TIDMTRIG
RNS Number : 0665C
Renewables Infrastructure Grp (The)
18 February 2022
18 February 2022
The Renewables Infrastructure Group Limited
("TRIG" or "the Company", a London-listed investment company
advised by InfraRed Capital Partners ("InfraRed") as Investment
Manager and RES ("Renewable Energy Systems") as Operations
Manager)
Annual Results for the 12 months ended 31 December 2021
2021 Highlights - Strong earnings and NAV growth
-- NAV per ordinary share of 119.3p ([1]) as at 31 December 2021
(December 2020: 115.3p). Growth driven by high near-term power
prices, increased near-term inflation and active portfolio
management
-- NAV total return of 9.5% for the year and 8.3% since IPO (annualised) ([2])
-- Earnings per ordinary share of 10.0p (2020: 5.9p) and profit
before tax of GBP210m (2020: GBP100m)
-- 2021 dividend target of 6.76p/share delivered and 2022 dividend target(4) set at 6.84p/share
-- Directors' portfolio valuation ([3]) of GBP2,726m as at 31
December 2021 (2020: GBP2,213m) following four
diversification-enhancing acquisitions, including TRIG's first
investment in Spain
-- Portfolio generated 4,125GWh of electricity in the year (2020: 3,953GWh)
-- The Company is consulting on increasing TRIG's Construction
& Development Investment Policy Limit from 15% to 25% of
portfolio value
-- Responsible investment and sustainability at the core of the business:
o Generated enough clean energy in 2021 to avoid 1.4m tonnes of
CO 2 emissions and power 1.1m homes ([4])
o Supported 38 community funds with GBP1.2m of contributions
o Maintained a strong health and safety environment with 0.21
reportable lost time accidents per 100,000 hours worked ([5])
Helen Mahy, CBE, Chairman of TRIG, said :
"Active portfolio management by InfraRed and RES has delivered
robust financial performance from TRIG in a year characterised by
the ongoing Covid-19 pandemic, volatile commodity markets and the
lowest wind resource in the Company's history.
As the Company approaches the ninth anniversary of its IPO, we
have progressed the Board's succession planning with the
appointments of Erna-Maria Trixl and John Whittle. Shelagh Mason
will be retiring from the TRIG Board at the end of February 2022 -
on behalf of my fellow Directors, I thank her for her service to
the Company. As the Board goes through this transition, my fellow
Directors and I are grateful for another year of strong support
from of TRIG's shareholders as they continue to support the
Company's diversification strategy.
The decarbonisation agenda remains central to public policy
across Europe. Renewables play an essential role in providing
affordable and clean electricity. This backdrop continues to ensure
a bright outlook for the Company."
Richard Crawford, Director, Infrastructure, InfraRed Capital
Partners said:
"The Company's geographical and technological diversification
strategy continues to benefit the portfolio, with the Nordic wind
and UK solar elements of the portfolio seeing considerably better
weather resource than the wind levels experienced in the UK and
Ireland.
The Company's first investment in a Spanish solar project is a
major milestone in supporting our diversification strategy further,
representing a new geography and a TRIG's first investment in solar
PV since 2016. We also increased the Company's presence in Sweden,
where we will almost double TRIG's generation capacity in the
Nordics region once in-construction assets become operational.
To capture opportunities within these and other established
markets, we will be consulting with shareholders on increasing the
Construction & Development Investment Policy Limit from 15% to
25% of portfolio value. Both InfraRed and RES have deep expertise
in managing construction and development activities across many
decades and are well placed to ensure TRIG continues to invest in
attractive projects across the Company's key markets."
Webcast details
TRIG will be presenting its results at 09:00 UK time today. The
presentation will be broadcast live and an archive version of the
presentation will be made available on the Group's website. The
link for the broadcast is https://brrmedia.news/TRIG_FY21
Enquiries
InfraRed Capital Partners Limited +44 (0) 20 7484 1800
Richard Crawford
Phil George
Minesh Shah
Mohammed Zaheer
Maitland/AMO +44 (0) 20 7379 5151
Rhys Jones
Charles WIthey
Notes
The Company
The Renewables Infrastructure Group ("TRIG" or the "Company") is
a leading London-listed renewable energy infrastructure investment
company. The Company seeks to provide shareholders with an
attractive long-term, income-based return with a positive
correlation to inflation by focusing on strong cash generation
across a diversified portfolio of predominantly operating
projects.
TRIG is invested in a portfolio of wind, solar and battery
storage projects across six European countries with aggregate net
generating capacity of over 2.2GW, enough renewable power for over
one million homes and displacing over 1.3 million tonnes of carbon
emissions per annum. TRIG is seeking further suitable investment
opportunities which fit its stated Investment Policy.
Further details can be found on TRIG's website at
www.trig-ltd.com .
Investment Manager
TRIG's Investment Manager is InfraRed Capital Partners Limited
("InfraRed"), an international infrastructure investment manager,
investing in real assets which contribute positively to society and
support the transition to a net zero future. It operates worldwide
from offices in London, New York, Sydney and Seoul. With around 165
professionals, it manages US$10bn+ of equity capital in multiple
private and listed funds, primarily for institutional investors
across the globe.
At InfraRed, a long-term, sustainability-led mindset is
essential to delivering lasting success, and this mindset directs
its assessment and management of the Environmental, Social and
Governance ("ESG") aspects of its business. InfraRed has been a
signatory of the Principles of Responsible Investment since 2011
and has been awarded triple A+ score in the 2020 review (relating
to the 2019 assessment period). It is also a member of the Net Zero
Asset Manager's Initiative, a certified CarbonNeutral(R) company
and is a TCFD supporter.
InfraRed is a part of SLC Management, the institutional
alternatives and traditional asset management business of Sun Life.
Over the past 30 years, InfraRed has established itself as a highly
successful developer and custodian of core infrastructure,
renewable energy and real estate assets that play a vital role in
supporting sustainable communities.
Operations Manager
TRIG's Operations Manager is RES (" Renewable Energy Systems"),
the world's largest independent renewable energy company.
RES has been at the forefront of wind energy development for
over 39 years, with the expertise to develop, engineer, construct,
finance and operate projects around the globe. RES has developed or
constructed onshore and offshore wind, solar, energy storage and
transmission projects totalling more than 21GW in capacity. RES
supports over 7.5GW of operational assets worldwide for a large
client base. Headquartered in Hertfordshire, UK, RES is active in
10 countries and has over 3,000 employees engaged in renewables
globally.
RES is an expert at optimising energy yields, with a strong
focus on safety and sustainability. Further details can be found on
the website at www.res-group.com .
1 Chairman's Statement
I am pleased to present the 2021 Annual Report & Financial
Statements for The Renewables Infrastructure Group Limited ("TRIG"
or the "Company"). The NAV as at 31 December 2021 was 119.3p per
share and earnings for 2021 were 10.0p/share. TRIG's NAV total
return from IPO to 31 December 2021 has been 8.3%, including
dividends paid.
NAV total return for 2021 of 9.5% represents solid performance
and reflects the Managers' continuing work to enhance our portfolio
(organically and through acquisitions), the sustained market demand
for renewable energy generating assets, and an increase in current
and near-term forward power prices. The impact of these factors was
dampened by reductions in medium- to long-term power price
forecasts, expected cuts to older solar feed-in tariffs in France
and the increase in future corporation tax rates in the UK.
Climate change continued to dominate the political agenda,
culminating in November 2021 with the 26th United Nations Climate
Change conference (COP26). Whilst the main achievements of COP26
were to focus on reducing coal-powered generation and to raise the
profile of methane emissions, increasing renewables generation as
an alternative to fossil fuels remains core to public policy. TRIG
makes a significant contribution to this agenda ([6]) . We are
proud that TRIG's current operational portfolio of 1.7GW is capable
of powering 1.3 million homes and avoiding approximately 1.6
million tonnes of carbon emissions per annum ([7]) . Once our
projects in construction become operational, TRIG's generation
capacity will grow to 2.2GW ([8]) .
There is increasing discussion of accelerating electrification;
however, action needs to be faster and greater in areas such as
flexible capacity, space and water heating, and industrial
processes. InfraRed and RES (the Company's Investment Manager and
Operations Manager, respectively) continue to engage actively in
the policy debate. InfraRed attended the pre-COP26 Global
Investment Summit, RES participated in the Energy Transition Hub at
COP26, and TRIG and its Managers made submissions to the UK
Government's Enabling a High Renewable, Net Zero Electricity
System: Call for Evidence.
The Company's portfolio has been further diversified through
acquisitions during the year and this was enabled by the support of
our shareholders. The Company conducted two successful fundraises
in 2021 that raised GBP440m, in aggregate, from existing and new,
institutional and retail investors. These fundraises were accretive
to existing shareholders at an average issuance price of 7.7%
premium to the NAVs prevailing at the time, and together with their
related acquisitions provide further portfolio diversification and
economies of scale (TRIG's Ongoing Charges Ratio for 2021 was
0.97%).
Dividends
Wind resource in 2021 has been unusually weak and was an outlier
in TRIG's nearly nine-year history. In the UK and similar European
latitudes (Ireland and Germany), wind levels have been at their
lowest since 2010. Against this backdrop, we are pleased that
dividend cover for the year was 1.06x, which with the benefit of
scrip dividends rose to 1.12x cash cover, and is after the
repayment of GBP145m project-level debt, reflecting the strength of
the Company's business model. If the Company adopted the
alternative business model of not repaying debt on a systematic
basis over each project's subsidy life, then, for comparison
purposes, dividend cash cover could have been 2.1x.
I am pleased to report a dividend target ([9]) for 2022 of
6.84p/share, an increase of 1.2% on the 2021 dividend. In setting
the 2022 dividend target the Board considered positive factors
including elevated near-term power prices and inflation, and was
mindful of medium term political and regulatory headwinds, such as
the increase in UK corporation tax rates, and the uncertainties in
medium and longer-term power price forecasts relating to the rate
of renewables deployment versus the growth rate of electricity
demand. The long-term sustainability of the Company's dividend
remains a priority for the Board.
Portfolio Construction and Investment Activity
Portfolio construction and the generation of attractive
risk-adjusted returns are key to the assessment of acquisition
opportunities, the benefits of which have been evident in 2021.
Whilst wind resource has been very low by historical standards
across much of the portfolio, generation in the Nordics has been
above budget for the second successive year and solar resource has
once again been in line with budget.
The investments made in 2021 will increase the proportion of
portfolio generation in the Nordics when the Grönhult and Twin
Peaks (Ranasjö and Salsjö) projects commence operations in late
2022 and early 2024 respectively. These sites will increase our
generation capacity ([10]) in the Nordics by nearly 90%. In
addition, TRIG's first investment on the Iberian Peninsula in a
portfolio of four ready-to-build solar projects will more than
double TRIG's solar generation capacity when they become
operational at the end of 2022.
TRIG's largest investment in 2021 was in the Beatrice offshore
wind farm in the UK, which receives a Contract for Difference
subsidy. The project commenced full operations in 2019 and its 84
Siemens Gamesa 7MW turbines are able to power c. 450,000 homes.
InfraRed maintains its prudent approach to assessing opportunities,
which is particularly important in sectors with subsidy tariffs
where competition for assets is high, with a focus on yield and
limiting single asset concentration.
Creating off-market, bilateral opportunities through
well-established relationships, and leveraging TRIG's reputation
for deliverability, is central to InfraRed's development of further
attractive investment opportunities. TRIG's acquisition focus
remains unchanged, targeting renewables and related infrastructure
investments ([11]) in the UK and Europe ([12]) . The wider Nordic,
Iberian and Benelux regions would be a natural fit for TRIG's
portfolio. Other geographies in Europe, where there is a
significant renewables deployment target, may be considered
following a rigorous analysis of the legal, regulatory and
operational environment.
InfraRed continues to screen flexible capacity opportunities,
particularly batteries, whose financial performance is driven by
intermittency of renewables and power price volatility, thereby
having low correlation to wholesale power price levels and
forecasts. The majority of opportunities in flexible capacity
technologies relevant to TRIG are at late-stage development or the
"shovel-ready" point of construction with suitable risk-reward
profile for long-term asset owners.
Value Enhancement and Portfolio Performance
As the Covid-19 pandemic continues, the health, safety and
welfare of the workforces of our Managers, on our sites and in our
supply chains remains paramount. We have continued to operate
Covid-aware practices and maintain our focus on the health and
safety of contractors on our sites. The portfolio's overall asset
availability was consistent with budgeted levels.
As noted, the performance of TRIG's portfolio during the period
was impacted by low weather resource, particularly in Great
Britain, Ireland and Germany. Overall, production for 2021 was
12.6% below budget.
Power prices captured in the period and near-term power price
forwards were higher than forecast, principally driven by high
global gas prices due to supply constraints in Europe and a rapid
rebound of global demand following the contraction in 2020. The
volatility of power prices over the past 24 months caused by
external factors, including the Covid-19 pandemic and commodity
price changes, underscores the need for a prudent approach to
revenue risk management.
Our Managers are focused on the sustainability of shareholder
returns, one component of which is to manage the overall
portfolio's sensitivity to changes in power price through
subsidy-supported revenues and actively applying power price fixes
/ hedges. This approach means that TRIG does not suffer the full
impact of low prices nor gain as much as may be possible from high
prices, as seen in 2020 and 2021 respectively. Over the next five
years, approximately 65% of forecast portfolio revenues benefit
from fixed power pricing per megawatt hour through subsidies or
hedging instruments. The medium to long-term power price forecasts
have reduced as greater renewables rollout is incorporated into
projection models without the same level of increase in assumed
flexible demand resulting from the energy transition, including
from electric vehicles and domestic heating.
Projects affected by retroactive cuts to historically-set French
feed-in tariffs for solar projects have exercised rights to appeal
under the legislation. This commences a dialogue with the relevant
authority to revisit proposed tariffs which may continue into 2023.
In parallel, Syndicat des Énergies Renouvelables ("SER"), the
French renewables trade association of which TRIG is a member, has
initiated an action for annulment of the legislation. InfraRed and
RES have also been in dialogue with officials at the Ministre de
L'Economie, des Finances et de la Relance and the UK's Department
of International Trade. After provisions of
1.6p/share, the remaining carrying value of affected projects
within TRIG's portfolio is 1.6p/share.
As reported in June 2021, following routine inspections at the
Merkur offshore wind farm in Germany, generation was paused as a
precautionary safety measure after cracks were identified in the
emergency evacuation rear frames of some turbines. The turbine
manufacturer has been monitoring the turbines and has implemented
an interim welding solution that enabled 50, on average, of the 66
turbines to operate during Q4 2021 and 60, on average in January
2022. Lost revenues are due to be compensated through contractual
protection mechanisms. Root cause analysis has been completed and a
long-term solution is being developed, which the turbine
manufacturer plans to substantially implement during 2022. The cost
of remediation remains with the manufacturer. No material impact is
expected on the carrying value of the project nor the financial
performance of Company, though the timing of distributions from the
project are expected to be delayed.
The construction of the 35MW Blary Hill project, in Scotland,
was completed ahead of schedule and on-budget in early 2022. The
construction of Haut Vannier (43MW in France), Grönhult (67MW in
Sweden) and the four sites comprising Project Cadiz (234MW in
Spain) remain on track to be completed in 2022. The construction of
the Twin Peaks projects (242MW ([13]) in Sweden) commenced in Q3
2021 and is scheduled to complete in 2024. Projects with
construction risk exposure represent 11% of TRIG's portfolio by
value at 31 December 2021.
Responsible Investment and Sustainability
The Board and the Managers believe that investing responsibly
and the consideration of environmental, social and governance
("ESG") factors is essential for maintaining a sustainable business
model over the long term. TRIG's ESG objectives are designed to
improve outcomes for shareholders and the portfolio's stakeholders.
We report against these objectives in our Sustainability Report,
available on the Company's website, and in Section 2.4 -
Sustainability.
The GBP500,000 TRIG Covid-19 Community Fund has now supported
over 60 community organisations. These funds are in addition to the
circa GBP1.1m ([14]) that the portfolio companies contribute to
their local communities each year.
In line with our commitment to the UN Sustainable Development
Goal 13 Climate Action, TRIG's Managers continue to expand their
assessment of the potential impact of climate change, including in
respect of the physical risks associated with adverse climate
change. The Company reports against all 11 recommendations of the
Task Force on Climate-related Financial Disclosures in Section 2.4
- Sustainability.
Social responsibility is integral to InfraRed's investment
process and our Managers' risk-based approach to due diligence.
Supply chain working conditions were a key focus in the due
diligence of Project Cadiz in Spain, particularly in relation to
the manufacture of solar PV panels. In doing so, we look to exert
influence to improve transparency and practices in the supply
chain.
We continue to align the Company's financial performance with
our sustainability goals, and have integrated key health &
safety, decarbonisation and community support metrics into TRIG's
revolving credit facility and certain hedging instruments.
Corporate Governance
Board composition is regularly discussed by the Board's
Nomination Committee to ensure that the Company's non-executive
Directors have a diverse range of relevant expertise and experience
to apply to the oversight of the Company and to engage effectively
with the Managers.
We are now approaching nine years since TRIG's IPO, and the
initial three Non-executive Directors, including myself, will be
retiring in 2022. Shelagh Mason and Jon Bridel will be retiring as
Non-executive Directors in February and May 2022 respectively. On
behalf of my fellow Directors and the Managers, I thank them for
their significant contributions to the success of the Company since
our IPO in 2013.
I am pleased to welcome John Whittle (appointed July 2021) and
Erna-Maria Trixl (appointment as of March 2022) to the Board. John
brings significant infrastructure investment and accounting
experience, and will succeed Jon Bridel as Audit Committee Chairman
and Shelagh Mason as Senior Independent Director. Erna-Maria is an
energy, infrastructure and sustainability expert and adds to the
TRIG Board's depth of energy and wider-infrastructure sector
experience.
A process is underway, utilising the services of a third-party
adviser, to select and appoint my successor as Chairman of the
Board.
These appointments continue the Nomination Committee's
recruitment and orderly succession plan which incorporates
appropriate handover periods, the principles and provisions of the
AIC Code ([15]) , and the recommendations of the Hampton-Alexander
and the Parker Reviews.
Principal Risks and Uncertainties
The Board and the Managers monitor and, where practicable,
mitigate a range of risks to TRIG's strategy. The main risks for
the Company continue to be:
Regulation: government or regulatory support for renewables
changing adversely;
Power prices: electricity prices falling or not increasing as
expected; and
Production performance: portfolio electricity production falling
short of expectations, including as a result of unfavourable
weather and asset unavailability.
These risks are considered in the Portfolio Construction and
Value Enhancement sections above and are expanded on in Section
2.10 - Risks and Risk Management.
Outlook
The climate change agenda will take another step forward in 2022
as countries attend COP27 in Egypt with promises of revised action
plans to steepen the rate of decarbonisation. Our strategy is
aligned with this and, increasingly, TRIG is delivering new
capacity having built c. 200MW capacity across nine projects since
IPO and with a further c. 450MW currently in construction across
four investments comprising eight sites.
As the renewables infrastructure market continues to mature and
attract more investors, an increasing proportion of relevant
projects are trading to long-term hold investors earlier in their
development cycle, including at or around the ready-to-build stage
rather than in the early years of operations. Moreover, the Company
itself is commencing developments on repowering, and further such
opportunities can be expected as older sites mature.
Construction and development projects constitute 11% of TRIG's
portfolio value; as compared to the investment policy limit on such
activities of 15% of portfolio value, which may pose a constraint
on future diversification of the portfolio. On the back of TRIG and
its Managers' extensive track record, the Board is considering,
subject to continuing positive feedback from shareholder
discussions, asking shareholders to increase TRIG's Investment
Policy development and construction limit from 15% to 25% at the
next AGM in May 2022. A construction case study is provided in
Section 2.5 - Portfolio that illustrates some of our Managers' deep
expertise in this area.
The energy transition is being fuelled by renewable electricity
generation, presenting further exciting investment opportunities
for TRIG. As the investable universe expands, so too has the volume
of capital seeking to invest in this sector. In that context,
InfraRed's portfolio construction and investment discipline as well
as RES's asset management expertise are more important than
ever.
I am grateful to TRIG's shareholders for their continuing
support of the Company and me as its Chairman. It has been a
pleasure to serve you as Chairman of TRIG since IPO, and I remain
confident that TRIG's business model, which has successfully
prevailed in 2021, will enable the Company to continue to generate
sustainable returns and contribute towards a net zero carbon
future.
Helen Mahy CBE
Chairman
17 February 2022
02 Strategic Report
2.1 TRIG's Investment Proposition
TRIG's purpose is to generate sustainable returns from a
diversified portfolio of renewables infrastructure that contribute
towards a net-zero carbon future.
TRIG's diversified portfolio predominantly consists of
operational wind farms and solar parks in the UK and Europe. The
Company aims to provide its investors with long-term, sustainable
dividends and to retain the portfolio's capital value through
re-investment of surplus cash flows after payment of dividends.
TRIG's key financial objectives are to provide its shareholders
with:
an attractive, long-term, income-based return by focusing on
strong cash generation across a portfolio of renewable energy
generating assets;
prudent financial management in the approach to cost control,
cash management, financing arrangements and hedging; and
a diversified investment portfolio at scale to spread risk,
increase share liquidity and realise efficiencies.
TRIG's Board and its Managers place responsible investment
practices at the heart of TRIG's business, as they are core to a
sustainable business model over the long-term. Our approach is
underpinned by the Company's Sustainability Objectives, which are
to:
mitigate climate change;
preserve our natural environment;
positively impact the communities TRIG works in; and
maintain ethics and integrity in governance.
TRIG's investment approach is based on the following two
factors:
Investment Approach
In order to achieve its investment objective to generate
sustainable returns, the Company invests in infrastructure that
contributes towards a net zero carbon future through the generation
of electricity from renewable energy sources, with a particular
focus on wind farms and solar PV parks. The Company also invests in
infrastructure that supports the energy transition, such as
flexible capacity.
The Group aims to achieve portfolio diversification principally
through investing across Europe (including UK & Ireland) and a
mix of renewable energy technologies, in order to improve the
stability of shareholder returns by reducing risks of single asset
concentration, power markets, regulatory frameworks and local
weather patterns. The Company's portfolio extends across six
countries, with the largest generating capacity of the
London-listed renewables investment companies.
TRIG's Board and the Managers (InfraRed Capital Partners, as
Investment Manager, and Renewable Energy Systems, as Operations
Manager) adhere to an Investment Policy in pursuit of the Company's
investment objective. The key investment limits below provide a
summary of the parameters within which investments are made. The
full wording of the Investment Policy can be found on the Company's
website at the following link:
www.trig-ltd.com/about-us/why-invest-with-trig/business-model/investment-policy.
Key investment limits
Investments are made in the UK and other European countries
where The Board and Managers believe there is a stable renewable
energy framework.
Up to 65% of the Portfolio Value[16] may be invested in projects
that are located outside the UK.
Whilst investments are predominantly made in wind farms and
solar projects, the Company may also invest in infrastructure that
is complimentary to renewables, such as flexible capacity, up to a
limit of 20% of Portfolio Value.
Up to 15%[17] of the Portfolio Value may be invested in
development or construction projects (including repowering of
existing assets).
In order to manage single asset concentration risk, no more than
20% of Portfolio Value may be invested in any single project.
Short-term debt (principally drawings on the Company's revolving
credit facility) is limited to 30% of the Portfolio Value.
Long-term debt (typically amortising project finance debt) is
limited to 50% of the Gross Portfolio Value (being the total
enterprise value of the Portfolio).
Historically, the Company has often made investments in 100% or
majority equity ownership of assets. As renewable energy projects
increase in size, the Company is increasingly acquiring minority
equity stakes. Where minority positions are taken, the Investment
Manager will secure TRIG's shareholder rights (including voting
rights) through shareholder agreements and other transaction
documentation.
Other policies covering revenue management, hedging, cash
balances, the origination of further investments, repowering and
material amendments to the Investment Policy can be found in the
full Investment Policy on the Company's website.
2.2 TRIG's Business Model and Strategy
Purpose
To generate sustainable returns from a diversified portfolio or
renewables infrastructure that contribute towards a net zero carbon
future.
Introduction
TRIG was the first geographically and technologically
diversified investment company investing in renewable energy
infrastructure listed on the London Stock Exchange, completing its
IPO in 2013. The Company has been a member of the FTSE 250 Index
since 2015, has been accredited as a Guernsey Green Fund since 2019
and retains the London Stock Exchange's Green Economy Mark. TRIG is
managed by its Investment Manager, InfraRed, and its Operations
Manager, RES.
With the support of shareholders, TRIG's growth since IPO has
enabled the Investment Manager, InfraRed, to diversify the
investment portfolio across technologies (currently onshore wind,
offshore wind, solar PV and battery storage) and geographies
(currently UK, Ireland, France, Germany, Sweden and Spain), with
other geographies considered following a rigorous analysis of the
legal, regulatory and operational environment. TRIG operates the
largest diversified portfolio of renewable energy investments
within the Investment Company sector.
Management
The Company has a board of independent non-executive Directors,
for whom biographies can be found in Section 3 along with, as the
Company is in its ninth year, details on succession planning. The
Board's role is to manage the governance of the Company in the
interests of shareholders and other stakeholders. In particular,
the Board monitors adherence to the Investment Policy, determines
the risk appetite of the Group (the Company, all of its
subsidiaries, and investments), sets Group policies and monitors
the performance of the Investment Manager, the Operations Manager
and other key service providers.
The Board meets a minimum of four times per year for regular
Board meetings and there are several ad hoc meetings dependent upon
the requirements of the business. In addition, the Board has five
committees covering the areas of Audit, Nominations, Remuneration,
Management Engagement and Market Disclosure, chaired by respective
members of the Board, which receive and consider specialist
independent adviser reports and presentations. Health & safety,
risk management, and sustainability each feature as dedicated
agenda items in the Board's regular, quarterly meetings.
The Board takes advice from the Investment Manager, InfraRed, as
well as from the Operations Manager, RES, on matters concerning the
market, the portfolio and new investment opportunities. Day-to-day
management of the Group's portfolio is delegated to InfraRed and
RES, with investment decisions within agreed parameters delegated
to an Investment Committee constituted by senior members of the
Investment Manager.
Other key service providers to the TRIG Group include Aztec
Financial Services (Guernsey) Limited providing Company Secretarial
and Administrative services, Investec Bank PLC and Liberum Capital
Limited as joint brokers, Maitland/AMO as financial public
relations advisers, Carey Olsen as legal advisers as to Guernsey
law, Norton Rose Fulbright LLP as legal advisers as to English law,
Link Asset Services (Guernsey) Limited as registrars and Deloitte
LLP as auditor. Lenders to the Group's revolving credit facility
are National Australia Bank, Royal Bank of Scotland International,
ING Group, Sumitomo Banking Corporation, Barclays and
Santander.
Group structure
Through the group structure, the Company owns a portfolio of
renewable energy infrastructure investments in the UK, Ireland,
France, Germany, Sweden and Spain.
TRIG seeks to protect and enhance the income from, and value of,
the existing portfolio through active management and sourcing of
new investments that enhance the diversification and scale of the
portfolio, utilising the expertise of the market-leading Investment
and Operations Managers appointed by the Company.
The Company has a 31 December year-end, announces interim
results in August and full year results in February. The Company
pays dividends quarterly and is a self-managed Alternative
Investment Fund under the European Union's Alternative Investment
Fund Managers Directive.
TRIG is a Guernsey-registered investment company (which is not
uncommon for UK-listed investment companies). Tax is paid by the
portfolio companies in the markets in which they operate and by the
Company's shareholders on the dividends they receive (according to
the jurisdiction and taxation status of each shareholder). The
structure ensures investors are not in a disadvantageous tax
position compared to direct investors in infrastructure projects;
in effect this emulates the structure formalised for real estate
investors by the creation in the UK of Real Estate Investment
Trusts ("REITs"). A similar tax treatment can be achieved by UK
Investment Trust Companies located onshore by applying the UK's
Investment Trust (Approved Company) (Tax) Regulations (2011) where
companies deem a portion of their dividends paid to investors as
interest distributions (although we note that for certain UK
shareholders the tax treatment of interest income is different to
dividend income).
The Board keeps the Company's residency and domicile under
regular review.
InfraRed Capital Partners Limited ("InfraRed") is TRIG's
Investment Manager. InfraRed has day-to-day responsibility for the
investment management of TRIG.
InfraRed is a specialist infrastructure investment manager(1) .
With over 165 members of staff across four countries, InfraRed has
over 25 years of investment experience and over US$10bn of
infrastructure equity under management.
At InfraRed, a long-term, sustainability-led mindset is
essential to delivering lasting success, and this mindset directs
its assessment and management of the Environmental, Social and
Governance ("ESG") aspects of its business. InfraRed has been a
signatory of the Principles of Responsible Investment since 2011
and maintains an A+ score. It is also a member of the Net Zero
Asset Managers Initiative, a certified CarbonNeutral(R) company(2)
and is a TCFD supporter.
InfraRed is a part of SLC Management, the institutional
alternatives and traditional asset management business of Sun Life.
Over the past 25 years, InfraRed has established itself as a highly
successful developer and custodian of core infrastructure and
renewable energy assets that play a vital role in supporting
sustainable communities. Further details can be found on their
website at www.ircp.com.
InfraRed's responsibilities as Investment Manager for TRIG
include:
Overall day-to-day management
Sourcing, transacting and approving new investments
Advising the Board on strategy and dividend policy
Advising on capital raising
Risk management and financial administration
Investor relations and investor reporting
Appointing all members of the Investment Committee
Assessing sustainability risks and integrating into each stage
of the investment decision-making process
Hedging strategies for key risks, including interest rates,
inflation, FX and power prices
Renewable Energy Systems Limited ("RES") is TRIG's Operations
Manager. The role of RES is to be responsible for overseeing the
asset management of the portfolio. This includes oversight of
operating and construction projects; operational reporting for all
project companies; and designing and implementing portfolio
performance optimisation plans. RES also provides support in the
assessment of acquisition activities and investor relations.
RES is the world's largest independent renewable energy company
having developed and/or constructed over 22GW of projects. RES also
supports an operational asset portfolio of 9.1GW with operations in
10 countries and over 2,500 employees globally. RES is a pure-play
renewables company with the expertise to develop, construct and
operate projects around the globe across a range of technologies
including onshore and offshore wind, solar, energy storage and
transmission & distribution.
A large, dedicated team of RES staff provide portfolio-level
operations management to the Company and its subsidiaries. RES also
draws on the experience and skills of a much wider pool of
expertise from within the company in order to fulfil its Operations
Manager role, utilising nearly four decades of renewables
experience to provide project-level services to TRIG and support
the evaluation of investment opportunities for the Group. TRIG
benefits from a right of first offer on RES' pipeline of
assets.
RES has a strong focus on safety and ESG (Environment, Social,
Governance), and provides a complete range of services for
renewables projects - from development and design, through
construction and engineering, to financial, technical and
commercial asset management services, and operations and
maintenance services. Further details can be found on their website
at www.res-group.com.
RES's responsibilities as Operations Manager for TRIG
include:
Providing operational management services for the portfolio
Implementing the strategy for electricity sales, insurance and
other areas requiring portfolio level decisions
Maintaining operating risk management policies and
compliance
Appointing senior individuals to the Advisory Committee
alongside InfraRed to advise TRIG on operational and strategic
matters
Community engagement and implementing sustainability initiatives
at an asset level
2.3 Market Development
Power prices
Current and near-term power prices
The power price environment over recent months has been
remarkable. From the pandemic induced lows of Q1 2021 we have now
seen wholesale power pricing rise to the highest levels since the
Company's IPO in 2013. Two factors dominate this surge: high
commodity prices and low weather resource for renewables
generators; with other factors such as increasing geopolitical
concerns, supply outages and a rapid recovery in demand also
contributing.
Elevated spot power prices are flowing into season ahead forward
power prices. For instance in the GB market, which has been one of
the most affected, forward power prices for the coming summer and
winter seasons increased by an average of 166% over the last six
months of 2021; indicating an expectation from the market that
elevated power prices will continue for the next year or so. There
is a similar pattern across all markets where TRIG has
investments.
Natural gas and carbon prices have been the principal commodity
drivers of elevated power prices in GB and Europe, where gas plants
often set the power price as the marginal electricity
generator.
Gas prices have surged due to depleted gas storage levels which
were not subsequently replaced after a cold 2020-21 winter in
Europe, combined with significantly increased demand from Asia for
liquified natural gas (LNG). European gas storage levels in
December 2021 were 17% and 40%(14) below the average seasonal
minimum and maximum levels, respectively, seen in recent times.
Increasing the supply of gas into Europe can also be impacted by
international politics, particularly geopolitical concerns in
Eastern Europe. Forward pricing of gas in Europe indicates that
elevated gas prices are expected to remain into 2023.
2021 saw historically low levels of wind resource in Europe for
renewable electricity generators, which resulted in upwards
pressure on power prices as more gas-fired electricity generation
was required to compensate for the lack of wind resource in
particular. For example, in the UK, the average wind resource was
the lowest it has been in over decade.
The UK and European carbon prices reached all-time highs peaking
above EUR89 a tonne during the year, influenced by demand from coal
and gas generators competing to fill the gap created by low wind
resource. Higher carbon prices are consistent with policy
encouraging industry to invest in cleaner technologies.
The Company's geographic diversification dampened the impact of
this low weather resource on TRIG's portfolio as a whole.
Electricity generation of TRIG's UK wind assets was 16% below
budget, whilst TRIG's Scandinavia wind and UK solar assets
performed broadly in line with budget. This diversification has
reduced the budget variance for the portfolio from 16% for the UK
alone to 12.6% at a portfolio level. The diversification of the
portfolio will be increased by the commencement of generation at
TRIG's Iberian solar projects, expected to be
by the end of 2022, and the completion of TRIG's onshore wind
construction projects in Sweden.
The Company is seeking to benefit from these elevated near-term
forward power prices by entering into forward fixes, supplementing
its longer-term fixed revenues per megawatt hour from government
subsidies. This is consistent with the Company's low-risk,
yield-oriented investment proposition. Over the next 12 months, 70%
(2020: 84%) of revenues are fixed per unit of generation and over
ten years this figure is 66% (2020: 74%). The decline in these
numbers is largely driven by the elevated power prices in the
near-term compared to last year's assumptions.
Longer-term power prices
The long-term outlook for power prices in Europe remains
intrinsically linked to the expected roll out of renewables and
demand for electricity. Market forecasts that feed into TRIG's
valuation, on average, have increased both the expected supply of
renewables capacity and the demand for electricity.
Forecasters are taking a cautious approach to reflecting stated
government objectives on renewables deployment and electrification
in their projections. Their power price forecasts do not currently
reflect electricity demand levels commensurate with whole-economy
decarbonisation, particularly in relation to heating, industry and
heavy transport.
Policy & regulation
United Kingdom
In October 2021, the UK government published its net-zero
strategy setting out how it plans to meet the country's climate
goals to achieve net-zero by 2050. Their strategy covers key
policies on renewable energy generation (target for the UK to be
powered entirely by clean electricity by 2035), light vehicle road
transportation (ban of sales of new petrol and diesel cars and vans
by 2030), home heating (some funding for heat pumps) and hydrogen
production (target of 5GW of low carbon hydrogen capacity by 2030)
that provide a clearer framework for the UK's journey to a net-zero
carbon emissions economy by 2050.
UK climate change policy has taken a significant step in the
right direction through publication of the Net Zero Strategy: Build
Back Greener report. However, key questions remain relating to the
decarbonisation of heavy transport and aviation as well as the
mechanism through which the UK's natural gas heating infrastructure
will be phased out. Whilst the UK's target for 100% renewable
electricity by 2035 is welcome news, a whole-economy approach needs
to be taken to decarbonisation, with key investments needed in grid
and flexible capacity (highlighted by 2021's poor wind resource) in
order to ensure security of supply for consumers as well as
incentivisation for consumers to make the fundamental lifestyle
changes needed.
Beyond climate change policy, the Spring Budget of 2021 included
an increase in the UK's corporation tax rate from 19% to 25% by
April 2023. This has been fully reflected in the Company's
valuation, with the underlying modelling assuming an increased tax
rate of 25% into perpetuity from April 2023, resulting in a
decrease in NAV per share of 3p, as previously reported.
Further developments relating to taxation could emerge in light
of the stretched government balance sheet and elevated consumer
household bills. The opposition parties in the UK have advocated a
one-off windfall tax on North Sea oil and gas production companies
to reduce the burden on consumers from high gas prices, whilst the
UK has also seen 26 retail energy suppliers collapse since August
2021.
European Union
The European Green Deal, introduced in 2020, included the target
of achieving climate neutrality by 2050. In July 2021 and in line
with this initiative, the EU raised its 2030 climate ambition by
committing to cut emissions by at least 55% by 2030 in its 'Fit for
55' strategy. The European Green Deal package covers policies
including strengthening the EU emissions trading scheme and a
carbon border adjustment mechanism, increasing member states'
emissions reduction targets, increasing renewables energy share
target from 32% to 40% by 2030 and increased energy efficiency
targets.
This suite of policies provides significant impetus for the
increased electrification and deployment of renewables across all
member state economies, which we expect to broaden TRIG's
addressable market, including opening up new potential
technologies, such as green hydrogen, in the medium to
long-term.
During December 2021, Germany's nuclear phase-out entered its
penultimate phase, as the country shut down half of its six nuclear
plants still operating, with the remainder due to be retired by the
end of 2022. Coupled with the closure of a number of lignite plants
during the year, 2021 was an important year for Germany's energy
transition. Elections in Germany also brought in a new coalition
government, with the Green party a significant coalition partner
and co-leader Robert Habeck set to lead the Economy and Energy
Ministry. The coalition agreement policy sees significant expansion
in both the supply of, and demand for, renewable electricity as
Germany accelerates its net-zero ambitions.
Consumers across Europe, including in the UK, face a period of
high energy costs - with some analysts estimating a doubling of
energy bills(15) , following what has been a period of decreasing
wholesale prices. This increases regulatory risk as governments
look to enact mechanisms to limit the impact on household bills.
The government in Spain introduced temporary measures to subsidise
retail prices funded by a levy on electricity generators benefiting
from "windfall" power prices that reflect increased gas costs but
do not use gas as an input source - therefore including renewables;
dampening the benefits from current high power prices.
During the year, the French Parliament enacted its planned
changes to historical solar feed-in-tariff levels, as discussed in
last year's annual report. For certain assets, such as those
located on the French islands/in overseas departments and those
integrated into buildings or projects which are agricultural in
nature, the Managers are identifying exemptions and mitigations
that may apply. The Company has joined Syndicat des énergies
renouvelables ("SER") which is pursuing action for the annulment of
the new legislation. InfraRed and RES have also been in dialogue
with officials at the Ministre de L'Economie, des Finances et de la
Relance and the UK's Department of International Trade. It remains
likely that this matter will take time to resolve and the final
outcome to become clear. A partial provision against the affected
assets has been taken and is discussed in more detail in Section
2.7 - Valuation of the Portfolio.
Portfolio construction & pipeline
The Company made four investments during the year that all
contributed to improving portfolio resilience and diversification.
The investments were made across three geographies, including the
Company's first investment in Spain, three technologies and
comprised a balance of subsidised and unsubsidised revenues. The
power price sensitivity remains broadly unchanged as a result of
these acquisitions, as the Managers seek to maintain the risk
profile of the Company. The benefit of having a large and
diversified portfolio has been especially evident this year, as the
impact of regulatory and wind resource challenges on the portfolio
as a whole have been reduced by geographic, technological and
revenue diversification.
TRIG's construction projects have progressed well during the
year, with Blary Hill commissioned in early 2022. TRIG's Swedish,
Spanish and French construction projects are all proceeding well,
with 340MW of capacity due to be delivered in 2022 in addition to
the 200MW of construction projects delivered to date. Throughout
the construction of these projects, TRIG is ensuring that
sustainability considerations remain at the forefront by making
efforts to reduce concrete usage work with local communities and
implement habitat management plans.
Both of TRIG's Managers have strong track records in delivering
renewable energy projects. InfraRed has invested in 1.7GW of
renewable capacity through construction and is developing a further
8GW, whilst RES has constructed or developed 22GW of renewable
capacity and is developing a further 16GW.
On the back of TRIG and its Managers' extensive track record,
the Board is considering asking shareholders to increase TRIG's
Investment Policy development and construction limit from 15% to
25% at the next AGM in May 2022.
The Managers continue to see construction and late-stage
development projects as attractive opportunities to leverage the
depth of their expertise and combined track record for the benefit
of TRIG to gain early access to investment opportunities in a
competitive market as well as presenting the opportunity for NAV
growth as projects are de-risked through to their operational
phase. As the Company's portfolio matures there will also be
significant repowering opportunities that would require development
activities, such as the Company's current repowering work in
France. Further details on the progress of TRIG's construction
projects can be found in Section 2.5 - Portfolio.
Outlook
The outlook for the Company remains strong. Whilst realised and
near-term forward power prices have provided support to earnings
and portfolio valuation, and have mitigated the impact of a period
of low wind levels, it is the long-term and structural factors
underpinning Europe's transition to a net-zero carbon economy that
provides the basis for sustainable returns to shareholders. With
policymakers beginning to address the greater need for
electrification, flexible capacity and the demand side of the
equation, complementing the significant pipeline of renewable
energy projects, the opportunity set for the Company remains
attractive. TRIG's diversified approach to investing in the energy
transition, across geographies, technologies and revenue types,
ensures it remains well placed to continue in its purpose of
providing sustainable returns to shareholders whilst contributing
to a net-zero carbon future for Europe.
2.4 Sustainability
TRIG's purpose is to generate sustainable returns from a
diversified portfolio of renewables infrastructure that contribute
towards a net zero carbon future.
Our investments, many of which have asset lives of 30 years or
more, require a long-term view to be taken and sustainable business
practices applied, both in the initial investment decisions and the
subsequent asset management.
TRIG's core business of generating renewable electricity is
central to a positive sustainability contribution. The TRIG Board
and its Managers recognise that TRIG's responsibility goes beyond
climate-related environmental considerations alone and seek to
incorporate sustainability throughout the Company's activities.
TRIG's actions are aligned with our sustainability goals.
Contributions towards the United Nations Sustainable Development
Goals (SDGs) are made through our investments and our impact on the
local communities around our assets. Primarily, the Company's
portfolio contributes towards SDG 7 Affordable and clean energy,
and SDG 13 Climate action. Our ESG commitments have a broader
reach, and overall TRIG actively contributes to 11 out of the 17
SDGs.
TRIG's Core Sustainable Development Goals Contributions[18]
Affordable and Clean Energy
Our business is focused on owning and operating renewable energy
assets. By investing in renewables, TRIG is helping to provide
clean energy across the UK and Europe, through construction funding
of new greenfield infrastructure and the acquisition of operational
assets from developers that then recycle capital into the build-out
of more renewables assets.
The recycling of capital enabled by asset owners such as TRIG
has contributed significantly to the reduction in cost of deploying
renewables. TRIG's current operational portfolio is capable of
powering the equivalent of 1.3 million homes with clean
energy[19].
Climate Action
TRIG's portfolio contributes towards a zero carbon future and is
currently capable of offsetting more than 1.6 million tonnes of
CO(2) emissions annually, generating 4,125GWh of renewable
electricity during 2021[20].
