland(11) 100% 100%
Corriegarth Scotland(13) 100% 100%
Cotton Farm England(12) 100% 100%
Crighshane Northern Ireland(11) 100% 100%
Douglas West Wind
Farm Scotland(13) 100% 100%
Earl's Hall Farm England(12) 100% 100%
Kildrummy Scotland(12) 100% 100%
Langhope Rig Scotland(12) 100% 100%
Maerdy Wales(12) 100% 100%
North Hoyle Wales(12) 100% 100%
Screggagh Northern Ireland(11) 100% 100%
Slieve Divena Northern Ireland(11) 100% 100%
Slieve Divena II Northern Ireland(11) 100% -
Stroupster Scotland(12) 100% 100%
Tappaghan Northern Ireland(11) 100% 100%
Walney Holdco(2) England(12) 100% -
Bicker Fen England(12) 80% 80%
Fenlands(3) England(12) 80% 80%
Nanclach Scotland(12) 75% 75%
Humber Holdco (4) England(12) 77.2% -
Dunmaglass Holdco(5) Scotland(12) 71.2% 71.2%
Stronelairg Holdco(6) Scotland(12) 71.2% 71.2%
Drone Hill Scotland(13) 51.6% 51.6%
North Rhins Scotland(12) 51.6% 51.6%
Sixpenny Wood England(12) 51.6% 51.6%
Yelvertoft England(12) 51.6% 51.6%
SYND Holdco(7) UK (12) 51.6% 51.6%
Corriegarth Holdings(8) Scotland(13) - 100%
Crighshane & Church
Hill Holdco(9) Northern Ireland(11) - 100%
Crighshane & Church
Hill Funding(9) Northern Ireland(11) - 100%
Douglas West Holdco(10) Scotland(13) - 100%
Nanclach Holdco(1) Scotland(12) - 75%
Nanclach Midco(1) Scotland(12) - 75%
------------------------- ---------------------- ------------------------- -------------------------
(1) The Group's investment in Nanclach is held through Breeze
Bidco. The investment was previously held through Nanclach Holdco,
which was held through Nanclach Midco, which was held through
Breeze Bidco until 19 December 2019, at which point the investment
was restructured. Nanclach Holdco and Nanclach Midco were dissolved
in September 2020 .
(2) The Group holds 100 per cent of Walney Holdco, which owns
25.1 per cent of Walney Wind Farm, resulting in the Group holding a
25.1 per cent indirect investment in Walney Wind Farm.
(3) The Group's investments in Deeping St. Nicholas, Glass Moor,
Red House and Red Tile are held through Fenlands.
(4) The Group holds 77.2 per cent of Humber Holdco, which owns
49 per cent of Humber Wind Farm, resulting in the Group holding a
37.8 per cent indirect investment in Humber Wind Farm.
(5) The Group holds 71.2 per cent of Dunmaglass Holdco, which
owns 49.9 per cent of Dunmaglass Wind Farm, resulting in the Group
holding a 35.5 per cent indirect investment in Dunmaglass Wind
Farm.
(6) The Group holds 71.2 per cent of Stronelairg Holdco, which
owns 49.9 per cent of Stronelairg Wind Farm, resulting in the Group
holding a 35.5 per cent indirect investment in Stronelairg Wind
Farm.
(7) The Group's investments in Drone Hill, North Rhins, Sixpenny
Wood and Yelvertoft are held through SYND Holdco.
(8) The Group's investment in Corriegarth was previously held
through Corriegarth Holdings, until 27 April 2020, at which point
the investment was restructured. Corriegarth Holdings was dissolved
in September 2020.
(9) The Group's investments in Crighshane and Church Hill are
held directly by the Group. The investment was previously held
through Crighshane & Church Hill Funding, which was held
through Crighshane & Church Hill Holdco until 10 December 2019,
at which point the investment was restructured. Crighshane &
Church Hill Funding and Crighshane & Church Hill Holdco were
dissolved in September 2020.
(10) The Group's investment in Douglas West is held directly by
the Group. The investment was previously held through Douglas West
Holdco until 16 December 2019, at which point the investment was
restructured. Douglas West Holdco was dissolved in September
2020.
(11) The registered office address is The Innovation Centre,
Northern Ireland Science Park, Belfast, BT3 9DT.
(12) The registered office address is 27-28 Eastcastle Street,
London, England, W1W 8DH.
(13) The registered office address is Citypoint, 65 Haymarket
Terrace, Edinburgh, EH12 5HD.
There are no significant restrictions on the ability of the
Group's unconsolidated subsidiaries to transfer funds in the form
of cash dividends.
The following table shows associates and joint ventures of the
Group which have been recognised at fair value as permitted by IAS
28 "Investments in Associates and Joint Ventures":
Ownership Interest as at Ownership Interest as at
Investment Place of Business 31 December 2020 31 December 2019
--------------------- ------------------- ------------------------- -------------------------
Braes of Doune Scotland(2) 50% 50%
ML Wind(1) England(3) 49% 49%
Little Cheyne Court England(3) 41% 41%
Clyde Scotland(4) 28.2% 28.2%
Rhyl Flats Wales(3) 24.95% 24.95%
--------------------- ------------------- ------------------------- -------------------------
(1) The Group's investments in Middlemoor and Lindhurst are 49
per cent (2019: 49 per cent). These are held through ML Wind.
(2) The registered office address is Citypoint, 65 Haymarket
Terrace, Edinburgh, EH12 5HD.
(3) The registered office address is Windmill Hill Business
Park, Whitehill Way, Swindon, Wiltshire, SN5 6PB.
(4) The registered office address is Inveralmond House, 200
Dunkeld Road, Perth, PH1 3AQ.
Loans advanced by Holdco to the investments are disclosed in
note 19.
