TIDMTRIG
RNS Number : 0136V
Renewables Infrastructure Grp (The)
05 August 2022
5 August 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 Renewable Energy Systems ("RES") as Operations
Manager)
Interim Report for the six months ended 30 June 2022
H1 2022 Key Highlights
- 134.2p Net Asset Value (NAV) per share(1) , increased by 12.5% since 31 Dec 2021 (119.3p)
- GBP3,236m Directors' portfolio valuation(2) , up 18.7% since 31 Dec 2021 (GBP2,726m)
- 6.84p dividend target reaffirmed for the year to December 2022 (2021: 6.76p)
- 1.39x dividend cover(3) for the six months to 30 June 2022 (H1 2021: 1.28x)
- GBP442m invested year to date (H1 2021: GBP341m)
- 17.9p earnings per share (H1 2021: 1.8p)
Sustainability Key Highlights
- 960,000 tonnes of CO(2) avoided(4)
- Portfolio capable of powering 1.7m homes with clean energy(5)
- Supporting 36 community funds with GBP1.2m budgeted for community contributions in 2021
- 0.52 reportable lost time accidents per 100,000 hours worked(6)
Helen Mahy, CBE, Chairman of the Company, said:
"In what will be my last set of results as Chairman, I am
pleased to present a strong set of results for the first half of
2022.
I am proud of what TRIG has achieved in the nine years since
IPO, and we continue to provide investors with resilient financial
performance and access to a portfolio of renewables that
contributes to decarbonisation and towards energy security in
Europe."
Richard Crawford, of InfraRed Capital Partners said:
"Amidst a challenging wider market for investors, TRIG's
portfolio continues to perform well and is benefitting from its
defensive positioning against elevated levels of inflation and
volatile commodity markets.
We have invested GBP442m in renewables year-to-date, with two
thirds of this invested in the UK. Our construction projects
continue to progress well, with the 35MW Blary Hill project being
funded entirely from re-investment cash flows.
TRIG's diversification across different power markets and
technologies remains a strength, as we make strategic acquisitions
that enhance the resilience of the portfolio."
Webcast details
TRIG will be presenting its results for the first half of 2022
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. To register to attend please email
Maitland/AMO at trig-maitlandamo@maitland.co.uk
Highlights Footnotes:
1. The Net Asset Value (NAV) per share as at 30 June 2022 is
calculated on the basis of 2,481,751,778 ordinary shares in issue
and to be issued as at 30 June 2022 including issues of ordinary
shares under the scrip dividend scheme and managers' shares (in
part payment of the management fee).
2. On an Expanded Basis. Please refer to Section 3 for an
explanation of the Expanded Basis.
3. Dividend cover reported on an expanded basis, being net
operational cash over dividends during the period. Please refer to
Section 3.0 for an explanation of the Expanded Basis. Figure of
1.39x (H1 2021: 1.28x) is on the basis of dividends paid, excluding
scrip.
4. Actual values calculated in accordance with the IFI Approach
to GHG Accounting for Renewable Energy.
Portfolio at 30 June 2022 is capable of mitigating 2m tonnes of carbon emissions p.a.
5. Based on the IFI Approach to GHG Accounting.
6. 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. H1
figures are presented on a year-to-date basis, the 12-month rolling
average figure for June 2022 is 0.36.
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 countries in Europe with aggregate net
generating capacity of over 2.4GW; enough renewable power for 1.7
million homes and to avoid over 2 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") which has successfully invested in infrastructure
projects since 1997. InfraRed is a leading international investment
manager, operating worldwide from offices in London, Hong Kong, New
York, Seoul and Sydney, and managing equity capital in multiple
private and listed funds, primarily for institutional investors
across the globe. InfraRed is authorised and regulated by the
Financial Conduct Authority.
The infrastructure investment team at InfraRed consists of over
100 investment professionals, all with an infrastructure investment
background and a broad range of relevant skills, including private
equity, structured finance, construction, renewable energy and
facilities management.
InfraRed implements best-in-class practices to underpin asset
management and investment decisions, promotes ethical behaviour and
has established community engagement initiatives to support good
causes in the wider community. InfraRed is a signatory of the
Principles of Responsible Investment.
Further details can be found on InfraRed's website at
www.ircp.com .
Operations Manager
TRIG's Operations Manager is RES (" Renewable Energy Systems"),
the world's largest independent renewable energy company.
RES has been at the forefront of wind energy development for
over 40 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 22GW in capacity. RES
supports over 9.5GW of operational assets worldwide for a large
client base. Headquartered in Hertfordshire, UK, RES is active in
11 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 .
01 Chairman's Statement
I am pleased to present the 2022 Interim Report for The
Renewables Infrastructure Group Limited ("TRIG" or "the Company").
The NAV as at 30 June 2022 was 134.2p per share, an increase in the
first half of 2022 by 14.9p per share.
These strong results have been underpinned by increases in
wholesale power prices and inflation feeding through into the
Company's revenues and portfolio valuation, providing investors
with a counter to the adverse impact of these factors on investment
portfolios generally. European energy supplies are being severely
impacted as a result of the conflict in Ukraine. This has added to
gas supply constraints which were already visible at the start of
2022 as we came out of the pandemic-induced economic
contraction.
Our portfolio, which has been carefully constructed to provide
diversification, and is being diligently managed by InfraRed (our
Investment Manager) and RES (our Operations Manager), is
contributing to the energy security and decarbonisation agenda with
energy generation capacity now 2GW with a further 463MW new
capacity in construction. We continue to invest substantial amounts
into renewables whilst maintaining pricing discipline, averaging in
excess of GBP500m per year since 2018 and GBP300m per year since
IPO in 2013.
The portfolio is well correlated with inflation, with half of
TRIG's revenues forecast over the next ten years directly linked to
inflation through subsidy support mechanisms. The substantial
majority of remaining revenues are from the sale of electricity
into the wholesale market which has a relationship with inflation
due to the inclusion of energy costs in inflation indices. This
combination of defensive exposure to elevated commodity markets and
inflationary pressure underpins the resilience of TRIG's
diversified portfolio.
Acquisitions made in the first half of 2022 continue TRIG's
strategy of portfolio diversification, which was a key theme of our
recent Capital Markets Seminar in April 2022, in particular by
geography and revenue sources. The Company committed to invest in
Hornsea One, the world's largest operational offshore wind farm,
providing further inflation-linked, subsidised income to the
portfolio. This was complemented by the Company's investment in the
Valdesolar solar park in Spain, which does not receive government
subsidies. Both projects are operational and yielding cash for the
portfolio. We also continued our investments into the Ranasjö &
Salsjö (Twin Peaks) and Grönhult wind farms which we are building
in Sweden, and the Cadiz solar projects under construction in
Spain. As with the construction of Blary Hill, the Twin Peaks
projects are being funded organically through re--investment cash
flows.
In May 2022, we published our annual Sustainability Report,
which highlights the progress made in 2021 in key areas such as
emissions data with enhanced disclosure on sustainability metrics
and regulations.
Your Board of Directors remains grateful for the continued
support of TRIG's shareholders in the Company's successful
fundraise of GBP277m in March 2022, the maximum available to the
Company under its "tap" facility. This was open to existing and
new, institutional and retail investors. In volatile equity and
energy market conditions, we continue to see renewables as well
positioned due to their critical importance to energy security and
achieving net zero targets.
Financial Results
The Company's NAV per share was 134.2p at 30 June 2022, an
increase of 12.5% to the NAV per share at 31 December 2021 of
119.3p. TRIG's annualised NAV total return (which takes into
account dividends paid) from IPO to 30 June 2022 has been 9.3%.
After operating and finance costs, net cash flow covered the
cash dividend 1.39 times1, or 2.4 times before the impact of
repaying project-level debt. TRIG has maintained its loan
amortisation profile, continuing to repay project level debt over
the remaining subsidy periods. Interest rate exposure within the
portfolio is substantially fixed and the Company has no structural
short-to-medium term debt, and therefore has little exposure to
rising costs from interest rate increases.
The high dividend cover in the first half of 2022 reflects
strong achieved power prices and generation performance consistent
with budgeted levels and does not take into account payments due to
TRIG, which predominately relate to the warranty settlement in
respect of the Merkur offshore wind farm in Germany. These payments
are due to be received in 2022/23. We continue to expect no
material impact on the carrying value of the project nor the
financial performance of the Company.
Investment Activity
Portfolio construction and the generation of attractive
risk-adjusted returns are key to InfraRed's assessment of
opportunities. The offshore wind farms in TRIG's portfolio are less
sensitive to changes in power price levels than the portfolio
average due to the subsidies they receive. The addition of these
lower risk projects enables the Investment Manager to add
unsubsidised higher returning projects into the portfolio while
maintaining the portfolio's overall power price sensitivity. This
approach has been demonstrated in the two investment commitments
made so far this year in the Hornsea One offshore wind farm and the
Valdesolar solar park.
TRIG's investment focus remains unchanged, targeting renewables
and related infrastructure investments, with benefits in risk
diversification from flexible generation such as battery storage
and hydroelectricity, as identified in April's Capital Markets
Seminar. Our focus includes onshore wind, offshore wind, solar PV
and flexible capacity technologies in the UK and Europe, including
France, Germany, Ireland, and the Iberian and Nordic regions.
Increasingly, as was also discussed at the Capital Markets Seminar,
we see a trend of projects finding their long-term owners earlier
in their lives - particularly projects in flexible capacity, Nordic
onshore wind and Iberian solar market segments. In addition, some
of TRIG's older portfolio assets are starting to offer
opportunities to be repowered over the coming years. This market
and portfolio evolution was the rationale for the increase from 15%
to 25% in TRIG's construction and development investment limit
under the Company's Investment Policy, which was approved by
shareholders at the AGM in May 2022.
The Managers continue to monitor technologies whose financial
performance is driven by intermittency of renewables and power
price volatility, which therefore have low or negative correlation
to power price forecasts. Such flexible capacity investments
include technologies such as batteries, hydroelectricity and, in
the longer term, green hydrogen.
Portfolio Performance
The electricity generation of TRIG's portfolio during the period
was close to budget, with strong performance in the Nordics
offsetting weaker wind resource in France and grid constraints
offshore in the UK and Germany. The Managers' focus on
diversification continues to reduce risk in the portfolio as a
whole.
Where the portfolio has exposure to market power prices, we have
seen the pressure from supply constraints within the energy market
feed through into both actual and forecast revenues. Recognising
the ongoing volatility in the power markets, further UK asset-level
power price fixes extending into 2026 are being placed.
Approximately 62% of portfolio revenues up to 2032 are subsidised
or benefit from power price fixes.
TRIG's construction assets are progressing well. The
construction of Blary Hill (35MW new capacity) was completed
on-time and on-budget in February, whilst Vannier, Grönhult,
Ranasjö & Salsjö (Twin Peaks) and the Cadiz solar projects
(together 463MW of new capacity) are all on course for successful
completion.
Corporate Governance
After nine years as Chairman of TRIG, I will step down in
October 2022 in accordance with the Board's succession plan.
Richard Morse will succeed me as Chairman of TRIG, and I firmly
believe the Company has the Board and the management team it needs
to continue its successful journey in providing sustainable returns
to shareholders and supporting the energy transition across
Europe.
I am pleased to welcome Richard to the Board of Directors.
Richard joined the Board on 18 July 2022 and brings extensive
experience in sustainable and regulated infrastructure investment,
with a particular focus on the energy sector. He is a partner at
Opus Corporate Finance, and was previously a partner at Greenhill
& Co, a managing director at Goldman Sachs and Deputy Director
General at Ofgem. He also brings a wealth of experience in
investment company governance, having been Chairman of JLEN
Environmental Assets Group from its IPO in 2014 until July 2022.
His appointment was the result of an extensive process led by the
Nomination Committee and supported by a third-party search
firm.
The Board is mindful of the AIC Code2, and the Hampton-Alexander
and Parker Reviews. A process is underway, again using the services
of a third-party search firm, to recruit a further Non-executive
Director to the Company's Board, in particular recognising the
importance of the recommendations of the Parker Review.
Responsible Investment and Sustainability
TRIG's 2022 Sustainability Report, available on the Company's
website alongside the Managers' own sustainability reports, sets
out progress made against our four sustainability goals with
several key developments:
Publication of Scope 1, 2 and 3 carbon emissions for the entire
portfolio, in line with TRIG's commitment to the Science Based
Targets initiative (SBTi);
Further developed our clearly defined sustainability key
performance indicators, informed by the Managers' annual
portfolio-wide ESG Survey which provides the basis for regular
monitoring of the portfolio;
Confirmation of TRIG's SFDR categorisation as an Article 8 fund,
and the results of our EU Taxonomy assessment;
Several case studies to highlight activities of the Managers and
in the portfolio; and
Having met the relevant ESG targets, savings of circa GBP150,000
will be made under the Company's ESG-linked revolving credit
facility in respect of the year ending 31 March 2023. These funds
will be used to establish new local electricity discount schemes in
the vicinity of our projects, recognising the current challenges on
household budgets.
Principal Risks and Uncertainties
The Board and the Managers monitor and, where practicable,
mitigate a range of risks to TRIG's strategy. TRIG's principal
risks have not changed from those set out in the Company's 2021
Annual Report, these continue to be:
Regulation: government or regulatory support for renewables
changing adversely;
Power prices: electricity prices falling below market
expectations 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 of the Company's 2021 Annual
Report.
We recognise that access to affordable clean energy is a
priority, as highlighted by the UN's Sustainable Development Goal
7. In the context of higher wholesale energy prices impacting
consumers, there is a potential elevated risk of government and
regulatory intervention in the power market. In the UK, there have
been suggestions of extending the "windfall tax" on the oil and gas
sector to electricity generation whilst the Department for
Business, Energy and Industrial Strategy has published a
consultation on Review of the Electricity Market Arrangements
(REMA), to which we and the Managers will be responding.