Climate change measures are integrated into TRIG's policies and
planning as the Company seeks to raise awareness of how to mitigate
climate change. We assess and report the climate-related risks and
opportunities associated with our portfolio, as well as taking
steps to reduce our carbon footprint.
Sustainability regulation
The Sustainable Finance Disclosure Regulation (SFDR)
The SFDR is an EU regulation that classifies funds by the extent
to which sustainability is integrated into its objectives and
investment decision making. TRIG is in the process of considering
its classification under SFDR. Currently the fund adheres to the
level 1 requirements of Article 8. The Board and TRIG's Managers
are considering whether Article 9 classification would be
appropriate for TRIG. Full disclosure is provided in the Company's
Article 23 Disclosure on the website.
EU Taxonomy
TRIG is eligible to be within the EU Taxonomy regulation. The
Company's investments seek to contribute substantially to the
environmental objectives relating to climate change mitigation and
climate change adaptation. In partnership with an external
consultant, the Managers are undertaking a detailed assessment of
TRIG's portfolio[21], against the technical screening criteria laid
out. Pilot projects have been used to represent the sustainability
contribution and risks of the wider portfolio. Full disclosure is
provided in the Company's Article 23 Disclosure on the website and
further progress will be reported in the 2022 Sustainability
Report.
Environmental
Mitigate climate change
Our business is focussed on owning and operating renewable
energy assets. TRIG's primary sustainability goal is to mitigate
climate change, and all investments in the portfolio contribute
towards this.
TRIG is a signatory to the Science Based Targets Initiative
(SBTi), a standard for corporate emissions reduction targets, which
certifies commitment and progress through third party validation.
To develop a robust understanding of the Company's carbon
footprint, current emissions and appropriate mitigation pathways,
the Company has engaged a recognised technical adviser.
TRIG's application of SBTi will result in the establishment of
appropriate data collection processes and emissions reduction
pathways, through close collaboration with the Company's value
chain and key stakeholders. This SBTi net-zero strategy aligns with
the vision of both Managers', InfraRed and RES being signatories of
the Net Zero Asset Manager initiative and SBTi respectively, and
TRIG's purpose.
InfraRed and RES are both carbon neutral companies and offset
their business's carbon emissions, including those associated with
electricity usage and business travel. In addition, emissions are
offset for the TRIG Board for business travel. Details on TRIG's
greenhouse gas emissions are included in the TCFD disclosures at
the end of this section.
Case study: Reducing concrete usage in Swedish construction
The Ranasjö, Salsjö and Grönhult projects, in construction in
Sweden, are undertaking several environmental initiatives that
complement the site specific conditions of the projects.
Given the geology of the sites, the turbines use rock anchored
foundations in most locations. Compared to normal gravity
foundations this will significantly reduce the carbon footprint of
each foundation by around 50%, through reducing the volume of
concrete needed. Out of the 51 turbine foundations across the
projects, 38 will be rock anchored.
The Grönhult project will also reuse bedrock present in the area
for the construction of roads and hardstands, reducing the need to
bring in additional material from outside the project area.
Technical requirements have been included within contract
tenders, including considerate use of rocks and road culverts.
These will be carried out in conjunction with use of a special
environmental permit for a local quarry in Salsjö, where the site
will source base and sub base materials (reducing impact from
transport of materials). The construction manager will also be
measuring waste during construction as part of a data-focused
approach to provide greater attention to minimising waste on
site.
Case study: Enhanced integration of ESG in financial
arrangements
Building on TRIG's sector-first ESG-linked revolving credit
facility, introduced during Q4 2020, InfraRed has worked to link
TRIG's performance against its key sustainability measures such as
the Company's FX and inflation hedging costs. The ESG key
performance indicators (KPIs) that TRIG's performance will be
judged on annually are consistent across TRIG's revolving credit
facility, FX hedges and inflation swaps:
Environmental: increase in the number of homes powered by clean
energy from TRIG's portfolio
Social: increase in the number of community funds supported by
TRIG
Governance: maintaining a low Lost Time Accident Frequency Rate
(LTAFR)[22]
These agreements, and the further integration of ESG into the
Company's processes, underlines TRIG's commitment in contributing
to SDG 13 Climate Action and directly links TRIG's ESG performance
to its financial performance for shareholders.
Preserving our natural environment
RES, as Operations Manager, works with individual project asset
managers to preserve the natural environment by executing
environmental management plans agreed with the authorities during
the project consenting process, undertaking vegetation surveys,
preventing biodiversity loss, recycling where possible and careful
usage of materials.
Further opportunities for habitat improvement are being explored
by asset managers to investigate and implement changes in
accordance with site specific construction method statements,
habitat management plans and environmental consultants where
appropriate.
The offshore projects in the portfolio are subject to extensive
ornithological, marine and other environmental surveys
pre-construction and throughout operations. These surveys help to
contribute to industry understanding of any potential impacts on
species. There are high levels of biodiversity around offshore
turbines with studies(23) showing that the infrastructure provides
fish with both shelter, and food from the organisms that grow on
the turbines.
Case study: Environmental management in construction
Initiatives to reduce the impact of the construction of Blary
Hill onshore wind farm in Scotland, which was completed in early
2022, have included:
The use of on-site borrow pits and an on-site concrete batching
plant, both of which reduce the need, and subsequent environmental
impact of, importing stone and concrete onto the site.
A tailored surface water quality monitoring plan has also been
created to manage the quality of watercourses draining the wind
farm in line with best practice site management, which minimises
the potential pollution during the construction phase.
A bespoke habitat management plan is now being implemented
across 53 hectares together with compensatory planting on 237
hectares (both on-site and off-site).
The habitat management plan will:
Improve the condition of the existing habitat, including
heather.
Enhance moorland bird habitats and provide a preferred nesting
habitat.
Improve the overall quality of the blanket bog habitat.
Increase the small mammal population within the area which will
increase hen harrier and short -- eared owl prey availability and
provide a suitable breeding habitat.
Increase the suitability for breeding curlew, providing an
enhanced breeding habitat over 500m from the wind
farm.
Increase the food source for black grouse.
23 Oceanography, Vol.33, No.4
24 Number of operational TRIG sites engaged in pro-active
habitat management plans that exceed standard environmental
maintenance. This number increases when new pro-active measures are
put in place, and when habitat management plans commence on
completion of the construction stage.
25 https://www.un.org/sustainabledevelopment
Social
Positively impact the communities in which TRIG works
We are sensitive to the impact that a renewable energy
generating facility can have on its local community. TRIG's assets
are often in rural areas where communities may experience limited
employment options or unemployment and limited social and health
facilities.
Tangible local benefits can be generated through initiatives
such as:
Using local employment and materials where possible.
The Local Electricity Discount Scheme (LEDS), whereby properties
closest to certain wind farms in the UK are eligible for a discount
on their electricity bills.
Educating the next generation about sustainability and renewable
energy through school education days on TRIG sites, when possible
and in line with Covid-related government guidelines.
Supporting local good causes, often via community funds, such as
donating to help fund social hubs, local healthcare, schools and
entertainment.
Asset managers across TRIG's portfolio proactively engage with
their local communities, meeting with the public on a regular basis
and have protocols in place to govern community benefit
arrangements, which are typically administered by local
organisations who are best placed to understand local
priorities.
TRIG has no direct employees, but actively engages with its
Managers in respect of their employee engagement programmes.
Alongside this, both InfraRed and RES look to give back to wider
society through various social initiatives.
Case study: Grants for solar and electric charging points
At the Four Burrows solar farm community fund over GBP24k was
awarded in grants to local organisations. Successful applicants
included Kenwyn Parish Council who were awarded GBP10.6k for the
installation of solar panels and an electric car charging point at
Shortlanesend Village Hall. This not only benefits local residents,
but also helps further the environmental ambitions for the wider
community, which directly links to the target of SDG 11 Sustainable
Cities and Communities. It's also key to reaching SDG7 of reliable
and sustainable energy for all.
TRIG's Managers' initiatives
Social initiatives at InfraRed are overseen and managed by the
company with support from initiative owners across the
business:
InfraRed GBP1m Charitable Foundation issued its first grants,
focused on improving employment opportunities for ex-offenders and
reducing
re-offending rates:
Switchback: enables young men to find a way out of the justice
system and build a stable, rewarding life they can be proud of
Working chance: helps women with convictions to develop the
confidence, skills and self-belief they need to overcome barriers
to employment
Lifecycle project: Since the start of the project, over 250
bikes have been donated to NHS staff at six hospitals within
InfraRed's portfolio
Creating better futures program: InfraRed collected, repurposed
and donated 69 laptops/tablets to three schools during the first
half of 2021
Community Fridge: an initiative at Failsworth School, supported
by Oldham Schools, in which food supplies are provided using a
'community fridge' to parents of the school and members of the
community most in need, with the intention of providing support
whilst helping break down the stigma of food banks. Launched nearly
a year ago, the project received a Community Award in 2021
RES has put sustainability at the heart of its activities since
commencing operations in 1981, engaging with local communities
throughout the wind and solar farm development process, supported
by a full-time community engagement team.
Diversity and Inclusion strategy: RES' five Affinity Networks
were launched in 2021, as an evolution of RES' D&I strategy. An
Affinity Network is a group formed around a shared experience or
concern for a given issue - RES' five groups are: race, gender,
LGBTQ+, age and disability. The purpose of each group is to provide
a platform across the company to raise awareness and support
positive change in areas such as culture, policies and unconscious
bias, to enable all employees to achieve their full potential.
Affinity Networks each have their own distinct committee and
executive sponsor
Supporting charities: RES supports charities through a range of
initiatives, including matching donations of up to GBP500 a year
per person for staff fundraising events and personal donations.
Staff are also offered up to 4 days of paid leave a year for
voluntary work, to participate in charity work and non-profit
initiatives
Renewable World: RES has been a long-time supporter of Renewable
World, a charity that aims to tackle poverty through the
installation of renewable energy projects. In 2021, the charity
expanded energy access for two communities in the Lake Victoria
region of Kenya. For more information about their work see
www.renewable-world.org
Mentoring: RES operates a global mentoring programme and
supports virtual learning and -development
Sir Robert McAlpine Foundation: The owners of RES have operated
a Foundation for over 50 years which gives grants to support small
charities situated throughout the UK that fall within specific
categories - namely children, youth, the elderly, social and
medical research
Governance
Maintain ethics and integrity in governance
Responsible investment practices and strong ethics and integrity
in governance are key to long-term success, including health &
safety, managing conflicts of interest, and maintaining
policies.
The Board has overall responsibility for TRIG's Sustainability
Policy(28) and its application, whilst the day-to-day management of
the portfolio is delegated to both Managers.
Sustainability is integrated into each stage of InfraRed's
investment process; from negative screening against firm and fund
exclusion lists to deal screening, due diligence and investment
approval. InfraRed publishes its own sustainability report and
sustainability policy, including its approach to the integration of
sustainability considerations into the investment cycle, on its
website.(29)
The Operations Manager leads management of project level ESG
policies and activities, whilst keeping active sight of TRIG's ESG
KPIs, community outreach activities, and health and safety
standards. RES works together with InfraRed to ensure that
sustainability considerations are also prioritised in the ongoing
management and reporting of the assets throughout the ownership
period. The Project Company Boards maintain a responsibility to
review and update SPV policies on an annual basis. This includes
HSQE, tax, ESG, and cybersecurity.
Both Managers stress ethics and integrity in their own
governance and believe it is vital to consider the needs of all
stakeholders. They maintain policies on Sustainability, Modern
Slavery, Diversity & Inclusion, Procurement, and Whistleblowing
and publish their own Sustainability Reports available on both
their respective websites. Please refer to page 44 of TRIG's 2021
Sustainability Report for more information on the policies held by
TRIG and its Managers.
A core component of good governance is promoting thought
leadership and best practice in the wider industry. InfraRed and
RES are actively engaged in public policy debates, engaging
directly with policy makers and through trade bodies such as the
Global Infrastructure Investor Association (GIIA), The
Infrastructure Forum and the Association of Investment Companies.
During the year:
The Managers made submissions to the UK government in relation
to their Enabling a High Renewable, Net Zero Electricity System:
Call for Evidence.
InfraRed attended the Global Investment Summit.
RES hosted the Energy Transition Hub during COP26 in conjunction
with industry bodies EnergyUK and RenewableUK. The Hub staged a
large number of sessions tackling the issues associated with the
scale of the energy transition.
InfraRed and RES continue to meet with stakeholders including
the Department for Business, Energy and Industry Strategy (BEIS)
and the Department for International Trade, and provides responses
to the varying planning and policy consultations in the regions
where TRIG is active.
InfraRed, hosted by the GIIA, engaged with the Scottish devolved
government on private capital investment in infrastructure.
InfraRed engaged with the UK government and Solar Energy UK in
relation to sustainability considerations in the solar industry
supply chain.
The Managers engaged with the French government in respect of
retrospective cuts to certain historical solar feed-in-tariffs.
InfraRed input to the AIC's response to the FCA consultation on
board diversity.
TRIG has published its full ESG disclosures with the Association
of Investment Companies (AIC). These can be found under the
Company's page on the AIC website.
Case study: Emergency evacuation drills
TRIG seeks to ensure Emergency Response Plans (ERPs) are in
place at all sites to ensure teams can respond effectively to
health & safety incidents and other emergencies that might
occur. They are tested and evaluated proactively.
At Egmere, a TRIG solar site in the England, these plans were
tested through an unannounced emergency exercise in collaboration
with St. John's Ambulance. The operations & maintenance and
asset management teams were tested with the simulation of an
accident to a lone worker, putting the ERP into practice.
A similar scenario was tested at Altahullion, a TRIG wind farm
in Northern Ireland, where a technician arriving in a turbine
nacelle discovered an unconscious "casualty" (a dummy) with a
simulated leg injury. The casualty was extracted from the hub and
evacuated down the outside of the tower. The casualty went into a
simulated cardiac arrest upon reaching the ground where the ground
crew took over applying the site's defibrillator and resuscitation
techniques until simulated medical assistance arrived.
Both tests were completed successfully and were useful in
identifying further practical actions to take to ensure safety of
personnel on site, including the development of training plans and
IT systems to encourage an efficient and rapid response.
Case study: Contractor management
Safety of the work environment, supported by robust processes,
is paramount. On commencement of construction projects, contractor
engagement days are typically held to share knowledge on best
practice and communicate the safety standards expected on TRIG
sites.
Across the portfolio, staff working on projects are encouraged
and empowered to 'stop the job' and report whenever something is
considered unsafe rather than putting themselves or others at risk.
During a lifting operation at one of the offshore sites the
activity was stopped due to the bag swaying uncontrollably even
though the conditions were within the safe lifting limits.
Where contractors are found to breach protocol and put health
& safety at risk, prompt action is taken, which may include
contractor termination. During the year, it was discovered that two
unrelated teams were operating on a turbine at the same time. This
was in contravention of the permit to work that was in place and
the second team should not have commenced their works. The team
working higher in the turbine should not have done so due to the
risk of falling objects that could harm the team working at the
base of the turbine. The operatives involved were immediately stood
down and later removed from the site.
TRIG's disclosure in relation to all eleven recommendations of
the TCFD is set out below:
Strategy
-----------------------------------------------------------------------------------------------
Recommendation Disclosure
------------------------------- --------------------------------------------------------------
1 Describe the Board's As previously reported, the Board has overall responsibility
oversight of climate for the oversight of TRIG's sustainability risks
related risks and opportunities, of which climate change is an
and opportunities important subset. Its approach is set out in TRIG's
Sustainability Policy, which is available on TRIG's
website.
The Board and Managers meet on a quarterly basis,
during which they review the risks facing the Company,
including risks related to climate change. TRIG's
investment strategy is intertwined with progress
towards a net zero carbon future. As such, consideration
of the transition and physical consequences of climate
change features in the discussions. The Board considers
climate-related events through its discussions with
the Managers, notably in respect of opportunities
through the Company's annual strategy reviews and
risks through the Company's risk management framework.
The Board's Management Engagement Committee reviews
the Managers' performance annually, including their
adherence to the Company's Sustainability Policy.
The Board's Audit Committee considers the Company's
climate-related disclosures.
---------------------------- --------------------------------------------------------------
2 Describe management's TRIG's Sustainability Policy, including climate
role in assessing change considerations, applies to both making new
and managing climate investments (throughout the deal screening and due
related risks diligence processes) and running of the current
and opportunities portfolio (asset management activities, monitoring
and reporting). Day-to-day management of TRIG's
portfolio is delegated to its Investment Manager,
InfraRed, and its Operations Manager, RES.
The Managers monitor climate-related government
policy, engaging with policy makers where appropriate,
and physical changes in the climate, to inform the
application of TRIG's strategy and the Managers'
assessment of the risks faced by the Company. Quarterly,
TRIG's Advisory Committee, comprised of representatives
from both Managers, considers TRIG's strategy and
risks, the output of which is reported to and discussed
with the Board.
InfraRed and RES each report on their sustainability
related activities, including relating to climate
change. Their reporting is available on their respective
websites.
RES and/or InfraRed are represented on the board
of each project company. Through
this role, they ensure that climate change related
risks are considered by project company
management teams and reflected in project company
risk registers.
---------------------------- --------------------------------------------------------------
3 Describe the climate-related TRIG's business model is specifically designed to
risks and opportunities take advantage of the investment opportunities arising
the organisation from the decarbonisation of energy usage - over
has identified the short, medium, and long term. The pace of the
over the short, transition to a net zero carbon future will dictate
medium and long the size of the investment opportunity for TRIG.
term Under current plans for renewables deployment spread
over the range of European countries in which TRIG
invests, coupled with the expected need for the
replacement of existing installations in due course,
the Managers expect there to be significant investment
opportunities for the Company over the long term.
This is further expanded upon in response to recommendation
four. Notwithstanding this, TRIG recognises that
risks relating to climate change could have an impact
on the Company. These risks are explored later in
the scenario analysis relating to recommendation
five.
---------------------------- --------------------------------------------------------------
4 Describe the impact The table below sets out a selection of key climate-related
of climate-related opportunities and risks as they apply to TRIG. Risks
risks and opportunities arising from climate change overlap with the Company's
on the organisation's principal risks: energy yield, energy pricing and
businesses, strategy government / regulations. The table includes a qualitative
and financial assessment of the impact of climate-related opportunities
planning and risks on:
TRIG's investments, strategy and financial planning;
Incorporating the expected timeframes.
Climate related opportunities and risks for TRIG
Impact Opportunities Risks
------------- ------------------------------------- --------------------------------------------
Portfolio In the short and medium term, In the near and medium term, transition
investments government policy aimed at risks to portfolio investments
the transition to a net-zero arise from unexpected changes to
carbon economy may present government policies. An increase
opportunities for follow-on in renewables build-out ambition
investments in the existing without sufficient demand-side
portfolio such as: action can reduce power price forecasts.
The co-location of storage, In the medium and longer term there
which may enhance the asset is a risk that developments in
and provide access to new renewables and other clean generation
revenue streams; technologies results in unforeseen
Repowering existing sites changes in wholesale power prices,
to extend asset life and due to either changes in the marginal
enhance investment performance. cost of generation which sets prices
In France, for example, repowered or policy changes to the system
sites are able to bid for for setting prices. This is reflected
new subsidies; in the Company's principal risk
Expanding sites to efficiently reporting in Section 2.10 - Risks
increase investment scale and Risk Management.
whilst utilising existing Climate change means that portfolio
site knowledge and, potentially, investments will likely be exposed
grid infrastructure. to more frequent extreme weather
events over time, increasing the
risk of physical damage to on-site
infrastructure and off-site transmission
and distribution systems, alongside
additional safety risks and operational
considerations. Such events may
be acute, including:
Forest, grassland or peat fires;
Flooding; or
Storms and high-speed wind gusts.
Or chronic, including:
Increased temperatures such that
the thermal capacity of equipment
could be exceeded;
Changes to ground conditions from
increased rain; or
Changes to cloud cover impacting
ground-level solar irradiation.
Risks also include potential long-term
changes to weather patterns causing
a material increase or decrease
in an asset's energy yield from
that expected at the time of investment.
Mitigation comes from portfolio
diversification across geographies
and technologies. This reduces
the overall impact of action taken
by an individual government, of
any local extreme weather event
or of any single asset failure.
Impact Opportunities Risks
---------- ------------------------------------ -------------------------------------------
Strategy Government policies across Economics are pushing projects
Europe have shown renewable to greater scale, which may result
energy has a central role in fewer opportunities by number.
to play in decarbonising This coupled with an increasing
our energy usage. This has volume of capital looking to deploy
resulted in significant growth into sustainable investment themes,
in markets where TRIG has means that renewable energy projects
an investment focus. In the can be highly sought after, and
near term, the greatest investment investment discipline is key. "Off-market"
activity in TRIG's key markets transactions sourced by the Investment
is expected to be from subsidised Manager, InfraRed, remain an important
offshore wind in the North route to attractive opportunities.
Sea and onshore wind in France, In the long term, as portfolios
and unsubsidised onshore mature and subsidy periods come
wind in the UK and Nordics to an end, the power price exposure
and solar in Iberia. of renewable investment portfolios
The geographies and technologies will naturally increase. The risks
within the portfolio are associated with power price exposure
likely to increase as the of projects exposed to merchant
Investment Manager, InfraRed, power price may be mitigated in
also considers a broader part through offtake agreements
range of investment opportunities or hedging instruments. Further
within the Company's investment analysis of the potential transitional
remit. impact of climate change on power
The development of renewables prices is presented in the scenario
frameworks across Europe analysis relating to recommendation
(if they are considered to five.
be credible, stable and robust)
could result in broadening
TRIG's diversification to
further geographies.
As newer storage technologies
mature, investment opportunities
may arise in such projects.
This may include the production
and storage of 'green' hydrogen
and its subsequent use to
generate electricity.
---------- ------------------------------------ -------------------------------------------
Financial The strength of the renewables Increasing penetration of intermittent
planning investment theme is underpinned renewable electricity generators
by both its strong ESG credentials, in the energy system risks increasing
including the positive impact the volatility in the prevailing
on climate change, and investors' and forecast power price.
desire for long-term sustainable In the near term, exposure is reduced
income. This provides the through managing the proportion
opportunity for TRIG to continue of revenues with fixed power prices,
to grow. For existing shareholders, achieved through the acquisition
this means greater diversification of investments with subsidised
through further acquisitions, revenues, fixing under offtake
increased economies of scale, agreements and the use of hedging
and accretion through raising instruments.
capital at a share price Forecasted revenues are budgeted
in excess of the Company's based on estimates of energy yield
net asset value per share. from individual projects. The accuracy
In 2020, TRIG entered into of these budgets are subject to
a new ESG-linked revolving risks relating to generation including
credit facility. This provides equipment downtime and low weather
the opportunity to reduce resource.
the margin and commitment In the medium term, the build-out
fees under the facility should of long-term storage infrastructure,
TRIG meet certain targets, charging infrastructure for electric
including increasing the vehicles and grid upgrades will
number of homes powered by help provide flexibility to the
clean energy from TRIG's energy system. This will support
portfolio. the power price at times when renewables
generation may exceed electricity
demand, thereby reducing periods
of low or negative pricing.
Strategy
-------------------------- --------------------------------------------------------------
Recommendation Disclosure
-------------------------- --------------------------------------------------------------
5 Describe the resilience TRIG's portfolio returns and potential to grow the
of the organisation's portfolio are subject to both transition risks and
strategy, taking physical risks.
into consideration Transition risks: Risks related to the transition
different future to a lower-carbon economy. The risks can be grouped
climate scenarios, into four categories: policy and legal risk; technological
including a 2degC risk; market risk; and reputational risk.
or lower scenario Physical risks: Risks associated with physical impacts
from climate change that could affect energy assets
and operating companies. These impacts may include
"acute" physical damage from variations in weather
patterns (such as severe storms, floods, and drought)
and "chronic" impacts (such as sea level rise, and
desertification).
The Board and the Managers have identified three
key factors that will be impacted by the transition
and physical risks of climate change:
Power price forecasts, which are impacted by renewables
build-out assumptions and the extent to which renewable
electricity can be utilised when it is generated.
This risk is most likely to manifest in a 2 degrees
Celsius or lower scenario, where transition risks
are greatest. The Investment Manager's analysis,
having taken input from a leading third-party power
forecaster, is set out below.
Energy yield, which could be impacted by changes
to weather patterns. Weather models are not able
to forecast the impact of climate change scenarios
on site-by-site weather patterns.
Asset availability, maintenance costs and replacement
costs will be impacted by changes in weather patterns
that result in more severe events such as lightning
strikes, hail and windstorms, floods and wildfires.
This risk is most likely to manifest in a higher
temperature scenario, where physical risks are greatest.
Impact of different climate related scenarios
The Managers have now completed an assessment of the potential
impact of a high transition risk scenario and a high physical risk
scenario. This assessment covers the whole of TRIG's portfolio.
Current long-term power price forecasts do not assume that
climate change is limited to 1.5-2 degrees and also do not
correspond with a 4-degree temperature change scenario (as
referenced in the next TCFD consideration, the high physical risk
scenario).
Therefore, to assess the potential impact from climate change on
power prices, net zero versions of power price forecasters were
used across TRIG's portfolio to estimate the impact of a high
transition risk scenario on TRIG's portfolio. Similarly for the
higher physical risk scenario, the current energy mix is assumed to
stay static as this is estimated to equate to a 4-degree
temperature change - all else being equal.
It is important to note that these forecasts are incredibly
complex, with a very large number of inputs that could be adjusted
differently to arrive at either a high transition risk scenario or
a high physical risk scenario. These scenarios could be arrived at
through a number of different paths. It is not necessary, for
instance, that in a high transition risk scenario that forecast
power prices may be lower; greater than expected demand, public
policy or a market "premium" on renewable electricity could result
in power prices at a higher level than those we assume in the high
transition risk scenario.
Equally, it is not necessary that in the high physical risk
scenario that power prices would increase relative to a high
transition risk scenario; for instance, electricity demand and
commodity prices may be lower than forecast.
High transition risk scenario (typically associated with a 1.5-2
degrees Celsius temperature change)
Under this scenario, we assume that policy measures are put in
place that accelerate the decarbonisation of energy production,
including higher than expected levels of renewables deployment, and
each country where TRIG invests achieving net zero carbon by
2050.
Physical risks from extreme weather events are less frequent and
effective annual insurance coverage remains currently generally
available.
In a high transition risk scenario:
There is downward pressure on forecast power prices for
renewables generators due to greater decarbonisation of the energy
mix from that assumed in the independent power price forecasts used
in the Company's valuation.
This is, in part, offset by an increase in electricity demand as
transport, industry and heating as these sectors move away from
fossil fuels.
An increase in carbon prices is expected; however, this is
likely to be offset by lower gas prices and greater periods of time
when non-emitting generation is setting the prevailing power
price.
Although these scenarios are very difficult to quantify,
modelling undertaken suggests a possible impact of this scenario
being an approximate 5% reduction in the Portfolio Value on a
committed basis, or approximately 7p per share. This impact could
be reduced as a result of industry efficiencies, such as lower
operating costs arising from greater competition between
sub-contractors as the sector continues to scale up, or increased
generation efficiencies and performance.
One of the challenges to achieving more renewables build-out
than assumed in current power price forecasts, and therefore
decarbonisation, is that as long-term power price falls, a feedback
loop of making fewer new projects financially viable is created,
which in turn reduces the rollout rate and therefore reduces the
downward pressure on forecast power prices.
Governments across TRIG's target markets are beginning to set
out detailed policies in relation to both supply and demand for
renewable electricity, which may address this feedback loop,
provide support to the power price and achieve the levels of
renewables rollout required for net zero carbon by 2050.
High physical risk scenario (typically associated with a 3-4
degrees Celsius temperature change)
This is a climate change scenario that results in a temperature
change of greater than 3 degrees Celsius, resulting in extreme
weather events that could threaten the successful operation of
assets within the portfolio.
We assume that under this scenario, renewables build-out lags
expectations, the energy system is not decarbonised to an extent
consistent with a lower impact from climate change and that
insurance for damages may become unavailable or very expensive.
Whilst current power price forecasts are not prepared on the
basis of an overall temperature change, the underlying assumptions,
particularly relating to renewables build-out, are consistent with
a 3 degrees Celsius scenario.
The Managers have undertaken analysis to consider the potential
physical impact of climate change on TRIG's portfolio in a
high-temperature change scenario. The IPCC's 6th Assessment Report
(issued on 11 August 2021) has helped guide the assessment of the
physical changes that may be seen in a high-temperature change
scenario.
To assess the potential physical impact the portfolio has been
segmented by region and technology, and reviewed for the risk of
both chronic and acute physical changes over the expected life of
each asset. Chronic changes refer to long-term and structural
physical risks. Acute changes refer to the increased risk of
specific, extreme short-term events. How events are categorised
under these two headings is set out in the subsequent table.
The review suggests a possible adverse impact of physical risks
in a high temperature change scenario of c. 1p to 3p per share. The
estimated financial impact does not consider the offsetting impact
of any insurance claims that may be possible.
In such a scenario, it is likely that the renewables rollout
assumptions incorporated in current power price forecasts are
unlikely to be met. Therefore, the Investment Manager considers
that the medium to longer-term reductions seen in the power price
forecasts in recent reporting periods may reverse and that there
may be limited overall net impact on NAV. The estimated financial
impacts are based on current views, which are likely to evolve as
industry methods mature.
A key mitigant to the portfolio as a whole suffering from a
material event at any one asset is the portfolio's asset
diversification including the geographic spread across six European
countries, which helps to reduce the impact of localised weather
events.
Sustainability considerations, including those relating to
climate change, are integrated throughout InfraRed's investment
process. Scenario and sensitivity analysis is also undertaken as
part of due diligence and examined by the Investment Committee when
considering investment approval.
The Managers have also undertaken analysis to consider the
impact on long-term power price forecasts of a 4 degree temperature
change scenario. In such a scenario, it is likely that the
renewables rollout assumptions incorporated in current power price
forecasts are unlikely to be met. The current energy mix across
Europe broadly equates to a 4 degree temperature change and
therefore the current power price assumptions from 2024 (upon
normalisation of forecast power prices from current elevated
levels) is applied across the forecast period as an
approximation.
This, net of the impact of the physical risk assessment, results
in an increase in Portfolio Value on a committed basis by
approximately 4% or approximately 6p per share. The estimated
financial impacts are based on current views, which are likely to
evolve as industry methods mature.
Physical risk assessment findings
The table below presents an update on the screening of TRIG's
portfolio for the risk of physical damage due to climate change on
a site-by-site basis, corresponding to a high physical risk
scenario under the Task Force on Climate-Related Financial
Disclosures (TCFD) guidance.
In addition to the mitigations set out, commercial protections
are also used to mitigate such risks, such as insurance, supplier
warranties or operation contractual scopes of work.
The review below suggests a possible adverse impact of physical
risks in a high temperature change scenario of c. 1p to 3p per
share.
Potential Potential impact of physical Mitigation measures in
physical risk risk place
Wind and tropical Increased incidence or Solar acquisition due
storms intensity of wind and diligence of wind loading
tropical storms may exceed assessments and embedded
the design wind-loading design principles, with
for solar sites with potential framework or foundation
to uproot foundations, reinforcements performed
damage frameworks and where material risks identified.
panels or be accompanied Wind turbines' built-in
by large hailstorms that high wind speed protection
damage panels. Windspeeds systems protect the turbines
above the design parameters from damage, supported
of the wind turbines and by realtime remote monitoring
their cut-out generating and software updates.
wind speeds could cause
internal mechanical damage
or external structural
damage to the wind turbine
blades.
------------------------------------ ----------------------------------
Fire Wildfires can result in Some habitat management
fire damage to the renewable plans include maintained
asset or the associated firebreaks in accordance
substation and any overhead with site risk assessments.
export cable. Any woodland Monoculture forestry
in the vicinity of wind is removed from the immediate
farms tends to be commercial vicinity of each wind
forestry, which when dry turbine to provide sufficient
can burn particularly space during turbine erection
fast and easily. Dry peat which provides a degree
can also have a higher of protection from fire.
exposure risk to fire. Some sites have wider
forestry removal to improve
energy yield performance
which can be coupled with
broadleaf compensatory
planting elsewhere.
------------------------------------ ----------------------------------
Icing Exposure to icing changes Climatic conditions are
as humidity levels increase considered during the
in those areas previously design phase to determine
less affected by icing. the extent of any icing
Wind turbine blades can impacts on yield as well
be prone to ice build-up, as the ice-throw risk
impacting aerodynamic (and potential throw distance).
performance or causing Turbines are set back
turbines to pause due from dwellings and roads
to rotor imbalances, thereby minimising risk to people
increasing downtime. Ice from ice throw.
throw from blades can Turbines are available
also pose a safety risk, with anti-icing or de-icing
or cause damage to infrastructure. systems. The reliability
and effectiveness of such
systems is however not
well established at this
stage.
------------------------------------ ----------------------------------
Flooding Flash flooding due to Solar acquisition due
increased intensity of diligence of exposure
rainfall caused by higher to flooding and installed
temperatures. Solar sites mitigations including
are generally considered drainage systems.
to be more exposed to
flooding due to their
larger footprint, high
volume of equipment mounted
close or below ground
level, with local topography
and geology also a consideration.
------------------------------------ ----------------------------------
Lightning Wind turbine blades can Wind turbine exposure
be susceptible to lightning to lightning is well understood
damage through to severe with extensive industry
structural damage or destruction experience of lightning
of a blade. Offshore turbines protection systems.
may be more susceptible Offshore turbines benefit
to damage due to salt from the knowledge gained
buildup reducing the efficiency onshore, with increasingly
of lightning protection sophisticated protection
systems. systems installed.
------------------------------------ ----------------------------------
Risk
----------------------------------------------------------------------------------------------------------------------
Recommendation Disclosure
------------------------------------------------------------ --------------------------------------------------------
6 Describe the organisation's processes for identifying and Overall, as previously noted, TRIG's business model is
assessing climate-related risk specifically designed to take advantage
of the investment opportunities arising from the
decarbonisation of energy usage. Nonetheless,
climate-related risks exist and are identified and
discussed through the Managers' wider risk
management processes. They are identified and assessed
by the Managers when making new investments
(throughout the deal screening and due diligence
processes) and in the running of the current
portfolio (asset management activities, monitoring and
reporting).
--------------------------------------------------------- --------------------------------------------------------
7 Describe the organisation's processes for managing Climate-related risks identified through the acquisition
climate-related risks process are managed through the acquisition
business plan and investment pricing. The
appropriateness of mitigating action is considered
by the Investment Committee as part of the investment
process. Representatives of RES and/or
InfraRed sit on the board of each project company.
Through this role, they ensure that climate
change related risks are considered by project company
management teams, reflected in project
company risk registers, and appropriate mitigation plans
are put in place. Those identified
in the running of the current portfolio are managed
through mitigating action, where possible.
Management activities are discussed by the Advisory
Committee through their quarterly review
of portfolio performance.
--------------------------------------------------------- --------------------------------------------------------
8 Describe how processes for identifying, assessing, and Climate-related risks are integrated into TRIG's risk
managing climate-related risks are management framework through the investment
integrated into the organisation's overall risk process and reported quarterly to the Board. The Board
management considers the completeness of the risks
recognised and the sufficiency of controls and
mitigation, identifying where it is felt further
action is required.
Metrics
----------------------------------------------------------------------------------------------------------------------
Recommendation Disclosure
------------------------------------------------------------ --------------------------------------------------------
9 Disclose the metrics used by the organisation to assess The Company utilises a range of metrics to monitor
climate-related risks and opportunities the contribution of the portfolio to mitigating
climate change, including the following:
Renewable energy generation
Tonnes of carbon emissions avoided
Homes powered by clean energy, which impacts the
margin and commitment fee paid under TRIG's
ESG-linked revolving credit facility
The proportion of portfolio sourcing electricity
under renewable energy tariffs
Number of Active Environmental Management projects
The Board and Managers consider several metrics that
relate to climate-related opportunities
and risks:
Renewables build-out assumptions in TRIG's investment
and target acquisition markets, which
impacts long-term power price forecast assumptions
Percentage of revenues with fixed power prices, which
impacts the extent to which fluctuations
in power price forecasts affects the portfolio
valuation and forecast cash flows
Energy yield, where deviations from expectations are
examined for climate-related risk factors,
including those arising from asset availability
-------------------------------------------------------- --------------------------------------------------------
10 Disclose Scope 1, Scope 2, and if appropriate, Scope 3 The Greenhouse Gas (GHG) Protocol categorises greenhouse
greenhouse gas emissions, and the related gas emissions into three groups,
risks or 'scopes': Scope 1 covers direct emissions from
owned/controlled sources; Scope 2 covers
indirect emissions from the generation of purchased
electricity, steam, heating and cooling
consumed by the company; and Scope 3 includes all other
indirect emissions that occur in the
Company's value chain.
TRIG's Scope 1 and Scope 2 greenhouse gas emissions are
disclosed below. TRIG has adopted
the operational control boundary approach for the
measurement of energy emissions for TRIG
projects, as the Directors believe this reflects the
level of emissions that can be actively
controlled and reduced. Moving forwards, to fully
represent TRIG's impact, we will capture
the greenhouse gas emissions from the entire portfolio
using the equity share approach, not
just the assets where TRIG has operational control.
TRIG will provide reporting on Scope 3 emissions within
its 2022 Sustainability Report. Data
gathering to support these estimates has commenced
considering key areas where emissions are
generated such as O&M and the elements of this that
contribute, for example those associated
with parts and spares and those associated with labour.
TRIG has engaged a third-party provider
to establish the company's baseline emissions and
progress will be reported in the 2022 sustainability
report.
Emissions have been calculated in accordance with the
GHG Protocol Corporate Accounting and
Reporting Standard. UK Government Conversion Factors
have been utilised for UK investments
and the latest EU RE-DISS values to calculate emissions
for non-UK investments.
Disclosure Year ended 31 December 2020 Year ended 31 December 2021
Scope 1 - direct emissions (tCO(2) e) 0 0
Scope 2 - indirect emissions, location based (tCO(2) e) 1,489 1,642
Total Scope 1 and 2 emissions (tCO(2) e) 1,489 1,642
Intensity ratio (tCO(2) e per MWh) 0.06% 0.08%
Scope 2 - indirect emissions, market based (tCO(2) e) 666 868
During 2022, the Managers are seeking to understand and quantify
the usage of other greenhouse gases, such as SF6, across the
portfolio, and will provide an update in due course.
11 Describe the targets used by the organisation to manage The Company's annual budgeting and semi-annual
climate-related risks and opportunities valuation process includes forecasts that may
and performance against targets be influenced by the transition and physical impacts
of climate change. These include expectations
in respect of variables, in particular:
Percentage of revenues with fixed power prices, which
impacts the extent to which fluctuations
in power price forecasts affects the portfolio
valuation and forecast cash flows
Energy yield, where deviations from expectations are
examined for climate-related risk factors,
including those arising from asset availability
Deviations of these variables from budgets and
changes to the variables in forecasts may serve
as leading indicators of changes to climate-related
opportunities, risks and performance.
As noted above, further scenario analysis is
underway, which may lead to further relevant
metrics and targets being identified.
TRIG is a signatory of SBTi - As part of this process
we will be setting Science Based Targets
by the end of 2023 for Scope 1, 2 and 3 emissions in
line with our SBTi commitment signed
during 2021.
Scope 1 and 2 emissions are currently reported (see
above). Establishing TRIG's Scope 3 emissions
involves significant data collection and engagement
with the Company's value chain. A third-party
expert has been engaged to support calculation of
baseline Scope 3 emissions.
We intend to report TRIG's Scope 3 emissions in the
Company's 2022 Sustainability Report,
which will be published in Q2,, where we will also
set out our approach to determine emissions
reductions objectives.
2.5 Portfolio
Portfolio diversification
The TRIG portfolio benefits from being diversified across
jurisdictions, power markets and generating technologies providing
multiple revenue sources, as well as a variety of geographic areas
with differing meteorological conditions affecting wind speeds and
solar irradiation, reducing year-on-year volatility.
Revenue profile
TRIG has the benefit of being diversified across several
separate power markets: Great Britain, the Single Electricity
Market (of The Republic of Ireland and Northern Ireland), France
and Germany (which sit within the main continental European power
market), Sweden (which sits in the Nordic electricity market) and
Spain (Iberian power market).
The TRIG portfolio has substantial near-term protection in cash
revenues from movements in wholesale power prices as the portfolio
receives a high proportion of its revenue from selling electricity
generated via Power Purchase Agreements ("PPAs") with fixed prices,
and from government subsidies such as Feed-in-Tariffs ("FiTs"),
Contract for Differences ("CfDs"), Renewable Obligation
Certificates ("ROCs") or from other hedges.
In the longer term, based on its current portfolio, TRIG is
expected to have greater exposure to future wholesale electricity
prices as subsidies and contracts with pre-determined pricing
run-off. As existing fixed-price contracts expire, the replacement
contracts may also have fixed-price elements, and any future
additions to the portfolio may have subsidies, decreasing the
merchant proportion shown below.
Acquisitions and outstanding commitments
In 2021, TRIG invested GBP479m in new projects. Investment
commitments entered into during the year are listed in the table
below:
Date Acquired Project Year Equity Net Revenue Type 35 Location
commissioned Share Capacity
(MW) 34
Contract for
January 2021 Beatrice offshore wind farm May 2019 17.5% 102.9 Difference UK 9%
February 2021 Grönhult onshore wind farm Expected Q4 100% 67 Wholesale Market UK 3%
2022
May 2021 Ranasjö Expected Q2 50% 78 Wholesale Market Sweden 4%
2024
Salsjö 43
Cadiz solar projects (Arenosas, Expected Q4
September 2021 Malabrigo, El Yarte and Guita) 2022 100% 234 Wholesale Market Spain 6%
34 This is TRIG's equity share of the nominal capacity of the windfarm.
35 The main revenue type during the subsidy period. Thereafter
all revenues are wholesale power market.
36 The segmentation above is on a fully committed basis and
includes assets under construction at the time the investment was
committed.
Current outstanding commitments
The Company has outstanding commitments of GBP231m relating to
the Swedish onshore wind farm construction projects (Ranasjö,
Salsjö and Grönhult), and the Cadiz solar projects (Arenosas,
Malabrigo, El Yarte and Guita), broken down in the table below, by
expected due date. The Company's acquisition facility was drawn
GBP73m as at 31 December 2021.
2022 2023 2024 Total
Outstanding Commitments (GBPm) 145 63 23 231
Projects in construction
By acquiring assets at an earlier stage in their development,
TRIG seeks to access improved returns and enhanced investment
opportunities. Importantly, TRIG has the benefit of its Managers'
expertise in the construction process: InfraRed as a greenfield
investor for the past 25 years and RES as a developer and/or
constructor of over 22GW of renewable assets globally.
Recently completed
Blary Hill, Scotland
Located on the Kintyre Peninsula in Scotland, Blary Hill is a
35MW onshore wind farm consisting of 14 Nordex 2.5MW turbines.
The project was completed early in 2022. Construction was
delivered by RES under an Engineering, Procurement and was used in
the construction of Solwaybank, TRIG's 30MW onshore wind farm also
located in Scotland.
Both the local community and the local environment have been
considered throughout the construction process.
Several local companies have been engaged for construction work,
with local employment centres being utilised for the recruitment of
labour operatives, and habitat management plans will be implemented
along with compensatory planting, to improve the condition of the
natural environment. Construction ("EPC") wrap, a management model
in which a principal contractor secures each of the supply
contracts and has contractual commitments to deliver the project on
time and on budget. This is the same management model that was used
in the construction of Solwaybank, TRIG's 30MW onshore wind farm
also located in Scotland.