Guarantees and counter-indemnities provided by the Group on
behalf of its investments are as follows:
Amount
-------------- ----------------- ------------------------- ------------------- -------------------------
Provider GBP'000
of security Investment Beneficiary Nature Purpose
-------------- ----------------- ------------------------- ------------------- ------------------------- --------
Kype Muir
Holdco Extension Nordex Guarantee Turbine supply 42,032
Douglas
The Company West Vestas Guarantee Turbine supply 27,022
Grid, radar,
Holdco Clyde SSE Counter-indemnity decommissioning 21,771
The Company North Hoyle The Crown Estate Guarantee Decommissioning, rent 18,263
The Company Humber Gateway RWE Guarantee Radar 4,900
The Company Rhyl Flats The Crown Estate Guarantee Decommissioning 3,156
Braes of
The Company Doune Land owner Guarantee Decommissioning 2,000
Tom nan
The Company Clach RBS Counter-indemnity Decommissioning 1,348
Douglas
The Company West Land owner Guarantee Decommissioning 1,200
The Company Stroupster RBS Counter-indemnity Decommissioning 366
Holdco Stronelairg SSE Guarantee Grid 301
Holdco Dunmaglass SSE Guarantee Grid 201
The Company Cotton Farm Land owner Guarantee Decommissioning 165
Sixpenny
The Company Wood Land owner Guarantee Community fund 150
Daventry District
The Company Yelvertoft Council Guarantee Decommissioning 82
Langhope
The Company Rig Barclays Counter-indemnity Decommissioning 81
The Company Maerdy Natural Resources Wales Guarantee Access rights to n/a
neighbouring land
123,038
-------------------------------------------------------------------------------------------------------- --------
The fair value of these guarantees and counter-indemnities
provided by the Group are considered to be GBPnil.
11. Receivables
Group 31 December 2020 31 December 2019
GBP'000 GBP'000
------------------- ----------------- -----------------
VAT receivable 480 508
Prepayments 90 82
Other receivables 64 14
634 604
------------------- ----------------- -----------------
Company 31 December 2020 31 December 2019
GBP'000 GBP'000
------------------- ----------------- -----------------
Prepayments 90 82
Other receivables 53 -
143 82
------------------- ----------------- -----------------
12. Payables
Group 31 December 2020 31 December 2019
GBP'000 GBP'000
----------------------------------- ----------------- -----------------
Acquisition costs payable 4,538 55
Loan interest payable 3,045 2,516
Commitment fee payable 328 290
Other finance costs payable 43 25
Other payables 463 302
Amounts due to SPVs - 1,343
VAT payable - 1,032
Investment management fee payable - 198
8,417 5,761
----------------------------------- ----------------- -----------------
Company 31 December 2020 31 December 2019
GBP'000 GBP'000
----------------------------------- ----------------- -----------------
Loan interest payable 3,045 2,516
Commitment fee payable 328 290
Other finance costs payable 43 25
VAT payable 48 41
Other payables 448 270
Investment management fee payable - 198
3,912 3,340
----------------------------------- ----------------- -----------------
13. Loans and borrowings
Group and Company 31 December 2020 31 December 2019
GBP'000 GBP'000
--------------------------- ----------------- -----------------
Opening balance 600,000 480,000
Revolving credit facility
Drawdowns 780,000 540,000
Repayments (380,000) (620,000)
Term debt facilities
Drawdowns 100,000 200,000
Closing balance 1,100,000 600,000
--------------------------- ----------------- -----------------
For the year ended For the year ended
Group and Company 31 December 2020 31 December 2019
GBP'000 GBP'000
--------------------------- ------------------- -------------------
Loan interest 18,399 16,944
Commitment fees 1,638 1,317
Facility arrangement fees 1,100 4,513
Other facility fees 140 140
Professional fees 91 115
--------------------------- ------------------- -------------------
Finance expense 21,368 23,029
--------------------------- ------------------- -------------------
The loan balance as at 31 December 2020 has not been adjusted to
reflect amortised cost, as the amounts are not materially different
from the outstanding balances.
In relation to non-current loans and borrowings, the Board is of
the view that the current market interest rate is not significantly
different to the respective instrument's contractual interest rates
therefore the fair value of the non-current loans and borrowings at
the end of the reporting periods is not significantly different
from their carrying amounts.
On 10 August 2020, the Company increased its revolving credit
facility with RBS International, RBC and Santander to GBP400
million, with the addition of a GBP100 million facility from
Barclays. The terms of the amended revolving credit facility remain
unchanged and comprise a margin of 1.75 per cent per annum and a
commitment fee of 0.65 per cent per annum.
As at 31 December 2020, the balance of this facility was GBP400
million (2019: GBPnil), accrued interest was GBP410,767 (2019:
GBPnil) and the outstanding commitment fee payable was GBP327,671
(2019: GBP290,274).
During the year, the Company entered into new term debt
arrangements with CBA and NAB, increasing the size of the
facilities. The Company's term debt facilities and associated
interest rate swaps have various maturity dates, as set out in the
below table:
Accrued interest
Loan Swap fixed at 31 December
Provider Maturity date margin rate Loan principal 2020
% % GBP'000 GBP'000
---------- ------------------ -------- ----------- --------------- -----------------
NAB 7 June 2022 0.75 0.0464 50,000 23
CBA 22 July 2022 1.65 1.9410 75,000 465
CBA 22 July 2022 1.65 1.2260 25,000 124
NAB 1 November 2023 1.20 1.4280 75,000 286
NAB 1 November 2023 1.20 0.7725 25,000 72
CBA 7 December 2023 1.00 0.1130 50,000 32
CBA 14 November 2024 1.35 0.8075 50,000 186
CBA 6 March 2025 1.55 1.5265 50,000 266
CIBC 3 November 2025 1.50 1.5103 100,000 437
NAB 1 November 2026 1.50 1.5980 75,000 337
NAB 1 November 2026 1.50 0.8425 25,000 85
CIBC 14 November 2026 1.40 0.81325 100,000 321
700,000 2,634
----------------------------- -------- ----------- --------------- -------------------
These loans contain swaps that are contractually linked.
Accordingly they have been treated as single fixed rate loan
agreements which effectively set interest payable at fixed
rates.
All borrowing ranks pari passu and is secured by a debenture
over the assets of the Company, including its shares in Holdco, and
a floating charge over Holdco's bank accounts.
14. Contingencies and commitments
As at 31 December 2020, the Group has invested GBP28 million in
the Douglas West wind farm project. Operations are scheduled to
commence in July 2021 with a total expected investment of GBP50
million.
In October 2019 , the Group announced that it had agreed to
acquire the Glen Kyllachy wind farm project for a headline
consideration of GBP57.5 million. The investment is scheduled to
complete in Q4 2021 once the wind farm is fully operational.
In December 2019, the Group announced that it had agreed to
acquire the Windy Rig and Twentyshilling wind farm projects for a
combined headline consideration of GBP104 million. The investments
are scheduled to complete in Q2 2021 and Q3 2021 respectively, once
each wind farm is fully operational.
In April 2020 , the Group announced that it had agreed to
acquire the South Kyle wind farm project for a headline
consideration of GBP320 million. The investment is scheduled to
complete in Q1 2023 once the wind farm is fully operational.