We believe that it is important that governments do not act in a
way which would be counterproductive to investment in
decarbonisation and enhancing energy security as well as lowering
of costs associated with generation. Currently, under the
Contract-for-Difference mechanism many of our projects in the UK
are paying back to the public purse the difference between the
agreed subsidy level and current power prices. It must also be
considered that whilst power prices are currently high, investors
in generating assets are reinvesting to support portfolio
resilience through periods when power prices are low. We only have
to look back to the power price fluctuations in 2020 and early 2021
to illustrate this. TRIG has invested GBP442m in renewables
projects in the year to date.
When considering any market intervention, the underlying
investors in renewables infrastructure must be considered. TRIG's
shareholders include corporate and institutional pension funds as
well as individual UK savers through their private pensions,
savings products and direct shareholdings. The reasons these
shareholders invest in TRIG include the Company's defensive
exposure to commodity prices and inflation, which can help offset
investments in other elements of the economy that suffer in such
market conditions, helping to maintain the value of savings.
As well as the UK, governments across Europe are considering
reforms to the electricity market, in particular to decouple the
costs of gas and electricity. There are a number of challenges that
such reforms will need to consider, including the move from a
centralised to a distributed energy generation system and the need
to promote flexible capacity. It will also be necessary to
recognise that renewables infrastructure typically has a
significantly greater upfront capital cost relative to its ongoing
operational costs compared to traditional thermal generation, for
example. As such, a reasonable return must be achieved on this
investment to promote further deployment. Wider use of the proven
Contract-for-Difference mechanism, including for existing
generation, may provide the basis of a solution providing greater
stability in prices for both consumers and investors. The Managers
are engaging with governments directly, and through industry bodies
and advisers, to contribute to their thinking on electricity market
reform. Ultimately, regulatory and government intervention that
risks reducing the attractiveness of renewables as an asset class
may lead to an increase in the cost of capital, leading to
long-term and wide-ranging impacts on the costs to consumers of the
energy transition.
Outlook
The conflict in Ukraine has brought energy security sharply into
focus. As the UK and the EU revisit their approach to energy
independence, this provides further impetus to renewables
investment in addition to the well-established climate action
imperative. TRIG continues to play an important role, principally
as a long-term owner of assets and therefore facilitating utilities
and developers in Europe to recycle capital into new projects. With
a significant portfolio of 2.4GW, including 463MW of new capacity
in construction, we remain an active participant in the drive to a
more sustainable future and greater energy security within the UK
and western Europe.
InfraRed and RES continue to excel in developing and delivering
the Company's business model of responsible investment practices,
careful portfolio construction and enhancing value for all
stakeholders. With a strong Board of Directors providing governance
oversight, TRIG remains well placed to enable investors to access
sustainable returns whilst contributing towards the energy
transition.
This is my final set of results as Chairman of TRIG's Board of
Directors. It has been an honour to serve TRIG's shareholders, work
with my fellow Board Directors and the Company's Managers and
contribute to climate action these past nine years. Thank you to
TRIG's shareholders for their continuing support of the
Company.
Helen Mahy CBE
Chairman
4 August 2022
1 Dividend cover was 1.32 times without the benefit of scrip
take-up (which was GBP3.6m in the period).
2 The AIC Code has been endorsed by the Financial Reporting
Council (FRC) and the Guernsey Financial Services Commission
(GFSC).
2.2 Market Development
Power prices
Power prices remain elevated throughout Europe, particularly in
markets where gas generation is most often the marginal
price-setting technology, with GB and Iberia being the most exposed
markets within TRIG's portfolio.
In addition, current and forward prices for gas and electricity
remain highly volatile as a result of supply constraints
exacerbated by the conflict in Ukraine. We have seen increases in
the forward power price curves across TRIG's key markets. Following
a prudent revenue management approach, the Managers have continued
their programme of fixing prices through power purchase agreements
("PPAs") and financial derivatives on a rolling basis where
appropriate. However, there have been few opportunities to fix
prices at the levels indicated by the forwards and greater
discounts to the forwards are being demanded by counterparties who
are willing to fix. There remains limited liquidity in the market
for fixes at these elevated levels. During the period, an
additional 472GWh of generation has been fixed with these fixes
securing value over periods between 1 and 4 years. For the next 12
months these fixes are equivalent to 7% of annual portfolio
production. In total, over the next 12 months, 66% of TRIG's
expected revenue is fixed.
TRIG has a balanced portfolio of assets across a range of
geographies, technologies and revenue types. Over the short term,
the majority of TRIG's current wholesale market exposure is through
projects with ROC subsidies in the UK where the total revenue of
projects includes the wholesale power prices as well as a subsidy
element. As projects in construction come online, the portfolio
will increasingly diversify in power price exposure to the Nordic
and Iberian regions.
Over the next 12 months, 34% of expected revenues are exposed to
wholesale power markets. This exposure is broken down below by
market:
Country Next 12 Months % of Revenues
Great Britain 63%
Northern Ireland 6%
Ireland 4%
France 1%
Germany 0%
Sweden 11%
Spain 15%
Total 100%
Natural gas and, to a lesser extent, carbon prices remain the
principal commodity drivers of elevated power prices.
The outlook for European gas supplies remains uncertain. The
European Parliament and member states agreed on a minimum gas
storage level of 80% full capacity by 1 November 2022, with this
target rising to 90% by 1 November 2023. With Russian gas flows
into Europe at serious risk, Europe is dependent on liquified
natural gas ("LNG") arriving by boat, principally from the USA and
Qatar. This supply line is complicated by outages at the Freeport
LNG Texas terminal and increased demand from Asian markets
following economic recovery after the pandemic. These factors point
to a difficult winter ahead for European gas supplies, which may
have a further impact on forward power prices depending on how long
the mismatch between LNG supply and demand persists.
The cost of electricity across Europe has also increased due to
outages at a number of French nuclear plants. According to analysis
by Bloomberg, France's nuclear reactors were operating at less than
half their full capacity in June 2022, as a result of both planned
and unplanned outages, and have produced the least electricity in
the first five months of the year since 2008. This has resulted in
France needing to import power from the UK - the reverse of the
predominant dynamic between the two markets.
In the longer run, on average across TRIG's key markets power
price forecasts have largely been flat. This has been broadly due
to an increase in renewables deployment forecasts along with an
increase in electricity demand and flexible capacity. There
continues to be a risk that renewables capacity increases faster
than the expected growth in electricity demand, which could reduce
power prices over the longer term. The pace of the energy
transition for both the supply and demand for renewable
electricity, and government policies across Europe in relation to
electricity market design, will be key to the long-term power price
outlook.
Policy & Regulation
United Kingdom
The principal policy response from the UK government to the
energy supply constraints arising from the Ukraine crisis has been
the publication of the British Energy Security Strategy, which
significantly increases capacity targets for nuclear, offshore wind
and solar generation. Importantly, annual Contract for Difference
auctions from March 2023 were confirmed, while the strategy also
commits to reducing planning and consent time from approximately
four years to one year.
These policy responses are welcomed by the renewables industry,
although the extent to which supply chains can ramp up and investor
confidence is maintained in the sector will be crucial to the
delivery of these stretching targets.
The UK government has also directly intervened in the oil and
gas market during the period, through the announcement of the
Energy Profits Levy to be charged at 25% in addition to existing
taxation of the sector. This measure has not been extended into
other sectors of the energy mix, such as electricity generation. We
believe that any extraordinary intervention in the electricity
markets that adversely impacts renewables will dampen investment
sentiment in the UK and be a drag on meeting commitments to energy
independence under its Energy Security Strategy. Performance of
generators should be considered in the context of an entire market
cycle during which there will be periods of relatively high and low
power prices, as we have seen in 2022 and 2020-2021, respectively.
TRIG expects to invest over GBP300m into UK renewables and related
infrastructure during 2022 based on existing commitments and
pipeline.
We welcome studies into what the optimum structure may be to
incentivise renewables investment and reduce volatility in the
wholesale power market, which may include decoupling power prices
from gas prices - which is an area covered by the recently launched
Review of Electricity Market Arrangements (REMA) consultation. We
believe any such moves should be taken in consultation with the
investors in renewable energy, who will be crucial to delivering
the targets envisioned by the Energy Security Strategy and
acknowledge the period of time provided to consider the full
complexities inherent in any market redesign. The Managers are
engaging with government directly, and through industry bodies and
advisers, to contribute to their thinking on electricity market
reform.
In July, the UK announced its biggest ever round of the
Contracts for Difference auctions with capacity of almost 11GW of
renewables secured, almost double the capacity achieved in the
previous round. The large majority of this capacity (7GW) was
awarded to offshore wind projects, where the auction strike price
achieved was the lowest to date.
European Union
In response to the crisis in Ukraine, the EU has committed to
ending its dependence on Russian imports by 2027, to be achieved
through deploying renewables faster, increasing energy efficiency
and switching gas supplies to other markets, notably LNG. Each of
these aims is immensely challenging to achieve and will require
buy-in at EU and member country levels. This steps up the challenge
already set out in the EU's 'Fit for 55' strategy and Green Deal
package, both published in 2021. Through the Global Infrastructure
Investor Association, InfraRed is engaging in the Investors
Dialogue on Energy hosted by the European Commission, which is a
platform for discussion of EU Financing policies and instruments to
support energy investments and progress towards 2030 and 2050
targets associated with the EU's 'Fit for 55' strategy and Green
Deal.
During the first half of 2022, the European Parliament was
unable to secure consensus around reforms to the EU Emissions
Trading Scheme ("ETS"), with disagreements principally relating to
the pace at which surplus allowances should be removed from the
system. Nonetheless, industrial decarbonisation is expected to
accelerate during the 2030s, and so the EU ETS deadlock should not
have an impact on renewables deployment, which remain the cheapest
form of new electricity generation in Europe. The switch-back to
coal to cover off some of the gas shortage will add to demand for
EU carbon credits.
The cost of gas has increased significantly across Europe,
partly due to supply constraints, and partly due to the higher
costs of LNG (which requires pressurisation, shipping and
depressurisation and is exposed to world-wide demand) compared with
piped gas.
Germany is amongst the most exposed to Russian gas imports of EU
states, but has announced targets to reduce Russian gas imports
from 55% of the total to 10% by the summer of 2024. This reduction,
in the near term, will chiefly be achieved through a shift of gas
supplier from Russia to US LNG, and the German government has
announced plans for three new LNG terminals.
Spain also has a significant exposure to gas prices and has
sought to protect consumers from the most significant cost
increases. This is principally being achieved through a mechanism
designed to cap gas prices, which then feeds into the electricity
markets with gas-fired electricity generation being the marginal
price setter for the Iberian power markets. This has not had any
impact on the valuation of the Spanish solar assets in TRIG's
portfolio as these investments were made incorporating the impact
of the Spanish gas price cap.
Both Spain and Germany remain attractive markets for TRIG. The
German offshore market will continue to provide opportunities for
growth in subsidised revenues, whilst the Iberian market continues
to offer strong diversification benefits and higher returns.
Portfolio construction, pipeline and investment outlook
The Investment Manager made two investments on behalf of the
Company during the period which both contributed to improving
portfolio resilience and diversification by being in different
geographies and technologies, and with differing levels of exposure
to power markets. The investments were in Hornsea One, a UK
offshore wind farm located off the east coast of England, and
Valdesolar, a solar park in the south of Spain. The portfolio's
overall power price sensitivity remains broadly unchanged as a
result of these acquisitions.
TRIG's construction projects continue to progress well in the
period, with Blary Hill commissioned in February 2022. TRIG's
current Swedish, Spanish and French construction projects will
deliver an aggregate of 463MW new renewable energy capacity by
2024, creating value for all stakeholders.
InfraRed continues to see construction and late-stage
development projects as attractive opportunities to leverage the
depth of the combined expertise and track record of both Managers
for the benefit of TRIG and its shareholders. As assets in more
established markets such as flexible capacity, Nordic onshore wind
and Iberian solar begin to trade earlier in their life cycles, the
investment policy limit increase to 25% of portfolio value is a
proportionate response to the changing marketplace without
materially changing the overall risk profile of the Company.
There remains a strong pipeline of assets across geographies,
technologies and revenue types that would be additive to TRIG's
portfolio. The Managers are also closely following the evolution of
business models in the flexible capacity technologies and are
actively reviewing opportunities to increase the portfolio's
exposure to such opportunities where revenues may be negatively or
uncorrelated to revenue from renewable generation.
The conflict in Ukraine has served as a stark reminder of the
importance of energy security. Coupled with the critical need for
decarbonisation and affordable energy, the renewables sector
continues to increase in relevance to society. TRIG continues to
provide shareholders with sustainable returns derived from a
portfolio invested in assets critical to each of these key themes.
The Managers' strategy towards managing the Company's power price
exposure means that the portfolio is also defensively positioned in
volatile commodity markets. Revenue support mechanisms across the
portfolio provide protection in today's inflationary
environment.
Benefiting from a differentiated, clear and robust strategy,
TRIG's Managers are well placed to continue delivering strong
performance for our shareholders.
2.3 Sustainability
Our approach
Our investments, many of which have asset lives of 30 years or
more, require a long-term view and the application of sustainable
business practices.
TRIG has four sustainability goals which the Company seeks to
fulfil with every investment made and in day-to-day conduct:
- Mitigate adverse climate change
- Preserve our natural environment
- Positively impact the communities we work in
- Maintain ethics and integrity in governance
The TRIG Board and its Managers seek to incorporate
sustainability throughout the Company's activities. The Board has
overall responsibility for TRIG's Sustainability Policy 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 the 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.
RES leads management of project-level ESG policies and
activities, whilst keeping active management of 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. RES publishes its own
sustainability report and sustainability policy, on its
website.
2022 Sustainability Report
TRIG's purpose is to generate sustainable returns from a
diversified portfolio of renewables infrastructure that contribute
towards a zero-carbon future.
This purpose has been pivotal to TRIG since IPO in 2013, and
efforts towards this objective are detailed in TRIG's 2022
Sustainability Report.
The report highlights achievements within 2021 as well as future
objectives for TRIG. Key developments contained within the report
include:
Publication of Scope 1, 2 and 3 carbon emissions for the entire
portfolio, in line with TRIG's commitment to the Science Based
Targets initiative (SBTi).
