TIDMRNEW
RNS Number : 0282L
Ecofin US Renewables Infrastr.Trust
08 September 2021
LEI No: 2138004JUQUL9VKQWD21
ECOFIN U.S. RENEWABLES INFRASTRUCTURE TRUST PLC
INTERIM REPORT
Period from incorporation on 12 August 2020 to 30 June 2021
HIGHLIGHTS
Financial
98.5 cents $67.4 million 1.0 cents
Fair value of portfolio, Dividends declared per
NAV per share up $0.9 million share
0.9% 1.4% 27.9%
NAV total return per share Share price total return Total gearing at Holdco
Operational
75% 18.3 years 58
IPO proceeds committed Weighted average remaining Assets within portfolio
as at term of revenue contracts
31 July 2021
68.3 gigawatt hours (1) 32,405 tonnes (2) 14,165 homes
Clean energy generated, of CO (2) e avoided powered for a year
0.6% above budget
Figures reported either as at the referenced date or over the
reporting period ended 30 June 2021. All references to cents and
dollars ($) are to the currency of the U.S., unless stated
otherwise.
1. Represents the Company's proportionate share
2. CO (2) e and water savings based on the Company's
proportionate share. CO (2) e calculations are derived using the
U.S. EPA's Emissions & Generation Resources Integrated
Database. Water information is derived from the U.S. EIA's
Thermoelectric cooling water data
During the period from the Company's IPO on 22 December 2020
through to 30 June 2021, the Company, through its investment in
RNEW Holdco, LLC ("Holdco"), completed four investments consisting
of the Seed Assets (identified in the Prospectus) and also
committed to a fifth investment. Since 30 June 2021, the Company
has committed to a further investment of approximately US$25
million, resulting in circa 75% of net IPO proceeds committed or
deployed.
Invested and committed assets
l The first three investments in solar assets (Oliver Solar,
Ellis Road Solar, and SED Solar Portfolio) totaling $36.3 million
were closed and funded in December 2020.
l The fourth investment in two operating utility scale solar
assets in California (Beacon Solar 2 & 5) totaling $24.7
million was closed and funded in February 2021.
l The fifth investment (Skillman Solar) totaling $6.2 million
($4.2 million equity) was committed to on 4 May 2021. This
investment is expected to be closed and funded upon the asset
achieving mechanical completion, targeted for September 2021.
l With the completion of the above acquisitions, the Company
will have committed to or invested in a portfolio of 56 operating
solar assets and 2 construction stage solar assets, with total
generating capacity of 79.2 MW (1) .
l Post the reporting period, the Company signed an agreement to
acquire twelve ground mount solar projects at construction stage
(Echo Solar Portfolio) with an aggregate asset value of
approximately $95 million. It is expected that the Company will
invest approximately $25 million during the construction phase with
the potential to increase its equity investment up to approximately
$63 million during the operating phase.
l Following signing of this agreement, the Company has now
committed or invested approximately 75% of the Company's IPO
proceeds.
l No major health and safety incidents were observed across the
portfolio. Asset generation and availability were largely
unaffected by the COVID-19 pandemic.
l In respect of the reporting period, the Company declared
dividends of 1.0 cents per Share, with the inaugural 0.4 cents per
Share dividend declared in May and paid in June coming one quarter
in advance of guidance provided during the IPO. The Company is
targeting an annual dividend yield of 5.25% to 5.75% (on the basis
of the Initial Issue Price), beginning in respect of the first
quarter of 2022, assuming that the assets acquired using the Net
Initial Proceeds are substantially fully operational by 31 December
2021.
l The Company's net asset value ("NAV") was $123.1 million or
98.5 cents per Share. The NAV total return over the period from 22
December 2020 was 0.9%.
l The Company, through its subsidiary Holdco, had $47.6 million
of long-term, non-recourse debt (2) representing approximately
27.9% of gross assets (3) .