In December 2020, the Group entered into an agreement to acquire
49.9 per cent of the Kype Muir Extension wind farm project for a
headline consideration of GBP51.4 million, to be paid once the wind
farm is fully operational (target Q4 2022). The Group will also
provide construction finance of up to GBP47 million, with first
utilisation expected in July 2021.
15. Share capital - ordinary shares of GBP0.01
Issued and fully Number of Share Share
Date paid shares issued capital premium Total
GBP'000 GBP'000 GBP'000
------------------ ------------------ --------------- --------- ---------- ----------
1 January 2020 1,517,537,310 15,175 1,442,218 1,457,393
Shares issued to the Investment
Manager
True-up of 2019
and
Q1 2020 Equity
7 February 2020 Element 316,145 3 372 375
Q2 2020 Equity
20 April 2020 Element 309,434 3 372 375
Q3 2020 Equity
7 August 2020 Element 312,344 3 372 375
Q4 2020 Equity
5 November 2020 Element 310,604 3 372 375
1,248,527 12 1,488 1,500
Other
1 October 2020 Capital raise 305,343,511 3,054 396,946 400,000
Less share issue
1 October 2020 costs - - (6,175) (6,175)
------------------ --------------- --------- ----------
31 December 2020 1,824,129,348 18,241 1,834,477 1,852,718
-------------------------------------- --------------- --------- ---------- ----------
Issued and fully Number of Share Share
Date paid shares issued capital premium Total
GBP'000 GBP'000 GBP'000
-------------------- ---------------------- --------------- --------- ---------- ----------
1 January 2019 1,131,449,780 11,314 946,211 957,525
Shares issued to the Investment Manager
True-up of 2018
and Q1 2019 Equity
25 January 2019 Element 272,110 3 372 375
Q2 2019 Equity
3 May 2019 Element 304,440 3 372 375
Q3 2019 Equity
31 July 2019 Element 304,504 3 372 375
Q4 2019 Equity
5 November 2019 Element 305,106 3 372 375
1,186,160 12 1,488 1,500
Other
27 February 2019 Capital raise 102,946,483 1,029 129,713 130,742
Less share issue
27 February 2019 costs - - (1,868) (1,868)
5 June 2019 Capital raise 281,954,887 2,820 372,180 375,000
Less share issue
5 June 2019 costs - - (5,506) (5,506)
---------------------- --------------- --------- ----------
31 December 2019 1,517,537,310 15,175 1,442,218 1,457,393
-------------------------------------------- --------------- --------- ---------- ----------
Shareholders are entitled to all dividends paid by the Company
and, on a winding up, provided the Company has satisfied all of its
liabilities, the shareholders are entitled to all of the residual
assets of the Company.
Pursuant to the terms of the Investment Management Agreement,
the Investment Manager receives an Equity Element as part payment
of its investment management fee as disclosed in note 3 to the
financial statements. The figures given in the table in note 3
include the true-up amount of the investment management fee for the
periods calculated in accordance with the Investment Management
Agreement and issued subsequent to 31 December 2020.
16. Net assets per share
Group and Company 31 December 2020 31 December 2019
---------------------------------- ----------------- -----------------
Net assets - GBP'000 2,229,873 1,842,766
Number of ordinary shares issued 1,824,129,348 1,517,537,310
---------------------------------- ----------------- -----------------
Total net assets - pence 122.2 121.4
---------------------------------- ----------------- -----------------
17. Notes supporting the Statement of Cash Flows
Reconciliation of operating profit for the year to net cash from
operating activities
For the year ended For the year ended
Group 31 December 2020 31 December 2019
GBP'000 GBP'000
----------------------------------------------------- ------------------- -------------------
Operating profit for the year 126,375 66,323
Adjustments for:
Movement in fair value of investments (notes 4 & 9) (9,763) 61,672
Investment acquisition costs 8,025 2,850
Increase in receivables (30) (315)
(Decrease)/increase in payables (2,412) 2,065
Equity Element of Investment Manager's fee (note 3) 1,500 1,500
Consideration for investee company taxable losses (612) 1,326
Net cash flows from operating activities 123,083 135,421
----------------------------------------------------- ------------------- -------------------
For the year ended For the year ended
Company 31 December 2020 31 December 2019
GBP'000 GBP'000
----------------------------------------------------- ------------------- -------------------
Operating profit for the year 125,763 66,323
Adjustments for:
Movement in fair value of investments (note 9) (144,842) (83,456)
Non cash settlement of loans to Group companies 16,914 16,796
(Increase)/decrease in receivables (61) 18
Decrease in payables (12) (159)
Equity Element of Investment Manager's fee (note 3) 1,500 1,500
-----------------------------------------------------
Net cash flows from operating activities (738) 1,022
----------------------------------------------------- ------------------- -------------------
Reconciliation of cash flows and non-cash flow changes in
liabilities arising from financing activities
Group and Company Loans and borrowings Other liabilities
GBP'000 GBP'000
---------------------------------------------------------- --------------------- ------------------
As at 1 January 2020 600,000 2,785
Cash flows (net) 500,000 (20,784)
Movements in Statement of Comprehensive Income (note 13) - 21,368
As at 31 December 2020 1,100,000 3,369
---------------------------------------------------------- --------------------- ------------------
Group and Company Loans and borrowings Other liabilities
GBP'000 GBP'000
---------------------------------------------------------- --------------------- ------------------
As at 1 January 2019 480,000 2,321
Cash flows (net) 120,000 (22,565)
Movements in Statement of Comprehensive Income (note 13) - 23,029
As at 31 December 2019 600,000 2,785
---------------------------------------------------------- --------------------- ------------------
18. Financial risk management
The Investment Manager and the Administrator report to the Board
on a quarterly basis and provide information to the Board which
allows it to monitor and manage financial risks relating to its
operations. The Group's activities expose it to a variety of
financial risks: market risk (including price risk, interest rate
risk and foreign currency risk), credit risk and liquidity
risk.
The Group's market risk is managed by the Investment Manager in
accordance with the policies and procedures in place. The Group's
overall market positions are monitored on a quarterly basis by the
Board.
Price risk
Price risk is defined as the risk that the fair value of a
financial instrument held by the Group will fluctuate. Investments
are measured at fair value through profit or loss and are valued on
an unlevered, discounted cashflow basis. Therefore, the value of
these investments will be (amongst other risk factors) a function
of the discounted value of their expected cashflows and, as such,
will vary with movements in interest rates and competition for such
assets. As disclosed in note 9, the discount rates are subjective
and therefore it is feasible that a reasonable alternative
assumption may be used resulting in a different valuation for these
investments.