Both the local community and the local environment have been
considered throughout the construction process. Several local
companies have been engaged for construction work, with local
employment centres being utilised for the recruitment of labour
operatives, and habitat management plans will be implemented along
with compensatory planting, to improve the condition of the natural
environment.
Under construction
Located in the Haute-Marne department in France, Vannier is a
43MW onshore wind farm consisting of 17 Envision E-131 2.5MW
turbines. Construction commenced in February 2020, with TRIG
acquiring Vannier in October 2020. Construction is being delivered
under an EPC wrap by an Envision-Velocita consortium, with RES
hired as Owner's Engineer to provide independent construction
monitoring.
Following permit issues at the site, construction was resumed in
September 2021, with takeover scheduled for August 2022.
Hardstandings for the turbines have recently been resurfaced,
pre-installation is complete for eight wind turbine generators and
nacelles, hubs and blades have begun to be delivered to the
site.
Grönhult, Sweden
Located in southwest Sweden, the 12 x Vestas V162 5.6MW (67.2MW)
project was acquired from Vattenfall in Jan 2021; construction
commenced in Q1 2021 and is scheduled for takeover in Dec 2022.
Vattenfall continue to manage the project under a multi contract
approach with RES hired as Owner's Engineer. Civil works are
progressing well with 6 of 12 foundations complete.
Ranasjö and Salsjö, Sweden
Located in Solleftea, Vasternorrland County, Central Sweden, the
two adjacent Ranasjo and Salsjo projects will consist of a total of
39 Siemens 6.2MW turbines (242 MW) with TRIG having 50% ownership
share alongside another InfraRed managed fund: European
Infrastructure Income Fund 4.
Construction commenced in September 2021 with initial forestry
and civils works underway. The project is being managed by the
developer Arise and is scheduled for take-over in February 2024.
RES has been hired as Owner's Engineer on both Swedish construction
projects providing additional oversight with respect to health and
safety, quality and progress of works, spend against budget,
compliance with consents and legislation and how activities are
performed on site.
Other pre-operational
Arenosas, Malabrigo, El Yarte and Guita, Spain
Located in the province of Cadiz, Spain, the projects have a
total capacity of 234MW. Construction on the projects began in
September 2021 and is being delivered by Statkraft under an EPC
wrap, with Statkraft also acting as Asset Manager. Ingenor have
been hired as Owner's Engineer to provide independent oversight
during construction. TRIG does not bear any construction risk for
the Cadiz solar projects, due to a right to put any of the four
projects back to Statkraft in the event that a project is not
successfully commissioned by its respective long stop date.
Of the four projects, Arenosas is the most advanced, having
finished site set-up and progressed well with civil and mechanical
works. Both El Yarte and Malabrigo are in the earlier stages of
similar works. La Guita has commenced construction following
acquirement of necessary permits. Across all projects,
consideration of the local community has been high, with events
held to invite local contractors to understand the opportunities
available.
Sustainability considerations during construction
Community Engagement
At Blary Hill, a virtual 'Meet the Buyer' event was held by RES,
in which local businesses discussed their skills and experience
that could be utilised in the construction of the wind farm.
Interest was overwhelming, with an additional event held the
following day to accommodate the interest received.
Concrete Usage
TRIG's Swedish construction projects, Ranasjo, Salsjo and
Gronhult, have been implementing environmental initiatives to
reduce the carbon footprint of their foundations. By using rock
anchored foundations and reusing bedrock local to the site, the
volume of concrete needed is reduced along with the need to bring
in additional materials.
Local Economy
TRIG's construction activities in the UK alone are estimated to
have provided c. 10m of local investment over the last 4 years.
Supply Chain
During TRIG's acquisition of four solar sites in Spain, the
Managers' assessment of the investment considered the challenges
associated with the supply chain of solar panel manufacturing.
On-site tracing of components and confirmation of the practical
application of codes of conduct is being undertaken during the
manufacture of the panels to be used.
Natural Habitat
Following construction at Solwaybank, compensatory planting has
meant that more than 90,000 trees of varying varieties have been
planted, including 14,000 native noncommercial broadleaf trees.
Ten Largest Investments
Set out below are the ten largest investments in the portfolio.
As at 31 December 2021, the largest investment (Beatrice) accounted
for approximately 10% of the portfolio by invested value. In total,
the 10 largest projects accounted for approximately 54% of the
project portfolio by value (2020: 55%).
Ten Largest Investments - Invested to date basis
Project Location Type % of portfolio by value at
31 December 2021 31 December 2020
Beatrice England Offshore Wind 10%
East Anglia 1 England Offshore Wind 9% 10%
Jädraås Sweden Onshore Wind 8% 9%
Merkur Germany Offshore Wind 6% 8%
Gode Wind 1 Germany Offshore Wind 5% 6%
Garreg Lwyd Wales Onshore Wind 5% 5%
Solwaybank Scotland Onshore Wind 3% 4%
Crystal Rig II Scotland Onshore Wind 3% 3%
Sheringham Shoal England Offshore Wind 3% 4%
Blary Hill Scotland Onshore Wind 2%
December 2021 largest ten investments 55% (38)
Pallas Ireland Onshore Wind 2% 3%
Mid Hill Scotland Onshore Wind 2% 2%
December 2020 largest ten investments 55%(38)
(38) This column does not cast due to rounding differences.
The table below sets out the top ten largest investments in the
portfolio, including investment commitments
Ten Largest Investments - Committed basis
Project Location Type % of portfolio by value at
31 December 2021
Beatrice England Offshore Wind 9%
East Anglia 1 England Offshore Wind 8%
Jädraås Sweden Onshore Wind 7%
Merkur Germany Offshore Wind 6%
Gode Wind 1 Germany Offshore Wind 5%
Garreg Lwyd Wales Onshore Wind 4%
Solwaybank Scotland Onshore Wind 3%
Crystal Rig II Scotland Onshore Wind 3%
Sheringham Shoal England Offshore Wind 3%
Grönhult Sweden Onshore Wind 3%
December 2021 largest ten investments 51%
Investment Portfolio
The TRIG portfolio as at 31 December 2021, includes 83 equity
investments in the UK, Republic of Ireland, France, Sweden, Germany
and Spain, comprising 50 wind projects, 32 solar PV projects and
one battery storage project. Additionally, the portfolio includes
one mezzanine debt investment in a mixed portfolio.
Project Market (Region)(1) TRIG's Equity Interest(2) Net Capacity (MW) Year Commissioned(3)
Onshore wind Farms
Roos GB (England) 100% 17.1 2013
Grange GB (England) 100% 14.0 2013
Tallentire GB (England) 100% 12.0 2013
Garreg Lwyd GB (Wales) 100% 34.0 2017
Crystal Rig 2 GB (Scotland) 49% 67.6 2010
Hill of Towie GB (Scotland) 100% 48.3 2012
Mid Hill GB (Scotland) 49% 37.2 2014
Blary Hill GB (Scotland) 100% 35.0 2022
Paul's Hill GB (Scotland) 49% 31.6 2006
Crystal Rig 1 GB (Scotland) 49% 30.6 2003
Solwaybank GB (Scotland) 100% 30.0 2020
Green Hill GB (Scotland) 100% 28.0 2012
Little Raith GB (Scotland) 100% 24.8 2012
Rothes 1 GB (Scotland) 49% 24.8 2005
Freasdail GB (Scotland) 100% 22.6 2017
Rothes 2 GB (Scotland) 49% 20.3 2013
Earlseat GB (Scotland) 100% 16.0 2014
Meikle Carewe GB (Scotland) 100% 10.2 2013
Neilston GB (Scotland) 100% 10.0 2017
Forss GB (Scotland) 100% 7.5 2003
Altahullion SEM (N. Ireland) 100% 37.7 2003
Lendrum's Bridge SEM (N. Ireland) 100% 13.2 2000
Lough Hill SEM (N. Ireland) 100% 7.8 2007
Pallas SEM (Rep. of Ireland) 100% 55.0 2008
Taurbeg SEM (Rep. of Ireland) 100% 25.3 2006
Milane Hill SEM (Rep. of Ireland) 100% 5.9 2000
Beennageeha SEM (Rep. of Ireland) 100% 4.0 2000
Haut Vannier(4) France (North) 100% 43.0 2022
Venelle France (North) 100% 40.0 2020
Epine France (North) 100% 36.0 2019
Rosières France (North) 100% 17.6 2018
Energie du Porcien France (North) 42% 16.3 2012
Montigny France (North) 100% 14.2 2018
Les Vignes France (North) 42% 5.2 2009
Fontaine-Mâcon France (North) 42% 5.1 2011
Rully France (North) 42% 5.0 2010
Val de Gronde France (North) 37% 4.5 2011
Haut Languedoc France (South) 100% 29.9 2006
Haut Cabardes France (South) 100% 20.8 2006
Cuxac Cabardes France (South) 100% 12.0 2006
Roussas-Claves France (South) 100% 10.5 2006
Jädraås Sweden 100% 212.9 2013
Salsjö - Twin
Peaks(4) Sweden 50% 77.5 2024
Grönhult(4) Sweden 100% 67.0 2022
Ranasjö - Twin
Peaks(4) Sweden 50% 43.4 2024
Total onshore wind at 31 December 2021 1,331.4
Offshore Wind Farms
Beatrice GB (Scotland) 17.5% 102.9 2018
East Anglia 1 GB (England) 14.3% 102.1 2020
Sheringham Shoal GB (England) 14.7% 46.6 2012
Merkur Germany 25% 99.0 2019
Gode Wind 1 Germany 25% 82.5 2017
Total offshore wind at 31 December 2021 433.1
Solar Photovoltaic Parks
Parley Court GB (England) 100% 24.2 2014
Egmere Airfield GB (England) 100% 21.2 2014
Stour Fields GB (England) 100% 18.7 2014
Tamar Heights GB (England) 100% 11.8 2014
Penare Farm GB (England) 100% 11.1 2014
Four Burrows GB (England) 100% 7.2 2015
Parsonage GB (England) 100% 7.0 2013
Churchtown GB (England) 100% 5.0 2011
East Langford GB (England) 100% 5.0 2011
Manor Farm GB (England) 100% 5.0 2011
Marvel Farms GB (England) 100% 5.0 2011
Midi France (South) 51% 6.1 2012
Plateau France (South) 49% 5.9 2012
Puits Castan France (South) 100% 5.0 2011
Chateau France (South) 49% 1.9 2012
Broussan France (South) 49% 1.0 2012
Pascialone France (Corsica) 49% 2.2 2011
Olmo 2 France (Corsica) 49% 2.1 2011
Santa Lucia France (Corsica) 49% 1.7 2011
Borgo France (Corsica) 49% 0.9 2011
Agrinergie 1 & 3 France (Réunion) 49% 1.4 2011
Chemin Canal France (Réunion) 49% 1.3 2011
Ligne des 400 France (Réunion) 49% 1.3 2011
Agrisol France (Réunion) 49% 0.8 2011
Agrinergie 5 France (Réunion) 49% 0.7 2011
Logistisud France (Réunion) 49% 0.6 2010
Sainte Marguerite France (Guadeloupe) 49% 1.2 2011
Marie Galante France (Guadeloupe) 49% 1.0 2010
Arenosas(4) Spain (Cadiz) 100% 58.1 2022
El Yarte(4) Spain (Cadiz) 100% 58.1 2022
Guita(4) Spain (Cadiz) 100% 58.1 2022
Malabrigo(4) Spain (Cadiz) 100% 58.1 2022
Total solar PV at 31 December 2021 388.7
Flexible capacity/ Mixed
portfolio
Broxburn battery storage GB (Scotland) 100% 20.0 2018
Phoenix SAS(6) France 0% - 2015
Total Portfolio at 31 December 2021 (83 assets) 2,173.2
Operating assets 1,709.9
Construction assets4 230.9
Contracted to acquire5 232.4
Total Portfolio at 31 December 2021 (83 assets) 2,173.2
Notes
1. SEM refers to the Irish Single Electricity Market.
2. This is TRIG's equity share of the nominal capacity of the
asset.
3. Where a project has been commissioned in stages, this refers
to the earliest commissioning date. For construction assets, this
refers to expected completion date.
4. Ranasjö, Salsjö, Grönhult, Haut Vannier and the Cadiz solar
projects are under construction. Due to contractual measures in
place, TRIG does not retain any construction risk for the Cadiz
solar projects.
5. This is the investment commitment to acquire the Cadiz solar
projects.
6. This investment is in the form of mezzanine level bonds where
the Company does not have an equity stake. The portfolio comprises
five onshore wind farms in Northern France with a combined capacity
of 74MW and four operational solar parks with battery storage
located on the islands of Corsica and La Réunion with a combined
capacity of 29MW ("the Portfolio"). All the Portfolio assets are
backed by the French government's Feed-in-Tariff subsidy and have
an average year of commission of 2015.
2.6 Operational Review
Operational metrics
The Company sets out below its key metrics which it utilises to
track its performance over time against its objectives.
Largest single Largest ten Operating history Electricity Average Revenue
investment investments (portfolio weighted Production (GBP/MWh)
average) years % increase
KPI as % of portfolio by value 39
(Year to) 2021 10% 54% 5.4 years 4,125GWh +5% 121.83
31 December
2020 10% 55% 4.7 years 3,953GWh +30% 96.22
2019 11% 52% 5.6 years 3,036GWh +51% 90.55
2018 9% 51% 5.4 years 2,042GWh +16% 105.63
2017 10% 52% 5.7 years 1,766GWh +20% 92.44
2016 11% 52% 6.7 years 1,469GWh +9% 82.83
2015 12% 56% 5.9 years 1,344GWh +65% 78.63
2014 10% 65% 5.0 years 814GWh +136% 84.43
39 On an invested basis.
TRIG portfolio update
Portfolio production for the year was 12.6% below budget. The
shortfall in generation was primarily due to poor wind resource in
all quarters, particularly during January, and through April to
September in the UK and Ireland. The wind speeds seen in the UK
region and the North Sea (also impacting the German offshore sites)
were the lowest since 2010. Overall production for the portfolio
was below the long-term budget P90 expectation (on a 10-year basis)
but in line with the budget P90 assumption for a single year in
isolation.
Within the portfolio, the poorest performing regions were
Germany Offshore and Ireland. In addition to the low wind resource
affecting both regions, Germany was also impacted by grid outages
at Gode Wind 1 in addition to the ongoing turbine rear frame issue
at Merkur which led to lower availability (Shortfalls resulting
from the issue at Merkur are due to be compensated as described in
the regional commentary below). Ireland experienced grid
constraints and curtailment which were prevalent for all operators
within the region.
With the exception of Merkur, regional availability has been
close to budget, with target levels exceeded in Scandinavia and
Ireland.
Recent GB wholesale electricity prices have risen significantly
during the last quarter of 2021. The increase in Average Revenue /
MWh in 2021 shown within the above table, reflects this increase in
wholesale prices, along with a change in the composition of the
portfolio, most notably the East Anglia 1 and Beatrice
acquisitions. Changes to the portfolio compositions in the year
equate to GBP7 of the GBP25 increase.
Regional commentary
The table below shows the TRIG share of production by region
against budget across the year.
Technology Region Production
Actual Budget Performance
GWh GWh vs Budget
%
GB 1,110 1,329 -16%
Wind Onshore France 626 722 -11%
Scandinavia 895 1,019 1%
Ireland 556 553 -26%
Wind Offshore GB 507 571 -12%
Germany 267 359 -13%
Solar GB & France 164 167 -2%
Total Portfolio 4,125 4,719 -12.6%
GB wind onshore
Generation was 16% below budget, almost entirely due to low wind
resource during January, April to September, and December.
Operational performance was good, and availability remained close
to budget except for Little Raith and Crystal Rig 1 which have both
had historic issues.
Little Raith has continued to underperform with further claims
under the availability warranty to be made. RES, as Asset Manager
for the project, have met with the O&M provider and an 18-month
improvement plan is now in place. Crystal Rig 1 availability was
lower than other sites for 2021 but improved as the year progressed
with targeted works undertaken to address long running causes of
downtime.
An extensive O&M tender was concluded in the latter part of
the year with new O&M contract for 7 sites to be entered on
expiry of the existing contracts through 2022 and 2023. This tender
took advantage of TRIG's scale and technology diversification to
achieve competitive pricing from four different suppliers. Ongoing
maintenance works through the year were typical for a wind
portfolio including blade repairs, main bearing replacements &
foundation inspections.
Construction at the Blary Hill site in Scotland completed early
in 2022, ahead of schedule. Turbine tests on completion are
underway.
GB wind offshore
With the addition of the two offshore assets East Anglia 1
(EA1), acquired in late 2020, and Beatrice, acquired in January
2021, as operational assets, TRIG now considers GB offshore and
German offshore as two separate regions.
GB offshore generation was 12% below budget, with low wind
resource responsible for most of this shortfall and other key
drivers including a grid constraint early in the year at Beatrice
combined with inter array cabling issues at the site, with
remediation works due to complete in Q1 2022.
There were some uncompensated grid outages at EA1 during Q3 due
to OFTO snagging works. At Sheringham, Covid-19 related delays to
servicing led to some minor faults with turbines and lower
availability in the second half of the year. A new alternative
O&M strategy in combination with the adjacent Dudgeon wind farm
has now been implemented.
Germany offshore
German generation was 13% below budget due to low wind and some
uncompensated grid outages. There was poor availability at Merkur,
as a consequence of the turbine rear frame issue. Downtime
associated with the Merkur issue is not included in the generation
variance above as this is to be compensated under the service
agreement availability warranty with the turbine supplier.
As reported in June 2021, following routine inspections at the
Merkur offshore wind farm in Germany, generation was paused as a
precautionary safety measure after cracks were identified in the
emergency evacuation rear frames of some turbines. The turbine
manufacturer has been monitoring the turbines and has implemented
an interim welding solution that enabled 50, on average, of the 66
turbines to operate during Q4 2021 and 60 in January 2022. Root
cause analysis has been completed and a long-term solution is being
developed, which the turbine manufacturer plans to substantially
implement during 2022. Compensation for lost revenues and the cost
of remediation remains with the manufacturer. No material impact is
expected on the carrying value of the project or the financial
performance of Company though the timing of distributions from the
project are expected to be delayed.
Gode Wind 1 suffered from grid outages in May and December, for
which downtime is not compensated as the outage timeframes fell
within the allowable number of days that the grid operator is
permitted for undertaking scheduled and unscheduled
maintenance.
France wind
French production was 12% below budget for the year, impacted by
poor wind in the second half of the year and lower availability at
two sites in the south due to maintenance campaigns and component
replacement works. These works were required due to the age of the
assets and the turbulent wind conditions these sites have
experienced.
Progress is being made on the repowering of these projects with
permission to bid for feed-in-tariffs granted by authorities.
Construction resumed at Vannier following the courts' dismissal
of a technical challenge to the environmental permit in July 2021.
Turbine deliveries and installation are underway with the site due
to reach commercial operations in August 2022.
Scandinavia wind
Until completion of the Ranasjö, Salsjö and Grönhult
construction projects, this region consists of the single large,
wholly owned, site Jädraås. The project performed well in 2021 with
availability above the budgeted level.
Both Swedish construction projects are progressing well and
remain on programme. Ground works including cable laying are
underway at the 67MW Grönhult project with completion on target for
end of 2022. Forestry and civil works commenced at the Ranasjö and
Salsjö sites, with the projects due to complete until early
2024.
Ireland (NI & ROI) wind
The region suffered from poor wind resource throughout the year
which, combined with some ongoing grid constraints and curtailment
at some sites, resulted in a large negative variance to budget of
26%. Budget production values do not reflect the high levels of
constraint seen in recent years as the long-term picture is
anticipated to improve as grid infrastructure improvements are
made. Lost production was already lower in 2021 compared to
2020.
Site-based availability is running close to budget, due to the
pro-active repairs, spares and maintenance approach taken by the
asset management teams, particularly on older assets.
Solar
Solar generation saw a 2% negative variance to budget for the
year, primarily driven by lower availability at some GB solar sites
than budgeted due to EPC rectification works undertaken towards the
end of the year. These works will ultimately lead to improved
performance of these sites in the future. Three solar sites in
Cornwall have benefited from inverter reconfiguration works which
have resulted in production well above budget.
There have been some electrical failure events involving
inverters or string combiner boxes across the solar portfolio
temporarily impacting parts of the sites. Whilst the plants
remained operational, given that sections of the sites were offline
for over 24 hours, these incidents were considered reportable
events and notified to the HSE. Root causes for these failures
include damage due to rodents and minor component failures.
Long-term portfolio performance against budget
2021 has been a low resource year with most regions in the
portfolio impacted. Whilst total generation in the year was below
long-term average expectations, it was within the variance we would
expect to see on an annual basis i.e. for a single year in
isolation. TRIG's geographical and technological diversity serves
to mitigate against varying weather conditions.
Enhancements
As Operations Manager, RES is dedicated to enhancing the value
of the portfolio through both commercial and technical initiatives.
RES has a structured enhancements framework that fosters a culture
of innovation, with opportunities regularly identified and assessed
both at individual site level and portfolio level.
Examples of some of the commercial and technical value
enhancements secured in 2021 include:
Optimised Operations & Maintenance strategy implemented at
Sheringham Shoal offshore wind farm, securing reduced annual
operating costs and improved turbine access (expected to reduce
downtime), through:
o Relocating the O&M base to reduce tidal restrictions and technician travel time
o Securing shared access to a Service Operation Vessel - this
large vessel is offshore for weeks at a time and so facilitates
better turbine access during poor sea conditions
Retrofit turbine controllers installed at Altahullion to enable
wake steering pilot project, seeking to increase overall site
generation while also minimise turbine loading by operating
turbines collaboratively to minimise wake impact on neighbouring
turbines
Blade enhancements installed at two trial turbines at Hill of
Towie and Green Hill, with yield impact being assessed to inform
potential rollout to wider portfolio
Turbine software upgrade implemented at Epine to increase energy
yield, following completion of required acoustic testing and
substation modifications, with results to be independently
verified
Improved PPA terms secured within existing contracts, including
optimised market index, improved offtake discounts and increased
REGO value
Material cost reductions negotiated across a number of
operational contracts while maintaining scope and quality of
service
Life extensions for TRIG projects continue to progress well,
utilising RES' specialist land, technical and commercial expertise.
Extended project life is considered as part of investment decisions
for upgrades, supported by detailed monitoring of site
performance.
Health and Safety
A strong focus on Health and Safety ("H&S") has always been
adhered to in TRIG's operations. The following provides an update
of H&S items of note during 2021:
There were 11 lost time accidents across the portfolio during
the year, mostly minor incidents where the injured party was able
to return to their normal duties within 7 days. These events were
primarily related to slips and trips. The increased ownership of
minority interests in larger offshore projects results in a higher
number of incidents being captured within our reporting. All
subcontractor incidents are also included within these values.
In addition to internal audits carried out by the asset managers
across the portfolio, independent HSQE Assurance audits were
undertaken at multiple representative sites in the onshore wind and
solar portfolios, with findings considered across the wider TRIG
portfolio. The Operations Manager also regularly undertook safety
walks across the portfolio.
The TRIG safety working group, a forum for safety
representatives of asset management service providers, continues to
pro-actively share best practice and enable collaborative
relationships across the portfolio.
Relevant industry safety alerts were shared and discussed
throughout the year and industry involvement continues. RES and
other asset managers have been contributing to the work of industry
bodies such as 'SafetyOn' and maintaining relationship with country
specific government bodies e.g. UK HSE.
Operations & maintenance and construction activities have
progressed well despite the impact of Covid-19, though some
availability impacts were seen due to delayed maintenance at the
offshore sites. Some restrictions on the movement of people across
borders at the outbreak of the Omicron variant also led to
occasional delays in scheduled maintenance being commenced.
A number of the asset managers have continued to focus on mental
health within their organisations. RES as Operations Manager held
'Wellbeing week' in 2021 hosting a variety of activities and
webinars focused around the four pillars of wellbeing: social,
physical, mental and financial.
2.7 Valuation of the Portfolio
Introduction
The Investment Manager is responsible for carrying out the fair
market valuation of the Group's investments which is presented to
the Directors for their approval and adoption. A valuation is
carried out on a six-monthly basis as at 30 June and 31 December
each year.
For non-market traded investments (being all the investments in
the current portfolio), the valuation is based on a discounted cash
flow methodology and adjusted in accordance with the European
Venture Capital Association's valuation guidelines where
appropriate to comply with IFRS 13 and IFRS 10, given the special
nature of infrastructure investments. Where an investment is
traded, a market quote is used.
The valuation for each investment in the portfolio is derived
from the application of an appropriate discount rate to reflect the
perceived risk to the investment's future cash flows to give the
present value of those cash flows. The Investment Manager exercises
its judgement in assessing the expected future cash flows from each
investment based on the project's expected life and the financial
model produced by each project entity. In determining the
appropriate discount rate to apply to a given investment the
Investment Manager takes into account the relative risks associated
with the revenues which include fixed price per MWh income (lower
risk) or merchant power sales income (higher risk). Where a project
has both income types a theoretical split of future receipts has
been applied, with a different (higher) discount rate used for an
investment's return deriving from the merchant income compared to
the fixed price income, equivalent to using an appropriate blended
rate for the investment.
The Directors' Valuation of the portfolio as at 31 December 2021
was GBP2,725.8m. This valuation compares to GBP2,213.0m as at 31
December 2020 and GBP2,491.0m as at 30 June 2021.[23]
Valuation movements
A breakdown of the movement in the Directors' valuation set out
in the table below.
Valuation movement in the year to 31 December 2021
* Foreign exchange movement is stated before the offsetting
effect of hedges which are held at the Company level. Foreign
exchange losses reduce to GBP21.1m after the impact of foreign
exchange hedges.
Valuation movement during the period to 31 December 2021 GBPm GBPm
Valuation of portfolio at 31 December 2020 2,213.0
Cash investments net of capital return 478.9
Cash distributions from portfolio (169.4)
Rebased valuation of portfolio 2,522.5
Changes in power prices forecast 117.1
Movement in discount rates 60.4
Changes in inflation assumptions / deposit rate 37.5
Change in Foreign Exchange* (58.7)
Changes in taxation assumptions (67.6)
French solar provision (28.7)
Balance of portfolio return 143.3
Valuation of portfolio at 31 December 2021 2,725.8
* Foreign exchange movement is stated before the offsetting
effect of hedges which are held at the Company level. Foreign
exchange losses reduce to GBP21.1m after the impact of foreign
exchange hedges.
The opening valuation at 31 December 2020 was GBP2,213.0m.
Allowing for net cash investments of GBP478.9m and cash receipts
from investments of GBP169.4m, the rebased valuation as at 31
December 2021 was GBP2,522.5m.
Cash investments of GBP478.9m during the year is predominantly
comprised of the following investments:
Investment during 2021 2021 Progress % of committed Total % of committed Portfolio
Portfolio Value [24] Value41
Grönhult 1% 3%
Blary Hill 2% 2%
Cadiz solar projects (Arenosas, Malabrigo, El Yarte and
Guita) 3% 6%
Twin Peaks (Ranasjö and Salsjö) 1% 4%
Beatrice 9% 9%
Further detail on each investment is included in section
2.5.
Each movement between the rebased valuation of GBP2,522.5m and
the 31 December 2021 valuation of GBP2,725.8m is considered in turn
below:
(i) Forecast power prices
The valuation at 31 December 2021 is based on current updated
power price forecasts for each of the markets in which TRIG invests
overlaid with a portion of the higher prices indicated by the
forward markets over the next c.2 years. The forecasts are
materially up in the short to medium term but lower over the longer
term, resulting in an overall increase in valuation of the
portfolio from a year ago by a net GBP117.1m.
2021 has seen significant increases in forecasts for wholesale
power prices over the short and medium term across most of the
regions in which TRIG invests driving the material increase in the
blended curves shown on the next page over the next 3-5 years,
compared with a year ago.
High commodity prices, in particular gas and to a lesser extent
carbon, are the principal drivers of the increase in forecasts
noted above - please refer to section 2.3 for further details. The
high gas prices are in part due to a general restriction in supply
and this scarcity combined with an increased level of commodity
demand and reduced intermittent generation supply (wind and solar)
together with outages within conventional generation have result in
a relatively tight and hence volatile market. These factors also
impact the forwards markets but with significant variation from
day-to-day. Consequently a relatively conservative approach has
been adopted, partially uplifting the forecasters' assumptions for
the forward prices indicated at the valuation date of 31 December
(taking approximately 40% of the uplift from reflecting the full
closing forward prices).
Beyond the short-term horizon covered by liquid forward markets
(c. 2 years), there is a further period of modestly increased
prices (compared to December 2020), while the forecasts assume gas
supplies and prices normalise.
Beyond the medium term the reduced forecast power prices are
driven by the increases in assumed renewable generation, as
reported in the Interim Results, with limited changes in
expectations in the second half of the year. Hence the resulting
curve shows very high near-term prices followed by relatively lower
prices in the medium and long term.
Power prices are one of the key risks faced by the Company: a
number of factors go into power price forecasting to estimate
electricity demand including the mix of generation technology
meeting this demand and for each technology their associated costs
of supply. As such, it is inherently difficult to estimate and then
apply these factors to accurately forecast the outcome of this
dynamic market. Please refer to Section 2.10 Risk and Risk
Management for further analysis.
The weighted average power price used to determine the
Directors' valuation is shown below in real terms - this is
comprised of the blend of forecasts for each of the power markets
in which TRIG is invested after applying expected PPA power sales
discounts and reflecting cannibalisation[25] and, where it is
believed appropriate, overlaying shorter term forwards to reflect
current market pricing.
Illustrative blended power price curve (real prices) for TRIG's
portfolio[26]
Region Average 2022-2026 Average 2027-2050 Average 2022-2050
GB (Real GBP/MWh) 68 37 42
Average of 5 euro jurisdictions*
(Real EUR/MWh) 57 44 46
* France, SEM, Germany, Sweden (SE2 and SE3) and Spain
Cannibalisation is assumed within the adopted power price
forecasts across each jurisdiction. The reduction in captured
wholesale electricity power prices is forecast to be further
impacted in each geography over time as the proportion of
production coming from renewables in each market increases.
(ii) Movement in valuation discount rates
The weighted average portfolio valuation discount rate as at 31
December 2021 was 6.6% (31 December 2020: 6.7%). The discount rates
used for valuing each investment represent an assessment of the
rate of return at which infrastructure investments with similar
risk profiles would trade on the open market.
During the year we have observed continuing strong competition
for renewables infrastructure, which remains a sought-after asset
class, and we continued to see new entrants to the market seeking
to buy assets. This has resulted in a continued reduction in the
prevailing discount rates applied to renewables investments.
Overall the Investment Manager, based on its experience of bidding
and transacting in the secondary market for renewable
infrastructure assets, has applied an average reduction of 0.3% to
discount rates across the portfolio compared to 31 December
2020.
In addition, the mix of investments made in the period have
increased the discount rate by approximately 0.2%.
During the year, the Company engaged an independent valuation of
the portfolio and a further review of the discount rates adopted
for the December 2021 valuation, which confirmed that the rates
used were appropriate. This change in assumption has led to an
increase in the valuation of the investments of GBP60.4m.
(iii) Changes to inflation assumptions
Over 2021 as the initial depressing impacts of the pandemic fall
out of the inflation figures (the "base effect"), and supply
constraints have taken hold, actual inflation has increased. This
has accelerated markedly during the second half of the year with
forecast expectations over the short to medium term materially
exceeding the previously assumed inflation forecast. Given the
quantum of increase, consensus amongst forecasters and broad
increases in prices across multiple sectors, a short-term increase
has been made to the assumption for inflation in the UK of 1.0% for
2022 and 0.75% for 2023. This has resulted in a positive valuation
impact of GBP37.5m.
(iv) Foreign Exchange Movement
Over the year, sterling has appreciated by 6% versus the euro,
leading to a GBP58.7m valuation loss on foreign exchange in
relation to the euro-denominated investments located in Germany,
Sweden ([27]) , France, the Republic of Ireland and Spain, which
reduces to a net GBP21.1m loss after the impact of foreign exchange
hedges held outside the portfolio at company level.
At 31 December 2021, euro-denominated investments comprised 37%
of the portfolio. On a committed basis, the proportion of euro
denominated investments based on the current portfolio will
increase to 42%.
The Group enters into forward hedging contracts (selling euros,
buying sterling) for an amount equivalent to its expected income
from euro-denominated investments over the short term, currently
approximately the next 48 months. In addition, the Group has
entered into further forward hedging contracts such that, when
combined with the "income hedges", the overall level of hedge
achieved in relation to the euro-denominated assets value is
currently approximately 80%. Hedging is also achieved when making
investments using the revolving credit facility by drawing in euros
for euro-based acquisitions. The Investment Manager keeps under
review the level of euro exposure and utilises hedges, with the
objective of minimising variability in shorter term cash flows with
a balance between managing the sterling value of cash flow receipts
and potential mark-to-market cash outflows.
(v) Change in corporation tax rate
As enacted in the Finance Act 2021, the forecast UK corporation
tax rate has been increased to 25% (from 19%) commencing April
2023. This change is assumed from this date throughout the lives of
all UK companies (i.e. for the full duration of the projects'
economic lives). This has resulted in a negative valuation impact
of GBP67.6m. This impact is unchanged to that reported in the June
2021 Interim Results.
(vi) French solar provision
As noted in Section 2.3 - Market Development, further detail has
been received in the year in respect of retrospective changes to
feed-in tariffs in France. This indicates that many of the older
French solar projects in the portfolio face proposed cuts to the
historical tariffs which are high relative to levels awarded today.
A provision of approximately GBP28.7m (1.4p/share) has been made in
the year, and the remaining valuation of the affected assets is
1.3% of Portfolio Value, as at 31 December 2021. The final outcome
still remains unclear and, taking into account the possibility of
appeals, may take some time to resolve. This impact is unchanged to
that reported in the June 2021 Interim Results.
(vii) Balance of portfolio return
This refers to the balance of valuation movements in the year
(excluding above) and represents an uplift of GBP143.3m, equivalent
to an 5.7% increase over the rebased value of the portfolio. The
balance of portfolio return comprises the expected return,
reflecting the net present value of the cash flows brought forward
by a year at the average prevailing portfolio discount rate.
Taking the opening average portfolio discount rate (6.7%) and
accounting for the fact that the acquisitions during the period
occurred partway through the period and consequently these cash
flows were brought forward by less than 12 months, gives an
expected increase over the year of 5.9%.
The main cause of lower portfolio return than the expected level
is the overall generation for the year being below budget with
lower wind speeds across geographies being partially offset by
higher actual power prices in the period, resulting in a net
downside of circa 2 pence per share.
Portfolio enhancement activities have benefitted portfolio
valuation and include new power purchase agreements with lower
costs to sell electricity than previously forecast. Several of the
power purchase agreements across the portfolio include optionality
to fix prices for a given period (typically three or six months, up
to twelve months in advance) - these options can be used to secure
prices when the markets are relatively high and reduce the risks to
short-term cash flows, actively managing the short-term power price
risk.
Small changes have been made to future assumed interest and
deposit rate assumptions in the year. However, the portfolio
remains relatively insensitive to the changes in interest rates,
which is an advantage to TRIG's approach of favouring long-term
structured project financing, rather than short-term corporate
debt. Structured project financing is secured against the
underlying assets, with the substantial majority benefitting from
long-term interest rate swaps which fix the interest costs to the
projects. As such, the overall impact of interest rate changes is
small.
Investment obligations
At the balance sheet date, the Company had outstanding
investment commitments in relation to the construction of the
Ranasjö, Salsjö and Grönhult onshore wind farms, and Cadiz solar
projects (Arenosas, Malabrigo, El Yarte and Guita).
Name Acquired Net MW Status Completion Date Outstanding Commitment* Value (fully committed)*
Grönhult Feb-21 67.0 Construction Q4 2022 2% 3%
Ranasjö Jul-21 43.4 Construction Q2 2024 2% 3%
Salsjö Jul-21 77.5 Construction Q2 2024 1% 1%
Arenosas Sept-21 58.1 Construction** Q4 2022 1% 2%
El Yarte Sept-21 58.1 Construction** Q4 2022 1% 2%
Guita Sept-21 58.1 Construction** Q4 2022 1% 1%
Malabrigo Sept-21 58.1 Construction** Q4 2022 1% 1%
* Expressed as a percentage of fully committed valuation of
GBP2,957.0m.
** TRIG does not bear construction risk on the Cadiz solar
projects. TRIG has a right to put any of the four projects back to
the developer of the projects in the event that a project is not
successfully commissioned by its long stop date.
The timeline of outstanding commitments is presented below:
2022 2023 2024 Total
Outstanding Commitments (GBPm) 145 63 24 231
------------------------------- ---- ---- ---- -----
Fully invested portfolio valuation
The valuation of the portfolio on a fully invested basis can be
derived by adding the valuation at 31 December 2021 and the
expected outstanding commitments as follows:
Portfolio valuation at 31 December 2021 GBP2,725.8m
Future investment commitments GBP231.2m
Portfolio valuation once fully invested GBP2,957.0m
Impact of sensitivity on portfolio value
For each of the sensitivities, it is assumed that potential
changes occur independently of each other with no effect on any
other base case assumption, and that the number of investments in
the portfolio remains static throughout the modelled life.
The sensitivities assume the portfolio is fully invested and
hence the Portfolio Value for the sensitivity analysis is
GBP2,957.0m. Accordingly, the NAV per share impacts shown above
assumes the issue of further shares to fund the balance of these
commitments.
All of TRIG's sensitivities above are stated after taking into
account the impact of project level gearing on returns.
The output sensitivity above incorporates an updated calculation
of the portfolio effect which reduces the variability as a result
of the diversification of the portfolio. The increased
diversification of the portfolio has increased this effect and
consequently reduced the sensitivity of the portfolio.
As an investment entity for IFRS reporting purposes, the Company
carries its investments in renewables infrastructure projects at
fair value. The results below are shown on a statutory and on an
"expanded" basis as we have done in previous years. See the box
below for further explanation.
2.8 Analysis of Financial Results
Basis of preparation
In accordance with IFRS 10 the Group carries investments at fair
value as the Company meets the conditions of being an Investment
Entity. In addition, IFRS 10 states that investment entities should
measure their subsidiaries that are themselves investment entities
at fair value. Being investment entities, The Renewables
Infrastructure Group (UK) Limited ("TRIG UK") and The Renewables
Infrastructure Group (UK) Investments Limited ("TRIG UK I"), the
Company's subsidiaries, through which investments are purchased,
are measured at fair value as opposed to being consolidated on a
line-by-line basis, meaning their cash, debt and working capital
balances are included as an aggregate number in the fair value of
investments rather than the Group's current assets. In order to
provide shareholders with more transparency into the Group's
capacity for investment, ability to make distributions, operating
costs and gearing levels, adjusted results have been reported in
the pro forma tables below.
The pro forma tables that follow show the Group's results for
the year ended 31 December 2021 and the prior year on a
non-statutory "Expanded basis", where TRIG UK and TRIG UK I are
consolidated on a line-by-line basis, compared to the Statutory
IFRS financial statements (the "Statutory IFRS basis").
The Directors have provided the non-statutory Expanded basis to
assist users of the accounts in understanding the performance and
position of the Company, by including the cash and debt balances
carried in TRIG UK and TRIG UK I and expenses incurred in TRIG UK
and TRIG UK I.
The necessary adjustments to get from the Statutory IFRS basis
to the non-statutory Expanded basis are shown for the primary
financial statements. The commentary provided on the primary
statements of TRIG is on the Expanded Basis.
Income Statement
The Statutory IFRS basis nets off TRIG UK and TRIG UK I's costs,
including overheads, management fees and acquisition costs against
income. The Expanded basis includes the expenses incurred within
TRIG UK and TRIG UK I to enable users of the accounts to fully
understand the Group's costs. There is no difference in profit
before tax or earnings per share between the two bases.
Balance Sheet
The Statutory IFRS basis includes TRIG UK and TRIG UK I's cash,
debt and working capital balances as part of portfolio value. The
Expanded basis shows these balances gross. There is no difference
in net assets between the Statutory IFRS basis and the Expanded
basis.
The majority of cash generated from investments had been passed
up from TRIG UK and TRIG UK I to the Company by 31 December
2021.
At 31 December 2021, TRIG UK I was GBP72.8m drawn on its
revolving credit facility (2020: GBP40m drawn) being the majority
of the difference between the Statutory IFRS basis and the Expanded
basis.
Cash Flow Statement
The Statutory basis shows cash movements for the top company
only (TRIG Limited). The Expanded basis shows the consolidated cash
movements above the investment portfolio which are relevant to
users of the accounts. Differences include income received by TRIG
UK and TRIG UK I applied to reinvestment and expenses incurred by
TRIG UK and TRIG UK I that are excluded under the Statutory IFRS
basis.
The purchase of investments on the Expanded basis is funded by
both the company's revolving credit facility and amounts passed
down after capital raises. The remaining balance is that of
reinvestment.
Income statement
Summary income Year to 31 December 2021 Year to 31 December 2020
statement GBP'million GBP'million
Statutory IFRS Adjustments(1) Expanded Basis Statutory IFRS Adjustments(1) Expanded Basis
Basis Basis
Operating income 174.8 29.5 204.3 119.2 26.6 145.8
Acquisition costs - (1.9) (1.9) - (0.8) (0.8)
----------------- ---------------- -------------- -------------- ----------------- -------------- --------------
Net operating
income 174.8 27.6 202.4 119.2 25.8 145.0
Fund expenses (1.9) (21.9) (23.8) (1.8) (18.2) (20.0)
Foreign exchange
(loss)/gains 37.6 0.0 37.6 (17.0) (3.9) (20.9)
Finance costs (0.0) (5.7) (5.7) (0.2) (3.7) (3.9)
----------------- ---------------- -------------- -------------- ----------------- -------------- --------------
Profit before tax 210.5 0.0 210.5 100.2 - 100.2
----------------- ---------------- -------------- -------------- ----------------- -------------- --------------
EPS(2) 10.0p - 10.0p 5.9p - 5.9p
----------------- ---------------- -------------- -------------- ----------------- -------------- --------------
1. The following were incurred within TRIG UK and TRIG UK I;
acquisition costs, the majority of expenses and acquisition
facility fees and interest. The income adjustment offsets these
cost adjustments.
2. Calculated based on the weighted average number of shares
during the year being approximately 2,103.9 million shares for 2021
and 1,712.0 million shares for 2020.
Analysis of Expanded Basis financial results
Profit before tax for the year to 31 December 2021 was GBP210.5
million, generating earnings per share of 10.0p, which compares to
GBP100.2 million and earnings per share of 5.9p for the year to 31
December 2020.
The EPS of 10.0p reflects significant valuation growth in the
year versus a weaker period of valuation growth in the comparative
period. During 2021 whilst there have been reductions in medium to
long term power price forecasts (mostly attributable to assumed
greater and faster build out of renewables across geographies) the
most significant factor has been significant growth in achieved and
forecast near term power prices. Increases in near power prices
have been mostly driven by increasing gas and carbon prices as
economies recover from the recession caused by the pandemic.
Factors driving higher gas prices include: 2021 starting with a
long cold winter that depleted European gas storage levels, some
gas supply sources into Europe have been disrupted and reduced and
demand for gas has increased significantly across the world.