New clearly defined sustainability key performance indicators,
informed by the Managers' annual portfolio-wide ESG Survey, which
provides the basis for regular monitoring of the portfolio.
Announcement of TRIG's SFDR categorisation as an Article 8 fund,
and the results of the EU Taxonomy assessment undertaken on the
portfolio.
An overview of TRIG's biodiversity strategy and the approach
taken across the portfolio to acknowledge the importance of and to
promote biodiversity.
2.4 Portfolio
Portfolio Diversification
The TRIG portfolio benefits from being diversified in a number
of ways. Through geographical diversification, the portfolio spans
a number of jurisdictions, power markets and weather systems,
reducing exposure to regulatory change or power price change in a
certain market, as well as reducing year-on-year production
volatility. Technological diversification further reduces
production volatility, and furthermore a range of counterparties
within each technology spreads credit risk.
This is illustrated in the charts on p.22 of the H1 2022 Interim
Report.
Revenue Profile
TRIG has the benefit of being diversified across five separate
power markets: Great Britain, the Republic of Ireland and Northern
Ireland (Single Electricity Market), France and Germany (which sit
within the main continental European power market), Sweden (which
sits within the Nordic electricity market) and Spain (Iberian power
market).
The TRIG portfolio has substantial near-term protection of 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,
other power price hedges such as swaps or forwards, and from
government subsidies, such as Feed-in Tariffs ("FiTs"), Contracts
for Difference ("CfDs") and Renewable Obligation Certificates
("ROCs").
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
expire. This may be managed by securing replacement contracts that
have fixed-price elements and making additions to the portfolio
that benefit from subsidies, each of which would decrease the
market revenue proportion of the forecast revenues.
Investment Portfolio
The TRIG portfolio as at 4 August 2022 includes 85 equity
investments in the UK, Republic of Ireland, France, Sweden, Germany
and Spain, comprising 51 wind projects, 33 solar PV projects and
one battery storage project. Additionally, the portfolio includes
one mezzanine debt investment in a mixed wind, solar and battery
portfolio.
Project Market (Region)(1) TRIG's Equity Interest(2) Net Capacity (MW)3 Year Commissioned(4)
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(5) GB (Scotland) 100% 30.4 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% 51.6 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 Vannier4 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% 4.2 2009
Fontaine-Mâcon France (North) 42% 5.1 2011
Haut Languedoc France (South) 100% 29.9 2006
Haut Cabardes France (South) 100% 20.8 2006
Cuxac Cabardes France (South) 100% 12.0 2006
Roussas-Claves France (South) 100% 10.5 2006
Rully France (North) 42% 5.0 2010
Val de Gronde France (North) 37% 4.5 2011
Jädraås Sweden 100% 212.9 2013
Gronhult(5) Sweden 100% 67.0 2022
Twin Peaks -
Ranasjö(5) Sweden 50% 43.4 2024
Twin Peaks -
Salsjö(5) Sweden 50% 77.5 2024
Total onshore wind at 4 August 2022 1,331.8
Offshore Wind Farms
East Anglia 1 GB (England) 14.3% 102.1 2020
Hornsea One(8) GB (England) 10.2% 122.4 2020
Sheringham Shoal GB (England) 14.7% 46.6 2012
Beatrice GB (Scotland) 17.5% 102.9 2018
Merkur Germany 24.6% 99.0 2019
Gode Wind 1 Germany 25% 82.5 2017
Total offshore wind at 4 August 2022 555.5
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
Valdesolar Spain (Badajoz) 49% 129.0 2021
Arenosas(5) Spain (Cadiz) 100% 58.1 2022
El Yarte(5) Spain (Cadiz) 100% 58.1 2022
Guita(5) Spain (Cadiz) 100% 58.1 2022
Malabrigo(5) Spain (Cadiz) 100% 58.1 2022
Total solar at 4 August 2022 517.7
Battery Storage/ Mixed
portfolio
Broxburn GB (Scotland) 100% 20.0 2018
Phoenix SAS(7) France 0% - 2015
Total Battery Storage / Mixed portfolio at 4
August 2022 20.0
Total Portfolio at 4 August 2022 2,425
Operating assets 1,961.7
Construction assets(5) 230.9
Contracted to acquire(6) 232.4
Total Portfolio at 4 August 2022 2,425
Footnotes
1 SEM refers to the Irish Single Electricity Market.
2 This is TRIG's equity share of the nominal capacity of the
asset.
3 This is each project's generation capacity pro-rated for
TRIG's share of equity capital and subordinated debt.
4 Where a project has been commissioned in stages, this refers
to the earliest commissioning date. For construction assets, this
refers to expected completion date.
5 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, therefore they are included in the table under
'Contracted to acquire'.
6 This is the investment commitment to acquire the Cadiz solar
projects.
7 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.
8 In March 2022 the company committed to invest in a 7.8% stake
in Hornsea One which completed in July 2022. In July 2022 the
Company committed to invest in a further 2.4% stake in Hornsea One.
Upon completion of the second tranche the Company will hold a 10.2%
stake in Hornsea One.2.5 Portfolio Performance
Capital Raising and Acquisitions
During the period, the Company raised gross proceeds of GBP277m
from an Initial Issue by way of a tap issuance under the Company's
general authority to disapply pre-emption rights taken at the 2021
AGM.
From 1 January 2022 to 4 August 2022, TRIG has invested GBP442m
relating to new projects, shown in the table below.
% of
portfolio on
Transaction Date Net Capacity a committed
Date Project commissioned Equity Share (MW)10 Revenue Type11 Location basis12
Hornsea One
offshore wind Contract for
March 2022 farm February 2020 10.2%(13) 122 Difference GB 9%
Valdesolar Wholesale
March 2022 solar project December 2021 49% 129 Market Spain 3%
Outstanding Commitments
As at 4 August 2022 the Company has outstanding commitments of
GBP216m relating to the second tranche of Hornsea One, 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(14) . The Company's acquisition facility was not drawn as at
30 June 2022, and was GBP195m drawn on 4 August 2022 (the date of
this report).
As at 4 August 2022 H2 2022 2023 2024 Total
Outstanding Commitments (GBPm)* 127 64 24 216
*Table does not cast due to rounding
10 This is TRIG's equity share of the nominal capacity of the
wind farm.
11 The main revenue type during the subsidy period. Thereafter
all revenues are wholesale power market.
12 The segmentation below is on a fully committed basis and
includes assets under construction at the time the investment was
committed.
13 In March 2022 the company committed to invest in a 7.8% stake
in Hornsea One which completed in July 2022. In July 2022 the
Company committed to invest in a further 2.4% stake in Hornsea One.
Upon completion of the second tranche the Company will hold a 10.2%
stake in Hornsea One.
14 More detail on the Company's outstanding commitments is
provided in section 2.6 - Valuation of the Portfolio.
Projects in construction
TRIG currently has four investments comprising eight projects
under construction that account for 12% of the portfolio, by
value.(15)
Vannier (Construction partner: Envision) - Construction has
significantly progressed in the period, with all turbines erected.
Completion of the wind farm is scheduled for autumn 2022.
Cadiz solar projects (Arenosas, Malabrigo, El Yarte and Guita)
(Construction partner: Statkraft) - Construction progressing well.
The panel traceability study was completed in the period with no
adverse findings. Module installation is complete at three of the
four sites and the main transformer has been installed at the
substation. The projects are on track to be operational in winter
2022.
Grönhult (Construction partner: Vattenfall) - Civil works were
completed on schedule and turbine deliveries have commenced. They
will be erected during summer 2022, with progress on the first
turbine underway. The project remains on track to be operational in
winter 2022.
Ranasjö & Salsjö (Twin Peaks) (Construction partner: Arise)
- Progress in line with programme. Foundation pours are nearly
complete at the Salsjö site, after which the on-site concrete
batching plant will move to the Ranasjö location. The planned grid
connection date may be slightly delayed, with potential solutions
being investigated to minimise any delay to project completion,
expected in 2024.
During the period, the Blary Hill (RES) project was completed on
time and on budget, and it is now included in the GB onshore wind
sub-portfolio. Its construction was fully funded from re-investment
proceeds.
Core to construction risk management is the appointment of an
experienced owner's engineer for each project to monitor
construction quality, provide independent assurance and to provide
routine on-site presence. During the period, project company
directors of the Ranasjö, Salsjö, Vannier and Cadiz projects
conducted site visits alongside the owner's engineers to view
progress first-hand, engage with site personnel to further develop
relationships and share best practice on health & safety.
15 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. Investments where
TRIG bears construction risk represent 8% of the portfolio, by
value.
Operations Summary
Portfolio production in the six months to 30 June 2022 was
consistent with budgeted levels, with strong winds in GB, Germany
and Scandinavia in Q1 offset by lower wind speeds in Q2 in addition
to grid-related downtime at offshore wind farms. Adjustments have
been made to generation values where such losses are compensated,
whether under insurance claims for lost revenue, compensated grid
curtailments from grid companies, compensated construction delay
from contractors or availability warranties from service
providers.
The portfolio has experienced high levels of power prices
throughout the period, meaning overall financial performance for H1
2022 was above budget. 'Budget' is the Managers' expected P50
production as applied in the valuation.
Production:
Production
Actual Variance
MWh %
GB Wind 774,436 6%
Ireland Wind 166,959 -5%
GB Offshore 678,500 -6%
Germany Offshore 338,481 -6%
France Wind 261,852 -9%
Scandinavia 313,382 14%
Solar & Storage 213,272 -2%
Total 2,746,882 (0.7%)
GB onshore wind
GB onshore wind generation was 6% above budget due to strong
winds in Q1.
Improvement works at Crystal Rig 1 are progressing, with one
upgrade package complete and showing positive availability
impact.
Operational challenges at Little Raith are being addressed
through an improvement plan agreed between the O&M contractor
and the RES asset manager, with some revenue protection through an
availability warranty.
Blade enhancements and foundation rectification works are
underway at Hill of Towie.
Production at Solwaybank has been boosted by reduced radar
curtailments in discussion with the Ministry of Defence.
All-island Ireland (Northern Ireland & Republic of Ireland)
wind
Ireland production was 5% below budget, driven by downtime for
major component works at multiple sites, most notably Altahullion
and Taurbeg.
Control systems upgrades have been completed at Lendrum's Bridge
to improve data analysis and proactive maintenance activities.
GB offshore wind
GB offshore generation was 6% below budget, largely driven by
grid challenges.
East Anglia One grid connection was curtailed to enable offshore
substation snagging works. The adverse impact of this was partly
offset by an above-budget increase in revenues resulting from its
inflation-linked UK Contract-for-Difference ("CfD"). Hornsea One
also has a UK CfD, which received an inflation uplift in excess of
the investment case.
Sheringham Shoal's financial performance was lifted by elevated
power prices in the period. The impact of this was dampened by a
temporary grid export restriction.
Hornsea One, of which the Company was committed to invest in the
first tranche in March, has been performing in line with its
generation budget.
Germany offshore wind
Generation was 6% below budget, primarily linked to planned grid
maintenance in addition to component replacement works. Planned
grid development in the region could reduce grid downtime in
future.
Repair and retrofit works associated with the Merkur rear frame
defect are progressing well. The settlement payment calculation
under the availability warranty for the year ended 31 March 2022
has been agreed with the turbine and O&M provider, with payment
to follow in due course and no financial impact on the carrying
value for the project.
France onshore wind
French production was 9% below budget for the year, largely due
to poor wind resource in January and May, in addition to some
downtime at the older sites due to major component maintenance
activities.
Repowering development activities for the four older sites are
progressing well. In addition to Cuxac, Claves has now also secured
a new Contract-for-Difference.
A sub-portfolio of five projects managed by Akuo secured higher
pricing under fixed-price market power purchase agreements from
September 2022 to December 2026.
Scandinavia onshore wind
Jädraås has continued to outperform budget in terms of both
generation and availability, achieving production 14% above budget
in the period. A scheduled blade repair campaign is underway and
expected to be completed in August 2022.
Solar
Valdesolar achieved excellent availability and secured good
power prices in the period, though this was partly offset by
production having been 6% below budget due to low irradiance and
some grid curtailment.
GB solar outperformed budgets due to good irradiance in the
period. Construction rectification works at several solar sites are
now nearing completion, with final works and snagging due to be
closed out Q3 2022.
Biodiversity activities at Marvel and Parsonage solar farms have
been progressed during the period, with placement of local beehives
and wildflower planting.
Enhancements
RES, as Operations Manager for the portfolio, is committed to
enhancing the value of the portfolio using both commercial and
technical initiatives. Through collaboration with TRIG's asset
managers, enhancements are identified, assessed and implemented.
The following examples are from the first half of 2022:
Blade enhancements are being rolled out at a Scottish onshore
wind site following yield uplift demonstrated during trial.
Phase 1 of the wake steering trial at Altahullion wind farm has
progressed. Analysis shows the retrofitted controllers have
achieved a reduction in loading, with a positive impact on expected
life of the turbines, and the adaptive yaw and pitch optimisation
has identified a potential 1% yield increase.
Tests have completed to enable Pallas onshore wind farm in
Ireland to provide grid services under DS3, providing an additional
revenue stream expected to generate circa GBP200k per year.
Icing parameters at Epine onshore wind farm in France have been
optimised to reduce generation losses in future winters.
Turbine pitch and yaw analysis is underway at Gode offshore wind
farm in Germany to optimise yield.
Solar maintenance schedules were adjusted in a cost-effective
manner in response to higher electricity pricing across the GB
portfolio, with night-time working also considered.
Health and Safety
Health and safety ("H&S") continues to be at the forefront
of all TRIG's operations. The following provides an update on
notable H&S items during the first half of 2022.
There were nine Lost Time Accidents resulting in the injured
person being off work for seven days or more ("7-day LTAs") during
the period. This resulted in a higher 7-day Lost Time Accident
Frequency Rate ("LTAFR") than seen in previous periods (0.52 H1
2022 compared to 0.27 H1 2021 and 0.21 H2 2021).