Interest rate risk
The Group's interest rate risk on interest bearing financial
assets is limited to interest earned on cash. The Group's only
other exposure to interest rate risk is due to floating interest
rates required to service external borrowings through the revolving
credit facility. An increase of 1 per cent represents the
Investment Manager's assessment of a reasonably possible change in
interest rates. Should the LIBOR rate increase from 0.03 per cent
to 1.03 per cent (2019: increase from 0.7 per cent to 1.7 per
cent), the annual interest due on the facility would increase by
GBP4,000,000 (2019: GBPnil) on the basis that the revolving credit
facility is GBP400 million drawn (2019: GBPnil). The Investment
Manager regularly monitors interest rates to ensure the Group has
adequate provisions in place in the event of significant
fluctuations.
T he associated interest rate swaps on amounts drawn under the
CBA, CIBC and NAB term debt facilities effectively sets interest
payable at a fixed rate for the full term of the loans, thereby
mitigating the risks associated with the variability of cashflows
arising from interest rate fluctuations.
The Board considers that, as shareholder loan investments bear
interest at a fixed rate, they do not carry any interest rate
risk.
The Group's interest and non-interest bearing assets and
liabilities as at 31 December 2020 are summarised below:
Interest bearing
Floating Non- interest
Group Fixed rate rate bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----------- ---------- -------------- ------------
Assets
Cash at bank - - 7,888 7,888
Other receivables (note
11) - - 544 544
Investments (note 9) 607,956 - 2,721,812 3,329,768
---------------------------- ----------- ---------- -------------- ------------
607,956 - 2,730,244 3,338,200
---------------------------- ----------- ---------- -------------- ------------
Liabilities
Other payables (note 12) - - (8,417) (8,417)
Loans and borrowings (note
13) (700,000) (400,000) - (1,100,000)
---------------------------- ----------- ---------- -------------- ------------
(700,000) (400,000) (8,417) (1,108,417)
---------------------------- ----------- ---------- -------------- ------------
The Group's interest and non-interest bearing assets and
liabilities as at 31 December 2019 are summarised below:
Interest bearing
Fixed
Group rate Floating rate Non-interest bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ---------- -------------- --------------------- ----------
Assets
Cash at bank - - 24,717 24,717
Other receivables (note 11) - - 522 522
Investments (note 9) 360,698 - 2,062,508 2,423,206
-------------------------------- ---------- -------------- --------------------- ----------
360,698 - 2,087,747 2,448,445
-------------------------------- ---------- -------------- --------------------- ----------
Liabilities
Other payables (note 12) - - (5,761) (5,761)
Loans and borrowings (note 13) (600,000) - - (600,000)
-------------------------------- ---------- -------------- --------------------- ----------
(600,000) - (5,761) (605,761)
-------------------------------- ---------- -------------- --------------------- ----------
The Company's interest and non-interest bearing assets and
liabilities as at 31 December 2020 are summarised below:
Interest bearing Non-interest
Floating
Company Fixed rate rate bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----------- ---------- ------------- ------------
Assets
Cash at bank - - 1,212 1,212
Other receivables (note
11) - - 53 53
Investments (note 9) - - 3,332,430 3,332,430
---------------------------- ----------- ---------- ------------- ------------
- - 3,333,695 3,333,695
---------------------------- ----------- ---------- ------------- ------------
Liabilities
Other payables (note 12) - - (3,912) (3,912)
Loans and borrowings (note
13) (700,000) (400,000) - (1,100,000)
---------------------------- ----------- ---------- ------------- ------------
(700,000) (400,000) (3,912) (1,103,912)
---------------------------- ----------- ---------- ------------- ------------
The Company's interest and non-interest bearing assets and
liabilities as at 31 December 2019 are summarised below:
Interest bearing
Fixed
Company rate Floating rate Non-interest bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ---------- -------------- --------------------- ----------
Assets
Cash at bank - - 574 574
Investments (note 9) - - 2,445,450 2,445,450
-------------------------------- ---------- -------------- --------------------- ----------
- - 2,446,024 2,446,024
-------------------------------- ---------- -------------- --------------------- ----------
Liabilities
Other payables (note 12) - - (3,340) (3,340)
Loans and borrowings (note 13) (600,000) - - (600,000)
-------------------------------- ---------- -------------- --------------------- ----------
(600,000) - (3,340) (603,340)
-------------------------------- ---------- -------------- --------------------- ----------
Foreign currency risk
Foreign currency risk is defined as the risk that the fair
values of future cashflows will fluctuate because of changes in
foreign exchange rates. The Group's financial assets and
liabilities are denominated in GBP and substantially all of its
revenues and expenses are in GBP. The Group is not considered to be
materially exposed to foreign currency risk.
Credit risk
Credit risk is the risk of loss due to the failure of a borrower
or counterparty to fulfil its contractual obligations. The Group is
exposed to credit risk in respect of other receivables, cash at
bank and loan investments. The Group's credit risk exposure is
minimised by dealing with financial institutions with investment
grade credit ratings and making loan investments which are equity
in nature.
The table below details the Group's maximum exposure to credit
risk:
Group 31 December 2020 31 December 2019
GBP'000 GBP'000
----------------------------- ----------------- -----------------
Other receivables (note 11) 544 522
Cash at bank 7,888 24,717
Loan investments (note 9) 607,956 360,698
616,388 385,937
----------------------------- ----------------- -----------------
The table below details the Company's maximum exposure to credit
risk:
Company 31 December 2020 31 December 2019
GBP'000 GBP'000
----------------------------- ----------------- -----------------
Other receivables (note 11) 53 -
Cash at bank 1,212 574
Loan investments (note 9) 2,134,956 1,392,818
----------------------------- ----------------- -----------------
2,136,221 1,393,392
----------------------------- ----------------- -----------------
The table below shows the cash balances of the Group and the
credit rating for each counterparty:
Group Rating 31 December 2020 31 December 2019
GBP'000 GBP'000
------------------- -------- ----------------- -----------------
RBS International BBB 6,753 24,150
The Crown Estate n/a 1,135 567
7,888 24,717
---------------------------- ----------------- -----------------
The table below shows the cash balances of the Company and the
credit rating for each counterparty:
Company Rating 31 December 2020 31 December 2019
GBP'000 GBP'000
------------------- -------- ----------------- -----------------
The Crown Estate n/a 1,135 567
RBS International BBB 77 7
1,212 574
---------------------------- ----------------- -----------------
Liquidity risk
Liquidity risk is the risk that the Group and the Company may
not be able to meet a demand for cash or fund an obligation when
due. The Investment Manager and the Board continuously monitor
forecast and actual cashflows from operating, financing and
investing activities to consider payment of dividends, repayment of
the Company's outstanding debt or further investing activities.