Elevated gas and hence wholesale power prices are expected to take
some time to normalise. Carbon prices have reached all-time highs
during the year also pushing up power prices.
Other areas contributing to valuation growth have been higher
levels of actual and forecast inflation in the UK and reductions in
valuation discount rates, reflecting continued strong competition
for the asset class. Efficient portfolio management alongside other
valuation enhancements have also benefitted portfolio value.
These increases are partially offset by foreign exchange
movements as sterling appreciated, the impact of an increase in
future UK corporation tax rates and provisions made for expected
reductions to French feed-in tariffs being proposed by the French
Government to apply to certain older solar projects with
historically high feed-in tariff levels. The latter two adverse
items were reported at the half year results and the impact is
unchanged.
Generation in the year was below budget with below average wind
speeds across many of the geographies TRIG operates in. This was
partially offset by higher than budgeted achieved power prices.
This net adverse variance is also recognised in Portfolio Value and
Operating Income.
Operating Income reflects the portfolio value movement in the
year and is more fully described in Section 2.7.
Acquisition costs relate to investments in the year, mostly
attributable to the investments in Beatrice, Grönhult, Ranasjö,
Salsjö, and the Cadiz solar projects (Arenosas, Malabrigo, El Yarte
and Guita).
Year to Year to
31 December 2021 31 December 2020
(GBP'million) (GBP'million)
Acquisition costs 1.9 0.8
Total Acquisition commitments made in the year 677.9 516.8
Acquisition costs as % of investments 0.3% 0.1%
------------------------------------------------ ------------------ ------------------
An increase in fund expenses in 2021 as compared to 2020
reflects the increase in the size of the portfolio.
Fund expenses of GBP23.8 million (2020: GBP20.0 million)
includes all operating expenses and GBP21.5 million (2020: GBP16.9
million) fees paid to the Investment and Operations Managers.
Management fees are charged at 1% of Adjusted Portfolio Value up to
GBP1 billion, 0.8% of Adjusted Portfolio Value between GBP1 billion
and GBP2 billion and 0.75% of Adjusted Portfolio Value in excess of
GBP2 billion as set out in more detail in the Related Party and Key
Adviser Transactions note, Note 18 to the financial statements.
During the year sterling strengthened against the euro resulting
in a negative foreign exchange valuation movement for existing euro
denominated assets resulting in a loss of GBP58.7 million (2020:
GBP42.6 million gain), partially offset by gains on foreign
exchange hedges and cash and debt balances held at Company level of
GBP37.6 million (2020: GBP20.9 million loss) recorded in the Income
Statement. The net foreign exchange loss in the period is hence
GBP21.1 million (2020: GBP21.7 million gain).
Finance costs relate to the interest and fees incurred relating
to the Group's revolving credit facility. The finance costs in the
period are higher than the comparative period reflecting the
increased facility size and a higher average level of drawings in
the year.
Ongoing charges
Ongoing Charges (Expanded Basis) Year to Year to
31 December 2021 31 December 2020
GBP'000s GBP'000s
Investment and Operations Managers' fees 21,520 16,945
Audit fees 272 185
Directors' fees and expenses 342 286
Other ongoing expenses 1,519 1,521
------------------------------------------ ----------------- -----------------
Total expenses(1) 23,653 18,937
------------------------------------------ ----------------- -----------------
Average net asset value 2,435,718 2,014,672
Ongoing Charges Percentage (OCP) 0.97% 0.94%
------------------------------------------ ----------------- -----------------
1. Total expenses excludes GBP0.1m (2020: GBP1.1m) of lost bid
costs incurred during the year.
The Ongoing Charges Percentage is 0.97% (2020: 0.94%). The
ongoing charges have been calculated in accordance with AIC
guidance and are defined as annualised ongoing charges (i.e.
excluding acquisition costs and other non-recurring items) divided
by the average published undiluted net asset value in the year. The
Ongoing Charges Percentage has been calculated on the Expanded
Basis and therefore takes into consideration the expenses of TRIG
UK and TRIG UK I as well as the Company's.
The increase in OCP level reflects higher amounts being drawn on
the revolving credit facility in the period resulting in a lower
NAV compared to Portfolio Value.
Balance sheet
Summary balance As at 31 December 2021 As at 31 December 2020
sheet GBP'million GBP'million
Statutory Adjustments Expanded Statutory Adjustments Expanded
IFRS Basis Basis IFRS Basis Basis
Portfolio value 2,636.8 89.0 2,725.8 2,160.9 52.1 2,213.0
Working capital 13.9 (15.9) (2.0) 12.3 (12.9) (0.6)
---------------------------- ----------- ----------- -------- ----------- ----------- --------
Hedging Asset/ (Liability) 27.3 (0.6) 26.7 (1.4) - (1.4)
Debt - (72.8) (72.8) - (40.0) (40.0)
Cash 28.2 0.3 28.5 23.1 0.8 23.9
---------------------------- ----------- ----------- -------- ----------- ----------- --------
Net assets(1) 2,706.2 - 2,706.2 2,194.9 - 2,194.9
---------------------------- ----------- ----------- -------- ----------- ----------- --------
Net asset value
per share 119.3p - 119.3p 115.3p - 115.3p
---------------------------- ----------- ----------- -------- ----------- ----------- --------
Analysis of Expanded Basis financial results
Portfolio value grew by GBP512.8 million in the year to
GBP2,725.8 million, primarily as a result of the investments made
as described more fully in the "Valuation Movements" section of
this Strategic Report.
Hedging assets and liabilities represent the value of
outstanding foreign exchange derivatives used to manage the
Company's risk to movements in the foreign exchange rate between
Sterling and Euro. Working capital amounts include debtors,
liabilities and capitalised financing costs.
Group cash at 31 December 2021 was GBP28.5 million (December
2020: GBP23.9 million) and acquisition facility debt drawn at 31
December 2021 was GBP72.8 million (December 2020: GBP40m).
Net assets grew by GBP511.3 million in the year to GBP2,706.2
million. The Company raised GBP433.9 million (after issue expenses)
of new equity and produced a GBP210.5 million profit in the year,
with net assets being stated after accounting for dividends paid in
the year (net of scrip take up) of GBP134.1 million. Other
movements in net assets totalled GBP1.0 million, being the
Managers' shares accrued at 31 December 2021 and to be issued on or
around 30 March 2022.
Net asset value ("NAV") and Earnings per share ("EPS")
reconciliation
Net asset value ("NAV") per share as at 31 December 2021 was
119.3p compared to 115.3p at 31 December 2020.
NAV per share Shares in Net assets
issue (m) (GBPm)
Net assets at 31 December 2020 115.3p 1,903.4 2,194.9
Profit/EPS to 31 December 2021 10.0p(1) - 210.5
Shares issued (net of costs)(2) 0.8p(3) 358.1 433.9
Dividends paid in 2021 (6.8)p (141.5)
Scrip dividend take-up(4) - 5.8 7.5
H2 2021 Managers' shares to be issued - 0.9 1.0
-------------------------------------- ------------- ---------- ----------
Net assets at 31 December 2021 119.3p 2,268.1(5) 2,706.2(5)
-------------------------------------- ------------- ---------- ----------
1. Calculated based on the weighted average number of shares
during the year being 2,103.9 million shares.
2. Includes shares issued to managers (less costs) during the year.
3 The increase in net assets per share of 0.8p was the result of
accretive share issues where shares were issued above the Company's
net asset value per share.
4. Scrip dividend take-up comprises 5.8 million shares issued during the year.
5. Balance does not cast due to rounding.
Cash flow statement
Summary cash Year to 31 December 2021 Year to 31 December 2020
flow statement GBP'million GBP'million
Statutory Adjustments Expanded Statutory Adjustments Expanded
IFRS Basis Basis IFRS Basis Basis
Cash received
from investments 155.4 20.5 175.9 120.6 27.4 148.1
Operating
and finance
costs (1.9) (23.6) (25.5) (1.7) (17.5) (19.3)
--------------------- ----------- ----------- -------- ----------- ----------- --------
Cash flow
from operations 153.5 (3.1) 150.4 118.9 9.9 128.8
Debt arrangement
costs - (0.1) (0.1) - (4.3) (4.3)
Foreign exchange
gains/ (losses) 3.1 0.5 3.6 (3.4) (3.5) (6.9)
Issue of
share capital
(net of costs) 434.9 (2.0) 432.9 318.3 (1.9) 316.4
Acquisition
facility
drawn/(repaid) - 32.8 32.8 - 40.0 40.0
Disposal
proceeds - - - 68.2 49.8 118.0
Purchase
of new investments
(including
acquisition
costs) (452.3) (28.6) (480.9) (499.5) (89.4) (588.9)
Distributions
paid (134.1) - (134.1) (107.0) - (107.0)
--------------------- ----------- ----------- -------- ----------- ----------- --------
Cash movement
in year 5.1 (0.5) 4.6 (104.5) 0.6 (103.9)
Opening cash
balance 23.1 0.8 23.9 127.6 0.2 127.8
--------------------- ----------- ----------- -------- ----------- ----------- --------
Net cash
at end of
year 28.2 0.3 28.5 23.1 0.8 23.9
--------------------- ----------- ----------- -------- ----------- ----------- --------
Analysis of Expanded Basis financial results
Cash received from investments in the year was GBP175.9 million
(2020: GBP148.1 million). The increase in cash received compared
with the previous year reflects the increase in the size of the
portfolio. The adjustment reflects working capital movements and
cashflow available for reinvestment and proceeds in the year.
Dividends paid in the year totalled GBP134.1 million (net of
GBP7.5m scrip dividends). Dividends paid in the prior year totalled
GBP107.0 million (net of GBP6.6 million scrip dividends).
Cash flow from operations in the year was GBP150.4 million
(2020: GBP128.8 million) and covers dividends paid of GBP134.1
million in the year (2020: GBP107.0 million) by 1.12 times (or 1.06
times without the benefit of scrip take up), or 2.08 times before
factoring in amounts invested in the repayment in project-level
debt. The Group repaid GBP145 million of project-level debt
(pro-rata to the Company's equity interest) in the year.
Share issue proceeds (net of costs) totalled GBP432.9 million
(2020: GBP316.4 million) reflecting the net proceeds of the 356.3
million shares issued during the year through the proceeds of two
equity fund raises under the share issuance programme.
In the year, GBP480.9 million of investments were made,
including acquisition costs. These were funded through the March
and September equity fund raises (net proceeds of GBP432.9
million), drawings on the Company's acquisition facility of GBP32.8
million, as well as the reinvestment of surplus cashflows.
Cash balances increased in the period by GBP4.6 million
reflecting cash flows generated exceeding distributions paid.
The company has future commitments relating to Ranasjö, Salsjö
and Grönhult, and the Cadiz solar projects (Arenosas, Malabrigo, El
Yarte and Guita) as follows.
2022 2023 2024 Total
(GBP'm) (GBP'm) (GBP'm) (GBP'm)
Outstanding Commitments 145 63 23 231
------------------------ -------- -------- -------- --------
Going Concern
The Group has the necessary financial resources to meet its
obligations. The Group benefits from a range of long-term contracts
with various major UK and European utilities and well-established
suppliers across a range of infrastructure projects. In addition,
it maintains a working capital component of GBP30m as part of its
revolving credit facility (sized at GBP500m and limited to 30% of
Portfolio Value). The Group's project-level external debt is
non-recourse to the Company and is limited to 50% of Gross
Portfolio Value. As a consequence, the Directors believe that the
Group is well placed to manage its business risks successfully.
The directors do not believe that there is a significant risk to
the business as a result of the Covid-19 pandemic but will continue
to monitor any future developments. Thus they continue to adopt the
going concern basis of accounting in preparing the interim
financial statements.
Related Parties
Related party transactions are disclosed in note 18 to the
condensed set of financial statements.
2.9 Financial KPIs and Review of the Year
(Year to) (Year to) (Year to) (Year to) (Year to)
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2021 2020 2019 2018 2017
Dividend per share (declared) 6.76p 6.76p 6.64p 6.50p 6.40p
------------------------------ ----------- ----------- ----------- ----------- -----------
Share price 134.4p 127.8p 138.4p 113.2p 108.6p
------------------------------ ----------- ----------- ----------- ----------- -----------
Net Asset Value per share 119.3p 115.3p 115.0p 108.9p 103.6p
------------------------------ ----------- ----------- ----------- ----------- -----------
Total Shareholder Return(1) -2.9% +29.3% +10.7% + 5.11%
(FTSE All (FTSE All (FTSE All (FTSE All
11.3% Share - Share: Share: Share:
(FTSE All
for the year (share price Share -
basis) 18.3%) -9.8%) 19.2%) -9.5%) +13.1%)
------------------------------ ----------- ----------- ----------- ----------- -----------
Portfolio Value GBP2,726m GBP2,213m GBP1,745m GBP1,269m GBP1,081m
Year-on-year growth +23% +26% +38% +17% +32%
Number of projects 83 77 74 62 57
Aggregate capacity 2,173MW 1,650MW 1,664MW 1,110MW 821MW
------------------------------ ----------- ----------- ----------- ----------- -----------
Market capitalisation
GBP3,047m GBP2,433m GBP2,265m GBP1,334m GBP1,029m
Year-on-year growth
+25% +7% +70% +30% +13%
Number of shares in issue
at year end 2,267.2m 1,904.4m 1,636.5m 1,178.4m 947.3m
------------------------------ ----------- ----------- ----------- ----------- -----------
Ongoing Charges Percentage 0.97% 0.94% 0.98% 1.12% 1.11%
------------------------------ ----------- ----------- ----------- ----------- -----------
1 Total Shareholder Return ("TSR") measures the internal rate of
return based on the share price at the beginning and end of the
financial year together with dividends per share reinvested in the
Company.
Financing
The Group's GBP500m revolving credit facility is with a banking
group comprising Royal Bank of Scotland International, National
Australia Bank, ING Bank NV, Sumitomo Mitsui Banking Corporation,
Santander and Barclays. The facility expiry date is 31 December
2023, with options to extend for up to an additional 24 months.
Margins on the facility when drawn are 1.85%, the facility can be
drawn in Sterling or Euros.
The revolving credit facility enables the Group to fund new
acquisitions and to provide letters of credit should they be
required. The facility includes a GBP30m working capital
element.
The short-term financing provided by the revolving credit
facility is limited to 30% of the portfolio value. It is intended
that any drawings used to finance acquisitions are repaid, in
normal market conditions, within a year through equity
fundraisings.
The acquisition facility was drawn down in the year to fund
investments and subsequently repaid following capital raises. The
balance at the year end is GBP73m having been drawn in the final
quarter of the year to fund projects in construction.
In addition to the revolving credit facility, the projects may
have underlying project level debt. There is an additional gearing
limit in respect of such debt, which is typically non-recourse to
TRIG, of 50% of the Gross Portfolio Value (being the total
enterprise value of such portfolio companies), measured at the time
the debt is drawn down or acquired as part of an investment. The
Company may, in order to secure advantageous borrowing terms,
secure a project finance facility over a group of portfolio
companies.
The project-level gearing at 31 December 2021 across the
portfolio was 40% (2020: 43%). Principal repayments in the year
totalled GBP145m, as the debt is retired over the project's subsidy
periods. Gearing has reduced during 2021 partially due to the
scheduled repayment of debt in the year, some of which introduced
new debt in projects and some of which were acquired without
project debt.
The vast majority of the project debt is fixed and has an
average cost of 3.4% (including margin). The project level debt is
fully amortising and repaid in each case over the period of the
subsidy term. The portfolio weighted average subsidy life remaining
is 11 years.
Foreign Exchange Hedging
At the year-end, 37% of the portfolio was located within France,
the Republic of Ireland, Sweden(44) , Germany and Spain and hence
is invested in euro-denominated assets. Once the committed
investments at the Ranasjö, Salsjö and Grönhult wind farm projects
in Sweden and the four solar projects in Cadiz, Spain, which are in
construction, are fully subscribed the proportion of
euro-denominated investments based on the current portfolio and
valuation will increase to 42%. ([28])
The Group enters into forward hedging contracts against expected
income from the euro-denominated investments' distributions up to
four years ahead. In addition, the Group aims to enter into further
forward hedging contracts such that, when combined with the "income
hedges", the overall level of hedge achieved in relation to the
euro-denominated assets is at least 50% of their aggregate value.
The group may also make drawings under the revolving credit
facility in euros which provides further foreign exchange
hedging.
During the majority of 2021 the Group targeted hedging of
approximately 60% to 80% of the overall euro portfolio value. The
Group has been maintaining this increased hedging level since 2019
in light of increased Euro/ Sterling exchange rate volatility risk
related to Brexit.
The Investment Manager keeps under review the level of euros
hedged, with the objective of minimising variability in
shorter-term cash flows and reducing NAV volatility. It seeks to
maintain a balance between managing the sterling value of cash flow
receipts and mark-to-market cash outflows.
As well as addressing foreign exchange uncertainty on the
conversion of the expected euro distributions from investments, the
hedge also provides a partial offset to foreign exchange movements
in the portion of the portfolio value relating to the
euro-denominated assets.
The impact on NAV per share of a 10% movement in the euro
exchange rate after the impact of hedges held by the Group outside
of the investment portfolio is 1.8p assuming an effective euro
foreign exchange hedge of 60% - this is explained in more detail in
Section 2.7 and Note 4 in the Notes to the Financial Statements
(Valuation Sensitivities - euro/sterling exchange rate).
2. 10 Risks and Risk Management
Risk Management
The Company has a risk management framework in place covering
all aspects of the Group's business. Given the nature of the
Company (being an Investment Company where the Company outsources
key services to the Investment Manager, Operations Manager and
other service providers), reliance is placed on the Group service
providers' own systems and controls.
The identification, assessment and management of risk are
integral elements of the Investment Manager's and the Operations
Manager's work in both managing the existing portfolio and in
transacting new investment opportunities.
The Managers and Board discuss and consider what emerging risks
there are to the Company at the board meetings. The Company has a
range of advisers in addition to its Managers. These advisers
report on key topics and potential events which may present
potential risks that the Board and the Manager need to monitor and,
where possible, mitigate. In addition, the Company and its Managers
are registered with various industry bodies which alert both the
Board and the Managers of emerging risks as key events and news
items unfold.
The inherent risk of each existing and emerging risk is assessed
based on their likelihood of occurring and their potential impact
should they manifest. Where necessary and possible, mitigation
plans are developed to reduce the residual risk.
The Managers utilise their systems, their policies, oversight of
the supply chain and third-party input to manage these risks. The
strength of mitigants and controls is applied to the inherent risk
to determine the residual risk, which is classified as 'high',
'medium', 'low' or 'insignificant'. If a new risk arises or the
likelihood of a risk occurring increases, a mitigation strategy is,
where appropriate, developed and implemented together with enhanced
monitoring by the Investment Manager and / or Operations
Manager.
The Managers review and consider the Group's key and emerging
risks with the Board on a quarterly basis. Given the stability of
the Company's investment policy and focus of its strategy (i.e.
investments in renewable energy infrastructure projects in the UK
or Europe), the risks in the Group are not expected to change
materially from quarter to quarter.
The Board's Management Engagement Committee also reviews the
performance of the Investment Manager and Operations Manager (as
well as all key service providers) annually, which includes a
consideration of the Managers' internal controls and their
effectiveness and the maintenance of a risk control matrix.
Risks and Uncertainties
The Board and the Managers have considered and reviewed the key
risks. Risks relating to the Covid-19 pandemic have emerged in the
year and risks relating to the UK's exit from the EU ("Brexit")
have reduced during the year. Both have had ongoing impacts through
2021 and into 2022, with Covid-19 risks likely to remain elevated.
In addition, it is considered that regulatory and political risk
has increased during the year. The Company has been faced with
substantial increases in corporation tax rates in the UK and
adverse regulatory change on subsidies in France. The risk of
increases in taxes remains as sovereign balance sheets are
stretched due to Covid-19 related stimuli, and with gas and
electricity prices placing greater pressure on household bills. We
consider this has increased the regulatory risk across TRIG's
markets.
The risks arising from these three elements are embedded in risk
factors already identified by the Board and the Managers. As such,
the Board and the Managers have concluded that there has been no
material change to the key risks or their residual risk
classifications in the year, including risks resulting from climate
change factors, other than the regulatory and political risks as
noted above.
Risks relating to the Covid-19 pandemic
Risk factor Key mitigants
Health and safety Enhanced Covid-19 site practices were promptly
implemented and remain under on-going review,
including testing crew boarding vessels, temperature
checking on-site and when entering buildings,
segregation of work teams, dedicating work vehicles
to specified individuals and working from home.
Operationally, this has meant we have maintained
with the 2021 AFR lower than that of 2020 0.21
v 0.49
Energy yield Maintaining asset availability through enhanced
asset condition monitoring and undertaking proactive
works when government restrictions allow
Diversified portfolio spreading weather dependency
and single asset reliance
Political / regulatory Pressures on government budgets resulting from
their response to the Covid-19 pandemic may result
in fiscal action. For example, France is seeking
to reduce certain historical solar feed-in-tariffs.
The Managers have engaged with French government
officials to highlight that secondary investors,
such as TRIG, are seeking a modest return from
their investment and that we are distinct from
historical developers. The French renewables
industry body has lodged an annulment action
against the tariff reduction law. The asset managers
of TRIG's projects are exercising the safeguarding
clause within the law to reduce the financial
impact on TRIG's investments. Further detail
on the financial impact is provided in Section
2.7 - Valuation of the Portfolio
Further retrospective action in Europe to existing
subsidy arrangements is mitigated as governments
look to maintain investor confidence to support
decarbonisation
Diversified portfolio spreading regulatory dependency
Taxation The UK government will be increasing the corporation
tax rate from 19% to 25% from April 2023. The
impact of this has been reflected in the Company's
Portfolio Valuation. Geographical diversification
of the Company's portfolio across Europe reduces
the impact of policy changes by any one government
Increased risk across the portfolio arising
from governments' response to the economic and
social consequences of the Covid-19 pandemic,
which may result in an increase in tax rates
to fund expenditure
The sensitivity of the Company's NAV to changes
in taxation rates is provided in Section 2.7
- Valuation of the Portfolio
Risks relating to Brexit
Risk factor Key mitigants
Political / regulatory Brexit may affect the relationship between Scotland
and the UK as a whole. An independent Scotland's
energy policies may impact the renewables market,
potentially including future new capacity deployment,
the treatment of historical subsidies or the
trajectory of power prices. The relationship
between the Scottish devolved government and
the UK's government at Westminster is monitored
Changes to UK fiscal policy may arise following
Brexit. The UK government's policy agenda is
monitored
Additional administration has been introduced
for goods, including parts, crossing the UK border
Electricity pricing Power prices in GB's two day-ahead auctions
were previously linked to a European-wide algorithm.
These are now de-coupled from each other resulting
in market inefficiencies. The risk of additional
price volatility is reduced through a significant
portion of TRIG's near-term portfolio-level revenue
benefits from government-backed subsidies. The
auctions may be re-coupled as part of new market
mechanisms by 2022
A UK Emissions Trading Scheme (UK ETS) replaced
the UK's participation in the EU ETS on 1 January
2021. The extent to which the UK ETS diverges
from the EU ETS in pricing level and scope may
lead to additional complexity in power price
management
Sub-contractor delivery The risk of sub-contractor delivery failure
or delay arising from Brexit related border controls
is mitigated through a dedicated programme by
the Operations Manager of ensuring the assets
in TRIG's portfolio and their sub-contractors
hold critical spares and that proactive monitoring
and maintenance was being undertaken to reduce
risk of failure
Macroeconomic factors Foreign exchange risk continues to be managed
through the Investment Manager's application
of the Company's hedging policy
Risks relating to significantly increased consumer bills
Risk factor Key mitigants
Political / regulatory Current very high commodity prices is leading
into higher consumer bills for gas and electricity,
potentially increasing the risk of adverse regulatory
change to mitigate retail costs. This risk is
mitigated through operating within stable regimes
and with governments where the support for the
net-zero transition is high
Risks identified in the Company's risk management framework
This section sets out the key risks faced by the Group
categorised by their residual risk rating.
The table below sets out the risks with a 'high' residual risk
categorisation. They relate to macro factors driven by
externalities where the common mitigant is the diversification
within TRIG's portfolio.
RESIDUAL RISK - 'HIGH'
Risk factor Key mitigants
Energy yield Diversification of the portfolio across a variety
Portfolio electricity of geographies, therefore weather systems, and
production falling short renewables technologies, including the complimentary
of expectations seasonal bias of solar production
Established nature of wind and solar technologies;
typical levels of availability in a given year
are around 96% to 99%
Experience of Operations Manager in monitoring
portfolio production and delivering asset availability
Utilisation of the Operations Manager's and
third-parties' expertise when assessing energy
yield estimates during acquisition due diligence
Improvements in technology providing future
opportunities for enhancement, life extensions
and repowering
The sensitivity of the Company's NAV to deviations
from energy yield expectations is provided in
Section 2.7 - Valuation of the Portfolio
RESIDUAL RISK - 'HIGH'
Risk factor Key mitigants
Electricity pricing A significant portion of TRIG's near-term portfolio-level
Wholesale electricity revenue benefits from government-backed subsidies
prices moving adversely, (e.g. renewable obligation certificates, feed
as a result of factors in tariffs and contracts for difference), power
including: (i) electricity price fixes or power price financial hedges
demand increasing less Forward pricing mechanisms, including through
then expected (ii) the offtake agreements with utility or corporate
volume of renewables counterparties and hedging instruments with financial
and other generation institutions, provides some protection against
with low marginal costs short-term fluctuations
increasing more than The weighted average power price forecast used
expected within the energy to determine the portfolio valuation is comprised
mix, and (iii) natural of a blend of the forecasts for each of the power
gas prices and carbon markets in which TRIG is invested after applying
pricing being lower than expected power purchase agreement sales discounts
expected. and reflecting cannibalisation
In the longer term, power price risk arising
from the climate-change-related transition to
net zero (expanded upon in the Company's TCFD
reporting in Section 2.4 - Sustainability) may
be mitigated through:
* Storage technologies enabling renewables to become
partly dispatchable and able to capture higher
prevailing prices at times of higher demand
* The increasing electrification of the transport and
heating sector and the commercial development of
renewables-generated 'green' hydrogen could support
long-term demand for power
* Greater value attribution to renewables because it is
green
The sensitivity of the Company's NAV to changes
in power price forecast assumptions is provided
in Section 2.7 - Valuation of the Portfolio
Political / regulatory UK and European economies where opportunities
Government or regulatory fall within TRIG's acquisition focus have, broadly,
support for renewables demonstrated a robust approach to grandfathering
changes adversely, including commitments(46) to existing installed capacity
retrospective changes The risk of regulatory changes to power markets
to contracted tariffs remains, elevated in the near-term given increased
or established cost frameworks consumer bills (e.g. recent intervention in Spain
and Italy). Diversification of the portfolio
across a variety of geographies means that electricity
is sold into distinct electricity markets (GB,
Irish SEM(47) , France, Nordics, Germany and
Spain), each with different factors influencing
the regional electricity price
Future subsidies generally track the fall in
development costs of maturing technologies, providing
appropriate public value-for-money
With the reductions in costs of deploying renewables
driving renewable energy to grid parity, unsubsidised
assets are being developed, particularly in the
Nordic (onshore wind) and Iberian (solar PV)
regions
Emphasis on energy security as a key item on
the public agenda, in light of both dwindling
North Sea fossil fuel production and broader
geopolitical concerns
Strong public and political momentum in TRIG's
markets of focus towards meeting long-term United
Nations, European Union and national decarbonisation
efforts (e.g. the EU's New Green Deal and the
UK's Energy White Paper)
Should Scotland separate from the rest of the
UK, an independent Scotland's energy policies
may impact the renewables market. The relationship
between the Scottish devolved government and
the UK's government at Westminster is monitored.
The Company's diverse portfolio alongside the
Scottish government's commitment to achieving
net-zero by 2045 reduces this risk
RESIDUAL RISK - 'MEDIUM'
Risk factor Key mitigants
Liquidity / treasury The Investment Manager's policies and controls
management in relation to cash management
Regular cash monitoring by the Board and Investment
Manager
Regular cash flow forecasting and stress testing
prepared by the Investment Manager and considered
by the Board in setting dividend targets and
declaring dividends
Revolving credit facility provides liquidity
to finance acquisitions between equity capital
markets fundraising
Counterparty credit Diversification of counterparty exposure through
several component suppliers and service sub-contractors
The Managers have dedicated credit monitoring
functions. Their analysis is reported to the
Board quarterly
Managers prepare contingency plans when credit
quality deterioration is identified to prepare
for an event of counterparty failure
Credit quality of project counterparties is
assessed as part of the acquisition due diligence
process
Further detail on the portfolio's counterparty
exposure is provided below
Taxation Corporation and local tax rates are changed
by governments and local authorities from time
to time. There is a risk that tax rates are increased
to fund government deficits arising from the
Covid-19 pandemic or to fund increased costs
arising to consumers from higher energy pricing.
Some mitigation is achieved as a result of the
diversification across geographies and therefore
different government policies
Relevant tax rules are closely monitored, utilising
third-party advisers where necessary
The sensitivity of the Company's NAV to changes
in taxation rates is provided in Section 2.7
- Valuation of the Portfolio
Sub-contractor delivery The Operations Manager, RES, sits on the boards
of the project companies. Through this role,
and reporting information provided, the Operations
Manager reviews projects and their sub-contractors'
performance
Where RES is a sub-contractor to a project or
in other specific circumstances, representatives
of the Investment Manager, InfraRed, will sit
on the board of the project company
The Operations Manager maintains a regular dialogue
with major sub-contractors to ensure challenges
and issues are resolved proactively
In extremis, sub-contractors can be terminated
for poor performance. Replacement sub-contractors
are generally readily available
Macroeconomic factors Foreign exchange: hedging policy established
and adhered to
Inflation: the income from the portfolio has
a correlation with inflation. Most of the subsidy
regimes and some costs are linked to inflation.
It is expected that power prices have some positive
correlation with inflation in the longer term
Interest rates: fixed-rate debt or interest
rate swaps to reduce interest rate exposure at
project level; limited exposure at Company level
The sensitivity of the Company's NAV to changes
in macroeconomic factors is provided in Section
2.7 - Valuation of the Portfolio
RESIDUAL RISK - 'MEDIUM'
Risk factor Key mitigants
Construction projects Through the acquisition process, the Investment
Manager, with input from the Operations Manager,
undertakes risk allocation and counterparty due
diligence when determining the appropriate valuation
for, and whether to proceed with, the opportunity,
utilising input from third-party legal and technical
advisers where necessary
The Operations Manager sits on the boards of
the project companies. Through this role, and
with reporting information provided, the Operations
Manager reviews construction progress and is
able to intervene where necessary
The Operations Manager provides quarterly updates
to the Board on each project in construction
Physical single Some infrastructure that is important to the
points of failure performance of TRIG's portfolio exists outside
the direct control of individual projects, such
as grid connections. Exposure to single points
of failure is reduced through portfolio diversification
and TRIG's balanced portfolio manages single
asset concentration
Acquisition due diligence considers the contractual
provisions and protections for individual projects,
factoring the conclusions into investment valuations
and decisions
Actively monitored by the Operations Manager
through project company risk matrices and analysis
of shared exposure between projects
Supply chain There is the risk of non-sustainable behaviour
(actual or alleged) in the supply chain that
may be outside the direct control of the Managers,
such as working conditions, greenhouse gas emissions,
and other ESG factors - to mitigate this acquisition
due diligence is a key control, with counterparties
identified as high risk being subjected to enhanced
procedures
The Operations Manager engages with and monitors
counterparties throughout the asset life with
a rigorous selection process for new counterparties
/ suppliers
Balancing risk Power price financial hedges may lead to generation
risk remaining with the generator. This means
that if the generator does not generate its contracted
level of electricity in any one settlement period,
then it must cash settle the difference. The
risk of significant financial exposure in this
regard is managed by:
* Hedging across a group of assets to reduce the risk
of under-performance of any one asset
* Increasing the length of the settlement period so
short-term down time or poor weather resource has
less of an impact on overall generation
* Limiting the volume of electricity production hedged,
typically less than P90 levels
RESIDUAL RISK - 'LOW' OR 'INSIGNIFICANT' GROUPED BY AIFMD CATEGORY
AIFMD category Risks
Operational
Liquidity Liquidity / treasury management
Asset-level liquidity and gearing
Counterparty Counterparty concentration
Credit Risk of counterparty failure
Market Electricity pricing
Macroeconomic factors, including interest rates,
inflation and foreign exchange
Equity capital markets
Deal flow and transaction pricing
Breach of company policies
Taxation Changes in corporation tax rates, limitations
on tax relief on interest deductions and other
tax risks
Counterparty Exposures
Given the importance of state subsidies for investment in
renewables, TRIG has exposure to the creditworthiness of and policy
commitments by national governments and is reliant on the
consistency of government policy, for example "grandfathering"
within the UK whereby renewables generators continue to receive the
same level of subsidy, set upon commissioning, for the duration of
the incentive. In addition, each project company enters into a
commercial PPA(48) with a utility or energy trading company to
enable them to sell the electricity generated and to receive the
FiT(49) or ROC(50) subsidy payments.
The project companies have entered into PPA's with a range of
providers. Each project company enters into a contract for the
maintenance of the plant. This is often, but not always, with the
original equipment manufacturer, in recent years there has been an
increase in the number of alternative providers in an expanding
renewables equipment maintenance market. There are also contracts
with equipment and/or EPC providers who may be building or
maintaining plant and/or have defect guarantees for past works. For
both wind and solar sectors, projects may also benefit from
equipment provider warranties. Failure of any of these
counterparties represents a risk for the group.
There are significant exposures to counterparties, for example,
Statkraft and Scottish Power (as PPA providers), and Vestas,
Siemens and RES (as equipment and maintenance providers). In the
event that a counterparty or guarantor enters insolvency, then
there is a risk of disruption while counterparties are replaced and
a risk of distribution lock-up for the assets that are project
financed.
Given the Covid-19 global pandemic, and financial difficulties
faced by some other turbine suppliers, there is concern around the
future of turbine suppliers in the sector. Whilst TRIG has the
largest exposures to Siemen and Vestas, the largest turbine
suppliers in Europe, the Company does use a wide range of suppliers
to help mitigate concentration risk. The fundamentals behind the
industry, policies supporting wind energy globally, remain in place
and we believe that although certain turbine suppliers may be
facing difficulty, the risk is not systemic.
Recent elevated wholesale power prices may present challenges to
retail electricity suppliers with unhedged positions, some of whom
may also be PPA providers to the Group. The Company regularly
monitors the credit worthiness of all PPA counterparties and has
not identified any significant financial issues with any of the
Group's PPA providers.
Some project companies have more than one counterparty in each
category - where that is the case, the relative valuation of the
associated project in the illustration below has been apportioned
between counterparties.
2.11 Stakeholders and Corporate Culture
Stakeholder Management
The Board believes in conducting business responsibly, which
means behaving ethically, respecting people and the
environment.
TRIG maintains high standards of business conduct and
stakeholder engagement to ensure a positive impact on the
communities and environment in which the Company operates. This
requires consideration of stakeholders by building strong
relationships with suppliers, customers, communities and
authorities among others.
TRIG's relationships with its stakeholders and its dedication to
maintaining a responsible approach to investment, is essential to
position TRIG well for the longer term - and is expected by its
shareholders.
Illustration of principle stakeholders
TRIG and its appointees work with many stakeholders in the
management of the business in the following categories:
Shareholders & the Board:
The Board of Directors is ultimately accountable to the
Shareholders for the running of the business, the making of key
strategic decisions, and all key appointments of service providers.
The Board is non-executive and delegates certain activities,
including day-to-day investment management and operations
management, and works closely with all key service providers.
Shareholder interaction is regarded as a critical component of the
management of TRIG and the Board works closely with the Managers,
InfraRed and RES, with the Company Secretary, Aztec, and with the
Company's brokers, Investec and Liberum, to keep abreast of the
needs and concerns of shareholders
Corporate-level suppliers:
As well as the critical day-to-day oversight of the portfolio
provided by InfraRed and RES, TRIG has a set of corporate providers
which ensure the smooth running of the Company. In administration,
Aztec provides consistent support for corporate and company
secretarial activities, while Investec and Liberum act as key
intermediaries between the Company and its shareholder base,
working with the Managers to arrange meetings with current and
prospective investors, monitoring equity market conditions and
advising on capital raising activities.
TRIG benefits from the commitment and flexibility of six
corporate lenders for the Company's revolving credit facility,
namely National Australia Bank, Royal Bank of Scotland
International, ING Group, Sumitomo Mitsui Banking Corporation,
Barclays and Santander. Carey Olsen and Norton Rose Fulbright
provide corporate legal support for the business in Guernsey and
London respectively and tax services are provided by KPMG. Our
registrar, Link Market Services maintains the shareholder register
and manages the processing of shareholder communications with our
other advisers. Regarding public relations, TRIG receives advice
and practical coordination from Maitland/AMO Strategic Advisers.
TRIG also accesses a number of key data providers, including
technical reports in relation to acquisitions and regular power
price forecasts and commentary from several specialised providers.
The Company's auditor is Deloitte. Additional valuation services
are provided by independent valuers from time to time. The Company
also receives a range of other services including shareholder list
analysis, webhosting, design and remuneration consulting.
Operational partners:
TRIG benefits from co-investing alongside several joint venture
partners, some being developers and vendors, such as Equinor,
Orsted, SSE and Akuo Energy and others being financial
co-investment partners, for example APG and Equitix. In each case,
the Managers build on the relationship with the co-investor,
providing representatives to attend project board meetings to
coordinate and monitor the investment, with the additional
potential to share best practices.
Vendors:
TRIG's reputation for reliability and efficiency in transaction
management with a variety of vendor counterparties (having now
transacted with 19 counterparties) helps the Company to continue to
derive value in origination by accessing projects off-market
(including from RES itself under the right of first offer
agreement).
Portfolio Customers:
As an energy provider, TRIG's key customers are PPA
counterparties. These offtakers pay for and receive TRIG's
portfolio companies' output - with revenues being payments for the
renewables benefits as well as commercial power for those projects
permitted to receive power market revenues.
Portfolio Suppliers:
TRIG's key operational suppliers include Original Equipment
Manufacturers ("OEMs"), spare part O&M providers and
increasingly Independent Service Providers ("ISPs"). On
construction projects the key suppliers are the EPC Contractors,
turbine suppliers and balance of plant contractors. Utilities also
provide certain site-specific services such as meter readings. The
operations teams maintain relationships with the site landowners
who receive rental payments. Lenders to the project companies
include many leading domestic and international banking groups,
TRIG's Managers maintain discussions with key lenders as there are
opportunities to refinance projects as market conditions allow and
this has been done selectively within the portfolio to date.
Local Communities:
TRIG is conscious of its role in the local communities in which
its projects operate. Close consultation with local planning
authorities is an important feature of renewables whether in
construction, during operations or preparing for the potential
repowering or dismantling of a project. Socially, TRIG seeks to
provide educational events at its larger sites, while also
contributing via community funds to local projects ranging from
playgroups to cultural events.
Economic activities around the sites provide additional demand
for local goods and services as well as local employment
opportunities for example in the maintenance of the sites and
access. These are particularly valued in areas where a long-term
urbanisation trend has resulted in reduction in the local rural
economies.
TRIG seeks to promote best practices across the portfolio, in
areas such as noise monitoring, shadow flicker, ice throw,
landscaping, the provision of community events and liaison with the
local media.
Further details on how TRIG interacts with the local community
can be found in Section 2.4, Sustainability.
Other External Stakeholders:
The Company maintains a close dialogue, through its Managers,
with key regulators as well as with the regulated networks, such as
National Grid and the relevant network operators in the UK. At a
policy level, TRIG's Managers monitor requirements and engage with
key government departments and regulatory bodies. At the network
level, TRIG's Managers and O&M providers communicate in several
areas for example on grid outage issues, on the role of renewables
assets as locally embedded suppliers of energy as well as on
technical or contractual issues. In the investment company space,
the Association of Investment Companies (AIC) plays a key role in
shaping the influence of this growing segment of the London market
and TRIG seeks to apply AIC guidelines where relevant to its
business and maintains an active dialogue as one of the leading
companies in its sub-sector. The Managers also keep market
financial analysts appraised of TRIG's strategy, performance and
outlook.
Section 172(1) Statement:
The Company provides disclosure relevant to the requirements of
Section 172(1) a)-f) throughout the Strategic Report. Please see
the table below for a reference to where this information can be
found:
Section 172(1) statement area Reference
The issues, factors and stakeholders During the Board's quarterly meetings,
the Directors consider relevant both the Investment Manager and Operations
in complying with section Manager are required to provide updates
172 (1) (a) to (f) and how on items that relate to section (a)-(f).
they have formed that opinion. Primarily, this is achieved through quarterly
Investment Manager and Operations Manager
reports.
The Company's relationships with suppliers,
customers and contractors is a key part
of the operations report, whilst items
relating to shareholders, Company reputation
and investment decisions are contained
within the Investment Manager report.
The Board challenges the Managers to be
alert to the concerns of stakeholders and
how best to address these concerns to ensure
continuing positive stakeholder engagement.
The Company's risk review framework also
facilitates the identification of items
relevant to the Section 172 (1) statement.
The annual review of the Strategy by the
board encompasses the longer-term factors
relating to the Company's decisions and
the implications for the communities and
environments in which our investments are
made.
As part of the Annual Strategic Review
process, key stakeholders such as partners,
suppliers, customers and local communities
are also discussed. The Board's approach
to engaging with these stakeholders are
outlined above.
(a) the likely consequences The Board considers the likely consequences
of any decision in the long-term on all stakeholders of decisions taken
as part of the Annual Review process. Please
see sections 2.1 TRIG's Investment Proposition
and 2.2 TRIG's Business Model and Strategy
(b) the interests of the Company's The Company does not have any employees.
employees Please see section 2.12 Stakeholders and
Corporate Culture
(c) the need to foster the Please see section 2.12 Stakeholders and
Company's business relationships Corporate Culture
with suppliers, customers
and others
(d) the impact of the Company's The risk framework of the Company overseen
operations on the community by the Board specifically consider environmental
and the environment and social factors, as detailed in section
2.10 Risks and Risk Management. Please
see Sections 2.4 Sustainability and 2.11
Stakeholders and Corporate Culture for
further information.
(e) the desirability of the An example of this would the Company's
Company maintaining a reputation signing of an ESG-linked credit facility
for high standards of business as explained elsewhere in this report.
conduct This facility is the first of its nature
in the listed infrastructure sector and
enhances the Company's reputation for high
standards of
business conduct. Please see sections 2.4
Sustainability and 2.12 Stakeholders and
Corporate Culture
(f) the need to act fairly Please see sections 2.4 Sustainability,
as between members of the 2.12 Stakeholders and Corporate Culture
Company and 6 Corporate Governance Statement
Corporate Culture
The Company's approach to corporate culture, including
sustainability and diversity and inclusion, includes:
Considering that the risk appetite of the Company is consistent
with the risk appetite of the Company on a regular basis;
Embedding and improving on good practices in the day-to-day
management processes - which are assessed by the Board in the
course of the quarterly Board meetings as well as in a wide range
of ad hoc interactions during the year;
Ensuring both Managers and the Board maintain specific
initiatives to promote diversity and inclusion;
Promoting an appropriate culture of stewardship, responsibility,
accountability and openness; and
A focus by the Board and Managers on appropriate interaction
with key stakeholders, including shareholders, lenders, regulators,
vendors, co-investors and suppliers.