This increase is partly driven by 7-day LTAs across the Cadiz
portfolio construction activities, which included back strains and
knocks to arms and legs associated with non-specialised work. Two
7-day LTAs occurred at a French onshore wind construction site
during tower laydown and assembly. TRIG's Operations Manager is
engaging with the site management teams to reduce occurrences, with
follow-up action taken for each incident.
Aiming to reduce the risk of similar incidents, the Operations
Manager shares details of incidents amongst the partners on the
TRIG portfolio in line with best practice sharing of information.
An increased focus is now being placed on leading indicators such
as safety audits, "good catches" and safety observations.
Positively, we are seeing a large number of hazard identifications
raised on many of the construction assets.
A number of TRIG's operational partners have held company-wide
safety days during the period. A strong health and safety culture
is core to both Managers; for example, RES, the Operations Manager,
held an offsite Safety Focus Event where there was an opportunity
for all staff to discuss why people might take risks and consider
the consequences.
Safety audits are performed annually by the service providers on
all assets and these are supported further by independent audits on
representative assets across the portfolio. In the period,
third-party audits have been undertaken across five sites.
Cybersecurity
TRIG recognises that globally there has been an increased level
of cybersecurity activity, including both targeted attacks and
viruses. TRIG continues to engage with its Managers and project
company asset managers to ensure proportionate protections are in
place and awareness is maintained.
2.6 Valuation of the Portfolio
The Investment Manager is responsible for carrying out a fair
market valuation of the Group's investment portfolio which is
presented to the Directors for their approval and adoption.
Valuations are carried out on a six-monthly basis at 31 December
and 30 June each year.
For non-market traded investments (being all the investments in
the current portfolio), the valuation principles used are based on
a discounted cash flow methodology and adjusted in accordance with
the European Venture Capital Association's valuation guidelines
where appropriate to comply with IFRS 13 and IFRS 9, given the
special nature of infrastructure investments. Where an investment
is traded, a market quote is used.
The valuation for each investment in the portfolio is derived
from the application of an appropriate discount rate to reflect the
perceived risk to the investment's future cash flows to give the
present value of those cash flows. The Investment Manager exercises
its judgement in assessing the expected future cash flows from each
investment based on the project's expected life and the financial
model produced by each project entity. In determining the
appropriate discount rate to apply to a given investment the
Investment Manager takes into account the relative risks associated
with the revenues, which include fixed price per MWh income (lower
risk) or merchant power sales income (higher risk). As a refinement
to the process of determining the appropriate discount rate, in
view of the increasing variation of project ages and revenue mixes
within the portfolio, where a project has both income types a
theoretical split of future receipts has been applied, with a
different (higher) discount rate used for an investment's return
deriving from the merchant income compared to the fixed price
income, to determine the appropriate blended rate for the
investment.
The Directors' valuation(16) of the portfolio of 85(17) project
investments as at 30 June 2022 was GBP3,235.6m (31 December 2021:
GBP2,725.8m for 84 projects). The Board regularly engages an
independent third-party expert to review the Manager's valuation,
and accordingly the Board commissioned an independent valuation
from the accountants BDO as at 30 June 2022. BDO's work included a
review of the key valuation assumptions including discount rates,
power price and cannibalisation, inflation and other macroeconomic
assumptions, operating costs and asset lives. BDO's work
corroborated the TRIG June 2022 valuation and the key underlying
assumptions as adopted by the Board and used within the preparation
of these accounts.
Valuation Movement
A breakdown of the movement in the Directors' valuation of the
portfolio in the period is set out in the table below.
* Foreign Exchange movements in the bridge are stated before the
offset of currency hedges which are held at the Company and its
subsidiaries TRIG UK and TRIG UK I. The valuation addition reduces
to GBP13.8m after netting off hedges.
16 Directors' Valuation is an Alternative Performance Measure
("APM"). See page 77 of the H1 2022 Interim Report for details of
APMs. Further, the reconciliation from the expanded basis financial
results is provided in Section 3.0 - Analysis of Financial Results,
and a reconciliation of the Directors' Portfolio Value (APM) to
Investments at Fair Value is providedin Note 10 to the Financial
Statements.
17 Hornsea One is not included as whilst the commitment to
invest was made in March 2022, completion and investment occurred
in July 2022 which was after the valuation date.
Valuation movement during the period to 30 June 2022 GBPm GBPm
Valuation of portfolio at 31 December 2021 2,725.8
Cash investments 168.6
Cash distributions from portfolio (119.1)
Rebased valuation of portfolio 2,775.4
Change in power price forecast 212.0
Change from inflation assumption / deposit rate 124.4
Foreign exchange movement* 31.5
Balance of portfolio return 92.3
Valuation of portfolio at 30 June 2022 3,235.6**
* A net gain of GBP13.8m after the impact of foreign exchange
hedges held at Company level.
** Table does not cast due to rounding.
The opening valuation at 31 December 2021 was GBP2,725.8m.
Allowing for cash investments of GBP168.6m and cash receipts from
investments of GBP119.1m, the rebased valuation as at 30 June 2022
was GBP2,775.4m.
During H1 2022, investments were made in the four projects set
out in the table below:
H1 2022 investments: % of Portfolio Value including commitment at 30 June 2022
% of Portfolio Value at 30 June Invested at Invested in
2022 31 December 2021 H1 2022 Invested at 30 June 2022 Value once fully invested
Valdesolar 0% 3% 3% 3%
Cadiz solar 3% 1% 4% 5%
Twin Peaks 1% 1% 1% 3%
Grönhult 1% 0%(18) 1% 3%
Each movement between the rebased valuation of GBP2,775.4m and
the 30 June 2022 valuation of GBP3,235.6m is considered in turn
below:
(i) Forecast power prices:
The valuation of the portfolio has increased by a net GBP212.0m
as a result of the movements in power price forecasts during the
six-month period including the change in power curve inflation (see
(ii) movement in actual and forecast inflation). The valuation uses
updated power price forecasts for each of the markets in which TRIG
invests.
Over the period spot power prices and the short-to-medium term
power price forecasts have markedly increased due to supply chain
constraints exacerbated by the conflict in Ukraine and associated
disruption to energy markets contracting the supply and pushing up
the cost of natural gas in many European countries. Many of the
affected countries are seeking to reduce and/or eliminate their use
of Russian gas, increasing their demand for other gas sources
(including LNG) in the shorter term and increasing the drive to
utilise other energy sources. This includes the potential use of
coal as a stopgap measure (notwithstanding its high carbon tax).
This transition has resulted in price forecasts remaining elevated
across the 2020s before reverting to the levels similar to those
forecast at the year end, as additional demand and supply are
broadly expected to balance. Over the longer term this also
includes electrifying sources of gas demand, accelerating the use
of hydrogen and including more intermittent renewable generation
and/or nuclear generation.
18 Corresponding to 0.1%
Prior to the Ukraine conflict near-term power prices across
Europe were already elevated, mainly caused by increasing gas
prices during 2021 and early 2022 with supply of gas not keeping up
with increasing demand. Gas storage levels were low over the last
winter period, as electricity demand increased during 2021 as
economies came out of lock-down and electricity generated from
other sources, such as wind and nuclear was lower than usual
(unusually low wind levels and outages respectively), meaning that
European gas prices and hence electricity prices were more
sensitive to reduced supply and/or increased demand.
The weighted average power price forecast used to determine the
Portfolio Valuation 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(19) .
The significant increase in near-term forecast wholesale power
prices discussed above results in a higher near-term forecast, but
after the shorter to medium-term constraints in energy supply work
through, forecast power prices return to similar levels to the
previous December 2021 forecasts. The table below separates average
real forecast power prices in Great Britain and the average across
the other five euro-denominated markets (SEM(21) , France, Spain,
Germany and Sweden) weighted by value for the period 2022-2026 and
beyond.
Average
Prices by Region (real) Average 2022-2026 Average 2027-2050 2022-2050
Great Britain (GBP per MWh) 125 40 55
Average of 5 euro-denominated markets (EUR per MWh) 95 48 56
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.
19 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.
20 Power price forecasts used in the Directors' valuation for
each of GB, SEM (Northern Ireland & Republic of Ireland),
France, Germany, Sweden and Spain are based on analysis by the
Investment Manager using data from forward prices available in the
market and leading power market advisers. In the illustrative
blended price curve, the power price forecasts are weighted by P50
estimates of production for each of the projects in the Company's
portfolio as at 30 June 2022.
21 SEM refers to the Irish Single Electricity Market.
(ii) Movement in actual and forecast inflation:
Throughout H1 2022, the material increases in energy prices (as
described in (i) above) as well as increases in food and other
commodity prices exacerbated by the conflict in Ukraine have
contributed to material increases in headline inflation (measured
versus price levels 12 months previously) across all the
geographies TRIG invests in.
The most significant increase in the UK resulted from the
step-up in the retail consumer energy price cap in April (with the
next change in energy price cap expected in October), while other
contributions have been more evenly spread. Headline inflation
figures are likely to remain high both from continued inflationary
pressures (in energy and in other factors) and as a result of the
"base effect", while the material increase in April remains within
the headline figure (e.g. for the April 2022 uplift, until the
April 2023 inflation figure is released).
Inflation applied to cashflows has been uplifted for actual
inflation in all geographies for the 5 months to May 2022. For the
remaining 7 months of 2022 we have assumed 6% for UK RPI, 5.25% for
UK CPI and 3% for CPI in the other European countries TRIG invests
in. Actual inflation for the 5 months on an annualised basis has
been above these levels but is expected to revert to more normal
levels by December 2023.
We have shown below the revised inflation assumptions and also
the effective annual rate for 2022, which combines the very high
actual inflation to date with the expected inflation levels for the
balance of 2022.
Inflation applied to future UK power prices tracks UK RPI till
2030 and is assumed to be 2.25% thereafter.
Inflation assumptions used in the Portfolio Valuation
2022 2023 2024-2029 2030+
Forecast
Index (Jun to Dec) Full-Year Equivalent*
UK RPI 6.00% 10.3% (was 3.75% previously) 3.50% 2.75% 2.00%
UK CPI 5.25% 8.4% (was 3.00% previously) 2.75% 2.00% 2.00%
UK Power Price 6.00% 10.3% (was 3.75% previously) 3.50% 2.75% 2.25% (was 2.75% previously)
Eurozone 3.00% 6.5% (was 2.00% previously) 2.00% 2.00% 2.00%
* This represents the average inflation across the year 2022
measured against the prior 12 months.
Consequently, the inflation review had the impact of increasing
the valuation by GBP124.4m. Note that this number was mainly driven
by inflation actuals accounting for approximately 80% of the
total.
(iii) Foreign exchange:
Over the half-year sterling has depreciated 2% against the euro
compared to the rate at December 2021 (31 December 2021: EUR
1.1899; 30 June 2022: EUR 1.1613). In aggregate this has led to a
gain in the period of GBP31.5m in the valuation of the
euro-denominated investments located in France, the Republic of
Ireland, Sweden(22) , Spain and Germany. After the impact of
forward currency hedges held at Company level are taken into
account, the foreign exchange gain reduces to GBP13.8m.
Euro-denominated investments comprised 40% of the portfolio at
the period end.
Once the committed investments are fully subscribed, the
proportion of euro-denominated investments based on the current
portfolio and valuation remains at 40% (including Hornsea One).
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 enters
into further forward hedging contracts such that, when combined
with the "income hedges", the overall level of hedge achieved in
relation to the euro-denominated assets is typically in the range
of 60% to 80% of their valuation. Hedging is also effected when
making investments using the revolving credit facility by drawing
in euros for euro 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.
22 The majority of the Swedish 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.
(iv) Balance of portfolio returns and discount rate unwind:
This refers to the balance of valuation movements in the period
(excluding (i) to (iii) above) and represents an uplift of GBP92.3m
and a 3.3% increase over the half-year in the rebased value of the
portfolio. The balance of portfolio return mostly reflects the net
present value of the cash flows brought forward by six months at
the prevailing portfolio discount rate (6.6%).
In addition to the unwinding of the discount rate:
- Actuals have been greater than forecast with higher than
forecast power prices being partially offset by overall generation
for the period being marginally below budget with low wind speeds
in Q2.
- Changes have been made to deposit rate assumptions, increasing
interest rate forecasts in line with market expectations and the
recent rises enacted by central banks across TRIG's markets. 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
not material.
- Several projects secured new fixed price power purchase
agreements, while others utilised existing optionality to fix some
prices at attractive rates, providing additional value and revenues
security.
- Minor movements that in aggregate slightly dampen performance.
Over the period no changes have been made to the discount rates
applied to the assets in the portfolio (and consequently no
associated movement appears within the valuation bridge).
We have observed over the period the approximately 1% increase
in long-term risk-free rates across the jurisdictions we invest in,
such that the blended long-term risk-free rate across those
jurisdictions is a little over 2% at the balance sheet date.
However, we have not observed movement in valuation discount rates,
noting that the strong inflation linkage of returns for renewables
projects continues to be one of the key factors making renewables
investments attractive to investors. A significant risk buffer
between the circa 2% long-term risk-free rate and the 6.7%
portfolio discount rate remains. We continue to observe strong
competition for new investment opportunities and continue to be
outbid on transactions for the majority of processes in which we
are involved.
The Weighted Average Discount Rate of the portfolio has moved
from 6.6% to 6.7% as a result of additions to the portfolio and
changes in the balance between forecast merchant and protected
(fixed) flows which have different discount rates.
Investment Obligations
Name Acquired Net MW Status Completion Date Outstanding Commitment* Value once fully invested*
Cadiz solar Sept 21 232.0 Construction Q4 2022 1% 5%
Grönhult Feb 21 67.0 Construction Q4 2022 2% 2%
Twin Peaks Jul 21 120.9 Construction 2024 2% 4%
*Expressed as a percentage of portfolio valuation once fully
invested, which takes into account expenditure on construction
projects.
At 30 June 2022, the Company had outstanding investment
commitments on seven projects (Grönhult, Twin Peaks (Ranasjö and
Salsjö) and Cadiz solar (Arenosas, El Yarte, Guita and Malabrigo))
with projects in construction. The outstanding commitments are
expected to be invested between 2022 and 2024.