As disclosed in note 14, the purchase price of wind farms
acquired which have less than 12 months' operational data, may be
adjusted once 2 years of operational data becomes available.
The following tables detail the Group's expected maturity for
its financial assets (excluding equity) and liabilities together
with the contractual undiscounted cashflow amounts:
Group - 31 December 2020 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------------- ------------ ---------- ------------
Assets
Other receivables (note 11) 544 - - 544
Cash at bank 7,888 - - 7,888
Loan investments (note 9) - - 607,956 607,956
Liabilities
Other payables (note 12) (8,417) - - (8,417)
Loans and borrowings (24,701) (948,496) (204,359) (1,177,556)
(24,686) (948,496) 403,597 (569,585)
----------------------------- ----------------- ------------ ---------- ------------
Group - 31 December 2019 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------------- ------------ ---------- ----------
Assets
Other receivables (note 11) 522 - - 522
Cash at bank 24,717 - - 24,717
Loan investments (note 9) - - 360,698 360,698
Liabilities
Other payables (note 12) (5,761) - - (5,761)
Loans and borrowings (18,576) (307,346) (362,287) (688,209)
902 (307,346) (1,589) (308,033)
The shareholder loan investments are repayable on demand.
The following tables detail the Company's expected maturity for
its financial assets (excluding equity) and liabilities together
with the contractual undiscounted cashflow amounts:
Company - 31 December 2020 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------------- ------------ ---------- ------------
Assets
Other receivables (note 11) 53 - - 53
Cash at bank 1,212 - - 1,212
Loan investments (note 9) - - 2,134,956 2,134,956
Liabilities
Other payables (note 12) (3,912) - - (3,912)
Loans and borrowings (24,701) (948,496) (204,359) (1,177,556)
(27,348) (948,496) 1,930,597 954,753
Company - 31 December 2019 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----------------- ------------ ---------- ----------
Assets
Cash at bank 574 - - 574
Loan investments (note 9) - - 1,392,818 1,392,818
Liabilities
Other payables (note 12) (3,340) - - (3,340)
Loans and borrowings (18,576) (307,346) (362,287) (688,209)
(21,342) (307,346) 1,030,531 701,843
The Group and Company will use cashflow generation, equity
placings , debt refinancing or disposal of assets to manage
liabilities as they fall due in the longer term.
Capital risk management
The Company considers its capital to comprise ordinary share
capital, distributable reserves and retained earnings. The Company
is not subject to any externally imposed capital requirements.
The Group's and the Company's primary capital management
objectives are to ensure the sustainability of its capital to
support continuing operations, meet its financial obligations and
allow for growth opportunities. Generally, acquisitions are
anticipated to be funded with a combination of current cash, debt
and equity.
19. Related party transactions
Amounts paid to the Directors during the year are as outlined in
the Directors' Remuneration Report. GBP35,221 (2019: GBP37,418) of
employer's national insurance was paid on non-executive Directors'
fees during the year.
During the year, the Company increased its loan to Holdco by
GBP893,045,995 (2019: GBP593,895,404) and Holdco settled amounts of
GBP150,908,753 (2019: GBP107,610,040). The amount outstanding at
the year end was GBP2,134,955,692 (31 December 2019:
GBP1,392,818,450).
During the year, GBPnil (2019: GBP742,228) was received from
Braes of Doune, GBPnil (2019: GBP351,026) was received from North
Rhins and GBPnil (2019: GBP232,480) was received from SYND Holdco
as compensation for corporation tax losses surrendered via
consortium relief through the Group.
During the year, Holdco received GBP2,937,063 (2019:
GBP2,788,430) in relation to renewables obligation proceeds on
behalf of Bin Mountain, Carcant and Tappaghan. Amounts due to these
investee companies as at 31 December 2020 were GBPnil (2019:
GBP1,342,894).
Under the terms of a Management Services Agreement with Holdco,
the Company receives GBP 800,000 per annum in relation to
management and administration services. During the year, GBP
800,000 (2019: GBP800,000) was paid from Holdco to the Company
under this agreement and amounts due to the Company at the year end
were GBP nil (2019: GBPnil).
Holdco has Management Service Agreements in place with various
wind farms. Total amounts received by Holdco, amounts paid to the
Investment Manager and amounts paid to the Administrator during the
year, are outlined in the table below.
For the year ended
31 December 2020
Expenses paid to the Investment Expenses paid to the
Income received Manager Administrator
GBP GBP GBP
Bishopthorpe, Brockaghboy, Church
Hill, Corriegarth, Crighshane,
Langhope Rig, North Hoyle,
Screggagh, Slieve Divena, Slieve
Divena II(1) , Stroupster, Tom
Nan Clach:
GBP47,495 income receivable per
wind farm per annum
GBP23,748 expenses payable to
the Investment Manager per wind
farm per annum
GBP23,748 expenses payable to
the Administrator per wind farm
per annum 558,066 279,033 279,033
Bin Mountain, Braes of Doune,
Carcant, Cotton Farm, Drone
Hill, Earl's Hall Farm,
Kildrummy,
Maerdy, North Rhins, Sixpenny
Wood, Tappaghan, Yelvertoft:
GBP35,622 income receivable per
wind farm per annum
GBP11,874 expenses payable to
the Investment Manager per wind
farm per annum
GBP23,748 expenses payable to
the Administrator per wind farm
per annum 427,464 142,488 284,976
Douglas West:
GBP32,313 income receivable per
annum
GBP23,748 expenses payable to
the Investment Manager per annum
GBP8,565 expenses payable to the
Administrator per annum 32,313 23,748 8,565
Dunmaglass Holdco, Stronelairg
Holdco:
GBP7,154 income receivable per
wind farm per annum
GBPnil expenses payable to the
Investment Manager per wind farm
per annum
GBP7,154 expenses payable to the
Administrator per wind farm per
annum 14,308 - 14,308
Bicker Fen, Fenlands:
GBP2,732 income receivable per
wind farm per annum
GBP2,732 expenses payable to the
Investment Manager per wind farm
per annum
GBPnil expenses payable to the
Administrator per wind farm per
annum 5,464 5,464 -
Walney Holdco(2) :
GBP18,000 income receivable per
annum
GBP9,000 expenses payable to the
Investment Manager per annum
GBP9,000 expenses payable to the
Administrator per annum 4,500 2,250 2,250
Total 1,042,115 452,983 589,132
(1) Acquired in March 2020. GBP35,620 income received and
GBP17,805 paid to the Investment Manager and Administrator during
the year.