The Chairman, Helen Mahy, sets a strong example in maintaining
an effective corporate culture, for example, by her active advocacy
of equal opportunities. Outside of TRIG, Helen is a member of the
steering committee of the Parker Review into the Ethnic Diversity
of UK boards which was published in October 2017 and updated in
February 2020. In addition, she is a patron of a charity, the
Social Mobility Business Partnership, she is co-chair of the
Employers Social Mobility Alliance, Chair of the Safety,
Sustainability, Health and Environment Advisory Committee of SSE
plc. and is an Equality and Human Rights Commissioner, for whom she
chairs the Audit and Risk Assurance Committee.
The Board has been 50% female since launch and three of the six
current Directors are female. Its members are drawn from the UK,
Germany and Scandinavia, which are key markets for TRIG.
TRIG has no employees beyond its non-executive Board therefore
the Directors look to the culture of TRIG's key service providers
in annual review processes in addition to ongoing monitoring. The
executive management of TRIG is provided by its Managers, InfraRed
and RES. Both are global businesses with a broad cultural
representation of employees reflecting the international nature of
their activities.
The Managers support equal opportunities regardless of age,
race, gender or personal beliefs and preferences, both in their
recruitment and when managing existing employees. Both Managers
prioritise work force engagement and implement a range of
initiatives to enhance employee wellbeing, including fitness and
mental health schemes, mentorship programs, promotion of charity
work and organising social activities. HR systems are in place to
allow employees to raise any concerns in confidence. InfraRed and
RES recognise that when their employees are engaged, they will
benefit from elevated productivity and increased employee
loyalty.
InfraRed employs over 150 professionals, representing a range of
nationalities, ages and cultural backgrounds. To support diverse
recruitment of candidates on merit and not on background, race or
gender, InfraRed staff may undergo "unconscious bias" training and
new staff are often recruited via a carefully considered process
which is "name blind".
The Board interacts regularly with staff of the Managers both at
senior and operational levels, in both formal and informal
settings. This promotes greater openness and trust between the key
individuals engaged in delivering against the Company's objectives
and ensures the Managers remain fully aligned with the Company's
corporate culture and approach to sustainability. The Board also
engages closely throughout the year with the Company's
administrator, brokers, and legal and public relations advisers to
gauge the broader positioning and direction of the business.
In addition to the Board Meetings being attended by the core
senior InfraRed and RES teams, other more junior members from
InfraRed and RES are encouraged to join. Not only does this aid
their development, but it also allows the Board to gain insight
into how senior management are supported and how prepared the
Managers are in relation to key person risk and long-term
succession planning.
InfraRed
InfraRed has a strong and clear set of values which it promotes
and monitors both at a company and individual level through
assessments. These values focus on the principles of Passion,
Curiosity, Trust, Partnership and Fulfilment.
InfraRed also adopts and implements the Principles for
Responsible Investment ("PRI") ([29]) which are widely recognised
and highly regarded around the world. In the assessments by PRI,
InfraRed maintains an A+ rating, standing well above industry
standards. The PRI can be summarised as follows:
to showcase leadership in responsible investment;
to incorporate sustainability issues into investment analysis
and decision-making;
to be active owners and incorporate sustainability issues into
ownership policies and practices;
to seek appropriate disclosures on sustainability issues by the
entities in which the investments are made;
to promote acceptance and implementation of PRI within the
investment industry; and
to report on activities and progress towards implementing the
PRI.
RES
Culture is very important for RES, from both a business
perspective and to RES' employees. The RES culture is what enables
its strategy to succeed and what motivates its people to perform.
RES' senior leadership are of the view that empowering employees
and promoting a strong safety culture is necessary to generate a
positive impact in the communities it works in.
RES' leadership maintains that, as the organisation grows and
adapts, it remains true to its culture, heritage and vision to
create a future where everyone has access to affordable low carbon
energy. RES' core values are reflected in their values of Passion,
Accountability, Collaboration and Excellence.
RES supervises a range of activities at a corporate level, to
support staff in their own volunteering and charitable fundraising
endeavours. At a portfolio level, activities are designed to
enhance interactions with local communities and make a difference
to the amenities available in the, often remote, locations where
TRIG's projects are sited.
Anti-Bribery and Corruption
Although TRIG has no employees, TRIG is committed to respecting
human rights in its broader relationships.
TRIG does not tolerate corruption, fraud, the receiving of
bribes or breaches in human rights. Both InfraRed and RES have
anti-corruption and bribery policies in place to maintain high
standards of business integrity, a commitment to truth and fair
dealing and a commitment to complying with all applicable laws and
regulations.
Both Managers have training for anti-bribery and corruption
which all employees are required to complete annually.
All counterparties undergo processes to mitigate against bribery
and corruption. When InfraRed completes acquisitions on behalf of
TRIG, vendor due diligence is performed, and all sales and purchase
agreements are required to have anti bribery and corruption
protection clauses.
Disclosure
On the basis of the Managers' recommendations, the Directors
have considered existing sustainability and corporate culture
policies, relative to good industry practice for an infrastructure
investment company, believing them to be current and
appropriate.
The Board remains committed to high standards of corporate
governance and keeps the Company's practices under review with
respect to current best practice. Further details of how the
Company complies with the various corporate governance standards
are set out in section 6 Corporate Governance Statement.
The Board wishes to be at the forefront of disclosure and
reporting of the Company's performance and strategic intentions.
The Board believes this is achieved by the communications as
follows:
Annual report and accounts;
Interim statement and accounts;
Detailed presentations to accompany the results;
Announcements of all material acquisitions; and
Meetings with shareholders held by the Investment Manager and
the Operations Manager.
Climate action is core to TRIG and its Managers' ethos. InfraRed
is a member of the Net-Zero Asset Managers initiative and the
impact of adverse climate change is integrated in its investment
cycle, and RES is an SBTi signatory. TRIG has committed to the
Science Based Targets Initiative (SBTi), the leading standard for
corporate emissions reduction targets, and is a supporter of the
recommendations of the Task Force on Climate-Related Financial
Disclosures (TCFD). Disclosure aligned to TCFD guidance is
consistent with the Company's approach to promoting best practice
disclosure. Climate change is a live topic and expertise on the
subject continues to evolve. Section 2.4 Sustainability covers
TRIG's TCFD disclosures.
The Company's website (www.TRIG-Ltd.com) which includes the
Company's prospectuses, financial disclosures and other
announcements since launch provides further information on TRIG and
its investments.
Disclosure of key sensitivities and risks has been developed by
the Board working with the Managers. The level and type of
disclosure has been developed and refined to assist in a full and
fair analysis of the Company and its investments.
This Strategic Report is approved by the Board of Directors of
The Renewables Infrastructure Group Limited.
17 February 2022
Registered Office:
East Wind, Trafalgar Court, Les Banques, St Peter Port, Guernsey
GY1 3PP
3.0 Board of Directors
Helen Mahy CBE Chairman
Appointed 14 June 2013, Helen is an experienced chairman and
non-executive Director. In addition to being Chairman of the
Company, Helen serves as a non-executive Director for SSE plc,
where she chairs the Safety, Sustainability, Health and Environment
Advisory Committee, and Gowling WLG (UK) LLP and is also an
Equality and Human Rights Commissioner. Previous Directorships
include SVG Capital plc, Stagecoach Group plc, Aga Rangemaster
Group plc, Primary Health Properties plc, Bonheur ASA and she was
also Chairman of MedicX Fund Ltd. Helen was Group Company Secretary
and General Counsel of National Grid plc and was a member of its
Executive Committee from September 2003 to January 2013 when she
retired from National Grid plc. Helen qualified as a barrister and
was an Associate of the Chartered Insurance Institute. In 2015 she
was awarded a CBE for services to business, particularly relating
to diversity in the workplace. Helen is a resident of the UK.
Relevant skills that support TRIG's long-term success:
Extensive energy and regulatory experience and a comprehensive
understanding of the listed investment company space including
applicable legal, governance, compliance, risk management, and
health & safety frameworks and best practice.
Broad experience from external Board interests, providing an
insight into different stakeholder perspectives that enables wider
discussion and debate.
An advocate for strong health & safety, inclusion &
diversity and employee wellbeing culture with extensive knowledge
of people matters and a focus on sustainability.
Shelagh Mason Director and Senior Independent Director
Appointed 14 June 2013, Shelagh is an English property
solicitor. She was Senior Partner of Spicer and Partners Guernsey
LLP until November 2014 and retired at the end of October 2020 as a
consultant with Collas Crill LLP, specialising in English
commercial property. She is also non-executive Chairman of the
Channel Islands Property Fund Limited which is listed on The
International Stock Exchange Authority Limited and Chairman of
Riverside Capital PCC. She sits on the Board of Skipton
International Limited, and Shelagh is also on the Board of Starwood
European Real Estate Finance Limited and Ruffer Investment Company,
both London listed. Previously, Shelagh was a member of the board
of Directors of Standard Life Investments Property Income Trust, a
property fund listed on the London Stock Exchange for 10 years
until December 2014. She retired from the board of MedicX Fund
Limited, a main market listed investment company investing in
primary healthcare facilities in 2017 after 10 years on the board.
She is a past Chairman of the Guernsey Branch of the Institute of
Directors and a member of the Chamber of Commerce, the Guernsey
International Legal Association and she also holds the IOD Company
Direction Certificate and Diploma with distinction. Shelagh is a
resident of Guernsey.
Relevant skills that support TRIG's long-term success:
Extensive listed investment company experience having sat on
such boards since 2003 in a number of different sectors.
40-year career as a solicitor in senior roles with commercial
and management experience.
Thorough understanding and keen interest in good corporate
governance and former Chairman of the Guernsey branch of the
Institute Of Directors.
Able to draw from long-term experience and knowledge of listed
boards and identify and bring best practice to her role.
Jon Bridel Director and Audit Committee Chair
Appointed 14 June 2013, Jon currently serves as a Director or
non-executive Chairman. These include Sequoia Economic
Infrastructure Income Fund Limited and SME Credit Realisation Fund
Limited, as well as DP Aircraft I Limited and Fair Oaks Income
Limited, which are both listed on the Specialist Fund Segment. Jon
previously worked as Managing Director of Royal Bank of Canada's
investment businesses in the Channel Islands and in senior
management positions in the British Isles and Australia in banking,
specialising in corporate finance and commercial credit and in
private multi-national businesses as Chief Financial Officer.
Graduating from the University of Durham with a degree of Master of
Business Administration in 1988, Jon also holds qualifications from
the Institute of Chartered Accountants in England and Wales where
he is a Fellow, the Australian Institute of Company Directors and
is a Chartered Marketer. Jon is a Member of the Chartered Institute
of Marketing, a Chartered Director and Fellow of the Institute of
Directors and a Chartered Fellow of the Chartered Institute for
Securities and Investment. Jon is a resident of Guernsey.
Relevant skills that support TRIG's long-term success:
Investment Company & Governance - 60 company years'
experience on listed investment and finance companies and a
qualified Chartered Director. Have developed many corporate
governance structures for listed companies over the past ten years.
Previously Managing Director and Investment Manager of a
substantial investment group and also a Chairman or director of
investment-licensed Private Equity groups.
Accounting, Audit & Finance - Chartered Accountant with 34
years post qualification experience in corporate finance, banking
and investment management and as CFO of a private multinational
business. 40 company years' experience as Audit or Risk Chair of
listed companies. Master's thesis on valuation of companies.
Legal & Regulatory - 34 years' experience structuring
transactions and drafting a range of legal documentation for
corporate finance, corporate debt, banking, M&A and commercial
law. Regulatory qualified in investments and sat on many boards
subject to a wide variety of laws, regulations, rules and
codes.
Klaus Hammer Director and Management Engagement Committee
Chair
Appointed 1 March 2014, Klaus is a graduate of the University of
Hamburg and gained an MBA at IMD Lausanne. He was previously Chief
Operating Officer of the global combined-cycle gas turbine power
plant business of EON, and also served on a variety of boards
including E.On Värmekraft Sverige AB, Horizon Nuclear Power Ltd.
and the UK Association of Electricity Producers. Prior to E.On,
which he joined in 2005, he spent 20 years with Royal Dutch Shell
in a variety of roles in both Europe and Africa. Among his other
recent roles, he was a public member of Network Rail until
mid-2014. Klaus also advises investors in energy-related
businesses. In 2018, he supported the setting-up of a major defence
contractor on an interim basis as Executive Finance Director in
Australia. Since last year he is a non-executive Director of the
Biotech company Terravesta. Klaus is a resident of Germany.
Relevant skills that support TRIG's long-term success:
Power sector experience across multiple technologies - practical
operational experience of generating assets across the gas, nuclear
and renewable energy sectors.
International operational experience - senior roles across
Europe and Africa within the energy sector.
Governance focused - strong track record of project oversight
and HSQE implementation.
Tove Feld Director
Appointed 1 March 2020, Tove is a Danish national and has more
than 25 years' experience in the renewables sector, with a focus on
offshore wind. Her previous roles include the Chief Technical
Officer at DONG Energy Wind Power (now Orsted) where she had a
prominent role in preparing the company for IPO, as well as Head of
Engineering Solutions for Offshore Wind at Siemens Wind Power. Tove
currently serves as Non-Executive Director on a number of Boards
supporting the Green Energy Transition including Venterra Group
plc, a service provider to the wind industry; Stiesdal, an
innovative technology company developing high impact solutions to
overcome climate change; FORCE Technology, a leading technological
service company; and CEKO Sensors ApS, an industrial monitoring and
optimisation sensor technology business. She also serves on the
Board of Representatives of the Danish Technical University. Tove
is a UF (USA) Engineering Graduate (M.Sc.), she has a Ph.D. from
Aalborg University (Denmark) and Executive MBA from IMD
(Switzerland). Tove is a resident of Denmark.
Relevant skills that support TRIG's long-term success:
Extensive Renewables and Energy Generation Operational
experience, proving a deep understanding of Technology, Commercial,
Project, Portfolio and Risk Management with a strong Health &
Safety focus.
Board and Governance Experience from external international
boards ranging from innovation to investment companies. Combined
with a deep Energy Market insight, various stakeholders' views and
the Net-Zero Framework.
Strong People and Business focus, extensive experience with
leadership and strategic transition from energy and infrastructure
business, encompassing a dedicated focus on QHSE, ESG and
Sustainability.
John Whittle Director
Appointed 1 July 2021, John Whittle is a Fellow of the Institute
of Chartered Accountants in England and Wales and holds the
Institute of Directors Diploma in Company Direction. He is the
non-executive Chairman of Starwood European Real Estate Finance Ltd
(LSE), a non-executive Director of Sancus Lending Group Ltd and
Audit Committee Chair of Chenavari Toro Income Fund Limited (listed
on the SFS segment of the Main Market of the London Stock
Exchange). Prior to these roles, John was Senior Independent
Director and Audit Committee Chair at International Public
Partnerships Ltd (INPP), the FTSE 250 infrastructure investment
company. In his executive career, amongst other senior roles, John
served as Finance Director of Close Fund Services and CEO of Hugh
Symons Group PLC. John is a resident of Guernsey.
Relevant skills that support TRIG's long-term success:
Investment Company & Governance; extensive experience gained
over a number of years at multiple FTSE listed business, in
particular during 12 years as a non-executive Director, including
as Audit Committee Chair and Senior Independent Director at INPP (a
FTSE 250 listed infrastructure Investment Company).
Accounting, Audit & Finance; Chartered Accountant with 43
years' post qualification experience including as a Financial
Director of a financial services business and CEO of a large mobile
telephone business.
Shareholder Engagement; through John's executive and
non-executive career he has deep experience of investor engagement,
particularly gained as Audit Chair and Senior Independent Director
of INPP and as Chairman of Aberdeen Frontier Markets Investment
Company.
Board succession
In 2022, Helen Mahy, Shelagh Mason and Jon Bridel will have
served as Non-executive Directors of TRIG for nine years and, in
line with good governance, they will be retiring from the Board in
due course. The Nomination Committee has an active succession plan,
and has appointed Erna-Maria Trixl to the Board. Her appointment
will commence on 1 March 2022, and she will stand for election at
the Company's 2022 Annual General Meeting. A process is underway,
utilising the services of a third-party adviser, to select and
appoint a successor to Helen Mahy as Chairman of the Board.
The senior officer roles of the retiring Non-executive Directors
will be fulfilled by:
Senior Independent Director: John Whittle
Audit Committee Chairman: John Whittle
Further details on the Board and its Nomination Committee's
approach to succession planning is provided in Section 6 -
Corporate Governance Statement.
Erna-Maria Trixl Director (effective 1 March 2022)
Erna-Maria is to be appointed to the TRIG Board as a
Non-executive Director, with effect from 1 March 2022. Erna-Maria
is an energy and infrastructure expert and is currently an
independent executive consultant focusing on renewables,
e-mobility, decarbonisation and sustainability. Erna-Maria is also
a member of the advisory board of METR Building Management Systems
GmbH. She previously served as chair of the supervisory board of
M-net Telekommunikations GmbH and as a member of the supervisory
board of Energie Suedbayern GmbH. Erna-Maria's executive roles
included membership of the executive board and chief sales officer
of Stadtwerke Muenchen GmbH, a municipal utility services company
owned by the City of Munich, and roles within the RWE Group and at
EnBW Energie Baden-Wuerttemberg AG.
Relevant skills that support TRIG's long-term success:
Extensive energy and renewables expertise and experience with
renewables investment strategies and performance management
Strong business and stakeholder focus, balancing short-term
performance and long-term value creation
Governance and risk management skills with a focus on climate
risks, sustainability and ESG
4.0 Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations. The Companies (Guernsey) Law, 2008, as
amended, requires the Directors to prepare financial statements for
each financial year. Under that law they have elected to prepare
the financial statements in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU and Article 4 of
the IAS Regulation and applicable law.
Under company law the Directors must not approve the accounts
unless they are satisfied that they give a true and fair view of
the state of affairs of the company and of the profit or loss of
the company for that period. In preparing these financial
statements, International Accounting Standard 1 requires that
Directors:
Properly select and apply accounting policies;
Present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
Provide additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
Make an assessment of the company's ability to continue as a
going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with the Companies (Guernsey) Law,
2008. They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Directors' Report and Corporate
Governance Statement. The Directors are responsible for the
maintenance and integrity of the corporate and financial
information included on the Company's website. Legislation in
Guernsey and the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Directors' responsibility statement
We confirm that to the best of our knowledge:
The financial statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company;
The Chairman's Statement and Report of the Directors include a
fair review of the development and performance of the business and
the position of the Company and Group taken as a whole together
with a description of the principal risks and uncertainties that it
faces; and
The annual report and financial statements when taken as a whole
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position,
performance, business model and strategy.
Disclosure of information to the Auditor
The Directors who held office at the date of approval of this
Directors' report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company's
auditor is unaware and that each Director has taken all the steps
that he or she ought to have taken as a Director to make himself or
herself aware of any relevant audit information and to establish
that the Company's auditor is aware of that information.
Auditor
Deloitte LLP have expressed their willingness to continue in
office as auditor and a resolution proposing their re-appointment
will be submitted at the Annual General Meeting.
On behalf of the Board of Directors of The Renewables
Infrastructure Group Limited
Helen Mahy CBE
17 February 2022
Registered Office:
East Wing, Trafalgar Court, Les Banques, St Peter Port,
Guernsey, Channel Islands, GY1 3PP
5.0 Report of the Directors
The Directors present their report and accounts of the Company
for the year to 31 December 2021.
Principal Activity
The Company is a closed-ended Guernsey incorporated investment
company, investing in and managing a portfolio of investments in
renewable energy infrastructure project companies. Its shares have
a premium listing on the Official List of the UK Listing Authority
and are traded on the main market for listed securities of the
London Stock Exchange.
Results and Distributions
The results for the year are summarised in the Operational
Review and Valuation of the Portfolio section of the Strategic
Report (Sections 2.6 and 2.7) and set out in detail in the audited
financial statements.
Distributions and Share Capital
The Company has declared four quarterly interim dividends for
the year ended 31 December 2021 for an aggregate annual dividend of
6.76p (2020: 6.76p) per share as follows:
1.69p per share was declared on 6 May 2021, to shareholders on
the register as at 14 May 2021, paid on 30 June 2021,
1.69p per share was declared on 3 August 2021, to shareholders
on the register as at 13 August 2021, paid on 30 September
2021,
1.69p per share paid on 4 November 2021, to shareholders on the
register as at 12 November 2021, paid on 31 December 2021, and
1.69p share was declared on 3 February 2022, to shareholders on
the register on 11 February 2022, to be paid on 31 March 2022.
The Company had one class of share capital, Ordinary Shares, in
issue as at 31 December 2021.
Shares in Issue
Ordinary Shares in issue have increased during the year from
1,903,402,338 to 2,267,246,415 as a result of further share issues,
issues of shares to the Managers in lieu of fees pursuant to the
Investment Management Agreement (in relation to InfraRed Capital
Partners Limited) and the Operations Management Agreement (in
relation to Renewable Energy Systems Limited) and take up of scrip
shares in lieu of dividends.
Date Description New Ordinary Number of
Shares Issued Shares in Issue
31 December 2020 Opening Position - 1,903,402,338
26 March 2021 Share issue 195,000,000 2,098,402,338
Issue of shares to the Managers in lieu of fees relating to H2
31 March 2021 2020 885,012 2,099,287,350
Issue of scrip dividend shares in lieu of 2020 4th (Q4)
31 March 2021 interim dividend 1,758,014 2,101,045,364
Issue of scrip dividend shares in lieu of 2021 1st (Q1)
30 June 2021 interim dividend 2,363,566 2,103,408,930
17 September 2021 Share issue 161,290,323 2,264,699,253
Issue of shares to the Managers in lieu of fees relating to H1
30 September 2021 2021 880,719 2,265,579,972
Issue of scrip dividend shares in lieu of 2021 2nd (Q2)
30 September 2021 interim dividend 306,590 2,265,886,562
Issue of scrip dividend shares in lieu of 2021 3rd (Q3)
31 December 2021 interim dividend 1,359,853 2,267,246,415
31 December 2021 Closing Position - 2,267,246,415
------------------- --------------------------------------------------------------- -------------- ----------------
Share Issues in the Year
Over 2021, the Company issued 356m shares over two equity issues
by way of placing (excluding the issuance of Managers' shares and
scrip issues). These issues raised gross proceeds of GBP440m at a
premium to NAV.
These issues took place in March and September. The March
fundraise resulted in the issue of 195m shares at 123.0p each. The
September fundraise resulted in the issue of 161m shares at 124.0p
each.
The net proceeds of these raisings have been used to acquire
assets over the year for the TRIG portfolio and to pay down the
Company's revolving credit facility. At 31 December 2021, the
Company's acquisition facility was GBP72.8m drawn.
Shares Issued to the Managers
The Managers are paid 20% of their annual management fee (up to
an adjusted portfolio value of GBP1bn) and advisory fees in shares.
In relation to this, 885,012 shares were issued in March 2021
(575,258 to the Investment Manager and 309,754 to the Operations
Manager) relating to fees for the second six months of 2020. A
further 880,719 shares were issued in September 2021 (572,468 to
the Investment Manager and 308,251 to the Operations Manager)
relating to fees for the first six months of 2021. Shares in lieu
of fees relating to the second six months of 2021 (expected to be
857,254 shares in total - comprised of 557,216 to the Investment
Manager and 300,038 to the Operations Manager) are to be issued in
March 2022. (See Note 18 to the financial statements for further
detail).
For the calculation of Net Asset Value ("NAV") per share as at
31 December 2021, the shares earned by the Managers but not yet
issued at that date have been included in the number of shares,
meaning that the Net Assets are divided by 2,268,103,669 shares to
arrive at the NAV per share.
For the calculation of Earnings per Share ("EPS"), the shares
earned by the Managers but not yet issued have been included in the
calculation of the weighted average number of shares based upon
them being issued at the end of the quarter in which the management
fees were earned. The resulting weighted average shares in issue
used to calculate EPS is 2,103,868,882.
In addition, senior representatives and connected individuals of
the Managers hold approximately two million shares.
As a result of the share issues during the year and the expected
issuance to the Managers in March 2022, the number of shares in the
Company held by the Investment Manager is expected to be 3,350,543
and the number of shares held by the Operations Manager is expected
to be 1,230,761.
Scrip Shares
An annual ordinary resolution to authorise the Directors to
offer the shareholders the right to receive further Ordinary Shares
("Scrip Shares") instead of cash in respect of all or part of any
dividend that may be declared will be proposed at the forthcoming
Annual General Meeting in 2022.
The Board believes that it would be in the general interest of
shareholders, who may be able to treat distributions of Scrip
Shares as capital for tax purposes or who may otherwise wish to
roll over their dividend entitlement into further investment in the
Company, to have the option of electing to receive part or all of
their dividends in the form of Scrip Shares. Shareholders who elect
to take Scrip Shares instead of receiving cash dividends will
increase their holdings without incurring dealing costs or stamp
duty. The Company benefits from the retention of cash for further
investment which would otherwise be paid out as a dividend.
The scrip dividend alternative was offered to shareholders in
relation to the interim dividends declared for the year ended 31
December 2021. A scrip alternative will again be offered to
shareholders for the dividend to be paid on 31 March 2022 relating
to the final quarter of 2021 and a scrip dividend circular will be
published separately in May 2022 with details of the scrip dividend
alternative for 2022. The Scrip Shares issued do not have any
entitlement to the dividends paid in the same month and declared in
the month before they are issued. The average take-up of scrip
dividends over the year was 5.3%.
Guernsey regulatory environment
As a Guernsey-registered closed-ended investment company, TRIG
is subject to certain ongoing obligations to the Guernsey Financial
Services Commission.
Directors
The Directors who held office during the year to 31 December
2021 were:
Helen Mahy CBE
Jon Bridel
Shelagh Mason
Klaus Hammer
Tove Feld
John Whittle
Biographical details of each of the Directors are shown in
Section 3.
Investment Manager
InfraRed Capital Partners Limited (the "Investment Manager" or
"InfraRed") acts as Investment Manager to the Group. A summary of
the contract between the Company, its subsidiaries and InfraRed in
respect of services provided is set out in Note 18 to the
accounts.
Operations Manager
Renewable Energy Systems Limited (the "Operations Manager" or
"RES") acts as Operations Manager to the Group. A summary of the
contract between the Company, its subsidiaries and RES in respect
of services provided is set out in Note 18 to the accounts.
Further details of the Managers are provided in Section 2.2 of
the Strategic Report.
Broker, Administrator and Company Secretary
The Company's joint brokers during the year to 31 December 2021
were Investec Bank PLC and Liberum Capital Limited.
The Company's Administrator during the year to 31 December 2021
is Aztec Financial Services (Guernsey) Limited.
Substantial Interests in Share Capital
As at 17 February 2022, the Company has received notification in
accordance with the Financial Conduct Authority's Disclosure and
Transparency Rule 5 of the following interests in 5% or more of the
Company's Ordinary Shares to which voting rights are attached:
Number of Ordinary Shares Held Percentage
Held
Newton Investment Management Ltd 171,021,326 7.54
Rathbone Investment Management Ltd 145,294,771 6.41
M&G Investment Management Ltd 116,011,201 5.11
------------------------------------ ------------------------------ ----------
Donations
The Company made no political donations during the year or the
preceding year.
Payment of Suppliers
It is the policy of the Company to settle all suppliers in
accordance with the terms and conditions of the relevant market in
which it operates. Although no specific code or standard is
followed, suppliers of goods and services are generally paid within
30 days of the date of any invoice. The Company has no trade
creditors.
Criminal Finances Act
The Board of The Renewable Infrastructure Company Limited has a
zero-tolerance commitment to preventing persons associated with it
from engaging in criminal facilitation of tax evasion. The Board
has satisfied itself in relation to its key service providers that
they have reasonable provisions in place to prevent the criminal
facilitation of tax evasion by their own associated persons and
will not work with service providers who do not demonstrate the
same zero-tolerance commitment to preventing persons associated
with it from engaging in criminal facilitation of tax evasion.
Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Strategic Report. The financial position of the
Group, its cash flows, liquidity position and borrowing facilities
are described in Section 2.8, Analysis of Financial Results of the
Strategic Report. In addition, Notes 1 to 4 to the financial
statements include the Group's objectives, policies and processes
for managing its capital; its financial risk management objectives;
details of its financial instruments and hedging activities; and
its exposures to credit risk and liquidity risk.
The Group has the necessary financial resources to meet its
obligations. The Group benefits from a range of long-term contracts
with various major UK and European utilities and well-established
suppliers across a range of infrastructure projects. In addition,
it maintains a working capital component of GBP30m as part of its
revolving credit facility (currently sized at GBP500m and limited
to 30% of Portfolio Value). The Group's project-level financing is
non-recourse to the Company and is limited to 50% of Gross
Portfolio Value. As a consequence, the Directors believe that the
Group is well placed to manage its business risks successfully.
The Company has a number of commitments related to the
construction of assets held within the portfolio and has sufficient
headroom in its revolving credit facility to finance these
activities.
The directors do not believe that there is a significant risk to
the business as a result of the COVID-19 pandemic but will continue
to monitor any future developments.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus they adopt the going concern basis of
accounting in preparing the annual financial statements.
This conclusion is based on a review of the Company's cash flow
projections including reasonably expected downside sensitivities
together with cash and committed borrowing facilities available to
it.
Viability Statement
The Directors have assessed the viability of the Group over a
five-year period to December 2026.
In making this statement the Directors have considered the
resilience of the Group, taking account of its current position,
the principal risks facing the business (being the level of
electricity production, the level of future energy prices and
continued government support for renewable subsidy payments), in
severe but plausible downside scenarios and the effectiveness of
any mitigating actions.
As part of being a self-managed Alternative Investment Fund, the
Directors, together with the Managers, rigorously assess the risks
facing the Group and consider sensitivity analysis against the
principal risks identified.
The Directors have determined that the five-year period to
December 2026 is an appropriate period over which to provide this
viability statement as this period accords with the Group's
business planning exercises and is appropriate for the investments
owned by the Group. The Group's risk management processes
(described in Section 2.10 (Risks and Risk Management)) consider
the key risks during this five-year period and beyond. These
include sustainability-related risks that take into account
environmental, social and governance considerations, one of which
is climate change (in line with the recommendations of the Task
Force on Climate-related Financial Disclosures ("TCFD")).
TRIG is the owner of a portfolio of project companies whose
underlying assets are predominately fully constructed and operating
renewable electricity-generating facilities with economic lives
well in excess of the period being considered. As a result, TRIG
benefits from predictable long-term cash flows and a set of risks
that can be identified and assessed. Over the next five years, 65%
of portfolio revenues are fixed per MWh under government subsidies
and fixed price PPAs. Forecast revenues for wholesale power prices
are based upon independent forecasts. The projects are each
supported by detailed financial models. The Directors believe that
diversification within the portfolio of projects helps to withstand
and mitigate risks it is most likely to meet.
The Investment Manager prepares and considers, and the Directors
review, summary five-year cash flow projections each year as part
of management reporting, business planning and dividend approval
processes. The projections consider cash balances, key covenants
and limits, dividend cover, investment policy compliance and other
key financial indicators over the five-year period. Sensitivity
analysis considers the potential impact of the Group's principal
risks occurring (individually, and together). These projections are
based on the Managers' expectations of future asset performance,
income and costs, and are consistent with the methodology applied
to produce the valuation of the investments.
The Directors review significant changes to the Company's cash
projections each quarter with the Managers as part of the quarterly
Board meetings. The viability assessment assumes continued
government support for existing subsidy arrangements other than for
early solar projects in France where subsidy levels are relatively
high. Generally, subsidy payments, which comprise an important
element of the Group's revenues alongside electricity sales into
the wholesale market, are considered to be robust. Subsidy earnings
are spread across several jurisdictions (UK, Ireland, Germany and
France) where it is expected that governments will act consistently
with their promises, especially in a sector which continues to need
to mobilise large amounts of capital. In the case of France, the
government states their adjustments are limited to the older solar
projects, which were awarded tariffs under legislation from 2010 or
earlier.
The Directors believe that whilst the risk to the value of the
Company's investments, its ability to operate its projects and
generate revenue presented by the ongoing Covid-19 pandemic is
significant, there has been minor disruption to the business to
date and the risk-mitigating activities have served to reduce the
impact. The Directors continue to work with the Managers to ensure
that the portfolio of investments are able to operate as
effectively as possible. The Managers have performed downside risk
scenario planning encompassing a range of potential outcomes and
these demonstrate that whilst profitability may be adversely
affected, the Company and its investments are expected to remain
viable.
As explained in the Chairman's Statement and in Section 2.10
(Risks and Risk Management), the Directors do not consider the
risks to the Company from Brexit or the Covid-19 pandemic to
significantly affect the principal risks set out above. The Group's
projects have continued to operate post Brexit and through the
Covid-19 disruption, and the Managers and Directors believe the
risks from Brexit and the pandemic disruption are reducing and
continue to be manageable.
Based on this review, the Directors confirm that they have a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the
five-year period to December 2026.
Internal Controls Review
Taking into account the information on emerging and principal
risks and uncertainties provided in Section 2.10 of the Strategic
Report and the ongoing work of the Audit Committee in monitoring
the risk management and internal control systems on behalf of the
Board (see Section 8, the Audit Committee Report), the
Directors:
are satisfied that they have carried out a robust assessment of
the principal risks facing the Company, including those that would
threaten its business model, future performance, solvency or
liquidity;
are satisfied the Company has adequate safeguards and procedures
in place during the Covid-19 pandemic to continue to function
effectively; and
have reviewed the effectiveness of the risk management and
internal control systems and no significant failings were
identified.
The internal controls review covers material controls including
financial, operational and compliance controls.
To enable the Directors to provide this statement in relation to
risks and controls, the Directors have worked with the Managers
to:
review the Company's risk dashboard and framework each
quarter;
consider each Manager's compliance with their own internal
controls each quarter;
receive presentations from each Manager on the effectiveness of
these controls and their internal controls environment at least
annually;
consider the Company's risk appetite, agree this with the
Managers and document this;
assess the impact of the Covid-19 pandemic on the Company;
and
consider the risk culture of the Company and within the Managers
and confirm these are appropriate and expected to support the
sustainability of the company and consistent with the risk
appetite.
Share repurchases
No shares have been bought back in the period. The latest
authority for the Company to make market purchases of Ordinary
Shares was granted to the Directors on 5 May 2021 and expires on
the date of the next Annual General Meeting. The Directors are
proposing that their authority to buy back shares be renewed at the
forthcoming Annual General Meeting.
Treasury Shares
Section 315 of the Companies (Guernsey) Law, 2008 allows
companies to hold shares acquired by market purchase as treasury
shares, rather than having to cancel them. Up to 14.99% of the
number of shares in issue at the date of the last AGM (5 May 2021)
may be held in treasury and may be subsequently cancelled or sold
for cash in the market. This gives the Company the ability to
reissue shares quickly and cost efficiently, thereby improving
liquidity and providing the Company with additional flexibility in
the management of its capital base.
There are currently no shares held in treasury. The Board would
only authorise the sale of shares from treasury at prices at or
above the prevailing net asset value per share (plus costs of the
relevant sale). If such a measure were to be implemented, this
would result in a positive overall effect on the Company's net
asset value. In the interests of all shareholders, the Board will
keep the matter of treasury shares under review.
On behalf of the Board of Directors of The Renewables
Infrastructure Group Limited
Helen Mahy CBE
17 February 2022
Registered Office:
East Wing, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, Channel Islands, GY1 3PP
6.0 Corporate Governance Statement
Introduction
The Board recognises the importance of a strong corporate
governance culture that meets the listing requirements. The Board
has put in place a framework for corporate governance which it
believes is appropriate for an investment company in line with the
best practices in relation to matters affecting shareholders,
communities, regulators and other stakeholders of the Company. With
a range of relevant skills and experience, all Directors contribute
to the Board discussions and debates on corporate governance. In
particular, the Board believes in providing as much transparency
for investors as is reasonably possible to ensure investors can
clearly understand the prospects of the business and enhance
liquidity of its shares while also preserving an appropriate level
of commercial confidentiality.
AIFM Directive
The Alternative Investment Fund Managers Directive seeks to
regulate alternative investment fund managers (in this paragraph,
"AIFM") and imposes obligations on managers who manage alternative
investment funds (in this paragraph, "AIF") in the EU or who market
shares in such funds to EU investors. The Company is categorised as
a self-managed Non-EEA AIF for the purposes of the AIFM Directive.
In order to maintain compliance with the AIFM Directive, the
Company needs to comply with various organisational, operational
and transparency obligations.
AIC Code
The Board of TRIG has considered the Principles and Provisions
of the AIC Code of Corporate Governance (AIC Code). The AIC Code
addresses the Principles and Provisions set out in the UK Corporate
Governance Code (the UK Code), as well as setting out additional
Provisions on issues that are of specific relevance to investment
companies. The Board considers that reporting against the
Principles and Provisions of the AIC Code, which has been endorsed
by the Financial Reporting Council and the Guernsey Financial
Services Commission, provides more relevant information to
shareholders. The company has complied with the Principles and
Provisions of the AIC Code. The AIC Code is available on the AIC
website (www.theaic.co.uk). It includes an explanation of how the
AIC Code adapts the Principles and Provisions set out in the UK
Code to make them relevant for investment companies.
Stewardship Code
The Company's Managers are responsible for day-to-day management
of the portfolio and therefore are best placed to engage with
portfolio companies and discharge stewardship obligations.
Accordingly, TRIG becoming a signatory to the Stewardship Code
would unnecessarily duplicate the work of the Managers.
The Board has instead chosen to exercise stewardship by
reporting against the AIC Code rather than by being signatories to
the Stewardship Code.
Guernsey Regulatory Environment
The Guernsey Financial Services Commission (the "Commission")
issued a Finance Sector Code of Corporate Governance. The Code
comprises Principles and Guidance and provides a formal expression
of good corporate practice against which shareholders, boards and
the Commission can better assess the governance exercised over
companies in Guernsey's finance sector.
The Commission recognises that the different nature, scale and
complexity of specific businesses will lead to differing approaches
to meeting the Code. Companies which report against the UK
Corporate Governance Code or the AIC Code are also deemed to meet
this code. The Directors have determined that the Company will
continue as a Guernsey-registered closed-ended investment
company.
Non-Mainstream Pooled Investments
On 1 January 2014, certain changes to the FCA rules relating to
restrictions on the retail distribution of unregulated collective
investment schemes and close substitutes came into effect.
As announced by the Company on 7 January 2014, following the
receipt of legal advice the Board confirms that it conducts the
Company's affairs, and intends to continue to conduct the Company's
affairs, such that the Company would qualify for approval as an
investment trust if it were resident in the United Kingdom. It is
the Board's intention that the Company will continue to conduct its
affairs in such a manner and that Independent Financial Advisers
should therefore be able to recommend its Ordinary Shares to
ordinary retail investors in accordance with the FCA's rules
relating to non-mainstream investment products.
The Board
The Board consists of six non-executive Directors. In accordance
with Provision 10 of the AIC Code all of the non-executives are
independent of the Investment Manager. The Chairman, Helen Mahy,
met the independence criteria of the AIC Code Provision 11 upon
appointment and has continued to meet this condition throughout her
term of service. Although not a requirement of the AIC Code, in
accordance with guidance in Provision 11, the Board has a Senior
Independent Director, Shelagh Mason, who was appointed as Senior
Independent Director in 2013. Being non-executive Directors, none
of the Directors have a service contract with the Company.
The Articles of Incorporation provide that each of the Directors
shall retire at each annual general meeting in accordance with
Provision 23 of the AIC Code. All six Directors intend to retire
and offer themselves for re-election at the forthcoming Annual
General Meeting in May 2022.
The Board believes that the balance of skills, gender,
experience, ethnicity, and knowledge of the current Board provides
for a sound base from which the interests of investors will be
served to a high standard. Following the growth of the Company in
recent years and as those Directors nearing their ninth anniversary
of appointment retire, the Board's Nomination Committee has an
active succession plan.
The Board aspires to equal representation of men and women on
the Board. At 31 December 2021, the Board was 50% female.
The Board recommends the re-election of each Director and
supporting biographies are disclosed in Section 3 of this annual
report.
The Board is scheduled to meet at least four times a year and
between these formal meetings there is regular contact with the
Investment Manager and Operations Manager, the Secretary and the
Company's Joint Brokers. The Directors are kept fully informed of
investment and financial controls, and other matters that are
relevant to the business of the Company that should be brought to
the attention of the Directors. The Directors also have access,
where necessary in the furtherance of their duties, to independent
professional advice at the expense of the Company.
The attendance record of Directors for the period to 31 December
2021 is set out below:
Quarterly Board Audit Committee Management Remuneration Nomination Market
meetings Engagement Committee Committee Disclosure
Committee Committee
Number of
meetings 4 4 3 3 4 1
Meetings
Attended:
H Mahy 4 N/A* 3 3 4 1
J Bridel 4 4 3 3 4 1
S Mason 4 4 3 3 4 1
K Hammer 4 4 3 3 4 1
T Feld 4 4 3 3 4 1
J Whittle** 2 2 2 2 2 1
* Helen Mahy is not a member of the Audit Committee and attends
at the invitation of the Committee
** John Whittle was appointed to the Board on 1 July 2021
During the period a further 26 ad hoc Board/Committee meetings
were held in Guernsey to deal with matters substantially of an
administrative nature and these were attended by those Directors
available.
The Board considers agenda items laid out in the notice and
agenda of meeting which are circulated to the Board in advance of
the meeting as part of the Board papers. Directors may request any
agenda items to be added that they consider appropriate for Board
discussion. Each Director is required to inform the Board of any
potential or actual conflicts of interest prior to Board
discussion.
The Board regularly considers the Company's strategy with regard
to market conditions and feedback from shareholders received
directly or from the Managers. The investment strategy is reviewed
regularly with the Investment Manager. Board meetings include a
review of investment performance and associated matters such as
health and safety, marketing/investor relations, risk management,
gearing, general administration and compliance, peer group
information and industry issues.
The Board and the governance arrangements continued to operate
effectively during 2021 despite restrictions preventing
face-to-face meetings for much of the year. The Board and Managers
and other service providers were able to utilise digital tools to
conduct virtual board meetings and other ad hoc meetings.
Performance Evaluation
The Board evaluates its performance and considers the tenure and
independence of each Director on an annual basis. The annual
evaluation for the period ended 31 December 2021 has been completed
by the Chairman and took the form of a questionnaire completed by
all of the Directors and additionally by the Managers and the
Company Secretary, including one-to-one interviews with each
Director holding office as at 31 December 2021. The questionnaire
covered Board effectiveness including areas such as inclusion and
diversity in accordance with the recommendations of the Parker
Review.52[30] For the evaluation of the Chairman, the Senior
Independent Director discussed the results of a questionnaire with
the Chairman following consultation with the other Directors. The
exercise confirmed that the Board runs well and effectively with an
appropriate level of balance and challenge.
The Board continues to monitor training for Directors. The
Directors consider and report regularly their training needs and
continuing professional development and training carried out. For
example, during the year, the Directors attended courses on
relevant subjects including cyber security, tax, corporate culture,
diversity, sustainability and ESG. Due to the Covid-19 pandemic, no
site visits were possible, however, the Directors believe that
visiting TRIG's assets enables them to gain a deeper understanding
of the Company's operations and the challenges faced on a
day-to-day basis by the projects' asset managers and will resume
site visits when appropriate, in line with government guidance.