Following 30th June, the Company completed the acquisition of a
7.8% stake in Hornsea One wind farm and has further committed to
acquire an additional 2.4% stake.
Value once fully
Name Expected completion date Net MW Status Outstanding Commitment* invested*
Hornsea One tranche 1 July 22 95 Operation 7% 9%
Hornsea One tranche 2 Q3 22 29 Operation 2%
*Expressed as a percentage of portfolio valuation once fully
invested, which takes into account expenditure on construction
projects.
Outstanding commitments in relation to Grönhult, Twin Peaks,
Cadiz solar and Hornsea:
H2 2022 2023 2024 Total
Outstanding Commitments at 30 June 2022 (GBPm) 324 64 24 412
Investments commitments entered into between 1 July and 4 August 2022 76
Investments made between 1 July and 4 August 2022 (273)
Outstanding commitments at 4 August 2022 127 64 24 216*
*Table does not cast due to rounding.
TRIG's Construction Assets
At the period-end TRIG had four investments comprising eight
projects in construction as follows, representing 12% of the
portfolio valuation once fully invested. The Company does not bear
any construction risk in relation to the Cadiz solar assets and
consequently, these are excluded from the construction limit.
The Company bears the construction risk on five of these
projects which account for 8% of portfolio value against the
construction limit of 25%.
Name of Asset Location Capacity (MW) Expected Completion Date
Vannier France (North) 40 Q3 2022
Cadiz solar - Arenosas Spain (South) 58 Q4 2022
Cadiz solar - El Yarte Spain (South) 58 Q4 2022
Cadiz solar - Guita Spain (South) 58 Q4 2022
Cadiz solar - Malabrigo Spain (South) 58 Q4 2022
Grönhult Sweden (SE3) 67 Q4 2022
Twin Peaks - Ranasjö Sweden (SE2) 43 2024
Twin Peaks - Salsjö Sweden (SE2) 78 2024
The valuation of the portfolio on a fully invested basis can be
derived by adding the valuation at 30 June 2022 and the expected
outstanding commitments as follows:
Portfolio valuation at 30 June 2022 GBP3,235.6m
Investments made in July 2022* GBP273.3m
Portfolio valuation at 30 June 22 + July 2022 investments GBP3,508.9m
Future investment commitments** GBP215.5m
Portfolio valuation once fully invested GBP3,724.5m
* Including completion of the Hornsea One Tranche 1, further
construction spend at Cadiz solar projects and Grönhult wind
farm
** Including Hornsea One Tranche 2, further construction spend
at Cadiz solar projects, Grönhult, Ranasjö and Salsjö wind
farms
2.7 Valuation Sensitivities
For each of the sensitivities (as shown below in Note 2), 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. As
such the Portfolio Value for the sensitivity analysis is the sum of
the Portfolio Valuation at 30 June 2022 (GBP3,235.6m) and the
outstanding investment commitments as set out above, i.e.
GBP3,724.5m.
Given the current macroeconomic environment, in addition to the
sensitivities representing the changes in the long-term assumptions
impacting the portfolio valuation, additional sensitivities
representing short-term one-off changes in assumptions have also
been considered for two key assumptions which have experienced
significant changes in short term forecasts over the period.
For inflation an increase of 3% in annual inflation applied over
the next 12 months would be expected to increase the portfolio
valuation by GBP78m (equivalent to 2.8 pence per share), a 3%
decrease for the next 12 months would be expected to reduce the
portfolio valuation by GBP78m.
For power prices an increase of 10% applied to the applicable
forecast curve for each market in which TRIG invests, applied for
the next 5 years, is expected to increase the valuation by GBP99m
(equivalent to 4.0 pence per share), a 10% decrease is expected to
reduce the portfolio valuation by GBP99m. As noted on page 35 of
the H1 2022 Interim Report, the average GB power price applicable
over the period is GBP125/MWh and the average across the other
European markets is EUR95/MWh.
2.8 Financing
The Group has a GBP600m ESG-linked revolving credit facility
(which includes a GBP30m working capital element) with the Royal
Bank of Scotland International, National Australia Bank, ING Bank
NV, Sumitomo Mitsui Banking Corporation, Santander and Barclays.
The acquisition facility is used to fund acquisitions. The Group
expanded the facility from GBP500m to GBP600m in March 2022. The
facility expires on 31 December 2023 with the option to extend for
up to an additional 24 months. This type of short-term financing is
limited to 30% of the Portfolio Value. It is intended that any
facility used to finance acquisitions is likely to be repaid, in
normal market conditions, within a year through equity fundraisings
and/or retained earnings.
The acquisition facility was undrawn at 30 June 2022 and GBP195m
drawn as at the date of this report. This follows investing GBP273m
during July 2022 with the majority of this investment being into
the initial 7.8% stake in the Hornsea One offshore wind farm (other
sources of funding the GBP273m July investment include remaining
cash balances from the March equity fund raise and reinvestment of
earnings from projects).
The acquisition facility was used to fund investments made in
the period before being fully repaid following the equity fund
raise in March and drawn again in July as explained above.
The majority of the projects within the Company's investment
portfolio have underlying long-term debt (by value 61% of the
Group's investments have project finance raised against them and
39% are ungeared (including construction commitments)).
The project-level gearing (aggregate project debt over aggregate
enterprise value) across the portfolio was 40% as at 30 June 2022
on an invested basis and adjusted to include the investment into
Hornsea One during Q3 2022 (and 39% on a fully committed investment
basis). This is the same as the level as at 31 December 2021 (40%).
Repayments of project-level debt and the valuation uplift in the
period have reduced gearing, with acquisitions in the period
offsetting the reduction. The largest addition in the period is the
investment in the Hornsea One offshore wind farm which has project
financing in place, to be fully repaid within the subsidy
period.
There is a gearing limit in respect of such project finance
debt, which is non-recourse to TRIG, of 50% of the Gross Portfolio
Value (being the total enterprise value of the Group's portfolio
companies), measured at the time the debt is drawn down or acquired
as part of an investment. The Company may, in order to secure
advantageous borrowing terms, secure a project finance facility
over a group of portfolio companies.
The vast majority of the debt is fixed and has an average cost
of 3.5% (including margin) reflecting the terms available on
interest rate swaps when the project debt was initially put in
place.
As at 30 June 2022, the Company had cash balances of GBP93m,
excluding cash held in investment project companies as working
capital or otherwise. This level has reduced to more usual levels
of period end cash (GBP20m - GBP30m being more typical) as surplus
cash is invested, as was the case during July.
03 Analysis of Financial Results
At 30 June 2022 the Group had investments in 85 projects(23) .
As an investment entity for IFRS reporting purposes, detailed in
Section 5, the Company carries these 85 investments at fair value.
The results below are shown on a statutory and on an "expanded"
basis as we have done in previous years. See the box below for
further explanation.
Basis of preparation
In accordance with IFRS 10 the Group carries investments at fair value
as the Company meets the conditions of being an Investment Entity.
In addition, IFRS 10 states that investment entities should measure
their subsidiaries that are themselves investment entities at fair
value. Being investment entities, The Renewables Infrastructure Group
(UK) Limited ("TRIG UK") and The Renewables Infrastructure Group (UK)
Investments Limited ("TRIG UK I"), the Company's subsidiaries, through
which investments are purchased, are measured at fair value as opposed
to being consolidated on a line-by-line basis, meaning their cash,
debt and working capital balances are included as an aggregate number
in the fair value of investments rather than the Group's current assets.
In order to provide shareholders with more transparency into the Group's
capacity for investment, ability to make distributions, operating
costs and gearing levels, adjusted results have been reported in the
pro forma tables below.
The pro forma tables that follow show the Group's results for the
year ended 31 December 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 Balance Sheet Cash Flow Statement
The Statutory IFRS basis The Statutory IFRS basis The Statutory basis shows
nets off TRIG UK and includes TRIG UK and cash movements for the
TRIG UK I's costs, including TRIG UK I's cash, debt top company only (TRIG
overheads, management and working capital balances Limited). The Expanded
fees and acquisition as part of portfolio basis shows the consolidated
costs against income. value. The Expanded basis cash movements above
The Expanded basis includes shows these balances the investment portfolio.
the expenses incurred gross. There is no difference Differences include income
within TRIG UK and TRIG in net assets between received by TRIG UK and
UK I to enable users the Statutory IFRS basis TRIG UK I applied to
of the accounts to fully and the Expanded basis. reinvestment and expenses
understand the Group's The majority of cash incurred by TRIG UK and
costs. There is no difference generated from investments TRIG UK I that are excluded
in profit before tax had been passed up from under the Statutory IFRS
or earnings per share TRIG UK and TRIG UK I basis.
between the two bases. to the Company at both
30 June 2022 and 31 December
2021.
At 30 June 2022, TRIG
UK I was undrawn on its
revolving credit facility
(Dec 2021: GBP72.8m drawn).
------------------------------ -----------------------------
23 Hornsea One is not included as whilst the commitment to
invest was made in March 2022, completion and investment occurred
in July 2022 which was after the valuation date. As at 4th August
following the completion of Hornsea One the Company had 86
investments.
Summary Income statement
Six months to 30 June 2022 Six months to 30 June 2021
GBP'million GBP'million
Statutory IFRS Statutory IFRS
Basis Adjustments(1) Expanded Basis Basis Adjustments(1) Expanded Basis
Operating income 444.1 16.6 460.7 10.5 14.7 25.2
Acquisition
costs - (1.2) (1.2) - (1.1) (1.1)
Net operating
income 444.1 15.4 459.5 10.5 13.6 24.1
Fund expenses (1.1) (12.1) (13.2) (0.9) (11.0) (11.8)
Foreign exchange
gains/(losses) (17.3) (0.4) (17.7) 27.2 0.4 27.6
Finance costs - (2.9) (2.9) - (3.1) (3.1)
Profit before
tax 425.7 - 425.7 36.8 - 36.8
EPS(2) 17.9p 17.9p 1.8p 1.8p
1. The following were incurred within TRIG UK and TRIG UK I;
acquisition costs, the majority of expenses and acquisition
facility fees and interest. The income adjustment offsets these
cost adjustments.
2. Calculated based on the weighted average number of shares
during the period being approximately 2,378.9 million shares.
Analysis of Expanded Basis financial results
Profit before tax for the six months to 30 June 2022 was
GBP425.7 million, generating earnings per share of 17.9p, which
compares to GBP36.8 million and earnings per share of 1.8p for the
six months to 30 June 2021.
The EPS of 17.9p reflects significant valuation growth in the
period. The valuation movement in the period to 30 June 2022 is
mainly attributable to increases in power price forecasts and
increases in the level of inflation adopted. In addition there has
been small positive valuation growth from foreign exchange
movements as sterling depreciated during the period. The valuation
gain in the comparative period was small, largely as a result of
the increase in UK corporation tax enacted in the Finance Act 2021,
which adversely affected profit and valuation by GBP67.6m.
No reductions or increases to valuation discount rates were
recognised in the period.
Operating Income reflects the portfolio value movement in the
six months and is fully described in Section 2.6.
Acquisition costs relate to investments made in the period,
being Valdesolar and Hornsea One. Whilst Hornsea One completed
after the period, costs were incurred in the six months to 30 June
2022.
The increase in fund expenses as compared to H1 2021 reflects
the increase in the size of the portfolio.
Fund expenses of GBP13.2 million (2021: GBP11.8 million)
includes all operating expenses and GBP11.9 million (2021: GBP10.4
million) of fees paid to the Investment and Operations Managers.
Management fees on additions are now levied at the lowest rate of
0.7% p.a. Management fees p.a. are charged at 1% of Adjusted
Portfolio Value up to GBP1 billion, 0.8% of Adjusted Portfolio
Value in excess of GBP1 billion, 0.75% of Adjusted Portfolio Value
in excess of GBP2 billion and 0.7% of Adjusted Portfolio Value in
excess of GBP3 billion as set out in more detail in the Related
Party and Key Advisor Transactions note, Note 14 to the financial
statements.
During the period sterling weakened, resulting in a foreign
exchange valuation gain for non-UK assets of GBP31.5 million (2021:
GBP39.4 million loss), partially offset by losses on foreign
exchange hedges and cash and debt balances held at Company level of
GBP17.7 million (2021: GBP27.6 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 similar to the comparative period.
Ongoing charges
Six months to 30 June 2022 Six months to 30 June 2021
Ongoing Charges (Expanded Basis) GBP'000s GBP'000s
Investment and Operations Management fees 11,861 10,419
Audit fees 192 139
Directors' fees and expenses 191 156
Other ongoing expenses 953 819
Total expenses(1) 13,198 11,535
Annualised equivalent 26,615 23,261
Average net asset value 3,018,107 2,300,487
Ongoing Charges Percentage (OCP) 0.88% 1.01%
1. Total expenses exclude GBPnil (2021: GBP0.3 million) of lost
bid costs incurred during the period.
The Ongoing Charges Percentage ("OCP") for the period is 0.88%
(FY 2021: 1.01%). The ongoing charges have been calculated in
accordance with AIC guidance and are defined as annualised ongoing
charges (i.e. excluding acquisition costs and other non-recurring
items) divided by the average published undiluted net asset value
in the period. The OCP 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 decrease in OCP level reflects lower amounts being drawn on
the Revolving Credit Facility (RCF) in the period versus the
comparative period, the growth of the Company in the period meaning
the Company's expenses are spread over a larger capital base and
also the tiered Manager Fees that reduce as Portfolio Value grows
and the increase in NAV recognised at 30 June 2022. There is no
performance fee paid to any service provider.
Summary Balance sheet
As at 30 June 2022 As at 31 December 2021
GBP'million GBP'million
Statutory IFRS Statutory IFRS
Basis Adjustments Expanded Basis Basis Adjustments Expanded Basis
Portfolio value 3,227.3 8.3 3,235.6 2,636.8 89.0 2,725.8
Working capital 3.8 (7.3) (3.5) 13.9 (15.9) (2.0)
Hedging
Asset/(Liability) 6.3 (1.3) 5.0 27.3 (0.6) 26.7
Debt - - - - (72.8) (72.8)
Cash 92.6 0.3 92.9 28.2 0.3 28.5
Net assets 3,330.0 - 3,330.0 2,706.2 - 2,706.2
Net asset value
per share 134.2p - 134.2p 119.3p - 119.3p
Analysis of Expanded Basis financial results
Portfolio value grew by GBP509.8 million in the six months to
GBP3,235.6 million, as a result of the investments made in the six
months to 30 June 2022 and valuation gains as described more fully
in the "Valuation of Portfolio" section of this Report.