(2) Acquired in August 2020. GBP4,500 income received and
GBP2,250 paid to the Investment Manager and Administrator during
the year.
For the year ended
31 December 2019
Expenses paid to the Investment Expenses paid to the
Income received Manager Administrator
GBP GBP GBP
Bishopthorpe, Brockaghboy, Church
Hill(1) , Corriegarth,
Crighshane(1) , Langhope Rig,
North
Hoyle, Screggagh, Slieve Divena,
Stroupster, Tom Nan Clach(2) :
GBP46,470 income receivable per
wind farm per annum
GBP23,235 expenses payable to
the Investment Manager per wind
farm per annum
GBP23,235 expenses payable to
the Administrator per wind farm
per annum 466,354 233,177 233,177
Bin Mountain, Braes of Doune,
Carcant, Cotton Farm, Drone
Hill, Earl's Hall Farm,
Kildrummy,
Maerdy, North Rhins, Sixpenny
Wood, Tappaghan, Yelvertoft:
GBP34,853 income receivable per
wind farm per annum
GBP11,618 expenses payable to
the Investment Manager per wind
farm per annum
GBP23,235 expenses payable to
the Administrator per wind farm
per annum 418,236 139,412 278,824
Douglas West:
GBP21,926 income receivable per
annum
GBP17,458 expenses payable to
the Investment Manager per annum
GBP4,468 expenses payable to the
Administrator per annum 21,926 17,458 4,468
Dunmaglass Holdco, Stronelairg
Holdco:
GBP6,417 income receivable per
wind farm per annum
GBPnil expenses payable to the
Investment Manager per wind farm
per annum
GBP6,417 expenses payable to the
Administrator per wind farm per
annum 12,834 - 12,834
Bicker Fen, Fenlands:
GBP2,673 income receivable per
wind farm per annum
GBP2,673 expenses payable to the
Investment Manager per wind farm
per annum
GBPnil expenses payable to the
Administrator per wind farm per
annum 5,346 5,346 -
Total 924,696 395,393 529,303
(1) MSA agreement in place from Q2 2019. GBP34,853 income
received and GBP17,426 paid to the Investment Manager and
Administrator, per wind farm during the year.
(2) Acquired in June 2019. GBP24,888 income received and
GBP12,490 paid to the Investment Manager and Administrator during
the year.
Amounts due to Holdco in respect of these fees as at 31 December
2020 were GBPnil (2019: GBPnil).
The table below shows dividends receivable in the year from the
Group's investments.
For the year ended For the year ended
31 December 2020 31 December 2019
GBP'000 GBP'000
Clyde 17,770 20,021
Stronelairg Holdco (1) 11,454 6,583
Brockaghboy 7,518 9,133
SYND Holdco (2) 6,782 7,972
North Hoyle 6,242 2,810
ML Wind (3) 5,978 5,243
Corriegarth Holdings (4) 5,851 17,036
Fenlands (5) 5,844 8,104
Rhyl Flats 5,639 5,788
Kildrummy 4,488 3,988
Cotton Farm 4,468 4,102
Little Cheyne Court 4,428 2,583
Dunmaglass Holdco (6) 3,954 3,452
Stroupster 3,876 6,354
Braes of Doune 3,862 4,998
Tappaghan 3,691 4,632
Maerdy 3,219 4,000
Langhope Rig 3,057 3,558
Bicker Fen 2,841 1,904
Bishopthorpe 2,811 3,460
Earl's Hall Farm 2,794 2,516
Slieve Divena 2,670 3,182
Screggagh 1,855 2,129
Carcant 1,400 863
Bin Mountain 1,256 1,420
Crighshane & Church Hill Holdco (7) - 3,667
123,748 139,498
(1) The Group's investment in Stronelairg is held through
Stronelairg Holdco.
(2) The Group's investments in Drone Hill, North Rhins, Sixpenny
Wood and Yelvertoft are held through SYND Holdco.
(3) The Group's investments in Middlemoor and Lindhurst are held
through ML Wind.
(4) The Group's investment in Corriegarth was previously held
through Corriegarth Holdings, until 27 April 2020, at which point
the investment was restructured. Corriegarth Holdings was dissolved
in September 2020.
(5) The Group's investments in Deeping St. Nicholas, Glass Moor,
Red House and Red Tile are held through Fenlands.
(6) The Group's investment in Dunmaglass is held through
Dunmaglass Holdco.
(7) The Group's investments in Crighshane and Church Hill are
held directly by the Group. The investment was previously held
through Crighshane & Church Hill Funding, which was held
through Crighshane & Church Hill Holdco until 10 December 2019,
at which point the investment was restructured. Crighshane &
Church Hill Funding and Crighshane & Church Hill Holdco were
dissolved in September 2020.
The table below shows interest received in the year from the
Group's shareholder loan investments.
For the year ended For the year ended
31 December 2020 31 December 2019
GBP'000 GBP'000
Stronelairg 5,201 2,688
Tom nan Clach 5,118 -
Clyde 4,290 5,781
Dunmaglass 3,414 1,758
Crighshane 1,040 -
Church Hill 708 -
Slieve Divena II 544 -
Corriegarth 478 -
Douglas West - 213
20,793 10,440
The table below shows the Group's shareholder loans with the
wind farm investments.
Loans Loans Loans Loans Accrued
at 1 advanced restructured Loan repayments at 31 interest
January in the in the in the December at 31 December
2020(1) year year year 2020 2020 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Tom nan
Clach 92,074 - - (6,200) 85,874 628 86,502
Stronelairg 86,619 - - - 86,619 1,306 87,925
Clyde 71,503 - - - 71,503 1,070 72,573
Dunmaglass 56,864 - - - 56,864 858 57,722
Crighshane 26,660 - - (1,995) 24,665 571 25,236
Church
Hill 16,240 - - (1,165) 15,075 276 15,351
Douglas
West 5,174 14,043 - - 19,217 642 19,859
Corriegarth(2) - - 50,500 (7,947) 42,553 1,284 43,837
Slieve
Divena
II - 22,182 - - 22,182 474 22,656
Walney - 172,727 - - 172,727 3,568 176,295
355,134 208,952 50,500 (17,307) 597,279 10,677 607,956
(1) Excludes accrued interest at 31 December 2019 of
GBP5,563,506.