As at or period to
Financial information 30 June 2021
Net assets (million) $123.1
Shares in issue (million) 125.0
NAV per share (cents) 98.5
Share price (cents) 101.0
Share price premium to NAV 2.5%
Dividends declared per share (cents) (4) 1.0
NAV total return per share (5) 0.9%
Share price total return (6) 1.4%
Cash (million) $54.7
1. Represents the Company's share of portfolio generating
capacity (including assets under construction, where
applicable)
2. Represents the Company's proportionate share of total debt at
the asset special purpose vehicle ("SPV") level across its existing
investments as at 30 June 2021
3. Gross Assets is the sum of the Company's NAV and proportionate share of debt
4. Dividends paid/payable and declared relating to the period
5. Opening NAV at IPO (after launch expenses): 98.0 (cents) per Share
6. Total return is based on the Share price in U.S. Dollars and
includes dividends paid for the period and immediately reinvested.
Initial Issue Price at IPO: $1.00
CHAIR'S STATEMENT
On behalf of the Board, I am pleased to present the 2021 interim
report for Ecofin U.S. Renewables Infrastructure Trust PLC. This
covers the period from the Company's incorporation on 12 August
2020 until 30 June 2021 and is its first report to
Shareholders.
Deployment of IPO proceeds
The acquisition of three of the four seed assets described in
the Company's Prospectus was completed before the end of 2020. The
acquisition of the fourth seed asset was completed in February
2021.
On 4 May 2021, the Company announced further $6.2 million
commitment to acquire a commercial-scale ground-mounted 2.6 MW
solar project in New Jersey with contracted revenues for 30 years
(Skillman Solar). Construction of this project is now at an
advanced stage with all racking, modules, and inverters installed
and closing is expected to occur in September.
In addition, post period end, on 22 July 2021, the Company
announced it had committed approximately $25 million to acquire a
69.4 MW portfolio (Echo Solar Portfolio) comprising 12
ground-mounted solar projects across Minnesota, Virginia and
Delaware which have 100% of their revenues contracted with utility
offtakers for twenty five years. This transaction is expected to
complete in stages over the next several months.
Once these two transactions are complete and also taking into
account the existing four seed assets, RNEW will have invested
approximately 75% of the net IPO proceeds of $122.5 million. This
is a very pleasing result in just eight months since IPO.
Portfolio overview
As at 30 June 2021, the Company's four investments were:
l 100% interest in an 11.3MW commercial rooftop and
ground-mounted solar portfolio consisting of 52 operating assets in
Massachusetts and one operating asset in Connecticut, which have
100% of their revenues contracted for a remaining weighted average
term of approximately 15 years ("SED Solar Portfolio");
l 100% interest in a 4.8MW commercial rooftop solar project in
California which has 100% of its revenues contracted for a
remaining weighted average term of 14 years ("Oliver Solar");
l 100% interest in a 7.1MW ground-mounted solar project in
Massachusetts which has 100% of its revenues contracted for a
remaining weighted average term of 20 years ("Ellis Road Solar");
and
l 49.5% interest in a 107.8MW solar portfolio consisting of two
operating assets in California, which have 100% of their revenues
contracted with an investment-grade rated utility for a remaining
weighted average term of approximately 21 years ("Beacon Solar 2
& 5").
Total generation from the Company's assets during the period to
30 June 2021 was 68.3GWh, 0.6% above budget. Details of the
performance of each asset are set out in the Investment Manager's
Report.
Results
NAV as at 30 June 2021 was 98.5 cents per share compared to 98.0
cents at the 22 December 2020 IPO date. This primarily reflects
movement in the fair value of investments of approximately 0.7
cents per share principally due to value increases in the Ellis
Road Solar and Oliver Solar projects as they completed construction
and transitioned from cost to fair market value, offset by payment
of a dividend of 0.4 cents per share on 10 June 2021. The share
price as at 30 June 2021 was 101.0 cents which represented a total
return of 1.4% over the period and reflected a premium to NAV of
2.5% as at 30 June 2021.
RNEW's profit before tax for the period to 30 June 2021 was
$1.086 million and earnings per share were 1.47 cents.