A key element of The Board's role is to provide investors with
reassurance as to the robustness of their oversight of the
business. During 2021 the TRIG Chairman met a number of
institutional investors in the Company and answered questions on
the Company's governance. It has been identified that it would be
beneficial for investors to have interaction with more members of
the TRIG Board. The Board has also worked with the Managers, using
their Board members' deep technical and governance experience, to
further develop the risk reporting tool used by the Managers to
report risks to the Board. This active input to the development of
the new framework has resulted in greater discussion and debate
amongst the Board and with the Managers. The Board asks the
leadership teams of both Managers to regularly provide business and
sector updates.
The independence of each Director has been considered and each
has been confirmed as being independent of the Company and its
Managers. The Board believes that the composition of the Board and
its Committees reflects a suitable mix of skills and experience,
and that the Board, as a whole, and its Committees functioned
effectively during 2021 and since the launch of the Company in
2013. It is recognised that maintaining the right Board composition
is central to the approach adopted for the Board succession
process. The Board has employed the use of a skills matrix to
identify if there are missing competences and confirmed that the
existing Directors held the appropriate range of skills. The skills
matrix tool also informs the selection process during the
appointment of new directors.
Going forward, the Board intends to retain certain aspects of
the practices adopted during the Covid-19 pandemic. These include
continuation of practices which maintain a low carbon footprint,
and combining face-to-face meetings with virtual calls where
appropriate. For example, where previously phone calls were
commonly utilised for ad hoc meetings, it has been decided that
virtual meetings, where possible, should be arranged as they
facilitate better interaction. During the year a number of ad hoc
deep-dive sessions were held and these were considered helpful and
efficient uses of time, given the geographic spread of Directors.
The Board has requested that the Managers continue this practice.
The importance of maintaining sufficient face-to-face meetings for
relationship purposes is, however, a key priority in order to
enhance social interaction and strategic discussions between
Directors.
The Board is diverse in its composition and thought processes.
The Directors have a breadth of experience relevant to the Company.
The Directors believe that any changes to the Board's composition
can be managed without undue disruption. The members of the Board
strive to challenge each other constructively to make sure all
issues are examined from different angles and the Board holds the
Managers properly to account on their progress on sustainability
and responsible investment.
Delegation of Responsibilities
The Board has delegated the following areas of
responsibility:
The day-to-day administration of the Company has been delegated
to Aztec Financial Services (Guernsey) Limited in its capacity as
Company Secretary and Administrator.
The Investment Manager has full discretion (within agreed
parameters) to make investments in accordance with the Company's
Investment Policy and has responsibility for financial
administration and investor relations, in addition to advising the
Board in relation to further capital raisings and the payment of
dividends amongst other matters, subject to the overall supervision
and oversight of the Board. Among the specific tasks of the
Investment Manager are the overall financial management of the
Company and existing portfolio as a whole, including the deployment
of capital, management of the Group's debt facilities, hedging
arrangements, the sourcing of new investments, preparing the
semi-annual valuations, the statutory accounts, the management
accounts, business plans, presenting results and information to
shareholders, coordinating all corporate service providers to the
Group and giving the Board general advice.
The Operations Manager is responsible for monitoring, evaluating
and optimising technical and financial performance across the
portfolio. The services provided by the Operations Manager include
maintaining an overview of project operations and reporting on key
performance measures, recommending and implementing strategy on
management of the portfolio including energy sales agreements,
insurance, maintenance and other areas requiring portfolio-level
decisions, and maintaining and monitoring health and safety and
operating risk management policies. The Operations Manager also
works jointly with the Investment Manager on sourcing and
transacting new business, providing assistance in due diligence of
potential new acquisitions, refinancing of existing assets and
investor relations. The Operations Manager does not participate in
any investment decisions taken by or on behalf of the Company or
undertake any other regulated activities for the purposes of the
UK's Financial Services and Markets Act 2000.
Members of the Investment Manager's and/or the Operations
Manager's teams are also appointed as Directors of the Group's
project companies and/or intermediate holding companies and as part
of their role in managing the portfolio, they attend Board meetings
of these companies and make appropriate decisions. Material
decisions are referred back to TRIG's investment committee and/or
advisory committee for consideration and determination, and the
TRIG Board is consulted on key matters relevant to TRIG's strategy,
policies or overall performance, both on an ad hoc basis where
required and during formal reporting sessions, including all
matters outside the Managers' delegated authority.
Committees of the Board
The committees of the Board are the Audit Committee, the
Remuneration Committee, the Nomination Committee, the Management
Engagement Committee, and the Market Disclosure Committee. Terms of
reference for each Committee have been approved by the Board.
The Chairman and members of each committee as at 31 December
2021 are as follows:
Audit Remuneration Committee Nomination Committee Management Engagement Market
Committee Committee Disclosure Committee
Chairman J Bridel S Mason H Mahy K Hammer H Mahy
Members S Mason H Mahy J Bridel J Bridel J Bridel
K Hammer J Bridel S Mason S Mason S Mason
T Feld K Hammer K Hammer H Mahy K Hammer
J Whittle T Feld T Feld T Feld T Feld
J Whittle J Whittle J Whittle J Whittle
Nomination Committee
The main terms of reference of the Committee are:
regularly review the structure, size and composition required of
the Board and make recommendations to the Board with regard to any
changes (including skills, knowledge and experience in accordance
with Principle K of the AIC Code);
give full consideration to succession planning for Directors
taking into account the challenges and opportunities facing the
Company;
be responsible for identifying and nominating candidates for the
approval of the Board, to fill Board vacancies as and when they
arise; and
ensure plans are in place for orderly succession to the Board
and oversee the development of a diverse pipeline for
succession.
The Nomination Committee met four times during 2021.
All directors are appointed on merit. When the Nominations
Committee considers Board succession planning and recommends
appointments to the Board, it takes into account a variety of
factors. Knowledge, experience, skills, personal qualities,
residency and governance credentials play an important part.
Consideration is also given to the gender, ethnicity, colour,
national origin, sexual orientation, age, religion and disability
of individuals. The Nominations Committee recognises that a diverse
Board enhances its performance. The Nominations Committee is also
cognisant of the role it can play in promoting social mobility. In
making recommendations to the Board, the Nominations Committee will
also seek to follow the recommendations of the Hampton Alexander
and Parker Reviews.
TRIG was supported in the recruitment processes that resulted in
the appointment of John Whittle by OSA Recruitment. OSA Recruitment
has no other connection with TRIG or John Whittle. TRIG was
supported in the recruitment processes that resulted in the
appointment of Erna-Maria Trixl by Russell Reynolds Associates.
Russell Reynolds Associates has no other connection with TRIG or
Erna-Maria Trixl.
Management Engagement Committee
The terms of reference of this committee are to review the
relationships between the Company and its main service providers,
including their performance, compliance with their contracts and
levels of fees paid. Recommendations from the Committee's review
are given to the Board for consideration and action.
The Management Engagement Committee met three times in 2021 in
accordance with its plan to review the performance of the key
service providers to the Group and the Company. No material
weaknesses were identified, some recommendations were conveyed to
certain providers, and the recommendation to the Board was that the
current arrangements are appropriate and provide high quality
services and advice to the Company and the Group. The Committee
convenes a planning meeting in August each year followed by a
meeting in November of each year to review the Investment Manager
and Operations Manager, and a meeting in February of each year to
review the other service providers. The Managers were duly
considered at the meeting of the Management Engagement Committee in
November 2021 and no material issues were identified in connection
with their respective appointments.
Details of the activities of the Remuneration Committee and the
Audit Committee are set out in Section 7 and Section 8,
respectively. All terms of reference for committees are available
from the Company's website or the Company Secretary upon
request.
Market Disclosure Committee
The Committee has responsibility for overseeing the disclosure
of information by the Company to meet its obligations under the
Market Abuse Regulation and the Financial Conduct Authority's
Listing Rules and Disclosure Guidance and Transparency Rules.
The main terms of reference for the Committee are:
To consider and decide whether information meets the definition
of inside information and whether the Company should announce
immediately or whether it is permissible to delay the
announcement.
When disclosure of inside information is delayed, to maintain
all required records, monitor the conditions permitting delay and
to provide any required notifications to the Financial Conduct
Authority.
The committee should also consider the requirement for an
announcement in the case of leaks of inside information.
To ensure that effective arrangements are in place to prevent
access to inside information.
The Market Disclosure Committee met once during 2021.
Relations with Shareholders - AIC Code Principle D
The Company welcomes the views of shareholders and places great
importance on communication with its shareholders. The Investment
Manager produces a regular factsheet which is available on the
Company's website. Senior members of the Investment Manager and
Operations Manager make themselves available, as practicable, to
meet with principal shareholders and key sector analysts. Feedback
from these meetings is provided to the Board on a regular basis.
The Board is also kept fully informed of all relevant market
commentary on the Company by the Company's Financial PR agency, as
well as receiving relevant updates from the Managers and the
Company's brokers. During the period, the Chairman of the Board met
seven separate institutional shareholders of the Company, providing
the chance for Shareholders to have a dialogue directly with the
Board. The Company's Chairman met with a number of institutional
investors during the year, answering questions relating to the
governance of the Company and the performance of its Managers.
The Company reports formally to shareholders twice a year and
will hold an Annual General Meeting in Guernsey in May 2022, at
which members of the Board will be available to answer shareholder
questions. In May 2021, Covid-19 restrictions resulted in the
Annual General Meeting being conducted via conference call, to
which shareholders were invited to join. If restrictions are still
in force in May 2022, we will be offering the same access to
shareholders again via another virtual Annual General Meeting. In
addition, shareholders receive written communications from the
Company either with documents enclosed or to notify them of new
information available to view on the Company's website.
Results of Extraordinary and Annual General Meetings are
announced by the Company promptly after the relevant meeting.
Additionally, other notices and information are provided to
shareholders on an ongoing basis through the Company's website in
order to assist in keeping shareholders informed. The Secretary and
Registrar monitor the voting of the shareholders and proxy voting
is taken into consideration when votes are cast at the Annual
General Meeting.
Shareholders may contact the Board via the Company Secretary,
whose contact details are found in Section 11 - Directors and
Advisers of this report.
7.0 Directors' Remuneration Report
The Remuneration Committee, chaired by Shelagh Mason and
comprising all the Directors, operates within clearly defined terms
of reference.
The terms of reference of the Committee are to determine and
agree the Board policy for the remuneration of the Directors of the
Company, including the approval of any ad hoc payments in respect
of additional corporate work required (e.g. for the work involved
with the issue of prospectuses and equity fund raises).
Statement of the Chairman of the Remuneration Committee
As all Directors of the Company are non-executive, they receive
an annual fee appropriate for their responsibilities and time
commitment but there are no other incentive programmes or
performance-related emoluments.
During the year, the Committee considered the external advice
received from Trust Associates in 2020, which included
recommendations in respect of Directors' remuneration for the
period between triennial external reviews, and considered it
remained appropriate for the basis of the Committee's 2021 review
of Directors' remuneration taking into account, inter alia, market
conditions and changes in the activities and scale of the Company.
The Committee's review of Directors' remuneration considered:
The increase in the net assets of TRIG, the number of assets in
the portfolio, the size of individual assets, and co-investing and
partnering activities;
The time commitment required to appropriately perform each
Director's role and their responsibilities in respect of TRIG;
Additional fees where a Director's duties extend beyond those
normally expected as part of the Director's appointment (e.g.
Chairmanship of the Board or one of its Committees); and
Market remuneration levels to attract and retain high-calibre
directors.
The Committee proposes and the Board has, subject to
Shareholders' approval, agreed to implement increases set out in
the table below, which, other than in respect of the Chairman of
the Board, are consistent with the guidance previously provided by
Trust Associates. The proposed remuneration for the Chairman of the
Board remains less than that previously proposed by Trust
Associates, and balances the increase in time commitment to perform
the role and the appropriate level to attract a high-calibre
successor, with the on-going challenging economic conditions
resulting from the Covid-19 pandemic notwithstanding that the
operations of the Company are continuing with no material adverse
effect.
Remuneration Policy
All Directors of the Company are non-executive and as such there
are:
no service contracts with the Company;
no long-term incentive schemes;
no options or similar performance incentives; and
no payments for loss of office unless approved by shareholder
resolution.
The Directors' remuneration shall:
reflect the responsibility, experience, time commitment and
position on the Board;
allow the Chairman of the Board and the Chairmen of each of the
Board's committees to be remunerated in excess of the remaining
Board members to reflect their increased roles of responsibility
and accountability;
be paid quarterly in arrears;
include remuneration for additional, specific corporate work
which shall be carefully considered and only become due and payable
on completion of that work; and
be reviewed by an independent professional consultant with
experience of investment companies and their fee structures, at
least every three years.
The maximum annual limit of aggregate fees payable to the
Directors as set in the Articles of Association is GBP450,000.
Remuneration Committee
The Remuneration Committee met three times during 2021 to
consider the remuneration of the Directors. Its membership
comprised of all Directors of the Company, which was deemed
appropriate as they are each independent and have the requisite
knowledge of the Company and experience to appropriately determine
remuneration.
The Remuneration Committee confirmed its recommendation for the
annual supplement for the additional responsibility borne by the
Senior Independent Director (Shelagh Mason) and the Chairman of the
Management Engagement Committee (Klaus Hammer) at GBP3,500 (2020:
GBP3,500) for each director.
The table below sets out the Directors' remuneration approved
and actually paid for the year to 31 December 2021, as well as the
annual rate proposed for the year ending 31 December 2022. Where
Directors serve for part of the year, their fee is pro rated
accordingly. Where a Director's role changes during the year (e.g.
succession of roles such as that of the Chairman), their fees for
the year will reflect the period of the year for which they have
borne additional responsibilities.
Director Role Base remuneration Base remuneration Additional fees Total remuneration
rate proposed for paid 2021 for fundraising in paid in 2021
2022 2021
Helen Mahy Chairman GBP88,000 GBP81,000 GBP15,000 GBP96,000
Jon Bridel Audit Committee GBP66,500 GBP65,000 GBP10,000 GBP75,000
Chairman
Klaus Hammer Chairman of the GBP57,500 GBP56,500 GBP10,000 GBP66,500
Management
Engagement
Committee
Shelagh Mason Senior GBP57,500 GBP56,500 GBP10,000 GBP66,500
Independent
Director
Tove Feld Director GBP54,000 GBP53,000 GBP10,000 GBP63,000
John Whittle* Director GBP54,000 GBP26,500 N/A GBP26,500*
Erna-Maria Trixl Director GBP54,000 N/A N/A N/A
Total GBP431,500 GBP338,500 GBP55,000 GBP393,500
* John Whittle was appointed to the Board on 1 July 2021 and his
remuneration has been prorated accordingly.
No additional fees were payable to the Directors in 2021 beyond
those set out in the table above relating to the issuance of the
Company's prospectus in March 2021. Where the Company requires
Directors to work on specific corporate actions, such as the
raising of further equity, an additional fee will be appropriately
determined.
Directors are entitled to claim reasonable expenses which they
incur attending meetings or otherwise in performance of their
duties relating to the Company. The total amount of Directors'
expenses paid for 2021 was GBP3,501.
The Board also considered the availability of time of each
Director, taking into account their other commitments, and
concluded that adequate time was in each case available for the
appropriate discharge of the Company's affairs.
Directors' Interests
The Directors of the Company at 31 December 2021, and their
interests in the Ordinary Shares of the Company, are shown in the
table below.
31 December 2021 31 December 2020
Ordinary Shares Ordinary Shares
Helen Mahy 145,959 116,472
Jon Bridel 28,922 27,466
Klaus Hammer 29,094 27,620
Shelagh Mason 207,864 118,697
Tove Feld 48,646 20,255
John Whittle 51,200 N/A
Some of the Directors' shares may be held jointly with their
spouse. All holdings of the Directors and their families are
beneficial. No changes to these holdings had been notified up to
the date of this report.
Other Disclosures
At the last AGM, held on 5 May 2021, the following resolution
including Directors' remuneration was approved:
Ordinary Resolution 9 - To approve the Directors' remuneration
report, including the proposed annual remuneration for routine
business for each Director, as set out in the Report and Financial
Statements, for the year ending 31 December 2021:
Shares voted Percentage
In Favour 1,379,851,804 99.92
Against 1,077,022 0.08
Withheld 394,365 N/A
8.0 Audit Committee Report
The Audit Committee has been in operation since the inception of
the Company. Chaired by Jon Bridel, it operates within clearly
defined terms of reference and comprises all of the Directors other
than the Chairman (who is not a member in accordance with provision
24 of the UK Corporate Governance Code). It is also the formal
forum through which the auditor reports to the Board of Directors
and they met four times in 2021 (it meets at least three times
annually).
The main duties of the Audit Committee are:
giving full consideration of, and recommending to the Board for
approval, the contents of the half year and annual financial
statements and reviewing the external auditor's report thereon
including consideration of whether the financial statements are
overall fair, balanced and understandable;
agreeing with the auditor the external audit plan including
discussing with the external auditor the key risk areas within the
financial statements;
considering and understanding the key risks of misstatement of
the financial statements and formulating an appropriate plan to
review these and agreeing with the Managers their processes to
manage these risk areas;
reviewing the Viability and Going Concern Statements and
reviewing the work prepared by the Investment Manager supporting
these statements;
reviewing the draft valuation of the Company's investments
prepared by the Investment Manager and making a recommendation to
the Board on the valuation;
monitoring ESG performance in line with the Company's ESG goals
and ensuring appropriate disclosures with respect to these targets
are reported and reviewed;
reviewing the scope, results, cost effectiveness, independence
and objectivity of the external auditor as well as reviewing the
effectiveness of the external audit process and making any
recommendations to the Board for improvement of the audit
process;
reviewing and recommending to the Board for approval the audit,
audit-related and non-audit fees payable to the external auditor or
their affiliated firms overseas and the terms of their
engagement;
reviewing the appropriateness of the Company's accounting
policies;
ensuring the standards and adequacy of the internal control
systems;
to consider any reports or information received in respect of
whistleblowing; and
reporting to the Board on how it has discharged its duties.
None of the members of the Audit Committee have any involvement
in the preparation of the financial statements of the Company, as
this has been contracted to the Investment Manager.
The Audit Committee meets the external auditor before and after
their audit and has discussed with the auditor the scope of their
annual audit work and also their audit findings. The auditor
attends the Audit Committee meetings at which the annual and
interim accounts are considered, and at which they have the
opportunity to meet with the Committee without representatives of
the Managers being present. The Audit Committee has direct access
to the auditor and to key senior staff of the Investment Manager,
and it reports its findings and recommendations to the Board which
retains the ultimate responsibility for the financial statements of
the Company.
Membership
The Chair of the Audit Committee, Jon Bridel, is a fellow of the
Institute of Chartered Accountants in England and Wales and in
addition serves as chairman of the audit committee for other listed
investment companies. Previously Jon worked in senior positions in
investment, corporate finance and commercial banking and was CFO of
two private multinational businesses.
Jon will retire as a member of the Board (including his role as
Audit Committee Chair) during 2022 and it is intended that he be
replaced by John Whittle, an existing member of the Board
(appointed 1 July 2021). John Whittle is a Fellow of the Institute
of Chartered Accountants in England and Wales and holds the
Institute of Directors Diploma in Company Direction. He is a
non-executive Director of several listed and unlisted companies and
was formerly a Senior Independent Director and Audit Committee
Chair at International Public Partnerships Ltd (INPP), the FTSE 250
infrastructure investment company. John has also spent time as
Finance Director and CEO during his executive career.
The Board is satisfied that both Jon and John have recent and
relevant financial experience as required under the UK Corporate
Governance Code. The other members of the Audit Committee during
the year were Shelagh Mason, Klaus Hammer and Tove Feld. Shelagh
will be resigning from her Directorship during the year. Klaus,
Tove and Erna-Maria Trixl (who will join the Audit Committee upon
her appointment on 1 March 2022) have extensive experience in the
renewables sector. The qualifications of the Audit Committee
members are outlined in the Directors' Biographies in Section
3.
Significant Issues Considered
After discussion with both the Managers and the external
auditor, the Audit Committee determined that the key risks of
misstatement of the Company's financial statements relate to the
valuation of the investments.
Valuation of Investments
As outlined in Note 13 to the financial statements, the total
carrying value of the investments at fair value (excluding the fair
value of TRIG UK and TRIG UK I) at 31 December 2021 was GBP2,636.8m
(2020: GBP2,160.9m). Market quotations are not available for these
financial assets, and as such, their valuation is undertaken using
a discounted cash flow methodology. This requires a series of
material judgements to be made as further explained in Note 4 to
the financial statements.
The valuation process and methodology were discussed by the
Audit Committee with the Investment Manager at the time of the
interim review, in November 2021 prior to the year-end valuation
process and again in February 2022 as part of the year-end sign --
off process. The Committee met with the auditor when it reviewed
and agreed the auditor's Group audit plan and also at the
conclusion of the audit of the financial statements, in particular
discussing the valuation process. The Investment Manager carries
out a valuation semi-annually and provides a detailed valuation
report to the Company. The Company also engaged a third-party
valuation expert to provide an independent valuation at June 2021
and also to review the valuation discount rates at December 2021.
In July 2021 the expert provided a report to the Audit Committee
that corroborated the valuation of the portfolio at June 2021. The
expert also provided a report to the Audit Committee in February
2022 confirming that the discount rates adopted at 31 December 2021
were appropriate.
Valuation of Investments - key forecast assumptions
The Audit Committee considered in detail those assumptions that
are subject to judgement that have a material impact on the
valuation. The key assumptions are:
Power Price Assumptions
A significant proportion of the wind and solar projects' income
streams are contracted subsidy receipts and power income under
long-term PPAs; some of which have fixed price mechanisms. However,
over time the proportion of power income that is fixed reduces and
the proportion where the Company has exposure to wholesale
electricity prices increases. The Investment Manager considers the
forecasts provided by a number of expert energy advisers and adopts
a profile of assumed future power prices by jurisdiction. Further
detail on the assumptions made in relation to power prices and
other variables that may be expected to affect these are included
in the Valuation section of the Strategic Report.
Macroeconomic Assumptions
Macroeconomic assumptions include inflation, foreign exchange,
interest and tax rate assumptions. The Investment Manager's
assumptions in this area are set out and explained in the Valuation
section of the Strategic Report.
Other Key Income and Cost Assumptions
Other key assumptions include operating costs, facility energy
generation levels and facility remaining operating life
assumptions.
The Audit Committee considers the remaining operating life
assumptions in light of public information provided by the
Company's peer group and reports provided by the Operations Manager
during the year considering the remaining operational lives for
investments and considering any potential extension of those lives
and the recognition of additional value resulting to be
appropriate. The independent valuation carried out in June 2021
also supported the assumed operating lives.
The Investment Manager has discussed and agreed the valuation
assumptions with the Audit Committee. In relation to the key
judgements underpinning the valuation, the Investment Manager has
provided sensitivities showing the impact of changing these
assumptions and these have been reviewed by the Investment Manager
and the Audit Committee to assist in forming an opinion on the
fairness and balance of the annual report together with their
conclusion on the overall valuation.
Valuation Discount Rates
The discount rates adopted to determine the valuation are
selected and recommended by the Investment Manager. The discount
rate is applied to the expected future cash flows for each
investment's financial forecasts derived adopting the assumptions
explained above, amongst others, to arrive at a valuation (using a
discounted cash flow methodology). The resulting valuation is
sensitive to the discount rate selected. The Investment Manager is
experienced and active in the area of valuing these investments and
adopts discount rates reflecting its current extensive experience
of the market. It is noted however that this requires subjective
judgement and that there is a range of discount rates which could
be applied. The discount rate assumptions and the sensitivity of
the valuation of the investments to this discount rate are set out
in the Valuation section of the Strategic Report.
The Audit Committee discussed with the Investment Manager the
process adopted to arrive at the selected valuation discount rates
(which includes comparison with other market transactions and an
independent review of valuation discount rates by a third-party
valuation expert both at December 2020 and at December 2021) and
satisfied itself that the rates applied were appropriate. The
Company uses a bifurcated discount rate approach (as more fully
explained on page 62).
Auditor Interaction
The external auditor explained the results of their review of
the valuation, including their consideration of the Company's
underlying cash flow projections, the economic assumptions and
discount rates to the Audit Committee. On the basis of their audit
work there were no adjustments proposed that were material in the
context of the financial statements as a whole.
Internal Controls and Risk Management
The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness and has therefore
established an ongoing process designed to meet the particular
needs of the Company in managing the risks to which it is
exposed.
The process is a risk-based approach to internal control through
a matrix which identifies the key functions carried out by the
Investment Manager, Operations Manager and other service providers;
the various activities undertaken within those functions; the risks
associated with each activity; and the controls employed to
minimise and mitigate those risks. A scoring based on 1 to 5 for
Likelihood and 1 to 5 for Impact is used and these are multiplied
together to give a total score. Mitigation is considered on a scale
of 1 to 5 and this leads to a residual risk rating being derived.
The matrix is updated on an on-going basis and reviewed quarterly
and the Board considers all material changes to the risk ratings
and the action which has been, or is being, taken. By their nature,
these procedures will provide a reasonable, but not absolute,
assurance against material misstatement or loss.
At each Board meeting, the Board also monitors the Group's
investment performance and it reviews the Group's activities since
the last Board meeting to ensure that the Investment Manager is
adhering to the Company's Investment Policy and approved investment
guidelines. The pipeline of new potential opportunities is
considered and the prices paid for new investments during the
quarter are also reviewed.
Further, at each Board meeting, the Board receives reports from
the Company Secretary and Administrator in respect of compliance
matters and duties they have performed on behalf of the
Company.
The Board has considered the need for an internal audit function
and it has decided that the systems and procedures employed by the
Investment Manager, the Operations Manager and the Administrator,
including their own internal review processes and the processes in
place in relation to the Company, provide sufficient assurance that
a sound system of internal control, which safeguards the Company's
assets, is maintained. An internal audit function specific to the
Company is therefore considered unnecessary.
The Board recognises that these control systems can only be
designed to manage rather than eliminate the risk of failure to
achieve business objectives, and to provide reasonable, but not
absolute, assurance against material misstatement or loss, and
relies on the operating controls established by the Company's
Administrator, the Investment Manager and the Operations Manager.
The Board considers on a periodic basis whether further third party
assurance is appropriate, and reviews at least annually the
proficiency of such controls in light of changes in the business
and its environment.
The Investment Manager prepares management accounts and updates
business forecasts on a quarterly basis, which allow the Board to
assess the Company's activities and review its performance. The
Board and the Investment Manager have agreed clearly defined
investment criteria, return targets, risk appetite, and exposure
limits. Reports on these performance measures, coupled with cash
projections and investment valuations, are submitted to the Board
at each quarterly meeting.
The Operations Manager prepares quarterly project performance
and project financial analysis, and highlights the key activities
performed and any specific new risks identified relating to the
operating portfolio for consideration by the Board.
Appointment of the external auditor
Deloitte LLP was appointed to be external auditor for the TRIG
Group on 19 September 2013.
The objectivity of the external auditor is reviewed by the Audit
Committee, which also reviews the terms under which the external
auditor may be appointed to perform non-audit services. The Audit
Committee reviews the scope and results of the audit, its cost
effectiveness and the independence and objectivity of the auditor,
with particular regard to any non-audit work that the auditor may
undertake. In order to safeguard auditor independence and
objectivity, the Audit Committee ensures that any other
audit-related and/or other assurance services provided by the
external auditor does not conflict with their statutory audit
responsibilities.
Audit-related and/or other assurance services generally relates
to the review of the interim financial statements and other
assurance work generally completed by the auditor. Any non-audit
services conducted by the external auditor outside of these areas
which are above GBP20,000 in aggregate in any period require the
consent of the Audit Committee. The external auditor may undertake
additional work for the Company, however these are limited to
specific services accepted in line with the FRC's 'whitelist' of
non-audit services. Some services that appear allowable under the
whitelist will be prohibited by the FRC's 'blacklist'. Tax
services, consulting, valuation or corporate finance services are
not permitted. In general, the Company seeks to avoid using
Deloitte for non-audit services and the Audit Committee will only
approve their appointment for such non-audit services where the
Committee is convinced that Deloitte is best placed to carry out
this work and that the appointment would not be to impair their
audit independence.
Total fees paid amounted to GBP746,750 for the year ended 31
December 2021, of which GBP182,800 related to audit and
audit-related services to the Company and its subsidiaries, TRIG UK
and TRIG UK Investments, and GBP496,000 related to audit of the
Group's project subsidiaries and other audit-related services. The
non-audit services provided by Deloitte in the year to the Company
and its subsidiaries are in relation to the review of the interim
financial statements at the half year totalling GBP44,500 and minor
other services of GBP23,450. In addition, audit fees of GBP15,000
were agreed in the current year in respect to the prior year.
European Union (EU) statutory audit legislation stipulates that
fees for permissible non-audit services should not exceed 70% of
the average audit fees paid by the Group in the last three
consecutive financial years following its implementation in 2016.
The Audit Committee must monitor auditor independence and will
consider these criteria as part of this role.
Notwithstanding such services, the Audit Committee considers
Deloitte LLP to be independent of the Company and that the
provision of such non-audit services is not a threat to the
objectivity and independence of the conduct of the audit.
To fulfil its responsibility regarding the independence of the
external auditor, the Audit Committee considered:
changes in audit personnel in the audit plan for the current
period;
a report from the external auditor describing their arrangements
to identify, report and manage any conflicts of interest; and
the extent of non-audit services provided by the external
auditor.
To assess the effectiveness of the external audit process, the
Audit Committee reviewed:
the external auditor's fulfilment of the agreed audit plan and
variations from it;
reports highlighting the major issues that arose during the
course of the audit; and
the effectiveness and independence of the external auditor
having considered the degree of diligence and professional
scepticism demonstrated by them.
The Audit Partner for the Company is John Clacy. Deloitte
rotates the Audit Partner every five years and the most recent
rotation took place during 2019.
The Audit Committee confirms that TRIG has complied with the
requirements of The Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of Competitive Tender Processes
and Audit Committee Responsibilities) Order 2014 since it became a
member of the FTSE 250 Index on 18 December 2015 and up to 31
December 2021. Deloitte was appointed as external auditor in 2013
following a competitive process and the Audit Committee terms of
reference are in line with the Order.
The Committee conducts a formal review of Deloitte following the
issue of the annual financial statements as it did in 2021 to
ensure that the Committee considers all aspects of the auditor's
service and performance. The outcome of the review in May 2021 was
positive and led to no material concerns over the performance of
the auditor. The Committee will perform a similar review in May
2022.
The Audit Committee remains satisfied with Deloitte's
effectiveness and independence as auditor having considered the
degree of diligence and professional scepticism demonstrated by
them.
Tender of the External Audit
In line with the UK Corporate Governance Code and in particular
the requirement to put the external audit out to tender at least
every 10 years, the Audit Committee sought to conduct a tender
exercise for the external audit of the Company, as previously
communicated. This is the ninth year of Deloitte's appointment as
the Company's auditor. The competitive audit tender exercise
actioned by the Audit Committee began in 2021 and concluded within
the year. The tender exercise allowed sufficient time such that any
potential new audit firm appointed could benefit from a cooling-off
period before their appointment (should they already be providing
services to the Company and/or Group that require such a
cooling-off period).
The tender process took into consideration best practice in line
with the 2018 UK Corporate Governance Code and the 2019 AIC Code of
Corporate Governance. This ensured a fair, robust and independent
tender process could be commenced to ensure the Company appointed
the most suitable firm.
The Audit Committee issued a request for a short submission to
six firms in March 2021 and, following a review by the Audit
Committee, a request for proposal was issued to three of those
firms in September 2021 to formally invite those chosen firms to
tender for the external audit of the Company.
Each firm was also given exclusive time with the current and
future audit committee chair (Jon Bridel and John Whittle,
respectively) as well as representatives of the Investment Manager
and Operations Manager to aid them in their submissions.
Members of the Audit Committee, together with representatives of
the Investment Manager and Operations Manager, met with all three
firms who were invited to tender in November 2021 to present their
submissions.
Following the Audit Committee review of submissions, the
Committee members resolved to recommend the continuing appointment
of Deloitte as auditors, deeming this course of action to be in the
best interests of shareholders, by virtue of the strength and
experience of the Deloitte audit team and lack of demonstrable
differentiation shown by challengers.
Having satisfied itself that the external auditor remains
independent and effective, and having concluded a full audit tender
process, the Audit Committee has recommended to the Board that
Deloitte LLP be reappointed as auditor for the year ending 31
December 2022.
Audit Committee Performance Evaluation
During the year, the Committee evaluated its performance
considering checklists provided by leading audit firms. All of the
Directors and the Managers completed the form and the results were
discussed at an Audit Committee meeting. A few items of a minor
nature arose and led to recommendations that have been adopted.
Overall, the finding of the evaluation was that the Audit Committee
is sufficiently skilled and experienced and effective in carrying
out its role.
10.0 Financial Statements
Income Statement
For the year ended 31 December 2021
Note Year ended Year ended
31 December 2021 31 December 2020
GBP'000's GBP'000's
Net gain on Investments 6 68,775 41,010
Dividend income 6 4,900 -
Interest income from Investments 6 101,121 78,165
----------------------------------- ---- ------------------ ------------------
Total operating income 174,796 119,175
Fund expenses 7 (1,904) (1,794)
----------------------------------- ---- ------------------ ------------------
Operating profit 172,892 117,381
Finance and other income/(expense) 8 37,570 (17,215)
----------------------------------- ---- ------------------ ------------------
Profit before tax 210,462 100,166
Income tax 9 - -
----------------------------------- ---- ------------------ ------------------
Profit after tax 10 210,462 100,166
----------------------------------- ---- ------------------ ------------------
Attributable to:
Equity holders of the parent 210,462 100,166
----------------------------------- ---- ------------------ ------------------
210,462 100,166
----------------------------------- ---- ------------------ ------------------
Earnings per share (pence) 10 10.0 5.9
----------------------------------- ---- ------------------ ------------------
All results are derived from continuing operations. The
accompanying notes are an integral part of these financial
statements.
There is no other comprehensive income or expense apart from
those disclosed above and consequently a separate statement of
comprehensive income has not been prepared.
Balance Sheet
As at 31 December 2021
Note As at As at
31 December 2021 31 December 2020
GBP'000's GBP'000's
Non-current assets
Investments at fair value through profit or loss 13 2,636,785 2,160,946
Other receivables 14 13,219 -
-------------------------------------------------- ---- ------------------ ------------------
Total non-current assets 2,650,004 2,160,946
-------------------------------------------------- ---- ------------------ ------------------
Current assets
Other receivables 14 28,306 12,501
Cash and cash equivalents 15 28,229 23,116
-------------------------------------------------- ---- ------------------ ------------------
Total current assets 56,535 35,617
-------------------------------------------------- ---- ------------------ ------------------
Total assets 2,706,539 2,196,563
-------------------------------------------------- ---- ------------------ ------------------
Current liabilities
Other payables 16 (362) (1,692)
-------------------------------------------------- ---- ------------------ ------------------
Total current liabilities (362) (1,692)
-------------------------------------------------- ---- ------------------ ------------------
Total liabilities (362) (1,692)
-------------------------------------------------- ---- ------------------ ------------------
Net assets 12 2,706,177 2,194,871
-------------------------------------------------- ---- ------------------ ------------------
Equity
Share capital and share premium 17 2,488,594 2,046,237
Other reserves 17 1,008 1,005
Retained reserves 17 216,575 147,629
-------------------------------------------------- ---- ------------------ ------------------
Total equity attributable to owners of the parent 12 2,706,177 2,194,871
-------------------------------------------------- ---- ------------------ ------------------
Net assets per Ordinary Share (pence) 12 119.3 115.3
-------------------------------------------------- ---- ------------------ ------------------
The accompanying notes are an integral part of these financial
statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 17 February 2022, and signed on its
behalf by:
Director: Jon Bridel Director: Helen Mahy
Statement of Changes in Shareholders' Equity
For the year ended 31 December 2021
Share capital and share premium Other Retained reserves Total equity
GBP'000's reserves GBP'000's GBP'000's
GBP'000's
Shareholders' equity at beginning of
year 2,046,237 1,005 147,629 2,194,871
------------------------------------ -------------------------------- ----------- ------------------ -------------
Profit for the year - - 210,462 210,462
Dividends paid - - (134,058) (134,058)
Scrip shares issued in lieu of
dividend 7,458 - (7,458) -
Ordinary Shares issued 439,850 - - 439,850
Costs of Ordinary Shares issued (6,948) - - (6,948)
Ordinary Shares issued in year in
lieu of Management Fees, earned in
H2 20201 1,005 (1,005) - -
Ordinary Shares issued in year in
lieu of Management Fees, earned in
H1 20212 992 - - 992
Ordinary Shares to be issued in lieu
of Management Fees, earned in H2
20213 - 1,008 - 1,008
------------------------------------ -------------------------------- ----------- ------------------ -------------
Shareholders' equity at end of year 2,488,594 1,008 216,575 2,706,177
------------------------------------ -------------------------------- ----------- ------------------ -------------
For the year ended 31 December 2020
Share capital and share premium Other Retained reserves Total equity
GBP'000's reserves GBP'000's GBP'000's
GBP'000's
Shareholders' equity at beginning of
year 1,721,309 1,008 161,120 1,883,437
------------------------------------ -------------------------------- ----------- ------------------ -------------
Profit for the year - - 100,166 100,166
Dividends paid - - (107,028) (107,028)
Scrip shares issued in lieu of
dividend 6,629 - (6,629) -
Ordinary Shares issued 320,000 - - 320,000
Costs of Ordinary Shares issued (3,704) - - (3,704)
Ordinary Shares issued in year in
lieu of Management Fees, earned in
H2 20194 1,008 (1,008) - -
Ordinary Shares issued in year in
lieu of Management Fees, earned in
H1 20205 995 - - 995
Ordinary Shares to be issued in lieu
of Management Fees, earned in H2
20201 - 1,005 - 1,005
------------------------------------ -------------------------------- ----------- ------------------ -------------
Shareholders' equity at end of year 2,046,237 1,005 147,629 2,194,871
------------------------------------ -------------------------------- ----------- ------------------ -------------
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent of the management fees
are to be settled in Ordinary Shares up to an Adjusted Portfolio
Value of GBP1 billion.
1 The GBP1,005,462 transfer between reserves represents the
885,012 shares that relate to management fees earned in the six
months to 31 December 2020 and were recognised in other reserves at
31 December 2020, and were issued to the Managers during the year,
with the balance being transferred to share premium reserve on 31
March 2021.
2 The GBP991,778 addition to the share premium reserve
represents the 880,719 shares that relate to management fees earned
in the six months to 30 June 2021 and were issued to the Managers
on 30 September 2021.
3 As at 31 December 2021, 857,254 shares equating to
GBP1,008,219, based on a Net Asset Value ex dividend of 117.61
pence per share (the Net Asset Value at 31 December 2021 of 119.3
pence per share less the interim dividend of 1.69 pence per share)
were due but had not been issued. The Company intends to issue
these shares to the Managers around 31 March 2022.
4 The GBP1,008,216 transfer between reserves represents the
889,550 shares that relate to management fees earned in the six
months to 31 December 2019 and were recognised in other reserves at
31 December 2019, and were issued to the Managers during the year,
with the balance being transferred to share premium reserves on 31
March 2020.
5 The GBP994,533 addition to the share premium reserve
represents the 893,480 shares that relate to management fees earned
in the six months to 30 June 2019 and were issued to the Managers
on 30 September 2020.
The accompanying notes are an integral part of these financial
statements.
Cash Flow Statement
For the year ended 31 December 2021
Note Year ended Year ended
31 December 2021 31 December 2020
GBP'000's GBP'000's
Cash flows from operating activities
Profit before tax 10 210,462 100,166
Adjustments for:
Net gain on investments 6, 13 (68,775) (41,010)
Dividend income 6 (4,900) -
Investment income from investments 6 (101,121) (78,165)
Acquisition costs - 20
Movement in other reserves relating to Manager shares 3 (3)
Realised gains/(losses) on settlement of FX forwards 7,643 (3,122)
Finance and other (income)/expense 8 (36,336) 17,215
------------------------------------------------------- ----- ------------------ ------------------
Operating cash flow before changes in working capital 6,976 (4,899)
Changes in working capital:
(Increase)/decrease in receivables (4) 831
Increase/(decrease) in payables 63 (1,245)
------------------------------------------------------- ----- ------------------ ------------------
Cash flow from operations 7,035 (5,313)
Distributions from investments 13 149,522 120,654
Interest on bank deposits 8 1 155
------------------------------------------------------- ----- ------------------ ------------------
Net cash from operating activities 156,558 115,496
------------------------------------------------------- ----- ------------------ ------------------
Cash flows from investing activities
Purchases of investments 13 (452,289) (499,466)
Amounts realised from exit proceeds - 68,125
Acquisition costs - (20)
------------------------------------------------------- ----- ------------------ ------------------
Net cash used in investing activities (452,289) (431,361)
------------------------------------------------------- ----- ------------------ ------------------
Cash flows from financing activities
Proceeds from issue of share capital during year 441,847 322,003
Costs in relation to issue of shares 17 (6,948) (3,704)
Dividends paid to shareholders 11 (134,058) (107,028)
------------------------------------------------------- ----- ------------------ ------------------
Net cash from financing activities 300,841 211,271
------------------------------------------------------- ----- ------------------ ------------------
Net increase/(decrease) in cash and cash equivalents 5,110 (104,594)
------------------------------------------------------- ----- ------------------ ------------------
Cash and cash equivalents at beginning of year 15 23,116 127,589
Exchange (losses)/gains on cash 3 121
------------------------------------------------------- ----- ------------------ ------------------
Cash and cash equivalents at end of year 15 28,229 23,116
------------------------------------------------------- ----- ------------------ ------------------
The accompanying notes are an integral part of these financial
statements.
Notes to the Financial Statements
1. General information
The Renewables Infrastructure Group Limited ("TRIG" or the
"Company") is a closed ended investment company incorporated in
Guernsey under Section 20 of the Companies (Guernsey) Law, 2008.
The shares are publicly traded on the London Stock Exchange under a
premium listing. Through its subsidiaries, The Renewables
Infrastructure Group (UK) Limited ("TRIG UK"), and The Renewables
Infrastructure Group (UK) Investments Limited ("TRIG UK I"), TRIG
invests in mainly operational renewable energy generation projects,
predominantly in onshore wind and solar PV segments, across the UK
and Europe. The Company, TRIG UK, TRIG UK I and its portfolio of
investments are known as the "Group".
These financial statements are for the year ended 31 December
2021 and comprise only the results of the Company, as all of its
subsidiaries are measured at fair value as explained below in Note
2 (a).
2. Key accounting policies
(a) Basis of preparation
The financial statements were approved and authorised for issue
by the Board of Directors on 17 February 2022.
The financial statements, which give a true and fair view, have
been prepared in compliance with the Companies (Guernsey) Law, 2008
and in accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union ("EU") using the
historical cost basis, except that the financial instruments
classified at fair value through profit or loss are stated at their
fair values. All accounting policies have been applied consistently
in these financial statements.
The financial statements are presented in pounds sterling, which
is the Company's functional currency. Foreign operations are
included in accordance with the policies set out in this note.