(2) The Group's investment in Corriegarth was restructured
during the year. The Group's equity interest decreased by
GBP50,499,818 and its shareholder loan balance increased by an
equivalent amount .
20. Ultimate controlling party
In the opinion of the Board, on the basis of the shareholdings
advised to them, the Company has no ultimate controlling party.
21. Subsequent events
On 27 January 2021, the Company announced a dividend of GBP 32.4
million, equivalent to 1.775 pence per share with respect to the
quarter ended 31 December 2020, bringing the total dividend
declared with respect to the year to 31 December 2020 to 7.1 pence
per share. The record date for the dividend was 12 February 2021
and the payment date is 26 February 2021.
On 19 February 2021, the Company issued 151 million new shares
at a price of 131 pence per share, raising gross proceeds of GBP198
million.
On 23 February 2021, the Group acquired the remaining 50 per
cent interest in Braes of Doune wind farm.
Company Information
Directors (all non-executive) Registered Company Number
Shonaid Jemmett-Page (Chairman)
(1) 08318092
William Rickett C.B.
Martin McAdam Registered Office
Lucinda Riches C.B.E 27-28 Eastcastle Street
Caoimhe Giblin London
Tim Ingram (2) W1W 8DH
Investment Manager Registered Auditor
Greencoat Capital LLP BDO LLP
The Peak 55 Baker Street
5 Wilton Road London
London W1U 7EU
SW1V 1AN
Administrator and Company Secretary Joint Broker
Ocorian Administration (UK) Limited RBC Capital Markets
The Innovation Centre Riverbank House
Northern Ireland Science Park 2 Swan Lane
Queen's Road London
Belfast EC4R 3BF
BT3 9DT
Depositary Joint Broker
Ocorian Depositary (UK) Limited Jefferies International
Limited
The Innovation Centre 100 Bishopsgate
Northern Ireland Science Park London
Queen's Road EC2N 4JL
Belfast
BT3 9DT
Registrar
Computershare
The Pavilions
Bridgewater Road
Bristol
BS99 6ZZ
(1) Appointed as Chairman with effect from 30 April 2020.
(2) Retired from the Board with effect from 30 April 2020 .
Supplementary Information (unaudited)
Under the Alternative Investment Fund Manager Regulations 2013
(as amended) the Company is a UK AIF and the Investment Manager is
a full scope UK AIFM.
Ocorian Depositary (UK) Limited provides depositary services
under the AIFMD.
The AIFMD outlines the required information which has to be made
available to investors prior to investing in an AIF and directs
that material changes to this information be disclosed in the
Annual Report of the AIF. There were no material changes in the
year.
All information required to be disclosed under the AIFMD is
either disclosed in this Annual Report or is detailed within a
schedule of disclosures on the Company's website at
www.greencoat-ukwind.com .
The Investment Manager covers the potential professional
liability risks resulting from its activities by holding
professional indemnity insurance in accordance with Article 9(7)(b)
of AIFMD.
The information in this paragraph relates to the Investment
Manager, the AIFM, and its subsidiary company providing services to
the AIFM and it does not relate to the Company. The total amount of
remuneration paid by the Investment Manager, in its capacity as
AIFM, to its 58 staff for the financial year ending 31 December
2020 was GBP11.9 million, consisting of GBP8.0 million fixed and
GBP3.9 million variable remuneration. The aggregate amount of
remuneration for the 5 staff members of the Investment Manager
constituting senior management and those staff whose actions have a
material impact on the risk profile of the Company was GBP0.9
million.
Defined Terms
Aggregate Group Debt means the Group's proportionate share of
outstanding third party borrowings
AGM means Annual General Meeting of the Company
AIC means the Association of Investment Companies
AIC Code means the AIC's Code of Corporate Governance
AIF means an Alternative Investment Fund as defined under the
AIFMD
AIFM means an Alternative Investment Fund Manager as defined
under the AIFMD
AIFMD means the Alternative Investment Fund Managers
Directive
Alternative Performance Measure means a financial measure other
than those defined or specified in the applicable financial
reporting framework
Balancing Mechanism means the system by which electricity demand
and supply is balanced by National Grid in close to real time
Barclays means Barclays Bank PLC
BDO LLP means the Company's Auditor as at the reporting date
Bicker Fen means Bicker Fen Windfarm Limited
Bin Mountain means Bin Mountain Wind Farm (NI) Limited
Bishopthorpe means Bishopthorpe Wind Farm Limited
Board means the Directors of the Company
Braes of Doune means Braes of Doune Wind Farm (Scotland)
Limited
Breeze Bidco means Breeze Bidco (TNC) Limited
Brockaghboy means Brockaghboy Windfarm Limited
Carcant means Carcant Wind Farm (Scotland) Limited
Cash Fee means the cash fee that the Investment Manager is
entitled to under the Investment Management Agreement
CBA means Commonwealth Bank of Australia
CFD means Contract For Difference between an electricity
generator and Low Carbon Contracts Company
Church Hill means Church Hill Wind Farm Limited
CIBC means Canadian Imperial Bank of Commerce
Clyde means Clyde Wind Farm (Scotland) Limited
Company means Greencoat UK Wind PLC
COP26 means the 2021 United Nations Climate Change
Conference
Corriegarth means Corriegarth Wind Energy Limited
Corriegarth Holdings means Corriegarth Wind Energy Holdings
Limited
Cotton Farm means Cotton Farm Wind Farm Limited
COVID-19 means an infectious disease discovered in late 2019 and
caused by the corona virus.