Cash at 30 June 2022 was GBP92.9 million (Dec 2021: GBP28.5
million) and acquisition facility debt drawings were GBPnil (Dec
2021: GBP72.8m). Shortly after the period end, the surplus cash
balance was deployed in investment activity.
Net assets grew by GBP623.8 million in the period to GBP3,330.0
million. The Company raised GBP274.3 million (after issue expenses)
of new equity during the period and produced a GBP425.6 million
profit in the period, with net assets being stated after accounting
for dividends paid in the period (net of scrip take up) of GBP77.1
million. Other movements in net assets totalled GBP1.0 million,
being Managers' shares accruing in H1 2022 and to be issued on or
around 30 September 2022.
Net asset value ("NAV") per share as at 30 June 2022 was 134.2p
compared to 119.3p at 31 December 2021.
Net asset value ("NAV") and Earnings per share ("EPS")
reconciliation
NAV per share Shares in issue (million) Net assets (GBP'million)
Net assets at 31 December 2021 119.3p 2,268.1 2,706.2
Dividends paid in H1 2022(2) (3.4)p - (80.7)
Profit/EPS to 30 June 2022(1) 17.9p - 425.6
Scrip dividend take-up(3) - 2.8 3.6
Shares issued (net of costs) 0.4p 210.2 274.3
H1 2022 Managers' shares to be issued(5) - 0.7 1.0
Net assets at 30 June 2022(4) 134.2p 2,481.8 3,330.0
1. Calculated based on the weighted average number of shares
during the period being 2,378.9 million shares
2. 1.69p dividend paid 31 March 2022 related to Q4 2021 (GBP38.3
million) and 1.71p dividend paid 30 June 2022 related to Q1 2022
(GBP42.4 million).
3. Scrip dividend take-up comprises 1.8 million shares, equating
to GBP2.2 million issued in lieu of dividends paid in March 2022
and 1.0 million shares, equating to GBP1.4 million issued in lieu
of dividends paid in June 2022.
4. Balance may not sum as a result of rounding differences.
5. The 0.7m shares represent the 748,569 shares that relate to
management fees earned in the six months to 30 June 2022 and are to
be issued to the Managers on 30 September 2022.
Summary Cash flow statement
Six months to 30 June 2022 Six months to 30 June 2021
GBP'million GBP'million
Statutory IFRS Statutory IFRS
Basis Adjustments Expanded Basis Basis Adjustments Expanded Basis
Cash received from
investments 103.5 17.1 120.6 64.9 27.7 92.6
Operating and finance
costs (0.8) (12.9) (13.7) (0.8) (11.9) (12.7)
Cash flow from
operations 102.7 4.2 106.9 64.1 15.8 79.9
Debt arrangement costs - (0.3) (0.3) - (0.1) (0.1)
Foreign exchange
gains/(losses) 4.2 (1.7) 2.5 5.7 (3.9) 1.8
Issue of share capital
(net of costs) 275.3 (0.9) 274.4 236.9 (1.0) 235.9
Acquisition facility
drawn - (72.8) (72.8) - 90.0 90.0
Purchase of new
investments (including
acquisition costs) (240.7) 71.5 (169.2) (245.0) (97.9) (342.9)
Distributions paid (77.1) - (77.1) (62.4) - (62.4)
Cash movement in period 64.4 - 64.4 (0.7) 2.9 2.2
Opening cash balance 28.2 0.3 28.5 23.1 0.8 23.9
Net cash at end of
period 92.6 0.3 92.9 22.4 3.7 26.1
Analysis of Expanded Basis financial results
Cash received from investments in the period was GBP120.6
million (June 2021: GBP92.6 million). The increase in cash received
compared with the previous period reflects the increase in the size
of the portfolio and stronger generation in the period versus the
comparative period.
Dividends paid in the period totalled GBP77.1 million (net of
GBP3.6m scrip dividends) and reflect dividends paid in the quarter
ended 31 March 2022 (GBP36.1 million, net of GBP2.2 million scrip
dividends) and the quarter ended 30 June 2022 (GBP41.0 million, net
of GBP1.4 million scrip dividends). Dividends paid in the
comparative period totalled GBP62.4million (net of GBP5.3 million
scrip dividends).
Cash flow from operations in the period was GBP106.9 million
(June 2021: GBP79.9 million) and covers dividends paid of GBP77.1
million in the period by 1.39 times (or 1.32 times without the
benefit of scrip take-up), or 2.4 times before factoring in amounts
invested in the repayment in project-level debt. The Group repaid
GBP83.5 million of project-level debt (pro-rata to the Company's
equity interest) in the period.
Share issue proceeds (net of costs) totalling GBP274.4 million
(June 2021: GBP235.9 million) resulting from the issue of 210.1
million shares issued at 132p in March 2022.
The Company's acquisition facility was repaid in the period as a
result of the March 2022 share raise, resulting in an undrawn
Tranche 1 position at the reporting date. The acquisition facility
was drawn shortly after the period to fund the completion of
Hornsea One Tranche 1, and ongoing funding for assets under
construction. GBP273.3m was invested in July which was funded by
the acquisition facility and surplus cash, resulting in an
acquisition facility balance at the reporting date of GBP195m.
In the period, GBP169.2 million was invested in acquisitions.
These were funded through the March share raise.
Cash balances increased in the period by GBP64.4 million,
reflecting cashflows generated that exceeded distributions paid as
well as some remaining cash from the March 2022 fund raise not
fully deployed that was invested in July 2022.
Going Concern
The Group has the necessary financial resources to meet its
obligations for the foreseeable future. The Group benefits from a
range of long-term contracts with various major UK and European
utilities and well-established suppliers across a range of
infrastructure projects. In addition, it maintains a working
capital component of GBP30m as part of its revolving credit
facility (recently increased to GBP600m 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 or current high rate of inflation
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.
For further information on going concern see note 2 in the
Condensed Financial Statements.
Related Parties
Related party transactions are disclosed in note 15 to the
condensed set of financial statements.
There have been no material changes in related party
transactions described in the last annual report.
04 Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
1. The condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting; and
2. The Chairman's Statement and the Managers' Report meets the
requirements of an Interim Managers' Report, and includes a fair
review of the information required by
a. DTR 4.2.7R, being an indication of important events during
the first six months and description of
principal risks and uncertainties for the remaining six months
of the year; and
b. DTR 4.2.8R, being the disclosure of related parties' transactions and changes therein.
By order of the Board
Helen Mahy
Chairman
4 August 2022
05 Condensed Financial Statements
5.0 Income Statement
Total operating income
Six months ended
Six months ended 30 June 2021
30 June 2022 (unaudited) (unaudited)
Note GBP'000s GBP'000s
Net gains/(losses) o investments 3 385,953 (39,862)
Dividend income 3 - 3,200
Interest income from investments 3 58,138 47,202
Total operating income 444,091 10,540
Fund expenses 4 (1,144) (906)
Operating profit 442,947 9,634
Finance and other (expense)/income 5 (17,315) 27,176
Profit before tax 425,632 36,810
Income tax 6 - -
Profit after tax 7 425,632 36,810
Attributable to:
Equity holders of the parent 425,632 36,810
425,632 36,810
Earnings per share (pence) 7 17.9p 1.8p
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.
5.0 Balance Sheet
As at As at
30 June 2022 31 December 2021
(unaudited) (audited)
Note GBP'000s GBP'000s
Non-current assets
Investments at fair value through profit or loss 10 3,227,256 2,636,785
Trade and other receivables 11 602 13,219
Total non-current assets 3,227,858 2,650,004
Current assets
Trade and other receivables 11 10,098 28,306
Cash and cash equivalents 12 92,623 28,229
Total current assets 102,721 56,535
Total assets 3,330,579 2,706,539
Current liabilities
Trade and other payables 13 (542) (362)
Total current liabilities (542) (362)
Total liabilities (542) (362)
Net assets 9 3,330,037 2,706,177
Equity
Share capital and share premium 14 2,767,562 2,488,594
Other reserves 14 992 1,008
Retained reserves 14 561,483 216,575
Total equity attributable to owners of the parent 9 3,330,037 2,706,177
Net assets per Ordinary Share (pence) 9 134.2 119.3
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 04 August 2022, and signed
on its behalf by:
Director: Director:
5.0 Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2022
Other
Share capital and share premium reserves Retained reserves Total equity
(unaudited) (unaudited) (unaudited) (unaudited)
GBP'000s GBP'000s GBP'000s GBP'000s
Shareholders' equity at beginning of
period 2,488,594 1,008 216,575 2,706,177
Profit for the period - - 425,633 425,633
Dividends paid - - (77,106) (77,106)
Scrip shares issued in lieu of
dividend 3,618 - (3,618) -
Ordinary Shares issued 277,338 - - 277,338
Costs of Ordinary Shares issued (2,995) - - (2,995)
Ordinary Shares issued in year in lieu
of Management Fees, earned in H2
20211 1,008 (1,008) - -
Ordinary Shares to be issued in lieu
of Management Fees, earned in H1
20222 - 992 - 992
Shareholders' equity at 30 June 2022 2,767,5623 992 561,4833 3,330,0373
For the year ended 31 December 2021
Share capital and share premium Other reserves Retained reserves Total equity
(audited) (audited) (audited) (audited)
GBP'000s GBP'000s GBP'000s GBP'000s
Shareholders' equity at beginning
of 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 20204 1,005 (1,005) - -
Ordinary Shares issued in year in
lieu of Management Fees, earned in
H1 20215 992 - - 992
Ordinary Shares to be issued in
lieu of Management Fees, earned in
H2 20216 - 1,008 - 1,008
Shareholders' equity at end of year 2,488,594 1,008 216,575 2,706,177
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent of the management fees
are to be settled in Ordinary Shares up to an Adjusted Portfolio
Value of GBP1 billion.
1 The GBP1,008,219 transfer between reserves represents the
857,254 shares that relate to management fees earned in the six
months to 31 December 2021 and were recognised in other reserves at
31 December 2021, and were issued to the Managers during the year,
with the balance being transferred to share premium reserves on 31
March 2022.
2 The GBP991,781 addition to the share premium reserve
represents the 748,569 shares that relate to management fees earned
in the six months to 30 June 2022 and are to be issued to the
Managers on 30 September 2022.
3 Amount may not cast due to rounding.
4 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 as
at 31 December 2020, and were issued to the Managers during the
prior year, with the balance being transferred to share premium
reserve on 31 March 2021.
5 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.
The accompanying notes are an integral part of these financial
statements.
5.0 Cash Flow Statement
Six months ended Six months ended
30 June 2022 30 June 2021
(unaudited) (unaudited)
Note GBP'000s GBP'000s
Cash flows from operating activities
Profit before tax 7 425,632 36,810
Adjustments for:
(Gain)/loss on investments 3 (385,953) 39,862
Dividend income from investments 3 - (3,200)
Interest income from investments 3 (58,138) (47,202)
Movement in other reserves relating to Managers' shares (16) (13)
Movement in accrued share issue costs - 15
Finance and other income/(expense) 5 17,315 (27,176)
Operating cash flow before changes in working capital (1,160) (904)
Changes in working capital:
Decrease/(increase) in receivables 25 (14)
Increase in payables 180 176
Cash flow from changes in working capital (955) (742)
Interest received from investments 67,525 29,808
Loan stock and equity repayments received 34,488 31,897
Dividends received from investments - 3,200
Interest income from cash on deposit 76 1
Net cash from operating activities 101,134 64,164
Cash flows from investing activities
Purchases of investments 10 (240,709) (245,000)
Net cash used in investing activities (240,709) (245,000)
Cash flows from financing activities
Proceeds from issue of share capital during period 278,346 240,855
Costs in relation to issue of shares (2,996) (3,996)
Dividends paid to shareholders 8 (77,106) (62,423)
Net cash from financing activities 198,244 174,436
Net increase/(decrease) in cash and cash equivalents 58,669 (6,400)
Cash and cash equivalents at beginning of period 28,229 23,116
Exchange gains on cash 5,725 5,709
Cash and cash equivalents at end of period 92,623 22,424
The accompanying notes are an integral part of these financial
statements.
5.0 Notes to the Condensed 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".
The interim condensed unaudited financial statements of the
Company (the "interim financial statements") as at and for the six
months ended 30 June 2022 comprise only the results of the Company,
as all of its subsidiaries are measured at fair value following the
amendment to IFRS 10 as explained below in Note 2.
The condensed interim financial information has been prepared on
the basis of the accounting policies, significant judgements, key
assumptions and estimates as set out in the notes to the Group's
annual financial statements for the year ended 31 December
2021.
The annual financial statements of the Company for the year
ended 31 December 2021 were approved by the Directors on 17
February 2022 and are available from the Company's Administrator
and on the Company's website http://trig-ltd.com/.
2. Key accounting policies
Basis of preparation
The interim financial statements were approved and authorised
for issue by the Board of Directors on 4 August 2022.
The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
International Accounting Standard 34 Interim Financial Reporting
("IAS 34"), as adopted by the European Union ("EU") and in
compliance with the Companies (Guernsey) Law, 2008. They should be
read in conjunction with the annual financial statements of the
Company for the year ended 31 December 2021, which are prepared in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the EU and using the historical cost basis,
except that the financial instruments classified at fair value
through profit or loss are stated at their fair values and that the
Company has applied the amendment to IFRS 10, as adopted by the EU
and as described below.
The interim financial statements are presented in sterling,
which is the Company's functional currency.
IFRS 10 states that investment entities should measure all of
their subsidiaries that are themselves investment entities at fair
value. Being investment entities, TRIG UK and TRIG UK I are
measured at fair value as opposed to being consolidated on a
line-by-line basis, meaning their cash, debt and working capital
balances are included in the fair value of investments rather than
the Group's current assets.