The preparation of financial statements in conformity with IFRS
as adopted by the EU requires the Directors to make judgements,
estimates and assumptions that affect the application of policies
and the reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the year in which the estimate is revised if the revision affects
only that year or in the year of the revision and future years if
the revision affects both current and future years. Note 3 shows
critical accounting judgements, estimates and assumptions.
(b) Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Strategic Report and also commented on in the
Viability Statement contained in the Directors' Report on page 106.
The financial position of the Group, its cash flows, liquidity
position and borrowing facilities are described in the Financial
Results on pages 68 to 73. In addition, Notes 1 to 4 of the
financial statements include the Group's objectives, policies and
processes for managing its capital, its financial risk management
objectives, details of its financial instruments and hedging
activities; and its exposures to credit risk and liquidity
risk.
The Group has a range of long-term contracts with various major
UK and European utilities and well-established suppliers across a
range of infrastructure projects. In addition, the Company
maintains a prudent level of leverage, limited to 30% of portfolio
value for fund-level financing, and limited to 50% of gross
portfolio value for the Group's project-level financing. The
project-level financing is non-recourse to the Company.
At 31 December 2021, the Company's leverage was 3% for
fund-level financing (2020: 2%) and 40% for project-level financing
(2020: 43%).
The Group has the necessary financial resources to meet its
obligations. In addition, it maintains a working capital component
of GBP30m as part of its revolving credit facility (currently sized
at GBP500m and limited to 30% of Portfolio Value). The revolving
credit facility is ESG-linked, resulting in a possible increase or
reduction to future interest payments based on the company's
performance against KPIs relating to ESG targets over time.
The facility expires on 31 December 2023, with an option to
extend for up to an additional 2 years; it was GBP73m drawn at 31
December 2021.
The Company has sufficient headroom on its revolving credit
facility covenants. These covenants have been tested and relate to
interest cover ratios and group gearing limits and the Company does
not expect these covenants to be breached. The Company and its
direct subsidiaries have a number of guarantees, detailed in Note
19. These guarantees relate to certain obligations that may become
due by the underlying investments over their useful economic lives.
We do not anticipate these guarantees to be called in the next 12
months and in many cases the potential obligations are insured by
the underlying investments.
The Group's project-level financing is non-recourse to the
Company and is limited to 50% of Gross Portfolio Value.
A cash balance of GBP28.2m at 31 December 2021 is held by the
Company, with further amounts held in the Company's direct and
indirect subsidiaries. In addition, the Company has a working
capital facility on its revolving credit facility of GBP30m.
Further to the above, the Company has a number of outstanding
commitments which are detailed in section 2.8 of this Annual
Report. These commitments can be fully covered by the Company's
revolving credit facility.
Since the start of 2020 the outbreak of the coronavirus (which
causes COVID-19) has spread to become a global pandemic, which, in
conjunction with the public health responses of various
governments, has led to uncertainty in the market. The directors of
the Company continue to follow advice given by the national and
international agencies (including the World Health Organisation and
Public Health England) to ensure best practices are followed.
To date there has not been a material impact on the ability of
the Company to carry out its operations. Restrictions imposed by
governments on public health grounds have impacted the consumption
of electricity, and consequently electricity prices, however these
measures are currently expected to be transitory and in place for
the shortest period practicable, ultimately with a recovery to
previous levels expected at this time. Consequently, the directors
do not believe that there is a significant risk to the value of the
Company's investments, operations or its overall business as a
result of the COVID-19 pandemic but will continue to monitor any
future developments.
The company is also affected by climate-related risks and the
board consider these when they assess the company's ability to
continue as a going concern. The company continues to monitor these
risks, including scenario analysis in line with the Task Force on
Climate-Related Financial Disclosure reporting requirements, as
described in section 2.4 of this Annual Report.
As a consequence, the Directors believe that the Group is well
placed to manage its business risks successfully. The directors do
not believe that there is a significant risk to the business as a
result of the COVID-19 pandemic but will continue to monitor any
future developments.
Having performed the assessment of going concern, the Directors
considered it appropriate to prepare the financial statements of
the Company on a going concern basis. The Company has sufficient
financial resources and liquidity and is well placed to manage
business risks in the current economic environment and can continue
operations for a period of at least 12 months from the date of
these financial statements.
(c) Basis of consolidation
The Company applies IFRS 10 'Consolidated Financial Statements',
and as an investment entity is required to measure all of its
subsidiaries at fair value. The financial statements therefore
comprise the results of the Company only. Subsidiaries are those
entities owned by the Company. The Company has ownership of an
investee, when it is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to
affect those returns through its power over the investee as defined
in IFRS 10 'Consolidated Financial Statements'.
The Directors believe it is appropriate and relevant to the
investor to account for the investment portfolio at fair value,
where consolidating it would not be.
The Company's subsidiaries, TRIG UK and TRIG UK I, carry out
investment activities and incur overheads and borrowings on behalf
of the Group. The Directors therefore provide an alternative
presentation of the Company's results in the Strategic Report on
pages 68 to 73 prepared under the "Expanded basis", which includes
the consolidation of TRIG UK and TRIG UK I.
An entity shall consider all facts and circumstances when
assessing whether it is an investment entity, including its purpose
and design. Under the definition of an investment entity, as set
out in paragraph 27 in the standard, the entity must satisfy all
three of the following tests:
Obtains funds from one or more investors for the purpose of
providing those investors with investment management services;
and
Commits to its investors that its business purpose is to invest
funds solely for returns from capital appreciation, investment
income, or both (including having an exit strategy for
investments); and
Measure and evaluate the performance of substantially all of its
investments on a fair value basis.
In respect of the first criterion, TRIG is an investment company
which enables shareholders to gain exposure to a diversified
portfolio of renewable energy and related infrastructure
investments coupled with the management of these investments.
In respect of the second criterion, the Company's purpose is to
invest funds for returns from capital appreciation and investment
income. The Company's exit of its investments in project companies
may be at the time the existing turbines or other generation assets
get to the end of their economic lives or planning or leasehold
land interests expire, at which point the project companies may be
considering redevelopment (referred to as a "repowering") of the
site. The Company may remain invested in the event there is the
opportunity to repower and undertake the repowering, subject to its
investment limits on construction activity being met and depending
on economic considerations at the time. The Company may also exit
investments earlier for reasons of portfolio balance or profit, as
there is an active secondary market for renewables projects in the
countries in which we operate.
In respect of the third criterion, the board evaluates the
performance of the assets on a fair market value basis throughout
the year as part of the management accounts review, and the company
undertakes a fair market valuation of its portfolio twice a year
for inclusion in its report and accounts with the movement in the
valuation taken to the income statement and thus measured within
its earnings.
Taking these factors into consideration, the Directors are of
the opinion that the Company has all the typical characteristics of
an investment entity and meets the definition in the standard.
(d) Financial instruments
Financial assets and liabilities are recognised on the balance
sheet when the Company becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised
when the contractual rights to the cash flows from the instrument
expire or the asset is transferred, and the transfer qualifies for
derecognition in accordance with IFRS 9 'Financial
Instruments'.
Financial derivatives are valued using a Mark to Market
valuation based on the underlying derivative contracts that are
executed with the banks.
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in
equity and debt securities, trade and other receivables, cash and
cash equivalents, loans and borrowings, and trade and other
payables.
Non-derivative financial instruments are recognised initially at
fair value including directly attributable transaction costs.
Subsequent to initial recognition, non-derivative financial
instruments are measured as described below.
Investments in equity and debt securities
Investments in the equity, loan stock and mezzanine debt of
entities engaged in renewable energy activities are designated upon
initial recognition as held at fair value through profit or loss.
Gains or losses resulting from the movement in fair value are
recognised in the income statement at each valuation point.
Financial assets are recognised/derecognised at fair value at
the date of the purchase/disposal. A financial asset (in whole or
part) is derecognised either:
When the group has transferred substantially all of the risk and
rewards of ownership; or
When it has neither transferred nor retained substantially all
of the risks and rewards when it no longer has control over the
asset or a portion of the asset; or
When the contractual rights to receive cash flow have
expired.
The initial difference between the transaction price and the
fair value, derived from using the discounted cash flows
methodology at the date of acquisition, is recognised only when
observable market data indicates there is a change in a factor that
market participants would consider in setting the price of that
investment. For the years ended 31 December 2021 and 31 December
2020, there were no such differences. In addition, there was no
material change on applying fair values between the date of
acquisition and the reporting date for acquisitions in the years
ended 31 December 2021 and 31 December 2020.
The Group manages these investments and makes purchase and sale
decisions based on their fair value.
The Directors consider the equity and loan stock to share the
same investment characteristics and risks and they are therefore
treated as a single unit of account for valuation purposes and a
single class for disclosure purposes.
(e) Impairment
Financial assets
Financial assets, other than those at fair value through profit
or loss, are assessed for indicators of impairment at each balance
sheet date. A financial asset is considered to be impaired if
objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount, and the present value of the estimated future cash flows
discounted at the original effective interest rate. Significant
financial assets are tested for impairment on an individual basis.
The remaining financial assets are assessed collectively in groups
that share similar credit risk characteristics. All impairment
losses are recognised in the income statement. An impairment loss
is reversed if the reversal can be related objectively to an event
occurring after the impairment loss was recognised. For financial
assets measured at amortised cost the reversal is recognised in the
income statement.
(f) Share capital and share premium
Ordinary Shares are classified as equity. Costs directly
attributable to the issue of new shares or associated with the
establishment of the Company that would otherwise have been avoided
are written off against the value of the ordinary share
premium.
(g) Cash and cash equivalents
Cash and cash equivalents comprises cash balances, deposits held
on call with banks and other short-term, highly liquid investments
with original maturities of three months or less. Bank overdrafts
that are repayable on demand are included as a component of cash
and cash equivalents for the purpose of the cash flow
statement.
(h) Investment income
Income from investments relates solely to returns from the
Company's subsidiaries, TRIG UK and TRIG UK I. This is recognised
as it accrues by reference to the principal outstanding and the
effective interest rate applicable and dividends when these are
received.
(i) Income tax
Under the current system of taxation in Guernsey, the Company is
exempt from paying taxes on non-Guernsey source income or capital
gains.
(j) Foreign exchange gains and losses
Transactions entered into by the Company in a currency other
than its functional currency are recorded at the rates ruling when
the transactions occur. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the balance sheet
date. Exchange differences arising on the retranslation of
unsettled monetary assets and liabilities are recognised
immediately in the income statement.
(k) Segmental reporting
The Chief Operating Decision Maker (the "CODM") is of the
opinion that the Group is engaged in a single segment of business,
being investment in renewable infrastructure to generate investment
returns while preserving capital. The financial information used by
the CODM to allocate resources and manage the Group presents the
business as a single segment comprising a homogeneous
portfolio.
(l) Fund expenses
All expenses are accounted for on an accruals basis. The
Company's investment management and administration fees (refer to
Note 7), finance costs and all other expenses are charged through
the income statement.
(m) Acquisition costs
In line with IFRS 3 (Revised), acquisition costs are expensed to
the income statement as incurred.
(n) Dividends
Dividends are recognised when they become legally payable. In
the case of interim dividends, this is when they are paid. For
scrip dividends, where the Company issues shares with an equal
value to the cash dividend amount as an alternative to the cash
dividend, a credit to equity is recognised when the shares are
issued.
(o) Statement of compliance
Pursuant to the Protection of Investors (Bailiwick of Guernsey)
Law, 1987 the Company is a Registered Closed-Ended Investment
Scheme. As an authorised scheme, the Company is subject to certain
ongoing obligations to the Guernsey Financial Services Commission
and meets its compliance requirements.
(p) Share-based payments
Equity-settled share-based payment transactions with parties
other than employees are measured at the fair value of the goods or
services received, except where the fair value cannot be estimated
reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at that date the entity
obtains the goods or the counterparty renders the service.
(q) New and revised standards
The Company notes the following standards and interpretations
which were in issue but not effective at the date of these
financial statements. They are not expected to have a material
impact.
Amendments to IFRS 10 Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
Amendments to IAS 1 Classification of Liabilities as Current or
Non-current (effective for annual periods beginning on or after 1
January 2023)
Amendments to IFRS 3 Reference to the Conceptual Framework
(effective for business combinations for which date of acquisition
is on or after the beginning of the first annual period beginning
on or after 1 January 2022)
Annual improvements to IFRS standards 2018-2020 Cycle (effective
for annual periods beginning on or after 1 January 2022)
Amendments to IAS 8 Definition of Accounting Estimates
(effective for annual periods beginning on or after 1 January
2023)
3. Critical accounting judgements, estimates and assumptions
The preparation of financial statements in accordance with IFRS
requires management to make judgements, estimates and assumptions
in certain circumstances that affect reported amounts. The
judgements, estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are outlined
below.
Key source of estimation uncertainty: Investments at fair value
through profit or loss
IFRS 13 establishes a single source of guidance for fair value
measurements and disclosures about fair value measurements. Fair
value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The Board
bases the fair value of the investments on information received
from the Investment Manager. Fair value is calculated on a
discounted cash flow basis.
Fair values for those investments for which a market quote is
not available, in this instance being all investments, are
determined using the income approach, which discounts the expected
cash flows at the appropriate rate. In determining the discount
rate, relevant long-term government bond yields, specific risks
associated with the technology (onshore wind, offshore wind,
battery storage and solar) and geographic location of the
underlying investment, and the evidence of recent transactions, are
all taken into consideration. The investments at fair value through
profit or loss, whose fair values include the use of level 3
inputs, are valued by discounting future cash flows from
investments in both equity (dividends and equity redemptions) and
subordinated loans (interest and repayments) to the Group at an
appropriate discount rate.
The weighted average discount rate applied in the December 2021
valuation was 6.6% (2020: 6.7%). The discount rate is considered
one of the most significant unobservable inputs through which an
increase or decrease would have a material impact on the fair value
of the investments at fair value through profit or loss which are
further discussed in Note 4 under sensitivities.
The other material impacts on the measurement of fair value are
the forward-looking power price curve, energy yields, operating
costs and macro-economic assumptions (including rates of inflation)
which are further discussed in Note 4 under sensitivities. The
company considers climate-related risks when assessing these
assumptions as detailed in section 2.4 of this Annual Report.
During the period up to and following the valuation date,
wholesale market forward prices materially exceeded the forecasts
provided by the market forecasters and showed significant levels of
day-to-day volatility. As such, the reflection of increased power
price expectations versus forecasts as a result of forward prices,
of which the portfolio valuation incorporates c. 40% equivalent to
c. 2 pence per share, would represent a potential area of increased
risk in the current market.
The Investment Manager, when considering the assumptions to
apply to the valuation of the investments at 31 December 2021,
considers several key assumptions.
Key Judgements
By virtue of the Company's status as an investment fund, and in
conjunction with IFRS 10 for investment entities, investments are
designated upon initial recognition to be accounted for at fair
value through profit or loss.
The Directors consider that the carrying value amounts of
financial assets and financial liabilities recorded at amortised
cost in the financial statement are approximately equal to their
fair values.
4 Financial instruments
Financial risk management
The objective of the Group's financial risk management is to
manage and control the risk exposures of its investment portfolio.
The Board of Directors has overall responsibility for overseeing
the management of financial risks, however the review and
management of financial risks are delegated to the Investment
Manager, which has documented procedures designed to identify,
monitor and manage the financial risks to which the Group is
exposed. Note 4 presents information about the Group's exposure to
financial risks, its objectives, policies and processes for
managing risk and the Group's management of its financial
resources.
Through its subsidiaries, TRIG UK and TRIG UK I, the Company
invests in a portfolio of investments predominantly in the
subordinated loan stock and ordinary equity of renewable energy
project companies. These companies are structured at the outset to
minimise financial risks where possible, and the Investment Manager
primarily focuses their risk management on the direct financial
risks of acquiring and holding the portfolio but continues to
monitor the indirect financial risks of the underlying projects
through representation, where appropriate, on the Boards of the
project companies, and the receipt of regular financial and
operational performance reports.
The Company has a diversified portfolio of assets which include
investments with both higher and lower risks and returns. These
risks and return differences relate, but are not limited to,
qualification to receive government subsidies, exposure to
fluctuations in future energy prices and levels of project finance
debt.
Interest rate risk
The Group invests in subordinated loan stock of project
companies, usually with fixed interest rate coupons. The
portfolio's cash flows are continually monitored and reforecast,
both over the near future and the long term, to analyse the cash
flow returns from investments. The Group may use borrowings to
finance the acquisition of investments and the forecasts are used
to monitor the impact of changes in borrowing rates against cash
flow returns from investments, as increases in borrowing rates will
reduce net interest margins.
The Group's policy is to ensure that interest rates are
sufficiently hedged to protect the Group's net interest margins
from significant fluctuations when entering into material
medium/long-term borrowings. This includes engaging in interest
rate swaps or other interest rate derivative contracts.
The Company has an indirect exposure to changes in interest
rates through its investment in project companies, many of which
are financed by senior debt. Senior debt financing of project
companies is generally either through floating rate debt, fixed
rate bonds or index-linked bonds. Where senior debt is floating
rate, the projects typically have similar length hedging
arrangements in place, which are monitored by the project
companies' managers, finance parties and boards of directors.
The revolving credit facility is ESG-linked, resulting in a
possible increase or reduction to future interest payments based on
the companies' performance against KPIs relating to ESG targets
over time.
Inflation risk
The Group's project companies are generally structured so that
contractual income and costs are either wholly or partially linked
to specific inflation, where possible, to minimise the risks of
mismatch between income and costs due to movements in inflation
indexes. The Group's overall cash flows vary with inflation,
although they are not directly correlated as not all flows are
indexed. The effects of these inflation changes do not always
immediately flow through to the Group's cash flows, particularly
where a project's loan stock debt carries a fixed coupon and the
inflation changes flow through by way of changes to dividends in
future years. Inflation is managed through the use of inflation
linked swaps where the Group deems it to be appropriate. The
sensitivity of the portfolio valuation is shown further on in Note
4.
Market risk
Returns from the Group's investments are affected by the price
at which the investments are acquired. The value of these
investments will be a function of the discounted value of their
expected future cash flows, and as such will vary with, inter alia,
movements in interest rates, market prices and the competition for
such assets. The Investment Manager carries out a full valuation
semi-annually and this valuation exercise considers changes
described above.
Currency risk
The projects in which the Group invests all conduct their
business and pay interest, dividends and principal in sterling,
with the exception of the euro-denominated investments which at 31
December 2021 comprised 37% (2020: 40%) of the portfolio by value
on an invested basis and 42% (2020: 37%) of the portfolio by value
on a committed basis. The sensitivity of the portfolio valuation is
shown in this note.
The Group monitors its foreign exchange exposures using its
near-term and long-term cash flow forecasts. Its policy is to use
foreign exchange hedging to provide protection to the level of
sterling distributions that the Company aims to pay over the
medium-term, where considered appropriate. This may involve the use
of forward exchange.
Credit risk
Credit risk is the risk that a counterparty of the Group will be
unable or unwilling to meet a commitment that it has entered into
with the Group. Key credit ratings for the Company's counterparties
are detailed in Note 14.
The credit standing of subcontractors is reviewed, and the risk
of default estimated for each significant counterparty position.
Monitoring is on-going, and year-end positions are reported to the
Board on a quarterly basis. The Group's largest credit risk
exposure to a project at 31 December 2021 was to the Beatrice
project, representing 10% (2020: East Anglia one, representing 9%)
of the invested portfolio value.
The largest subcontractor counterparty risk exposure (O&M or
OEM whereby the maintenance provider is not always the original
equipment manufacturer) was to Vestas, who provided turbine
maintenance services in respect of 24% (2020: Vestas 26%) of the
invested portfolio by value. The largest exposure to any equipment
manufacturer was to Siemens, who provided turbines in respect of
46% of the invested portfolio value (2020: Siemens 39%).
The Group's investments enter into Power Price Agreements
("PPA") with a range of providers through which electricity is
sold; the PPAs are priced into the fair value of the investments.
The largest PPA provider to the portfolio at 31 December 2021 was
Statkraft, who provided PPAs to projects in respect of 19% (2020:
Statkraft 22%) of the invested portfolio value.
At 31 December 2021, there were no loans and other receivables
considered impaired for the Group.
The Group's maximum exposure to credit risk over financial
assets is the carrying value of those assets in the balance sheet.
The Group does not hold any collateral as security.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure, as far as possible,
that it will have sufficient financial resources and liquidity to
meets its liabilities when due. The Group ensures it maintains
adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and
liabilities. The Group's investments are predominantly funded by
share capital and medium-term debt funding.
The Group's investments are generally in private companies, in
which there is no listed market and therefore such investment would
take time to realise, and there is no assurance that the valuations
placed on the investments would be achieved from any such sale
process.
The Group's investments have borrowings which rank senior and
have priority over the Group's own investments into the companies.
This senior debt is structured such that, under normal operating
conditions, it will be repaid within the expected life of the
projects. Debt raised by the investment companies from third
parties is without recourse to the Group.
The Group's revolving credit facility, which was GBP72.8m drawn
at 31 December 2021 (31 December 2020: GBP40m), is held by TRIG UK
and TRIG UK I, and is guaranteed by the Company. The facility is in
place until December 2023 and contains an option to extend.
Capital management
TRIG UK and TRIG UK I, the Company's subsidiaries, have a
GBP500m revolving credit facility with Royal Bank of Scotland
International Limited, National Australia Bank Limited, ING Bank
N.V, Barclays Bank PLC, Banco Santander S.A. London Branch and
Sumitomo Mitsui Banking Corporation. The facility expires on 31
December 2023. The facility was GBP72.8m drawn at 31 December
2021.
The Group makes prudent use of its leverage. Under the
investment policy, borrowings, including any financial guarantees
to support outstanding subscription obligations but excluding
internal Group borrowings of the Group's underlying investments,
are limited to 30% of the portfolio value.
From time to time, the Company issues its own shares to the
market; the timing of these purchases depends on market prices.
In order to assist in the narrowing of any discount to the Net
Asset Value at which the Ordinary Shares may trade, from time to
time the Company may at the sole discretion of the Directors:
make market purchases of up to 14.99% per annum of its issued
Ordinary Shares; and
make tender offers for the Ordinary Shares.
There were no changes in the Group's approach to capital
management during the year.
Fair value estimation
The following summarises the significant methods and assumptions
used in estimating the fair values of financial instruments:
Non-derivative financial instruments
The fair value of financial instruments traded in active markets
is based on quoted market prices at the balance sheet date.
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
Group uses the income approach, which discounts the expected cash
flows attributable to each asset at an appropriate rate to arrive
at fair values. In determining the discount rate, regard is had to
relevant long-term government bond yields, the specific risks of
each investment and the evidence of recent transactions.
Derivative financial instruments
The fair value of financial instruments inputs other than quoted
prices traded in active markets is based on quoted market prices at
the balance sheet date. The quoted market price used for financial
assets held by the Group is the current bid price. Note 2 discloses
the methods used in determining fair values on a specific
asset/liability basis. Where applicable, further information about
the assumptions used in determining fair value is disclosed in the
notes specific to that asset or liability.
Classification of financial instruments
31 December 2021 31 December 2020
GBP'000s GBP'000s
Financial assets
Designated at fair value through profit or loss:
Investments 2,636,785 2,160,946
Other financial assets 27,293 -
-------------------------------------------------- ---------------- ----------------
Financial assets at fair value 2,664,078 2,160,946
-------------------------------------------------- ---------------- ----------------
At amortised cost:
Other receivables 14,232 12,501
Cash and cash equivalents 28,229 23,116
-------------------------------------------------- ---------------- ----------------
Financial assets at amortised cost 42,461 35,617
-------------------------------------------------- ---------------- ----------------
Financial liabilities
Designated at fair value through profit or loss:
Other financial liabilities - 1,399
-------------------------------------------------- ---------------- ----------------
Financial liabilities at fair value - 1,399
-------------------------------------------------- ---------------- ----------------
At amortised cost:
Other payables 362 293
-------------------------------------------------- ---------------- ----------------
Financial liabilities at amortised cost 362 293
-------------------------------------------------- ---------------- ----------------
The Directors believe that the carrying values of all financial
instruments are not materially different to their fair values.
Other financial assets/liabilities represent the fair value of
foreign exchange forward agreements in place at the year-end.
Fair value hierarchy
The fair value hierarchy is defined as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
As at 31 December 2021
Level 1 Level 2 Level 3 Total
GBP'000's GBP'000's GBP'000's GBP'000's
Investments at fair value through profit or loss - - 2,636,785 2,636,785
------------------------------------------------- ---------- ---------- ---------- ----------
- - 2,636,785 2,636,785
------------------------------------------------- ---------- ---------- ---------- ----------
Other financial assets - 27,293 - 27,293
------------------------------------------------- ---------- ---------- ---------- ----------
- 27,293 - 27,293
------------------------------------------------- ---------- ---------- ---------- ----------
As at 31 December 2020
Level 1 Level 2 Level 3 Total
GBP'000's GBP'000's GBP'000's GBP'000's
Investments at fair value through profit or loss - - 2,160,946 2,160,946
------------------------------------------------- ---------- ---------- ---------- ----------
- - 2,160,946 2,160,946
---------- ---------- ---------- ----------
Other financial liabilities - (1,399) - (1,339)
------------------------------------------------- ---------- ---------- ---------- ----------
- (1,399) - (1,339)
------------------------------------------------- ---------- ---------- ---------- ----------
Other financial liabilities/assets represent the fair value of
foreign exchange forward agreements in place at the year-end.
Investments at fair value through profit or loss comprise the
fair value of the investment portfolio, on which the sensitivity
analysis is calculated, and the fair value of TRIG UK and TRIG UK
I, the Company's subsidiaries being its cash, working capital and
debt balances.
31 December 2021 31 December 2020
GBP'000's GBP'000's
Portfolio value 2,725,805 2,213,030
TRIG UK and TRIG UK I
Cash 225 737
Working capital (19,345) (17,211)
Debt(1) (69,900) (35,610)
------------------------------------------------- ---------------- ----------------
(89,020) (52,084)
Investments at fair value through profit or loss 2,636,785 2,160,946
------------------------------------------------- ---------------- ----------------
1 Debt arrangement costs of GBP2,927k (2020: GBP4,390k) have
been netted off the GBP72.8m (2020: GBP40m) debt drawn by TRIG UK
and TRIG UK I.
Level 2
Valuation methodology
Fair value is based on price quotations from financial
institutions active in the relevant market. The key inputs to the
discounted cash flow methodology used to derive fair value include
foreign currency exchange rates and foreign currency forward
curves. Valuations are performed on a six-monthly basis every June
and December for all financial assets and all financial
liabilities.
Level 3
Valuation methodology
The Investment Manager has carried out fair market valuations of
the investments as at 31 December 2021 and the Directors have
satisfied themselves as to the methodology used, the discount rates
and key assumptions applied, and the valuation. All investments are
at fair value through profit or loss and are valued using a
discounted cash flow methodology.
The fair value of investments has been calculated using a
bifurcated methodology whereby cash flows are discounted on the
basis of the risk and return profile of the underlying cash
flows.
The following economic assumptions were used in the discounted
cash flow valuations at:
31 December 2021 31 December 2020
Inflation applied to UK ROC Income 3.75% (2022), 3.50% (2023), 2.75% until 3.0% 2020, 2.75% thereafter
2030, 2.00% thereafter
3% (2022), 2.75% (2023), 2.00%
Inflation applied to UK CfD Income thereafter 2.00%
UK inflation rates (other) 3.75% (2022), 3.50% (2023), 2.75%
2.75% thereafter
Ireland, France, Sweden, Germany and
Spain inflation rates 2.00% 2.00%
--------------------------------------- --------------------------------------- ------------------------------------
UK deposit interest rates 0.25% to 2025, 1.25% thereafter 0.25% to March 2023, 1.0% thereafter
--------------------------------------- --------------------------------------- ------------------------------------
Ireland, France, Sweden, Germany and 0.0% to 2025, 0.25% thereafter 0.0% to March 2023, 0.5% thereafter
Spain deposit interest rates
--------------------------------------- --------------------------------------- ------------------------------------
UK corporation tax rate 19% to April 2023, 25% thereafter 19.00%
--------------------------------------- --------------------------------------- ------------------------------------
Ireland corporation tax rate 12.5% active rate, 25% passive rate 12.5% active rate, 25% passive rate
--------------------------------------- --------------------------------------- ------------------------------------
France corporation tax rate 25% 28%; reducing to 25% by 2022
--------------------------------------- --------------------------------------- ------------------------------------
Sweden corporation tax rate 20.6% 20.6%
--------------------------------------- --------------------------------------- ------------------------------------
Germany corporation tax rate 15.8% 15.8%
--------------------------------------- --------------------------------------- ------------------------------------
Spain corporation tax rate 25% 25%
--------------------------------------- --------------------------------------- ------------------------------------
Euro/sterling exchange rate 1.1899 1.1191
--------------------------------------- --------------------------------------- ------------------------------------
Energy yield assumptions P50 case P50 case
--------------------------------------- --------------------------------------- ------------------------------------
Valuation Sensitivities
Sensitivity analysis is produced to show the impact of changes
in key assumptions adopted to arrive at the valuation. For each of
the sensitivities, it is assumed that potential changes occur
independently of each other with no effect on any other base case
assumption, and that the number of investments in the portfolio
remains static throughout the modelled life.
The sensitivities assume the portfolio is fully invested and
hence the Portfolio Value for the sensitivity analysis is the sum
of the Portfolio Valuation at 31 December 2021 (GBP2,726m) and the
outstanding investment commitments (GBP231m) being GBP2,957m.
Accordingly, the NAV per share impacts shown below assume the
issue of further shares to fund these commitments.
The analysis below shows the sensitivity of the portfolio value
(and its impact on NAV) to changes in key assumptions as
follows:
Discount rates
The discount rates used for valuing each investment are based on
market information and the current bidding experience of the Group
and its Managers.
The weighted average valuation discount rate applied to
calculate the portfolio valuation is 6.6% at 31 December 2021
(2020: 6.7%). An increase or decrease in this rate by 0.5% has the
following effect on valuation.
Discount rate NAV/ share impact -0.5% change Total Portfolio Value +0.5% change NAV/ share impact
Directors' valuation -
December 2021 +4.4p +GBP111.7m GBP2,957.0m -GBP103.9m -4.1p
----------------------------- ----------------- ------------ --------------------- ------------ -----------------
Directors' valuation -
December 2020 +4.7p +GBP107.3m GBP2,629.8m -GBP100.5m -4.4p
----------------------------- ----------------- ------------ --------------------- ------------ -----------------
Power Price
The sensitivity considers a flat 10% movement in power prices
for all years, i.e. the effect of adjusting the forecast
electricity price assumptions in each of the jurisdictions
applicable to the portfolio down by 10% and up by 10% from the base
case assumptions for each year throughout the operating life of the
portfolio.
A change in the forecast electricity price assumptions by plus
or minus 10% has the following effect.
Power Price NAV/ share impact -10% change Total Portfolio Value +10% change NAV/ share impact
Directors' valuation - December
2021 -8.1p -GBP202.7m GBP2,957.0m +GBP200.8m 8.0p
------------------------------- ----------------- ----------- --------------------- ----------- -----------------
Directors' valuation - December
2020 -7.6p -GBP173.6m GBP2,629.8m +GBP172.7m 7.6p
------------------------------- ----------------- ----------- --------------------- ----------- -----------------
Energy Yield
The base case assumes a "P50" level of output. The P50 output is
the estimated annual amount of electricity generation (in MWh) that
has a 50% probability of being exceeded - both in any single year
and over the long term - and a 50% probability of being
underachieved. Hence the P50 is the expected level of generation
over the long term.
The sensitivity illustrates the effect of assuming "P90 10-year"
(a downside case) and "P10 10-year" (an upside case) energy
production scenarios. A P90 10-year downside case assumes the
average annual level of electricity generation that has a 90%
probability of being exceeded over a 10-year period. A P10 10-year
upside case assumes the average annual level of electricity
generation that has a 10% probability of being exceeded over a
10-year period. This means that the portfolio aggregate production
outcome for any given 10-year period would be expected to fall
somewhere between these P90 and P10 levels with an 80% confidence
level, with a 10% probability of it falling below that range of
outcomes and a 10% probability of it exceeding that range. The
sensitivity includes the portfolio effect which reduces the
variability because of the diversification of the portfolio. The
sensitivity is applied throughout the life of each asset in the
portfolio (even where this exceeds 10 years).
The table below shows the sensitivity of the portfolio value to
changes in the energy yield applied to cash flows from project
companies in the portfolio as per the terms P90, P50 and P10
explained above.
Energy Yield NAV/ share impact P90 10-year Total Portfolio P10 10-year NAV/ share impact
exceedance Value exceedance
Directors'
valuation -
December 2021 -13.9p -GBP348.6m GBP2,957.0m +GBP381.3m 15.2p
------------------- ----------------- ------------------ ------------------- ------------------ -----------------
Directors'
valuation -
December 2020 -14.3p -GBP324.4m GBP2,629.8m +GBP349.3m 15.3p
------------------- ----------------- ------------------ ------------------- ------------------ -----------------
Inflation rates
The projects' income streams are principally a mix of subsidies,
which are amended each year with inflation, and power prices, which
the sensitivity assumes will move with inflation. The projects'
management, maintenance and tax expenses typically move with
inflation, but debt payments are fixed. This results in the
portfolio returns and valuation being positively correlated to
inflation.
The portfolio valuation assumes 3.75% p.a. inflation for the UK
in 2022, 3.5% in 2023 and 2.75% thereafter and 2.0% p.a. for each
of Sweden, France, Germany, Ireland and Spain.
The sensitivity illustrates the effect of a 0.5% decrease and a
0.5% increase from the assumed annual inflation rates in the
financial model for each year throughout the operating life of the
portfolio.
Inflation assumption NAV/ share impact -0.5% change Total Portfolio Value +0.5% change NAV/ share impact
Directors' valuation -
December 2021 -4.3p -GBP107.7m GBP2,957.0m +GBP115.4m 4.6p
----------------------------- ----------------- ------------ --------------------- ------------ -----------------
Directors' valuation -
December 2020 -4.8p -GBP110.1m GBP2,629.8m +GBP120.0m 5.3p
----------------------------- ----------------- ------------ --------------------- ------------ -----------------
Operating costs
The sensitivity shows the effect of a 10% decrease and a 10%
increase to the base case for annual operating costs for the
portfolio, in each case assuming that the change to the base case
for operating costs occurs with effect from 1 January 2022 and that
change to the base case remains reflected consistently thereafter
during the life of the projects.
Operating costs NAV/ share impact -10% change Total Portfolio Value +10% change NAV/ share impact
Directors' valuation - December
2021 5.2p +GBP129.5m GBP2,957.0m -GBP130.7m -5.2p
------------------------------- ----------------- ----------- --------------------- ----------- -----------------
Directors' valuation - December
2020 5.8p +GBP131.5m GBP2,629.8m -GBP132.6m -5.8p
------------------------------- ----------------- ----------- --------------------- ----------- -----------------
Taxation rates
The profits of each project company are subject to corporation
tax in their home jurisdictions at the applicable rates (the tax
rates adopted in the valuation are set out in Note 4 to the
financial statements). The tax sensitivity looks at the effect on
the Directors' valuation of changing the tax rates by +/- 2% each
year in each jurisdiction and is provided to show that tax can be a
material variable in the valuation of investments. The
sensitivities incorporate the impact of portfolio level
reliefs.
Taxation rates NAV/ share impact -2% change Total Portfolio Value +2% change NAV/ share impact
Directors' valuation - December
2021 1.7p +GBP43.5m GBP2,957.0m -GBP43.8m -1.7p
--------------------------------- ----------------- ---------- --------------------- ---------- -----------------
Directors' valuation - December
2020 1.6p +GBP37.2m GBP2,629.8m -GBP37.4m -1.6p
--------------------------------- ----------------- ---------- --------------------- ---------- -----------------
Interest rates
This shows the sensitivity of the portfolio valuation to the
effects of a reduction of 1% and an increase of 2% in interest
rates. The change is assumed with effect from 1 January 2022 and
continues unchanged throughout the life of the assets.
The portfolio is relatively insensitive to changes in interest
rates. This is an advantage of TRIG's approach of favouring
long-term structured project financing (over shorter-term corporate
debt) which is secured with the substantial majority of this debt
having the benefit of long-term interest rate swaps which fix the
interest cost to the projects.
The portfolio sensitivity to interest rates is assessed
asymmetrically, noting that there is limited capacity for further
interest rate reductions.
Interest rates NAV/ share impact -1% change Total Portfolio Value +2% change NAV/ share impact
Directors' valuation - December
2021 -0.1p -GBP2.5m GBP2,957.0m +GBP0.8m 0.0p
--------------------------------- ----------------- ---------- --------------------- ---------- -----------------
Directors' valuation - December
2020 -0.0p -GBP0.9m GBP2,629.8m +GBP0.2m 0.0p
--------------------------------- ----------------- ---------- --------------------- ---------- -----------------
Currency rates
The sensitivity shows the effect of a 10% decrease (euro weakens
relative to sterling) and a 10% increase (euro strengthens relative
to sterling) in the value of the euro relative to sterling used for
the 31 December 2021 valuation (based on a 31 December 2021
exchange rate of EUR1.1899 to GBP1). In each case it is assumed
that the change in exchange rate occurs from 1 January 2022 and
thereafter remains constant at the new level throughout the life of
the projects.
At the year-end, 42% of the committed portfolio was located in
Sweden, France, Germany, Ireland and Spain comprising
euro-denominated assets.
The Group has entered into forward hedging of the expected euro
distributions for up to 48 months ahead and in addition placed
further hedges to reach a position where at least 60% of the
valuation of euro-denominated assets is hedged. The hedge reduces
the sensitivity of the portfolio value to foreign exchange
movements and accordingly the impact is shown net of the benefit of
the foreign exchange hedge in place. The value of the outstanding
commitments on Grönhult, Ranasjö, Salsjö and the Cadiz solar
projects (Arenosas, El Yarte, La Guita and Malabrigo) are included
in this sensitivity. A 60% hedge is assumed for the sensitivity
below and during 2021, typical hedge levels have been between
approximately 60-80%.
Currency rates NAV/ share impact -10% change Total Portfolio Value +10% change NAV/ share impact
Directors' valuation - December
2021 -1.8p -GBP44.0m GBP2,957.0m +GBP44.0m 1.8p
------------------------------- ----------------- ----------- --------------------- ----------- -----------------
Directors' valuation - December
2020 -1.4p -GBP31.9m GBP2,629.8m +GBP31.9m 1.4p
------------------------------- ----------------- ----------- --------------------- ----------- -----------------
The euro/sterling exchange rate sensitivity does not attempt to
illustrate the indirect influences of currencies on UK power prices
which are interrelated with other influences on power prices.
Asset Lives
Assumptions adopted in the year-end valuation typically range
from 25 to 40 years from the date of commissioning, with an average
30 years for the wind portfolio and 38 years for solar portfolio.
The overall average across the portfolio at 31 December 2021 is 30
years (31 December 2020: 30 years).
The sensitivity below shows the impact on the valuation of
assuming all assets within the portfolio have a year longer and a
year shorter asset life assumed.
Asset Lives NAV/ share impact -1 year change Total Portfolio Value +1 year change NAV/ share impact
Directors' valuation -
December 2021 -1.0p -GBP25.6m GBP2,957.0m +GBP23.3m 0.9p
------------------------- ----------------- -------------- --------------------- -------------- -----------------
Directors' valuation -
December 2020 -1.2p -GBP27.0m GBP2,629.8m +GBP23.4m 1.0p
------------------------- ----------------- -------------- --------------------- -------------- -----------------
5. Segment reporting
The Chief Operating Decision Maker (the "CODM") is of the
opinion that the Group is engaged in a single segment of business,
being investment in renewable infrastructure to generate investment
returns while preserving capital. The financial information used by
the CODM to allocate resources and manage the Group presents the
business as a single segment comprising a homogeneous
portfolio.
6. Total operating income
For year ended For year ended
31 December 31 December
2021 2020
GBP'000s GBP'000s
Gain on investments 68,775 41,010
Dividend income 4,900 -
Interest income from investments 101,121 78,165
--------------------------------- --------------- ---------------
Total operating income 174,796 119,175
--------------------------------- --------------- ---------------
The gains on investment are unrealised. On the Expanded basis,
which includes TRIG UK and TRIG UK I, the Company's subsidiaries,
which the Directors consider to be an extension of the Company's
investment activity, total operating income is GBP204,331k (2020:
GBP145,826k). The reconciliation from the IFRS basis to the
expanded basis is shown in Section 2.8 of the Strategic Report on
page 68.
7 Fund expenses
For year ended For year ended
31 December 31 December
2021 2020
GBP'000s GBP'000s
Fees payable to the Company's Auditor:
For audit of the Company's financial statements 171 140
For the other audit-related assurance services 45 39
For additional fees in respect to the prior period 15 15
Investment and management fees (Note 18) 200 200
Directors' fees (Note 18) 339 283
Other costs 1,134 1,117
---------------------------------------------------- --------------- ---------------
Fund expenses 1,904 1,794
---------------------------------------------------- --------------- ---------------
The fees to the Company's Auditor include GBP45k (2020: GBP39k)
payable in relation to audit-related assurance services in respect
of the interim review of the half-yearly financial statements.
In addition to the above, GBP508k (2020: GBP445k) was paid to
Deloitte LLP (the Company's auditor) in respect of audit services
provided for the 2021 audit to unconsolidated subsidiaries.
On the Expanded basis, fund expenses are GBP23,759k (2020:
GBP19,987k); the difference being the costs incurred within TRIG UK
and TRIG UK I, the Company's subsidiaries. The reconciliation from
the IFRS basis to the Expanded basis is shown in Section 2.8 of the
Strategic Report on page 69.
The Company had no employees during the current or prior year.
The Company has appointed the Investment Manager and the Operations
Manager to manage the portfolio, the Company and its subsidiaries,
on its behalf.
8. Finance and other income/ (expense)
For year ended For year ended
31 December 31 December
2021 2020
GBP'000s GBP'000s
Interest income:
Interest on bank deposits 1 155
--------------------------------------------------- --------------- ---------------
Total finance income 1 155
--------------------------------------------------- --------------- ---------------
Gain/(loss) on foreign exchange:
Realised gain/(loss) on settlement of FX forwards 7,643 (3,122)
Fair value gain/(loss) of FX forward contracts 28,693 (14,020)
Other foreign exchange gains/(losses 1,233 (228)
--------------------------------------------------- --------------- ---------------
Total gain/(loss) on foreign exchange 37,569 (17,370)
--------------------------------------------------- --------------- ---------------
Finance and other income/(expense) 37,570 (17,215)
--------------------------------------------------- --------------- ---------------
On the Expanded basis, finance income is GBP1k (2020: GBP155k)
and finance costs are GBP5,793k (2020: GBP4,036k); the difference
being the Group's acquisition facility costs which are incurred
within TRIG UK and TRIG UK I, the Company's subsidiaries. These
costs are shown in Section 2.8 of the Strategic Report on page
69.
9. Income tax
Under the current system of taxation in Guernsey, the Company is
exempt from paying taxes on income, profits or capital gains.
Therefore, income from investments is not subject to any further
tax in Guernsey, although these investments will bear tax in the
individual jurisdictions in which they operate.
10. Earnings per share
Earnings per share is calculated by dividing the profit
attributable to equity shareholders of the Company by the weighted
average number of Ordinary Shares in issue during the year.