CPI means the Consumer Price Index
CPIH means the Consumer Price Index including owner occupiers'
housing costs
Crighshane means Crighshane Wind Farm Limited
Crighshane & Church Hill Funding means Crighshane and Church
Hill Funding Limited
Crighshane & Church Hill Holdco means Crighshane and Church
Hill Holdco Limited
DCF means Discounted Cash Flow
Deeping St. Nicholas means Deeping St. Nicholas wind farm
Douglas West means Douglas West Holdco and Douglas West Wind
Farm
Douglas West Holdco means Douglas West Holdco Limited
Douglas West Wind Farm means Douglas West Wind Farm Limited
Drone Hill means Drone Hill Wind Farm Limited
DTR means the Disclosure Guidance and Transparency Rules
sourcebook issued by the Financial Conduct Authority
Dunmaglass means Dunmaglass Holdco and Dunmaglass Wind Farm
Dunmaglass Holdco means Greencoat Dunmaglass Holdco Limited
Dunmaglass Wind Farm means Dunmaglass Wind Farm Limited
Earl's Hall Farm means Earl's Hall Farm Wind Farm Limited
Equity Element means the ordinary shares issued to the
Investment Manager under the Investment Management Agreement
ESG means Environmental, Social and Governance
EU means the European Union
Fenlands means Fenland Windfarms Limited
FRC means the Financial Reporting Council
GAV means Gross Asset Value
GB means Great Britain consisting of England, Scotland and
Wales
Glass Moor means Glass Moor wind farm
Group means Greencoat UK Wind PLC and Greencoat UK Wind Holdco
Limited
Holdco means Greencoat UK Wind Holdco Limited
Humber Gateway means Humber Holdco and Humber Wind Farm
Humber Holdco means Greencoat Humber Limited
Humber Wind Farm means RWE Renewables UK Humber Wind Limited
HV means high voltage
IAS means International Accounting Standards
IFRS means International Financial Reporting Standards
Investment Management Agreement means the agreement between the
Company and the Investment Manager
Investment Manager means Greencoat Capital LLP
IPEV Valuation Guidelines means the International Private Equity
and Venture Capital Valuation Guidelines
IRR means Internal Rate of Return
Kildrummy means Kildrummy Wind Farm Limited
KPI means Key Performance Indicator
Langhope Rig means Langhope Rig Wind Farm Limited
Lindhurst means Lindhurst Wind Farm
Listing Rules means the listing rules made by the UK Listing
Authority under Section 73A of the Financial Services and Markets
Act 2000
Little Cheyne Court means Little Cheyne Court Wind Farm
Limited
Maerdy means Maerdy Wind Farm Limited
Middlemoor means Middlemoor Wind Farm
ML Wind means ML Wind LLP
NAB means National Australia Bank
Nanclach means Nanclach Limited
Nanclach Holdco means Nanclach Holdco Limited
Nanclach Midco means Nanclach Midco Limited
NAV means Net Asset Value
North Hoyle means North Hoyle Wind Farm Limited
North Rhins means North Rhins Wind Farm Limited
ODFM means Optional Downward Flexibility Management
PPA means Power Purchase Agreement entered into by the Group's
wind farms
RBC means the Royal Bank of Canada
RBS International means the Royal Bank of Scotland International
Limited
Red House means Red House wind farm
Red Tile means Red Tile wind farm
Review Section means the front end review section of this report
(including but not limited to the Chairman's Statement, Strategic
Report, Investment Manager's Report and Report of the
Directors)
Rhyl Flats means Rhyl Flats Wind Farm Limited
ROC means Renewable Obligation Certificate
RPI means the Retail Price Index
Santander means Santander Global Banking and Markets
Screggagh means Screggagh Wind Farm Limited
Sixpenny Wood means Sixpenny Wood Wind Farm Limited
Slieve Divena means Slieve Divena Wind Farm Limited
Slieve Divena II means Slieve Divena Wind Farm No. 2 Limited
SPVs means the Special Purpose Vehicles which hold the Group's
investment portfolio of underlying wind farms
Stronelairg means Stronelairg Holdco and Stronelairg Wind
Farm
Stronelairg Holdco means Greencoat Stronelairg Holdco
Limited
Stronelairg Wind Farm means Stronelairg Wind Farm Limited
Stroupster means Stroupster Caithness Wind Farm Limited
SYND Holdco means SYND Holdco Limited
Tappaghan means Tappaghan Wind Farm (NI) Limited
TCFD means Task Force on Climate-Related Financial
Disclosures
Tom nan Clach means Breeze Bidco and Nanclach
TSR means Total Shareholder Return
UK means the United Kingdom of Great Britain and Northern
Ireland
UK Code means the UK Corporate Governance Code issued by the
FRC
Walney means Walney Holdco and Walney Wind Farm
Walney Holdco means Greencoat Walney Holdco Limited
Walney Wind Farm means Walney (UK) Offshore Windfarms
Limited
Yelvertoft means Yelvertoft Wind Farm Limited
Alternative Performance Measures
Performance Measure Definition
CO(2) emissions reduced The estimate of the portfolio's annual
per annum CO(2) emission reductions, based on the
portfolio's estimated generation as at
the relevant reporting date.
Homes powered per annum The estimate of the number of homes powered
by electricity generated by the portfolio,
based on the portfolio's estimated generation
as at the relevant reporting date.
NAV movement per share Movement in the ex-dividend Net Asset
(adjusting for dividends) Value per ordinary share during the year.
NAV per share The Net Asset Value per ordinary share.
Net cash generation The operating cash flow of the Group
and wind farm SPVs.
Premium to NAV The percentage difference between the
published NAV per ordinary share and
the quoted price of each ordinary share
as at the relevant reporting date.
Total return (NAV) The movement in the ex-dividend NAV per
ordinary share, plus dividend per ordinary
share declared or paid to shareholders
with respect to the year.
Total Shareholder Return The movement in share price, combined
with dividends paid during the year,
on the assumption that these dividends
have been reinvested.
Cautionary Statement
The Review Section of this report has been prepared solely to
provide additional information to shareholders to assess the
Company's strategies and the potential for those strategies to
succeed. These should not be relied on by any other party or for
any other purpose.
The Review Section may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "may", "will" or "should" or,
in each case, their negative or other variations or comparable
terminology.
These forward-looking statements include all matters that are
not historical facts. They appear in a number of places throughout
this document and include statements regarding the intentions,
beliefs or current expectations of the Directors and the Investment
Manager concerning, amongst other things, the investment objectives
and Investment Policy, financing strategies, investment
performance, results of operations, financial condition, liquidity,
prospects, and distribution policy of the Company and the markets
in which it invests.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Company's actual investment performance, results
of operations, financial condition, liquidity, distribution policy
and the development of its financing strategies may differ
materially from the impression created by the forward-looking
statements contained in this document.
Subject to their legal and regulatory obligations, the Directors
and the Investment Manager expressly disclaim any obligations to
update or revise any forward-looking statement contained herein to
reflect any change in expectations with regard thereto or any
change in events, conditions or circumstances on which any
statement is based.
In addition, the Review Section may include target figures for
future financial periods. Any such figures are targets only and are
not forecasts.
This Annual Report has been prepared for the Company as a whole
and therefore gives greater emphasis to those matters which are
significant in respect of Greencoat UK Wind PLC and its subsidiary
undertakings when viewed as a whole.
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END
FR FLFETFRISFIL
(END) Dow Jones Newswires
February 25, 2021 02:00 ET (07:00 GMT)
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