The Chief Operating Decision Maker (the "CODM") is of the
opinion that the Group is engaged in a single segment of business,
being investment in renewable energy assets to generate investment
returns while preserving capital. The financial information used by
the CODM to allocate resources and manage the Group presents the
business as a single segment comprising a homogeneous portfolio.
The CODM has been identified as the Board of Directors of the
Company acting collectively.
The Company's financial performance does not suffer materially
from seasonal fluctuations.
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 period ended 30 June 2022 and the year ended 31
December 2021, 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 period
ended 30 June 2022 and 31 December 2021.
Going concern
The Group has the necessary financial resources to meet its
obligations for at least the next 12 months following the date of
this report. 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 acquisition facility (currently sized at GBP600m and
limited to 30% of Portfolio Value). The facility is available until
31 December 2023 with an option to extend. The facility was undrawn
at 30 June 2022.
The Company has sufficient headroom on its revolving acquisition
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
16. 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 from the date of signing these financial statements and in
many cases the potential obligations are insured by the underlying
investments.
The project-level gearing (aggregate project debt over aggregate
enterprise value) across the portfolio was 40% as at 30 June 2022
on an invested basis and adjusted to include the investment into
Hornsea One during Q3 2022 (and 39% on a fully committed investment
basis).
A cash balance of GBP92.6m at 30 June 2022 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 acquisition facility of
GBP30m.
Further to the above, the Company has a number of outstanding
commitments. These commitments can be fully covered by the
Company's revolving credit facility.
The company is 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.
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 (including but
not limited to the conflict in Ukraine and current upward
inflationary pressures) and can continue operations for a period of
at least 12 months from the date of these financial statements.
Classification of financial instruments
30 June
2022 31 December 2021
GBP000s GBP000s
Financial assets
Designated at fair value through profit or loss:
Investments 3,227,256 2,636,785
Other financial assets 6,291 27,293
Financial assets at fair value 3,233,547 2,664,078
At amortised cost:
Trade and other receivables 4,409 12,501
Cash and cash equivalents 92,623 23,116
Financial assets at amortised cost 97,032 35,617
Financial liabilities
At amortised cost:
Trade and other payables 542 293
Financial liabilities at amortised cost 542 293
The Directors believe that the carrying values of all financial
instruments are not materially different to their fair values.
Other financial assets represent the fair value of foreign
exchange forward agreements in place at the period end.
Fair value hierarchy
The fair value hierarchy is defined as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
As at 30 June 2022
Level 1 Level 2 Level 3 Total
GBP'000s GBP'000s GBP'000s GBP'000s
Investments at fair value through profit or loss - - 3,227,256 3,227,256
- - 3,227,256 3,227,256
Other financial assets - 6,291 - 6,291
- 6,291 - 6,291
As at 31 December 2021
Level 1 Level 2 Level 3 Total
GBP'000s GBP'000s GBP'000s GBP'000s
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
Other financial assets represent the fair value of foreign
exchange forward agreements in place at the period 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.
30 June 2022 31 December 2021
GBP'000s GBP'000s
Portfolio value 3,235,634 2,725,805
TRIG UK and TRIG UK I
Cash 290 225
Working capital (11,076) (19,345)
Debt1 2,408 (69,900)
(8,378) (89,020)
Investments at fair value through profit or loss 3,227,256 2,636,785
1 Debt arrangement costs of GBP2,408k (2021: GBP2,927k) have
been netted off the GBPnil (2021: GBP72.8m) 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 30 June 2022 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:
30 June 2022 31 December 2021
Inflation applied to UK ROC Income Actual, 6% (2022), 3.50% (2023), 2.75% 3.75% (2022), 3.50% (2023), 2.75%
(to 2030), 2% thereafter until 2030, 2.00% thereafter
Inflation applied to UK CfD Income Actual, 5.25% (2022), 2.75% (2023), 2% 3% (2022), 2.75% (2023), 2.00%
thereafter thereafter
UK inflation rates (UK power prices)) Actual, 6% (2022), 3.50% (2023), 2.75% 3.75% (2022), 3.50% (2023),
(to 2030), 2.25% thereafter
2.75% thereafter
Ireland, France, Sweden, Germany and
Spain inflation rates Actual, 3% (2022), then 2% 2.00%
UK deposit interest rates 1.25% (to 2023), then 1.75% 0.25% to 2025, 1.25% thereafter
Ireland, France, Sweden, Germany and
Spain deposit interest rates 1% (to 2024), then 1.25% 0.0% to 2025, 0.25% thereafter
UK corporation tax rate 19% to April 2023, 25% thereafter 19% to April 2023, 25% thereafter
Ireland corporation tax rate 12.5% active rate, 25% passive rate 12.5% active rate, 25% passive rate
France corporation tax rate 25% 25%
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 1.1613 1.1899
Energy yield assumptions P50 case P50 case
Valuation Sensitivities
Sensitivity analysis for key sources of estimation and
uncertainty 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 30 June 2022 (GBP3,235.6m), the
outstanding investment commitments (GBP488.8m) including the
investment in Hornsea One in July 2022 for the initial 7.8%
completed in July and the additional 2.4% the Company committed to
invest in July) bringing the portfolio value on a committed basis
to GBP3,724.5m. A breakdown of the Company's commitments can be
found in section 2.6.
Given the current macroeconomic environment, in addition to the
sensitivities representing the changes in the long-term assumptions
impacting the portfolio valuation, additional sensitivities
representing short-term one-off changes in assumptions have also
been considered for two key assumptions which have experienced
significant changes in short term forecasts over the period.
For inflation an increase of 3% in annual inflation applied over
the next 12 months would be expected to increase the portfolio
valuation by GBP78m (equivalent to 2.8 pence per share), a 3%
decrease for the next 12 months would be expected to reduce the
portfolio valuation by GBP78m.
For power prices an increase of 10% applied to the applicable
forecast curve for each market in which TRIG invests, applied for
the next 5 years, is expected to increase the valuation by GBP99m
(equivalent to 4.0 pence per share), a 10% decrease is expected to
reduce the portfolio valuation by GBP99m. As noted on page 35 of
the H1 2022 Interim Report, the average GB power price applicable
over the period is GBP125/MWh and the average across the other
European markets is EUR95/MWh.
The analysis below shows the sensitivity of the portfolio value
(and its impact on NAV) to changes in key assumptions as
follows:
Discount rates
The discount rates used for valuing each investment are based on
market information and the current bidding experience of the Group
and its Managers.
The weighted average valuation discount rate applied to
calculate the portfolio valuation is 6.7% at 30 June 2022 (Dec
2021: 6.6%). 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 - June
2022 +4.7p +GBP131.9m GBP3,724.5m -GBP122.8m -4.4p
Directors' valuation -
December 2021 +4.4p +GBP111.7m GBP2,957.0m -GBP103.9m -4.1p
Power Price
The sensitivity considers a flat 10% movement in power prices
for all years, i.e. the effect of adjusting the forecast
electricity price assumptions in each of the jurisdictions
applicable to the portfolio down by 10% and up by 10% from the base
case assumptions for each year throughout the operating life of the
portfolio.
A change in the forecast electricity price assumptions by plus
or minus 10% has the following effect.
Power Price NAV/share impact -10% change Total Portfolio Value +10% change NAV/share impact
Directors' valuation - June 2022 -10.0p -GBP279.3m GBP3,724.5m +GBP284.4m 10.2p
Directors' valuation - December
2021 -8.1p -GBP202.7m GBP2,957.0m +GBP200.8m 8.0p
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.
P90 10 year Total Portfolio P10 10 year
Energy Yield NAV/share impact exceedance Value exceedance NAV/share impact
Directors'
valuation - June
2022 -16.1p -GBP449.0m GBP3,724.5m +GBP495.0m 17.8p
Directors'
valuation -
December 2021 -13.9p -GBP348.6m GBP2,957.0m +GBP381.3m 15.2p
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 generally fixed. This results in
the portfolio returns and valuation being positively correlated to
inflation.
The portfolio valuation assumes 6.0% p.a. inflation for the UK
in 2022, 3.5% in 2023 and 2.75% thereafter and 3.0% in 2022 and
2.0% thereafter 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 - June
2022 -4.8p -GBP134.0m GBP3,724.5m +GBP156.7m 5.6p
Directors' valuation -
December 2021 -4.3p -GBP107.7m GBP2,957.0m +GBP115.4m 4.6p
Operating costs
The sensitivity shows the effect of an illustrative 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 July 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 - June 2022 +5.7p +GBP157.5m GBP3,724.5m -GBP157.7m -5.7p
Directors' valuation - December
2021 +5.2p +GBP129.5m GBP2,957.0m -GBP130.7m -5.2p
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 2 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 - June 2022 +2.6p +GBP72.0m GBP3,724.5m -GBP61.5m -2.2p
Directors' valuation - December
2021 +1.7p +GBP43.5m GBP2,957.0m -GBP43.8m -1.7p
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 July 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 - June 2022 -0.0p -GBP0.9m GBP3,724.5m +GBP2.1m 0.1p
Directors' valuation - December
2021 -0.1p -GBP2.5m GBP2,957.0m +GBP0.8m 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 30 June 2022 valuation (based on a 30 June 2022 exchange rate
of EUR1.1613 to GBP1). In each case it is assumed that the change
in exchange rate occurs from 1 July 2022 and thereafter remains
constant at the new level throughout the life of the projects.
At the period end, 40% of the committed portfolio was located in
Sweden, France, Germany, Ireland and Spain comprising
euro-denominated assets.
The Group enters 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. Typical hedge levels for the Company have been between
approximately 60-80%.
Currency rates NAV/share impact -10% change Total Portfolio Value +10% change NAV/share impact
Directors' valuation - June 2022 -1.9p -GBP52.3m GBP3,724.5m +GBP52.3m 1.9p
Directors' valuation - December
2021 -1.8p -GBP44.0m GBP2,957.0m +GBP44.0m 1.8p
The euro/sterling exchange rate sensitivity does not attempt to
illustrate the indirect influences of currencies on UK power prices
which are interrelated with other influences on power prices.
Asset Lives
Assumptions adopted in the year-end valuation typically range
from 25 to 40 years from the date of commissioning, with an average
of 30 years for the wind portfolio and 38 years for the solar
portfolio. The overall average across the portfolio at 30 June 2022
is 30 years (31 December 2021: 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 -
June 2022 -1.1p -GBP30.8m GBP3,724.5m +GBP29.5m 1.1p
Directors' valuation -
December 2021 -1.0p -GBP25.6m GBP2,957.0m +GBP23.3m 0.9p
3. Total operating income
For period ended For period ended
30 June 30 June
2022 2021
GBP'000s GBP'000s
Gain/(loss) on investments 385,953 (39,862)
Dividend income - 3,200
Interest income from investments 58,138 47,202
Total operating income 444,091 10,540
4. Fund expenses
For period ended For period ended
30 June 30 June
2022 2021
GBP'000s GBP'000s
Fees payable to the Company's auditor:
For the audit of the Company's financial statements 95 70
For audit-related assurance services 52 48
Investment and management fees 99 99
Directors' fees 184 156
Other costs 714 533
Fund expenses 1,144 906
On the Expanded basis, fund expenses are GBP13,194k (Jun 2021:
GBP11,784k); the difference being the costs incurred within TRIG UK
and TRIG UK I, the Company's subsidiaries. The reconciliation from
the Statutory IFRS basis to the Expanded basis is shown in the
Analysis of Financial Results section on page 43 of the H1 2022
Interim Report.
The Company had no employees during the current or prior period.
The Company has appointed the Investment Manager and the Operations
Manager to advise on the management of the portfolio, the Company
and its subsidiaries, on its behalf. Audit-related services are
solely in relation to the interim review of the half-yearly
financial statements.
5. Finance and other (expense)/income
For period ended For period ended
30 June 30 June
2022 2021
GBP'000s GBP'000s
Interest income:
Interest on bank deposits 76 1
Total finance income 76 1
(Loss)/gain on foreign exchange:
Realised gain on settlement of FX forwards 3,611 5,709
Fair value (loss)/gain of FX forward contracts (21,001) 21,468
Other foreign exchange losses (1) (2)
Total (loss)/gain foreign exchange (17,391) 27,175
Finance and other (expense)/income (17,315) 27,176
On the Expanded basis, finance income is GBP76k (Jun 2021:
GBP1k) and finance costs are GBP2,932k (Jun 2021: GBP3,131k); the
difference being the Group's acquisition facility costs which are
incurred within TRIG UK and TRIG UK I, the Company's
subsidiaries.
The gain on foreign exchange on the Expanded basis is GBP17,698k
(Jun 2021: gain of GBP27,569k). The reconciliation from the
Statutory IFRS basis to the Expanded basis, which includes a large
FX movement within TRIG UK and TRIG UK I, the Company's
subsidiaries, is shown in the Analysis of Financial Results section
on page 43 of the H1 2022 Interim Report.
6. 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.
7. Earnings per share
Earnings per share ("EPS") is calculated by dividing the profit
attributable to equity shareholders of the Company by the weighted
average number of Ordinary Shares in issue during the period.
30 June 30 June
2022 2021
Profit attributable to equity holders of the Company ('000) GBP425,632 GBP36,810
Weighted average number of Ordinary Shares in issue ('000) 2,378,853 2,009,262
Earnings per Ordinary Share (Pence) 17.9p 1.8p
Further details of shares issued in the period are set out in
Note 14.
8. Dividends
30 June 31 December
2022 2021
GBP'000s GBP'000s
Amounts recognised as distributions to equity holders during the period:
Interim dividend for the 3 months ended 31 December 2020 of 1.69p 32,167
Interim dividend for the 3 months ended 31 March 2021 of 1.69p 35,508
Interim dividend for the 3 months ended 30 June 2021 of 1.69p 35,548
Interim dividend for the 3 months ended 30 September 2021 of 1.69p 38,293
Interim dividend for the 3 months ended 31 December 2021 of 1.69p 38,316
Interim dividend for the 3 months ended 31 March 2022 of 1.71p 42,407
80,723 141,516
Dividends settled as a scrip dividend alternative 3,618 7,458
Dividends settled in cash 77,105 134,058
80,723 141,516
On 1 August 2022, the Company declared an interim dividend of
1.71 pence per share for the three-month period ended 30 June 2022.