Dividends
In May 2021, the Board declared a maiden interim dividend in
respect of the period from IPO to 31 March 2021 of 0.4 cents per
share. This was followed in early August 2021 by a further interim
dividend for the quarter ended 30 June 2021 of 0.6 cents per share,
resulting in a total of 1.0 cent per share for the period from IPO
to 30 June 2021. For the period to 30 June 2021, the dividend was
covered 1.1 times (1) .
I am pleased to say the Company remains on track to achieve its
target annual dividend yield of 2-3% (based on the Initial Issue
Price) in respect of the extended year from admission until 31
December 2021, and of 5.25% to 5.75% (on the basis of the Initial
Issue Price), beginning in respect of the first quarter of 2022,
assuming the net IPO proceeds are deployed and the assets become
substantially fully operational.
Board
The Board has worked well during the period and no changes have
taken place since IPO. As a result of the impact of COVID -- 19,
board meetings have been held remotely. More recently, from
end-July onwards, most of the Board have been able to meet in
person - a very welcome development.
I would like to thank my fellow Directors, the Ecofin team and
all our advisers for their hard work and dedication both in
achieving RNEW's successful IPO and for the Company's performance
to date. The Company's broker, Stifel Nicolaus Europe Limited,
initiated research coverage of RNEW's shares in March 2021, with a
Positive rating.
Outlook
In December 2020, the U.S. Congress passed a broad spending bill
which included a two-year extension of the investment tax credit
(ITC) for solar power (retaining throughout 2022 the 2020 rate of
26% which had been due to step down to 22% in 2021) and a one year
extension of the production tax credit (PTC) for onshore wind
power. The Biden Administration has ushered in a new era of
enhanced federal government support for renewable energy. Shortly
after being sworn into office, President Biden issued a series of
executive actions aimed at tackling climate change. These included
setting a goal of achieving a carbon pollution-free power sector by
2035 and having the U.S. rejoin the Paris Climate Agreement within
30 days, which was achieved on 19 February 2021. Looking ahead,
President Biden's Infrastructure Plan (which requires Congressional
approval to be implemented) along with a forthcoming Congressional
budget reconciliation bill, is expected to include billions of
dollars of incentives for the solar and wind industries including a
10 year extension of the ITC and a national clean energy standard.
These moves provide further support for growth of the renewables
sector in the U.S., which has continued to be very active
notwithstanding the impact of COVID-19.
As set out in more detail in the Investment Manager's Report,
the Company's near-term pipeline of potential investment
opportunities continues to be strong and exceeded $3.0 billion as
at 31 August 2021. The Investment Manager is currently working on
both solar and wind opportunities and RNEW remains on track to
fully commit its net IPO proceeds in 2021. The Board remains very
positive about the scale of opportunity for RNEW, its progress to
date, the significant pipeline of investment opportunities, and its
outlook for the future.
Patrick O'D Bourke
Chair
7 September 2021
1. Calculated based on Portfolio net cash distributions divided
by dividend paid in respect of the quarter ended 31 March 2021 and
dividend declared in respect of the quarter ended 30 June 2021.
INVESTMENT MANAGER'S REPORT
For the period ended 30 June 2021
Investments
6 INVESTMENTS: four investments closed and two further
commitments since the IPO on 22 December 2020
Since the IPO on 22 December 2020, the Company has closed and
funded all four seed acquisitions described in the Prospectus
(Beacon Solar 2 and 5, SED Solar Portfolio, Ellis Road, Oliver
Solar). Three of the four seed investments totaling $36.3 million
were closed by 31 December 2020. The fourth seed investment of
$24.7 million to acquire a 49.5% equity interest in two operating
utility scale solar PV assets in California was closed on 2
February 2021.
On 4 May 2021, the Company announced a commitment to acquire a
100% interest in a commercial solar PV project in New Jersey (NJ)
for approximately $6.2 million (Skillman Solar). This acquisition
is subject to customary closing conditions including achieving
mechanical completion and remains on track to close by September
2021. Funding for this asset is expected to consist of $4.2 million
from the Company and approximately $2.0 million from a tax equity
investor with which the Investment Manager has previously
transacted.