31 December 31 December
2021 2020
Profit attributable to equity holders of the Company ('000) GBP210,462 GBP100,166
Weighted average number of Ordinary Shares in issue ('000) 2,103,869 1,711,999
Earnings per Ordinary Share (Pence) 10.0p 5.9p
------------------------------------------------------------- ------------ ------------
Further details of shares issued in the year are set out in Note
17.
11. Dividends
31 December 31 December
2021 2020
GBP'000s GBP'000s
Amounts recognised as distributions to equity holders during the year:
Interim dividend for the 3-month year ended 31 December 2019 of 1.66p 27,167
Interim dividend for the 3-month year ended 31 March 2020 of 1.69p 27,673
Interim dividend for the 3-month year ended 30 June 2020 of 1.69p 29,379
Interim dividend for the 3-month year ended 30 September 2020 of 1.69p 29,439
Interim dividend for the 3-month year ended 31 December 2020 of 1.69p 32,167
Interim dividend for the 3-month year ended 31 March 2021 of 1.69p 35,508
Interim dividend for the 3-month year ended 30 June 2021 of 1.69p 35,548
Interim dividend for the 3-month year ended 30 September 2021 of 1.69p 38,293
------------------------------------------------------------------------ ----------- ------------
141,516 113,658
------------------------------------------------------------------------ ----------- ------------
Dividends settled as a scrip dividend alternative 7,458 6,629
Dividends settled in cash 134,058 107,028
--------------------------------------------------- ------- -------
141,516 113,657
--------------------------------------------------- ------- -------
On 3 February 2022, the Company declared an interim dividend of
1.69 pence per share for the period 1 October 2021 to 31 December
2021. The total dividend, GBP38,316,464, payable on 31 March 2022,
is based on a record date of 10 February 2022 and the number of
shares in issue at that time being 2,267,246,415.
31 December 31 December
2021 2020
Pence Pence
Amounts recognised as distributions to equity holders during the year:
Interim dividend for the quarter ended December 2019 1.66
Interim dividend for the quarter ended March 2020 1.69
Interim dividend for the quarter ended June 2020 1.69
Interim dividend for the quarter ended September 2020 1.69
Interim dividend for the quarter ended December 2020 1.69
Interim dividend for the quarter ended March 2021 1.69
Interim dividend for the quarter ended June 2021 1.69
Interim dividend for the quarter ended September 2021 1.69
------------------------------------------------------------------------ ----------- -----------
Total dividend per share 6.76 6.73
------------------------------------------------------------------------ ----------- -----------
12. Net assets per Ordinary Share
31 December 31 December
2021 2020
Shareholders' equity at balance sheet date ('000) GBP2,706,177 GBP2,194,871
------------------------------------------------------------------------------------------ ------------ ------------
Number of shares at balance sheet date, including management shares accrued but not yet
issued
('000) 2,268,104 1,904,287
------------------------------------------------------------------------------------------ ------------ ------------
Net Assets per Ordinary Share at balance sheet date (Pence) 119.3p 115.3p
------------------------------------------------------------------------------------------ ------------ ------------
Shares are issued to the Investment Manager and the Operations
Manager twice a year in arrears, usually in March and September for
the half-year ending December and June, respectively.
As at 31 December 2021, 857,254 shares equating to GBP1,008,219,
based on a Net Asset Value ex dividend of 117.61 pence per share
(the Net Asset Value at 31 December 2021 of 119.3 pence per share
less the interim dividend of 1.69 pence per share) were due but had
not been issued. The Company intends to issue these shares around
31 March 2022.
In view of this, the denominator in the above Net assets per
Ordinary Share calculation is as follows:
31 December 31 December
2021 2020
000s 000s
Ordinary Shares in issue at balance sheet date 2,267,246 1,903,402
Number of shares to be issued in lieu of Management fees 857 885
------------------------------------------------------------------------- ------------- -------------
Total number of shares used in Net Assets per Ordinary Share calculation 2,268,104 1 1,904,287
------------------------------------------------------------------------- ------------- -------------
1 Balance does not cast due to rounding
13. Investments at fair value through profit or loss
Investments at fair value through profit or loss is the sum of
the portfolio valuation and the carrying amount of TRIG UK and TRIG
UK I, the Company's subsidiaries.
31 December 31 December
2021 2020
GBP'000s GBP'000s
Brought forward 2,160,946 1,741,457
Investments in the year 452,289 499,466
Distributions paid to the Company (149,522) (188,779)
Dividend income 4,900 -
Interest income from investments 99,397 67,792
Gain on valuation 68,775 41,010
----------------------------------- ------------ ------------
Carried forward 2,636,785 2,160,946
----------------------------------- ------------ ------------
The following information is non-statutory. It provides
additional information to users of the financial statements,
splitting the fair value movements between the investment portfolio
and TRIG UK and TRIG UK I, the Company's subsidiaries.
31 December 31 December
2021 2020
GBP'000s GBP'000s
Fair value of investment portfolio
Brought forward value of investment portfolio 2,213,030 1,745,185
Investments in the year 478,928 588,249
Exit proceeds2 - (117,950)
Distributions paid to the Company (169,447) (147,958)
Interest income 75,167 69,869
Dividend income 33,928 23,506
Gain on valuation 94,199 52,130
------------------------------------------------------- ------------ -----------
Carried forward value of investment portfolio 2,725,805 2,213,030
------------------------------------------------------- ------------ -----------
Fair value of TRIG UK & TRIG UK I
Brought forward value of TRIG UK & TRIG UK I (52,083) (3,728)
Cash movement (512) 521
Working capital movement (2,135) (11,661)
Debt movement1 (34,290) (37,215)
------------------------------------------------------- ------------ -----------
Carried forward value of TRIG UK & TRIG UK I (89,020) (52,083)
------------------------------------------------------- ------------ -----------
Total investments at fair value through profit or loss 2,636,785 2,160,947
------------------------------------------------------- ------------ -----------
1 Debt arrangement costs of GBP2,927k (2020: GBP4,390k) have
been netted off the GBP72.8m (2020: GBP40m) debt drawn by TRIG UK
and TRIG UK I.
2 In the prior year, this related to the exit of Ersträsk and
sell down of Merkur.
The gains on investment are unrealised.
The SPVs (Project companies) in which the company invests are
generally restricted on their ability to transfer funds to the
Company under the terms of their individual senior funding
arrangements. Significant restrictions include:
- Historic and projected debt service and loan life cover ratios exceed a given threshold;
- Required cash reserve account levels are met;
- Senior lenders have agreed the current financial model that
forecasts the economic performance of the Project company;
- The Project company is in compliance with the terms of its senior funding arrangements; and
- Senior lenders have approved the annual budget for the company.
Details of investments recognised at fair value through profit
or loss were as follows:
31 December 2021 31 December 2020
------------------------------- -------------------------------
Investments (project name) Country Equity Subordinated loan stock Equity Subordinated loan stock
TRIG UK UK 100% 100% 100% 100%
TRIG UK I UK 100% 100% 100% 100%
Roos UK 100% 100% 100% 100%
The Grange UK 100% 100% 100% 100%
Hill of Towie UK 100% 100% 100% 100%
Green Hill UK 100% 100% 100% 100%
Forss UK 100% 100% 100% 100%
Altahullion UK 100% 100% 100% 100%
Lendrums Bridge UK 100% 100% 100% 100%
Lough Hill UK 100% 100% 100% 100%
Milane Hill Republic of Ireland 100% 100% 100% 100%
Beennageeha Republic of Ireland 100% 100% 100% 100%
Haut Languedoc France 100% 100% 100% 100%
Haut Cabardes France 100% 100% 100% 100%
Cuxac Cabardes France 100% 100% 100% 100%
Roussas-Claves France 100% 100% 100% 100%
Puits Castan France 100% 100% 100% 100%
Churchtown UK 100% 100% 100% 100%
East Langford UK 100% 100% 100% 100%
Manor Farm UK 100% 100% 100% 100%
Parsonage UK 100% 100% 100% 100%
Marvel Farms UK 100% 100% 100% 100%
Tamar Heights UK 100% 100% 100% 100%
Stour Fields UK 100% 100% 100% 100%
Meikle Carewe UK 100% 100% 100% 100%
Tallentire UK 100% 100% 100% 100%
Parley UK 100% 100% 100% 100%
Egmere UK 100% 100% 100% 100%
Penare UK 100% 100% 100% 100%
Earlseat UK 100% 100% 100% 100%
Taurbeg Republic of Ireland 100% 100% 100% 100%
Four Burrows UK 100% 100% 100% 100%
Rothes 2 UK 49% 49% 49% 49%
Mid Hill UK 49% 49% 49% 49%
Paul's Hill UK 49% 49% 49% 49%
Rothes 1 UK 49% 49% 49% 49%
Crystal Rig 1 UK 49% 49% 49% 49%
Crystal Rig 2 UK 49% 49% 49% 49%
Broussan France 48.9% 100% 48.9% 100%
Plateau France 48.9% 100% 48.9% 100%
Borgo France 48.9% 100% 48.9% 100%
Olmo 2 France 48.9% 100% 48.9% 100%
Chateau France 48.9% 100% 48.9% 100%
Pascialone France 48.9% 100% 48.9% 100%
Santa Lucia France 48.9% 100% 48.9% 100%
Agrinergie 1&3 France 48.9% 100% 48.9% 100%
Agrinergie 5 France 48.9% 100% 48.9% 100%
Agrisol France 48.9% 100% 48.9% 100%
Chemin Canal France 48.9% 100% 48.9% 100%
Ligne des 400 France 48.9% 100% 48.9% 100%
Logistisud France 48.9% 100% 48.9% 100%
Marie Galante France 48.9% 100% 48.9% 100%
Sainte Marguerite France 48.9% 100% 48.9% 100%
Freasdail UK 100% 100% 100% 100%
FVP du Midi France 51.0% 100% 51.0% 100%
Neilston UK 100% 100% 100% 100%
Garreg Lwyd UK 100% 100% 100% 100%
Broxburn UK 100% 100% 100% 100%
Sheringham Shoal UK 14.7% 14.7% 14.7% 14.7%
Pallas Republic of Ireland 100% 100% 100% 100%
Solwaybank UK 100% 100% 100% 100%
Montigny France 100% 100% 100% 100%
Rosieres France 100% 100% 100% 100%
Jadraas Sweden 100% 100% 100% 100%
Venelle France 100% 100% 100% 100%
Fujin France 41.9% 100% 34.6% 100%
Epine France 100% 100% 100% 100%
Little Raith UK 100% 100% 100% 100%
Gode Wind 1 Germany 25% 25% 25% 25%
Blary Hill UK 100% 100% 100% 100%
Merkur Germany 24.6% 24.6% 24.6% 24.6%
Haut Vannier France 100% 100% 100% 100%
East Anglia 1 UK 14.3% 14.3% 14.3% 14.3%
Beatrice UK 17.5% 17.5% - -
Grönhult Sweden 100% 100% - -
Ranasjö Sweden 50% 50% - -
Salsjö Sweden 50% 50% - -
Arenosas Spain 100% 100% - -
El Yarte Spain 100% 100% - -
Guita Spain 100% 100% - -
Malabrigo Spain 100% 100% - -
31 December 2021 31 December 2020
------------------------- -------------------------
Investments (project name) Country Ownership Mezzanine debt Ownership Mezzanine debt
Phoenix France - 100% - 100%
On 15 January 2021, TRIG exchanged contracts to acquire 17.5% of
equity interest in Beatrice offshore wind farm located off the
northeast coast of Scotland and completed in March 2021 following
regulatory and lending consent.
On 12 February 2021, TRIG acquired 100% interest in Grönhult, a
67.2 MW ready-to-build onshore wind farm located in the southwest
of Sweden. The project was purchased from Vattenfall, the leading
Swedish utility supplier and major developer of renewables, who
will also manage the construction process. The project is expected
to become operational at the end of Q4 2022 and will be funded
through equity investment rather than project debt.
On 27 May 2021, TRIG exchanged contracts to acquire a 50%
interest in two onshore pre-construction wind farms, Ranasjö and
Salsjö, also known as Twin Peaks, located in central Sweden. TRIG
has partnered with InfraRed European Infrastructure Income Fund 4,
who acquired a 50% interest in the project alongside TRIG. This is
consistent with TRIG's strategy of partnering with aligned
co-investors on larger transactions whilst maintaining a
diversified portfolio. The transaction subsequently completed in
July 2021.
On 06 September 2021, TRIG exchanged contracts to acquire a 100%
interest in four solar PV sites located in the province of Cadiz,
Spain. The four sites combine for a total capacity of 234MW. This
solar investment in Spain adds to TRIG's technological and
geographical diversification, including diversification of power
markets and weather systems.
Further detail of acquisitions made in the year can be found in
Section 2.5 of the Strategic Report.
14. Other receivables
31 December 31 December
2021 2020
GBP'000's GBP'000's
Other receivables 14,232 12,501
Fair value of FX forward contracts expiring within 12 months 14,074 -
------------------------------------------------------------- ------------ -----------
Total current receivables 28,306 12,501
------------------------------------------------------------- ------------ -----------
Fair value of FX forward contracts expiring after 12 months 13,219 -
------------------------------------------------------------- ------------ -----------
41,525 12,501
------------------------------------------------------------- ------------ -----------
The Company has entered into forward foreign currency contracts
to hedge the expected euro distributions up to a maximum of 48
months. In addition, the Company has placed further hedges and aims
to reach a position where 60%-80% of the valuation of
euro-denominated assets is hedged, providing a partial offset to
foreign exchange movements in the portfolio value relating to such
assets.
The following table details the forward foreign currency
contracts outstanding as at 31 December 2021. The total euro
balance hedged at 31 December 2021 was EUR747.5m (2020:
EUR747.5m).
31 December 2021
Average exchange rate Foreign currency Notional value Fair value
EUR'000's GBP'000's GBP'000's
Less than 3 months - - - -
3 to 6 months 1.0980 73,200 66,665 4,823
6 to 12 months 1.1173 202,500 181,242 9,251
12 to 24 months 1.1052 100,600 91,021 4,863
Greater than 24 months 1.1084 371,200 334,886 8,356
----------------------- --------------------- ---------------- -------------- ----------
1.1094 747,500 673,814 27,293
----------------------- --------------------- ---------------- -------------- ----------
As at the year-end, the valuation on the foreign exchange
derivatives consisted of GBP10,279k receivable from NatWest Markets
Plc, GBP16,784k receivable from National Australia Bank Limited and
GBP230k receivable from Santander UK PLC. At 31 December 2021
NatWest Markets Plc had an S&P credit rating of A/Stable,
National Australia Bank Limited had an S&P credit rating of
AA-/Stable and Santander UK PLC had an S&P credit rating of
A/Stable.
15. Cash and cash equivalents
31 December 31 December
2021 2020
GBP'000's GBP'000's
Bank balances 28,229 23,116
-------------------------- ------------ -----------
Cash and cash equivalents 28,229 23,116
-------------------------- ------------ -----------
On the Expanded basis, which includes balances carried in TRIG
UK and TRIG UK I, cash is GBP28,454k (2020: GBP23,853k). The
reconciliation from the IFRS basis to the Expanded basis is shown
in Section 2.8 of the Strategic Report on page 68.
As at the year-end, cash and cash equivalents on the Expanded
basis consisted of GBP1k held with Sumitomo Mitsui Banking
Corporation Europe Limited and GBP28,453k held with Royal Bank of
Scotland International Limited. At 31 December 2021 Sumitomo Mitsui
Banking Corporation Europe Limited had an S&P credit rating of
A/Stable and Royal Bank of Scotland International Limited had an
S&P credit rating of A-/Stable.
16. Other payables
31 December 31 December
2021 2020
GBP'000's GBP'000's
Management fees1 50 50
Fair value of forward FX contracts - 1,399
Other payables 312 243
------------------------------------ ------------ -----------
362 1,692
------------------------------------ ------------ -----------
1 For related party and key advisor transactions see note
18.
17. Share capital and reserves
Ordinary Shares Ordinary Shares
31 December 31 December
2021 2020
'000's '000's
Opening balance 1,903,403 1,636,564
---------------------------------------- ---------------- ----------------
Issued for cash 356,289 260,000
Issued as a scrip dividend alternative 5,788 5,056
Issued in lieu of management fees 1,766 1,783
---------------------------------------- ---------------- ----------------
Issued at 31 December - fully paid 2,267,246 1,903,403
---------------------------------------- ---------------- ----------------
On 26 March 2021, the Company issued 195,000,000 shares raising
GBP239,850,000 before costs.
On 17 September 2021, the Company issued 161,290,323 shares
raising GBP200,000,000 before costs.
In each case the Company used the funds to repay the revolving
credit facility and then fund acquisitions.
The company issued 5,788,023 shares in relation to scrip take-up
as an alternative to dividend payments in relation to the dividends
paid in the year.
The holders of the 2,267,246,415 (2020: 1,903,402,338) Ordinary
Shares are entitled to receive dividends as declared from time to
time and are entitled to one vote per share at meetings of the
Company. The Company shares are issued at nil par value.
Share capital and share premium
31 December 31 December
2021 2020
GBP'000s GBP'000s
Opening balance 2,046,237 1,721,309
Ordinary Shares issued 449,305 328,632
Cost of Ordinary Shares issued (6,948) (3,704)
------------------------------- ------------ -----------
Closing balance 2,488,594 2,046,237
------------------------------- ------------ -----------
Other reserves
31 December 31 December
2021 2020
GBP'000s GBP'000s
Opening balance 1,005 1,008
Shares to be issued in lieu of management fees incurred in H1 2020 - 995
Shares to be issued in lieu of management fees incurred in H2 2020 (Note 18) - 1005
Shares to be issued in lieu of management fees incurred in H1 2021 (Note 18) 992
Shares to be issued in lieu of management fees incurred in H2 2021 (Note 18) 1,008
Shares issued in the year, transferred to share premium (1,997) (2,003)
------------------------------------------------------------------------------ ----------- ------------
Closing balance 1,008 1,005
------------------------------------------------------------------------------ ----------- ------------
Retained reserves
Retained reserves comprise retained earnings, as detailed in the
statement of changes in shareholders' equity.
18. Related party and key advisor transactions
Loans to related parties:
31 December 31 December
2021 2020
'000's '000's
Short-term balance outstanding on accrued interest receivable 13,147 11,423
Short-term balance outstanding from TRIG UK, in relation to Management fees to be settled
in shares2 1,008 1,005
Long-term loan stock to TRIG UK and TRIG UK I1 1,671,894 1,312,037
------------------------------------------------------------------------------------------- ----------- ------------
1,686,049 1,324,465
------------------------------------------------------------------------------------------- ----------- ------------
1 Included within Investments at fair value through profit or
loss on the Balance Sheet.
2 Included within Other receivables on the Balance Sheet.
During the year, interest totalling GBP101,121k (2020:
GBP78,165k) was earned in respect of the long-term interest-bearing
loan between the Company and its subsidiaries TRIG UK and TRIG UK
I, of which GBP13,147k (2020: GBP11,423k) was receivable at the
balance sheet date.
Key advisor transactions
The Group's Investment Manager (InfraRed Capital Partners
Limited) and Operations Manager (Renewable Energy Systems Limited)
are entitled to 65 per cent and 35 per cent, respectively, of the
aggregate management fee (see below), payable quarterly in
arrears.
The aggregate management fee payable to the Investment Manager
and the Operations Manager is 1 per cent of the Adjusted Portfolio
Value in respect of the first GBP1 billion of the Adjusted
Portfolio Value, 0.8 per cent in respect of the Adjusted Portfolio
Value between GBP1 billion and GBP2 billion, 0.75 per cent in
respect of the Adjusted Portfolio Value between GBP2 billion and
GBP3 billion and 0.70 per cent in respect of the Adjusted Portfolio
Value in excess of GBP3 billion. These fees are payable by TRIG UK,
less the proportion that relates solely to the Company, the
advisory fees, which are payable by the Company.
The advisory fees payable to the Investment Manager and the
Operations Manager in respect of the advisory services they provide
to the Company are GBP130k per annum and GBP70k per annum,
respectively. The advisory fees charged to the Company are included
within the total fee amount charged to the Company and its
subsidiary, TRIG UK, as set out above. The Investment Manager
advisory fee charged to the income statement for the year was
GBP130k (2020: GBP130k), of which GBP33k (2020: GBP33k) remained
payable in cash at the balance sheet date. The Operations Manager
advisory fee charged to the income statement for the year was
GBP70k (2020: GBP70k), of which GBP18k (2020: GBP18k) remained
payable in cash at the balance sheet date.
The Investment Manager management fee charged to TRIG UK for the
year was GBP13,858k (2020: GBP10,884k), of which GBP3,290k (2020:
GBP2,484k) remained payable in cash at the balance sheet date. The
Operations Manager management fee charged to TRIG UK for the year
was GBP7,462k (2020: GBP5,861k), of which GBP1,772k (2020:
GBP1,337k) remained payable in cash at the balance sheet date.
In addition, the Operations Manager received GBP13,070k (2020:
GBP9,752k) for services in relation to Asset Management, Operation
and Maintenance and other services provided to project companies
within the investment portfolio, and GBP79k (2020: GBP65k) for
additional advisory services provided to TRIG UK, neither of which
are consolidated in these financial statements.
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent of the Group's
aggregate management fees up to an Adjusted Portfolio Value of GBP1
billion are to be settled in Ordinary Shares. The shares issued to
the Managers by the Company relate to amounts due to the Managers
by TRIG UK. Accordingly, TRIG UK reimburses the Company for the
shares issued.
As at 31 December 2020, 885,012 shares equating to GBP1,005,462,
based on a Net Asset Value ex dividend of 113.61 pence per share
(the Net Asset Value at 31 December 2020 of 115.3 pence per share
less the interim dividend of 1.66 pence per share) were due, in
respect of management fees earned in H2 2020, but had not been
issued. The Company issued these shares on 31 March 2021.
On 30 September 2021, the Company issued 880,719 shares,
equating to GBP991,777, based on a Net Asset Value ex dividend of
112.61 pence per share (the Net Asset Value at 30 June 2021 of
113.0 pence per share less the interim dividend of 1.69 pence per
share), in respect of management fees earned in H1 2021.
As at 31 December 2021, 857,254 shares equating to GBP1,008,219,
based on a Net Asset Value ex dividend of 117.61 pence per share
(the Net Asset Value at 31 December 2021 of 119.3 pence per share
less the interim dividend of 1.69 pence per share) were due, in
respect of management fees earned in H2 2021, but had not been
issued. The Company intends to issue these shares on 31 March
2022.
The Directors of the Company received fees for their services.
Further details are provided in the Directors' Remuneration Report
on page 121. Total fees for the Directors for the year were
GBP338,500 (2020: GBP282,667). Directors' expenses of GBP3,510
(2020: GBP3,042) were also paid in the year.
All of the above transactions were undertaken on an arm's length
basis.
19. Guarantees and other commitments
As at 31 December 2021, the Company and its subsidiaries had
provided GBP177.0m (2020: GBP58.9m) in guarantees in relation to
projects in the TRIG portfolio.
The Company also guarantees the revolving credit facility,
entered into by TRIG UK and TRIG UK I, which it may use to acquire
further investments.
As at 31 December 2021 the Company has GBP231.2m of future
investment obligations (2020: GBP392.0m).
More details on timing and amounts can be found in section 2.8
of the Strategic Report.
The Company and its subsidiaries have issued decommissioning and
other similar guarantee bonds with a total value of GBP22.8m (2020:
GBP22.9m).
20. Contingent consideration
The Group has performance-related contingent consideration
obligations of up to GBP1.8m (2020: GBP0.4m) relating to
acquisitions completed prior to 31 December 2021. These payments
depend on the performance of certain wind farms and other
contracted enhancements. The valuation of the investments in the
portfolio does not assume that these enhancements are achieved. If
further payments do become due, they would be expected to be offset
by an improvement in investment. The arrangements are generally two
-- way in that if performance is below base case levels, some
refund of consideration may become due.
21. Events after the balance sheet date
On 3 February 2022, the Company declared an interim dividend of
1.69 pence per share for the period 1 October 2021 to 31 December
2021. The total dividend, GBP38,316,464, payable on 31 March 2022,
is based on a record date of 10 February 2022 and the number of
shares in issue at that time being 2,267,246,415.
22. Subsidiaries
As a result of applying Investment Entities (Amendments to IFRS
10, IFRS 12 and IAS 27) and Investment Entities: Applying the
Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS
28), all subsidiaries (including Associates and Joint Ventures) are
held at fair value based on the Company's ownership interest as
opposed to being consolidated on a line-by-line basis. The
following subsidiaries have not been consolidated in these
Financial Statements:
Name Country Ownership
Interest
The Renewables Infrastructure Group (UK) Limited UK 100%
The Renewables Infrastructure Group (UK) Investments Limited UK 100%
Roos Energy Limited UK 100%
Grange Renewable Energy Limited UK 100%
Hill of Towie Limited UK 100%
Green Hill Energy Limited UK 100%
Wind Farm Holdings Limited UK 100%
Forss Wind Farm Limited UK 100%
Altahullion Wind Farm Limited UK 100%
Lendrum's Bridge Wind Farm Limited UK 100%
Lendrum's Bridge (Holdings) Limited UK 100%
Lough Hill Wind Farm Limited UK 100%
European Investments (SCEL) Limited UK 100%
European Investments (Cornwall) Limited UK 100%
European Investments (Cornwall) Holdings Limited UK 100%
Churchtown Farm Solar Limited UK 100%
East Langford Solar Limited UK 100%
Manor Farm Solar Limited UK 100%
European Investments Solar Holdings Limited UK 100%
Sunsave 12 (Derriton Fields) Limited UK 100%
Sunsave 25 (Wix Lodge Farm) Limited UK 100%
Parley Court Solar Park Limited UK 100%
Egmere Airfield Solar Park Limited UK 100%
Penare Farm Solar Park Limited UK 100%
European Investments (Earlseat) Limited UK 100%
Earlseat Wind Farm Limited UK 100%
European Investments Solar Holdings 2 Limited UK 100%
BKS Energy Limited UK 100%
Hazel Renewables Limited UK 100%
Kenwyn Solar Limited UK 100%
MC Power Limited UK 100%
Tallentire Energy Limited UK 100%
Freasdail Energy Limited UK 100%
Neilston Community Wind Farm LLP UK 100%
Carbon Free Limited UK 100%
NDT Trading Limited UK 100%
Carbon Free Neilston Limited UK 100%
Garreg Lwyd Energy Limited UK 100%
UK Energy Storage Services Limited UK 100%
Solwaybank Energy Limited UK 100%
European Wind Investments Group Limited UK 100%
European Wind Investments Group 2 Limited UK 100%
Irish Wind Investments Group Limited UK 100%
Offshore Wind Investments Group Limited UK 100%
Scandinavian Wind Investments Group Limited UK 100%
European Storage Investments Group Limited UK 100%
Trafalgar Wind Holdings Limited UK 100%
European Investments Tulip Limited UK 100%
Little Raith Wind Farm Limited UK 100%
Blary Hill Energy Limited UK 100%
Offshore Wind Investments Group 2 Limited UK 100%
Offshore Wind Investments Group 3 Limited UK 100%
Offshore Wind Investments Group 4 Limited UK 100%
Scandinavian Wind Investments Group 2 Limited UK 100%
Iberian Solar Investment Group Limited UK 100%
Verneuil Holdings Limited UK 72%
Merkur Offshore Wind Farm Holdings Limited UK 69%
Fred. Olsen Wind Limited UK 49%
Fred. Olsen Wind Holdings Limited UK 49%
Fred Olsen Wind 2 Limited UK 49%
Crystal Rig Windfarm Limited UK 49%
Rothes Wind Limited UK 49%
Paul's Hill Wind Limited UK 49%
Crystal Rig II Limited UK 49%
Rothes II Limited UK 49%
Mid Hill Wind Limited UK 49%
Equitix Offshore 3 Limited (MidCo 1) UK 37%
Equitix Offshore 4 Limited (MidCo 2) UK 37%
Equitix Offshore 5 Limited (BidCo) UK 37%
Bilbao Offshore Investment Limited UK 36%
Bilbao Offshore Holding Limited UK 36%
Beatrice Offshore Windfarm holdco Ltd UK 18%
Beatrice Offshore Windfarm Ltd (ProjectCo) UK 18%
Scira Offshore Energy Limited UK 15%
East Anglia One Limited UK 14%
The Renewables Infrastructure Group (France) SAS France 100%
CEPE de Haut Languedoc SARL France 100%
CEPE du Haut Cabardes SARL France 100%
CEPE de Cuxac SARL France 100%
CEPE des Claves SARL France 100%
CEPE de Puits Castan SARL France 100%
Verrerie Photovoltaique SAS France 100%
Parc Eollen Nordex XXI SAS France 100%
CEPE Rosieres France 100%
CEPE Montigny La Cour SARL France 100%
Energies TIlle et Venelle Holdings SAS France 100%
Energies Entre Tille et Venelle SAS France 100%
Haut Vannier Holding SAS France 100%
Haut Vannier SAS France 100%
FPV du Midi France 51%
FPV Chateau France 49.1%
FPV du Plateau France 49.1%
SECP Bongo France 49.1%
SECP Olmo 2 France 49.1%
FPV Pascialone France 49.1%
FPV Santa Lucia France 49.1%
FPV Agrinergie France 49.1%
FPV d'Export France 49.1%
Agrisol 1A Services France 49.1%
SECP Chemin Canal France 49.1%
FPV Ligne des Quatre Cents France 49.1%
FPV Ligne des Bambous France 49.1%
Heliade Bellevue France 49.1%
SECP Creuilly France 49.1%
Akuo Tulip Assets SAS France 49.1%
FPV Broussan France 49.1%
Fujin SAS France 41.9%
Eolienne de Rully France 41.9%
Parc Eollen de Fontaine Macon France 41.9%
Parc Eollen de Vignes France 41.9%
Val De Gronde France 37.3%
Energie du Porcin France 33.5%
German Offshore Wind Investments Group (Holdings) Limited Germany 100%
German Offshore Wind Investments Group Limited Germany 100%
Gode Wind 1 Investor Holding GmbH Germany 50%
Gode Wind 1 Offshore Wind Farm GmbH Germany 25%
Merkur Offshore GP GmbH Germany 24.6%
Merkur Offshore Investment Holdings GmbH & Co KG Germany 24.6%
Merkur Offshore Holdings GmbH Germany 24.6%
PG Merkur Holding GmbH Germany 24.6%
Merkur Offshore GmbH Germany 24.6%
Merkur Offshore Service GmbH Germany 24.6%
Malabrigo Solar SLU Spain 100%
Arenosas Solar SLU Spain 100%
El Yarte Solar SLU Spain 100%
Pisa Solar Holdings Limited Spain 100%
MHB Wind Farms Limited Republic of Ireland 100%
MHB Wind Farms (Holdings) Limited Republic of Ireland 100%
Taurbeg Limited Republic of Ireland 100%
Pallas Energy Supply Limited Republic of Ireland 100%
Pallas Windfarm Limited Republic of Ireland 100%
Sirocco Wind Holding AB Sweden 100%
Jadraas Vindkraft AB Sweden 100%
Gronhult Wind AB Sweden 100%
Hallasen Kraft AB Sweden 100%
Krange Sweden 50%
GOW01 Investor LuxCo SARL Luxembourg 50%
Alternative Performance Measures ("APMs")
We assess our performance using a variety of measures that are
not specifically defined under IFRS. These alternative performance
measures are termed "APMs". The APMs that we use may not be
directly comparable with those used by other companies.
These APMs are used to present an alternative view of how the
Company has performed over the year and are all financial measures
of historical performance.
Performance Measure Definition
Investments made Investments made is the sum of investments entered into
in the year (which net off small amounts
relating to any refinance proceeds or sell downs) and
does not include movements in the balance
sheet items in TRIG UK Limited and TRIG UK Investments
Limited. The IFRS measure of investments
made (see note 13 to the accounts) includes movements in
TRIG UK Limited and TRIG UK Investments
Limited also
Directors' Portfolio Valuation The Valuation of the investments only and excluding the
cash, working capital and debt balances
in TRIG UK Limited and TRIG UK Investments Limited which
are the companies owned by TRIG Limited
through with investments are made. The IFRS measure of
Investments at fair value through profit
or loss is the Directors Portfolio Value plus the
consolidation of the balance sheets of TRIG
UK Limited and TRIG UK Investments Limited. Portfolio
Value or Directors Portfolio Value is
reconciled to Investments at fair value through profit or
loss at note 13 to the accounts
NAV per share The Net Asset Value per ordinary share
Total shareholder return for the year (share price The movement in share price, combined with dividends paid
appreciation plus dividends paid) during the year
Total NAV return for the year (NAV per share appreciation The movement in the NAV per ordinary share, plus dividend
plus dividends paid) per ordinary share declared or paid
to shareholders with respect to the year
Sustainability Terminology Glossary
Term Definition
Renewable electricity generated The amount of renewable electricity generated by the portfolio during the
year, net of the
Company's ownership share
Tonnes of CO2 avoided per annum The estimate of the portfolio's annual CO(2) emission reductions, based
on the portfolio's
estimated generation as at the relevant reporting date prepared on the
IFI approach to GHG
Accounting
Lost Time Accident Frequency Rate (LTAFR) A safety at work metric for every 100,000 hours worked. Calculated as the
number of accidents
which occurred in the given period divided by number of hours worked
times 100,000. Whilst
all accidents are recorded, only accidents that have resulted in the
worker being unable to
perform their normal duties for more than seven days are included in this
calculation, in
line with reportable accidents as defined by UK HSE RIDDOR regulation
Directors and Advisers
DIRECTORS
Helen Mahy (Chairman)
Jonathan (Jon) Bridel
Shelagh Mason
Klaus Hammer
Tove Feld
John Whittle (appointed 1 July 2021)
Erna-Maria Trixl (to be appointed 1 March 2022)
REGISTRAR
Link Market Services (Guernsey) Limited
PO Box 627
St Peter Port
Guernsey
GY1 4PP
ADMINISTRATOR TO COMPANY, DESIGNATED MANAGER, COMPANY SECRETARY
AND REGISTERED OFFICE
Aztec Financial Services (Guernsey) Limited
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3PP
+44 1481 748 831
INVESTMENT MANAGER
InfraRed Capital Partners Limited
Level 7, One Bartholomew Close
Barts Square
London EC1A 7BL
OPERATIONS MANAGER
Renewable Energy Systems Limited
Beaufort Court
Egg Farm Lane
Kings Langley
Hertfordshire WD4 8LR
FINANCIAL PR
Maitland/AMO
3 Pancras Square
Kings Cross
London N1C 4AG
UK TRANSFER AGENT
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Helpline: 0371 664 0300
AUDITOR
Deloitte LLP
Regency Court
Esplanade
St Peter Port
Guernsey GY1 3HW
BROKERS
Investec Wealth & Investment Limited
30 Gresham Street
London EC2V 7QP
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Key Company Data
Company name The Renewables Infrastructure Group Limited
Registered address East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey
Listing London Stock Exchange - Premium Listing
Ticker symbol TRIG
SEDOL BBHX2H9
Index inclusion FTSE All-Share, FTSE 250, FTSE 350 and FTSE 350 High Yield indices
Company year-end 31 December
Dividend payments Quarterly (March, June, September, December)
Investment Manager ("IM") InfraRed Capital Partners Limited
Operations Manager ("OM") Renewable Energy Systems Limited
Company Secretary and Administrator Aztec Financial Services (Guernsey) Limited
Net assets GBP2,706m as at 31 December 2021
Market capitalisation GBP3,047m as at 31 December 2021
Management Fees 1.0% per annum of the Adjusted Portfolio Value ([31]) of the investments up to
GBP1.0bn (with
0.2% of this paid in shares), falling to (with no further elements paid in
shares) 0.8% per
annum for the Adjusted Portfolio Value above GBP1.0bn, 0.75% per annum for the
Adjusted Portfolio
Value above GBP2.0bn and 0.7% per annum for the Adjusted Portfolio Value above
GBP3.0bn. Fees
are split between the Investment Manager (65%) and the Operations Manager (35%).
No performance or acquisition fees
ISA, PEP and SIPP status The ordinary shares are eligible for inclusion in PEPs and ISAs (subject to
applicable subscription
limits) provided that they have been purchased in the market. The shares are
permissible assets
for SIPPs.
NMPI status Following the receipt of legal advice, the Board confirms that it conducts the
Company's affairs,
and intends to continue to conduct the Company's affairs such that the Company
would qualify
for approval as an investment trust if it were resident in the United Kingdom,
and that IFAs
should therefore be able to recommend its Ordinary Shares to ordinary retail
investors in
accordance with the FCA's rules relating to non-mainstream investment products.
FATCA The Company has registered for FATCA and has a GIIN number of
J0L1NL.99999.SL.831
KID The Company issues a KID in line with EU PRIIPs regulation, and this can be
found on the Company's
website
Investment policy The Company's investment policy can be found on the Company's website
Website www.TRIG-Ltd.com
http://www.rns-pdf.londonstockexchange.com/rns/0665C_1-2022-2-17.pdf
[1] The Net Asset Value (NAV) per share at 31 December 2021 is
calculated on the basis of the 2,267,246,415 Ordinary Shares in
issue at 31 December 2021 plus a further 857,254 Ordinary Shares to
be issued to the Managers in relation to part-payment of Managers'
fees for H2 2021 and a NAV of GBP2,706m.
[2] Please refer to Section 2.10 for more detail on Company
performance.
[3] On an Expanded Basis. Please refer to Section 2.9 for an
explanation of the Expanded Basis.
[4] On a committed portfolio basis as at 31 December 2021, based
on the IFI Approach to GHG Accounting. At year end, the operational
portfolio was capable of powering 1.3m homes and avoiding 1.6m
tonnes of carbon emissions.
[5] The LTAFR is calculated on the basis of the number of
accidents which have occurred in the period divided by the number
of hours worked multiplied by 100,000 to give a rate for every
100,000 hours worked. Whilst all accidents are recorded by RES,
only accidents that have resulted in a worker being unable to
perform their normal duties for more than seven days are included
in this calculation in line with reportable accidents as defined by
UK HSE RIDDOR regulation
[6] In 2021, TRIG's portfolio generated the equivalent of 3% of
the UK's total renewable electricity generation.
[7] On a committed basis at the date of this report. Based on
average regional household electricity consumption figures and the
IFI Approach to GHG Accounting for Renewable Energy.
[8] Calculated based on each project's generation capacity
pro-rated for TRIG's share of subordinated debt and equity capital.
Capacity is from both generation and battery output and includes
expected capacity arising from investment commitments as at 31
December 2021.
[9] The Company's dividend policy is to increase the dividend
when the Board considers it prudent to do so, considering forecast
cash flows, expected dividend cover, inflation across TRIG's key
markets, the outlook for electricity prices and the operational
performance of the Company's portfolio.
[10] Calculated based on each project's generation capacity
pro-rated for TRIG's share of subordinated debt and equity
capital.
[11] Including onshore wind, offshore wind, solar PV and
flexible capacity technologies. Flexible capacity is generation
technologies that can store energy and respond to electricity
demand levels and pricing signals, such as batteries, pumped hydro
storage and green hydrogen. Within flexible capacity technologies,
the Investment Manager's current principal focus is on battery
storage projects.
[12] To date the Company has invested in the UK, France,
Germany, Ireland, Spain and Sweden.
[13] Total project size in which TRIG has a 50% ownership.
[14] Pro-rated based on TRIG's % ownership of portfolio companies.
[15] The AIC Code has been endorsed by the Financial Reporting
Council (FRC) and the Guernsey Financial Services Commission
(GFSC).
[16] Portfolio Value is calculated on a committed basis and at
the time of investment. This applies to all instances of Portfolio
Value used throughout the Investment Policy.
[17] The Board is considering asking shareholders to increase
TRIG's Investment Policy construction limit from 15% to 25% of
portfolio value on a committed basis at the May 2022 AGM.
[18] https://www.un.org/sustainabledevelopment
[19] During 2021, TRIG's operational portfolio generated enough
clean energy to power the equivalent of 1.1m homes. Once the
projects in construction are operational the portfolio will be
capable of powering the equivalent of 1.5 million homes with clean
energy.
([20]) During 2021, TRIG's operational portfolio generated
enough clean energy to avoid 1.4m tonnes of carbon emissions. Once
the projects in construction are operational the portfolio will be
capable of offsetting 1.9 million tonnes of CO2 emissions annually.
Calculated in accordance with the IFI Approach to GHG Accounting
for Renewable Energy.
[21] The Managers' initial assessment, performed in conjunction
with a third party expert, is that at least 75% of the Company's
investments would qualify as environmentally sustainable economic
activities, including 1% in enabling activities (TRIG's battery
storage investment).
[22] A safety at work metric which measures the number of
personnel injured and unable to perform their normal duties for
seven days or more, for each hundred thousand hours worked.
[23] Directors' Valuation is an Alternative Performance Measure
("APM"). See page 173 for details of APMs. Further, the
reconciliation from the expanded basis financial results is
provided in Section 2.8 - Analysis of Financial Results, and a
reconciliation of the Directors' Portfolio Value (APM) to
Investments at Fair Value is provided in Note 13 to the Financial
Statements.
[24] Committed Portfolio Value is GBP2,957.0m and includes
GBP231.2m of investment commitments outstanding at the Balance
Sheet data.
[25] Cannibalisation describes the effect that renewables (an
intermittent generator) can have on the overall power prices,
whereby the marginal cost of generation, which in turn drives the
power prices, is lower than the average which would be expected of
a continuous base load generator as a result of the additional
supply when renewables are generating. Rates differ over time and
between markets but all are affected.
[26] Power price forecasts used in the Directors' valuation for
each market are based on analysis by the Investment Manager using
data from leading power market advisers. In the illustrative
blended price curve, the power price forecasts are weighted by the
P50 estimate of production for each of the projects in the 31
December 2021 portfolio. Forecasts are shown net of assumptions for
PPA discounts and cannibalisation. The average level of reduction
to the baseload forecast power price assumed to renewable
generation across the portfolio is approximately 15% - 20%.
[27] The majority of Jädraås wind farm income is from wholesale
power sales which in the Nord Pool are denominated in Euros.
Accordingly, the investment is treated as Euro denominated
notwithstanding that the smaller subsidy element of the revenues
and some operating costs are denominated in Swedish Krona.
45 The majority of the Swedish wind farms' income is from
wholesale power sales which in the Nord Pool are denominated in
Euros. Accordingly, the investments in Sweden are treated as Euro
denominated notwithstanding that the smaller subsidy element of the
revenues and some operating costs are denominated in Swedish
Krona.
[29] Principles for Responsible Investment ("PRI") ratings are
based on following a set of Principles, including incorporating ESG
issues into investment analysis, decision-making processes and
ownership policies. More information is available at
https://www.unpri.org/about-the-pri.
52 The Parker Review into the Ethnic Diversity of UK boards
which was published in October 2017 and updated in February
2020
[31] Adjusted Portfolio Value means fair market value, without
deductions for borrowed money or other liabilities or accruals, and
including outstanding subscription obligations.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR ZZGMZFNZGZZZ
(END) Dow Jones Newswires
February 18, 2022 02:00 ET (07:00 GMT)
The Renewables Infrastru... (LSE:TRIG)
Historical Stock Chart
From Mar 2024 to Apr 2024
The Renewables Infrastru... (LSE:TRIG)
Historical Stock Chart
From Apr 2023 to Apr 2024