The dividend, which is payable on 30 September 2022, is expected to
total GBP42,425,155, based on a record date of 11 August 2022 and
the number of shares in issue being 2,481,003,209.
9. Net assets per Ordinary Share
30 June 31 December
2022 2021
Shareholders' equity at balance sheet date ('000) GBP3,330,037 GBP2,706,177
Number of shares at balance sheet date, including management shares accrued but not yet
issued
('000) 2,481,752 2,268,104
Net Assets per Ordinary Share at balance sheet date (Pence) 134.2p 119.3p
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.
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 issued these shares on 31 March
2022.
As at 30 June 2022, 748,569 shares equating to GBP991,781, based
on a Net Asset Value ex dividend of 132.49 pence per share (the Net
Asset Value at 30 June 2022 of 134.2 pence per share less the
interim dividend of 1.71 pence per share) were due but had not been
issued. The Company intends to issue these shares around 30
September 2022.
In view of this, the denominator in the above Net assets per
Ordinary Share calculation is as follows:
30 June 31 December
2022 2021
000s 000s
Ordinary Shares in issue at balance sheet date 2,481,003 2,267,246
Number of shares to be issued in lieu of Management fees 749 857
Total number of shares used in Net Assets per Ordinary Share calculation 1 2,481,752 2,268,104
1 Balance may not cast due to rounding
10. 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.
30 June 31 December
2022 2021
GBP'000s GBP'000s
Brought forward 2,636,785 2,160,946
Investments in the period 240,709 452,289
Distributions paid to the Company (102,013) (149,522)
Dividend income - 4,900
Interest income from investments 65,822 99,397
Gain on valuation 385,953 68,775
Carried forward 3,227,256 2,636,785
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.
30 June 31 December
2022 2021
GBP'000s GBP'000s
Fair value of investment portfolio
Brought forward value of investment portfolio 2,725,805 2,213,030
Investments in the year 168,635 478,928
Distributions paid to the Company (119,082) (169,447)
Interest income 42,020 75,167
Dividend income 13,720 33,928
Gain on valuation 404,536 94,199
Carried forward value of investment portfolio 3,235,634 2,725,805
Fair value of TRIG UK & TRIG UK I
Brought forward value of TRIG UK & TRIG UK I (89,020) (52,083)
Cash movement 65 (512)
Working capital movement 8,269 (2,135)
Debt movement1 72,308 (34,290)
Carried forward value of TRIG UK & TRIG UK I (8,378) (89,020)
Total investments at fair value through profit or loss 3,227,256 2,636,785
1 Debt arrangement costs of GBP2,408k (Dec 2021: GBP2,927k) have
been netted off the GBP0nil (Dec 2021: GBP72.8m) debt drawn by TRIG
UK and TRIG UK I.
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:
30 June 2022 31 December 2021
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% 41.9% 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% 17.5% 17.5%
Grönhult Sweden 100% 100% 100% 100%
Ranasjö Sweden 50% 50% 50% 50%
Salsjö Sweden 50% 50% 50% 50%
Krange Sweden 50% 50% 50% 50%
Arenosas Spain 100% 100% 100% 100%
El Yarte Spain 100% 100% 100% 100%
Guita Spain 100% 100% 100% 100%
Malabrigo Spain 100% 100% 100% 100%
Arcos Spain 100% 100% - -
Valdesolar Spain 100% 100% - -
30 June 2022 31 December 2021
Mezzanine Mezzanine
Investments (project name) Country Ownership debt Ownership debt
Phoenix France - 100% - 100%
In March 2022 the company exchanged contracts to acquire a 7.8%
equity interest in the Hornsea One offshore wind farm in the UK
from Global Infrastructure Partners. The acquisition was not
completed within the period to 30 June 2022 and has therefore not
been included in the valuation. The acquisition was completed on 21
July 2022.
On 19 July 2022, the Company exchanged contracts to acquire a
further 2.4% equity interest in the Hornsea One offshore wind farm
from Global Infrastructure Partners (from whom the Company
announced the acquisition of its original stake on 17 March
2022).
Also, in March 2022 the company acquired a 49% equity interest
in Project Valdesolar, an operating solar park in the province of
Badajoz, Spain from Repsol, a Spanish-listed global energy company.
Valdesolar represents approximately 3% of TRIG's portfolio, by
value. Together with the Cadiz solar projects, this acquisition
further enhances TRIG's technological and geographical
diversification.
In the period TRIG made additional investments in Pisa and Twin
Peaks to fund their respective construction programmes, in line
with outstanding commitments.
11. Trade and other receivables
30 June 31 December
2022 2021
GBP'000s GBP'000s
Trade and other receivables 4,409 14,232
Fair value of FX forward contracts expiring within 12 months 5,689 14,074
Total current receivables 10,098 28,306
Fair value of FX forward contracts expiring after 12 months 602 13,219
10,700 41,525
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 places 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 30 June 2022. The total euro balance
hedged at
30 June 2022 was EUR1,096.9m (Dec 2021: EUR747.5m).
Average
exchange Foreign currency Notional value Fair value
rate EUR'000s GBP'000s GBP'000s
Less than 3 months 1.1153 80,000 71,703 2,580
3 to 6 months 1.1262 150,100 133,533 3,384
6 to 12 months 1.1285 315,000 281,440 3,225
Greater than 24 months 1.1279 551,800 490,945 (2,898)
1.1220 1,096,900 977,622 6,291
As at the period end, the valuation on the foreign exchange
derivatives consisted of a receivable from Natwest Markets Plc and
National Australia Bank Limited and a payable to Santander UK PLC
and to Barclays PLC. At 30 June 2022 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, Santander UK PLC had an
S&P credit rating of A/Stable and Barclays Bank PLC had an
S&P credit rating of A/Positive.
12. Cash and cash equivalents
30 June 31 December
2022 2021
GBP'000s GBP'000s
Bank balances 92,623 28,229
Cash and cash equivalents 92,623 28,229
On the Expanded basis, which includes balances carried in TRIG
UK and TRIG UK I, cash is GBP92,913k (2021: GBP28,454k). The
reconciliation from the IFRS basis to the Expanded basis is shown
in section 3.
As at the period end, cash and cash equivalents on the Expanded
basis consisted of GBP42,500k held with Sumitomo Mitsui Banking
Corporation Europe Limited, GBP42,500k with ING Bank NV and
GBP7,913k held with Royal Bank of Scotland International Limited.
At 30 June 2022 Sumitomo Mitsui Banking Corporation Europe Limited
had an S&P credit rating of A/Stable, ING Bank NV 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.
13. Trade and other payables
30 June 31 December
2022 2021
GBP'000s GBP'000s
Management fees1 50 50
Trade and other payables 492 312
542 362
1 For related party and key advisor transactions see note 15.
14. Share capital and reserves
Ordinary Shares Ordinary Shares
30 June 31 December
2022 2021
'000s '000s
Opening balance 2,267,247 1,903,403
Issued for cash 210,105 356,290
Issued as a scrip dividend alternative 2,795 5,788
Issued in lieu of management fees 857 1,766
Total issued - fully paid(1) 2,481,003 2,267,247
1. Figures may not cast due to rounding.
On 24 March 2022, the Company issued 210,104,535 shares raising
GBP277,337,986 before costs.
The Company issued 2,795,005 shares in relation to scrip take-up
as an alternative to dividend payments in relation to the dividends
paid in the period.
The holders of the 2,481,003,209 (Dec 2021: 2,267,246,415)
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
30 June 31 December
2022 2021
GBP'000s GBP'000s
Opening balance 2,488,594 2,046,237
Ordinary Shares issued 281,963 449,305
Cost of Ordinary Shares issued (2,995) (6,948)
Closing balance 2,767,562 2,488,594
Other reserves
30 June 31 December
2022 2021
GBP'000s GBP'000s
Opening balance 1,008 1,005
Shares to be issued in lieu of management fees incurred
in H1 2021 (Note 16) - 992
Shares to be issued in lieu of management fees incurred
in H2 2021 (Note 16) - 1,008
Shares to be issued in lieu of management fees incurred
in H1 2022 (Note 16) 992
Shares issued in the period, transferred to share
premium (1,008) (1,997)
Closing balance 992 1,008
Retained reserves
Retained reserves comprise retained earnings, as detailed in the
statement of changes in shareholders' equity.
15. Related party and key advisor transactions
Loans to related parties:
30 June 31 December
2022 2021
GBP'000s GBP'000s
Short-term balance outstanding on accrued interest receivable 3,349 13,147
Short-term balance outstanding from TRIG UK, in relation to Management fees to be settled
in shares2 992 1,008
Long-term loan stock to TRIG UK and TRIG UK I1 1,860,653 1,671,894
1,864,994 1,686,049
1 Included within Investments at fair value through profit or
loss on the Balance Sheet
2 Included within Trade and other receivables on the Balance
Sheet
During the period, interest totalling GBP58,138k (Jun 2021:
GBP47,202k) 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 GBP3,349k (2021: GBP28,602k) 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 period was
GBP64k (Jun 2021: GBP64k), of which GBP32k (Jun 2021: GBP32k)
remained payable in cash at the balance sheet date. The Operations
Manager advisory fee charged to the income statement for the year
was GBP35k (Jun 2021: GBP35k), of which GBP18k (Jun 2021: GBP18k)
remained payable in cash at the balance sheet date.
The Investment Manager management fee charged to TRIG UK for the
period was GBP7,645k (Jun 2021: GBP6,708k), of which GBP3,615k (Dec
2021: GBP2,484k) remained payable in cash at the balance sheet
date. The Operations Manager management fee charged to TRIG UK for
the period was GBP4,117k (2021: GBP3,612k), of which GBP1,946k
(2021: GBP2,069k) remained payable in cash at the balance sheet
date.
In addition, the Operations Manager received GBP5,580k (Jun
2021: GBP6,708k) for services in relation to Asset Management,
Operation and Maintenance and other services provided to project
companies within the investment portfolio, and GBPnil (June 2021:
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.
On 31 March 2022, the Company issued 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 as at 31 December
2021 of 119.3 pence per share less the interim dividend of 1.69
pence per share), in respect of management fees earned in H2
2021.
As at 30 June 2022, 748,569 shares equating to GBP991,781, based
on a Net Asset Value ex dividend of 132.49 pence per share (the Net
Asset Value as at 30 June 2022 of 134.2 pence per share less the
interim dividend of 1.71 pence per share) were due but had not been
issued. The Company intends to issue these shares around 30
September 2022.
The Directors of the Company received fees for their services.
Total fees for the Directors for the period were GBP183,740 (Jun
2021: GBP156,000). Directors' expenses of GBP7,019 (Jun 2021:
GBPnil) were also paid in the period.
All of the above transactions were undertaken on an arm's length
basis.
16. Guarantees and other commitments
As at 30 June 2022, the Company and its subsidiaries had
provided GBP163.4m (Dec 2021: GBP177.0m) in guarantees in relation
to projects in the TRIG portfolio.
The Company also guarantees the revolving acquisition facility,
entered into by TRIG UK and TRIG UK I, which it may use to acquire
further investments.
As at 30 June 2022 the Company has GBP412.8m of future
investment obligations (Dec 2021: GBP231.2m). Following investments
made in July, outstanding commitments at 4 August 2022 have reduced
to GBP216m.
The Company and its subsidiaries have issued decommissioning and
other similar guarantee bonds with a total value of GBP22.8m (Dec
2021: GBP22.8m).
17. Contingent consideration
The Group has performance-related contingent consideration
obligations of up to GBP0.5m (Dec 2021: GBP1.8m) relating to
acquisitions completed prior to 30 June 2022. 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.
18. Events after the balance sheet date
On 19 July 2022, the Company exchanged contracts to acquire a
further 2.4% equity interest in the Hornsea One offshore wind farm
from Global Infrastructure Partners (from whom the Company
announced the acquisition of its original stake on 17 March 2022).
Upon completion of the second tranche of Hornsea One the Company
will own 10.2% of the asset.
On 1 August 2022, the Company declared an interim dividend of
1.71 pence per share for the three-month period ended 30 June 2022.
The dividend, which is payable on 30 September 2022, is expected to
total GBP42,425,155, based on a record date of 11 August 2022 and
the number of shares in issue being 2,481,003,209.
The Revolving Credit Facility ("RCF") was utilised to finance
acquisitions after the balance sheet date. At the date of signing
these accounts the RCF was GBP195m drawn.
Alternative Performance Measures ("APM")
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
NAV per share The Net Asset Value per ordinary share
Annualised total return on a NAV per share plus dividends The movement in the NAV per ordinary share, plus dividend
basis since IPO per ordinary share declared or paid
to shareholders since IPO
Invested year to date Investments made is the sum of investments made and
committed to in the year to date (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 10 to the
accounts) also includes movements in
TRIG UK Limited and TRIG UK Investments Limited
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 which 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 in note 10 to the
accounts
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 CO2 emission reductions, based on
current electricity
generation mix within each of TRIG's regions
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
Homes powered per annum The estimate of the number of homes powered by electricity generated by the
portfolio, based
on the portfolio's estimated generation as at the relevant reporting date
prepared using the
IFI approach to GHG Accounting
06 Directors and Advisers
DIRECTORS
Helen Mahy (Chairman)
John Whittle
Tove Feld
Klaus Hammer
Erna-Maria Trixl (appointed 1 March 2022)
Richard Morse (appointed 18 July 2022)
Shelagh Mason (resigned 28 February 2022)
Jonathan (Jon) Bridel (resigned 27 May 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 Asset Services
Central Square
29 Wellington Street
Leeds
LS1 4DL
Helpline: 0871 664 0300
AUDITOR
Deloitte LLP
Regency Court
Esplanade
St Peter Port
Guernsey GY1 3HW
BROKERS
Investec Wealth & Investment Limited
30 Gresham Street
London EC2V 7QP
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
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END
IR EAEPLESNAEAA
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