Diversified utility scale and commercial solar portfolio of 58
assets spanning four U.S. states
The portfolio has 97% of revenues contracted under fixed-price
power purchase agreements (PPAs) with creditworthy counterparties
with a weighted average remaining term of 18.3 years. As a result,
during the PPA contract term, the projects are insulated from
wholesale power price volatility and volume risk, which contributes
to a more stable and predictable source of cash flow.
As at 30 June 2021, the Company had committed approximately 55%
of the net proceeds raised at its IPO ($ 67.4 million committed
capital). Including the additional acquisition announced on 22 July
of Echo Solar Portfolio , the Company has committed approximately
75% of its net IPO proceeds.
Details of each asset held or committed to as at 30 June 2021
are set out in the table below:
Remaining
revenue
Capacity Number Start contract Contracted
Investment (MW) Ownership of of term revenue Acquisition
name Sector State (1) (2) assets Phase operations (years) source(s) date
Beacon Utility
Solar scale PPA with
2 solar California 29.5 49.5% 1 Operational 2017 21.5 utility Feb 2021
Beacon Utility
Solar scale PPA with
5 solar California 23.9 49.5% 1 Operational 2017 21.4 utility Feb 2021
PPA with
municipalities,
schools,
universities,
and commercial
offtakers
(including
fixed price
contract
SED Solar Commercial Massachusetts, for solar
Portfolio solar Connecticut 11.3 100% 53 Operational 2012-2019 15.2 incentives); Dec 2020
Feed-in-tariff
Ellis Commercial (FIT) with
Road Solar Solar Massachusetts 7.1 100% 1 Operational 2021 19.9 utility Dec 2020
PPA with
Oliver Commercial Construction 2021 commercial
Solar Solar California 4.8 100% 1 (3) (3) 14.0 offtaker Dec 2020
FIT with
state power
agency;
Skillman Commercial commercial
Solar Solar New Jersey 2.6 100% 1 Construction 2021E 15.0 offtaker Sep 2021E
Totals 79.2 58 18.3
E = Estimate
1 Capacity reflects RNEW's proportionate ownership interest in the assets
2 Cash equity ownership
3 3Oliver Solar achieved mechanical completion during Q2 2021
and subsequently commenced operations following certain
enhancements requested by the offtaker
Investment commitments since 30 June 2021
On 22 July 2021, the Company announced it had signed an
agreement to acquire twelve solar photovoltaic projects at
construction stage (Echo Solar Portfolio). The combined capacity of
the projects is estimated at 69MW, which will help offset 83,000
tonnes of CO (2) equivalent each year. The aggregate asset value is
approximately $95 million. The projects are expected to be
completed and to commence operations in phases beginning in the
first quarter of 2022. Ecofin is working with construction and tax
equity financing parties to structure these transactions optimally
for the Company's Shareholders. On 24 August 2021, Ecofin signed a
term sheet with an experienced U.S. solar project lender to finance
a portion of this transaction on a phased, non-recourse basis to
align with the Company's investment objectives. It is expected that
the Company will invest approximately $25 million during the
construction phase; there is also potential to increase this equity
investment up to approximately $63 million during the operating
phase through a reduction of gearing. Completion of this
transaction will further diversify the investment portfolio across
the states of Minnesota, Virginia, and Delaware through 25-year
fixed price PPAs with investment grade utility purchasers.
Following the signing of this agreement, the Company has
committed or invested approximately 75% of the IPO proceeds.
Operating performance
In the six months ended 30 June 2021, the portfolio generated
68.3 GWh of clean energy, 0.6% ahead of budget. Irradiation was in
line with our expectations and availability was higher than
forecast, particularly at Beacon Solar 2 and 5; this was partially
offset by lower output in February at the SED Solar Portfolio due
to higher than usual snowfall (see Operating project performance in
this report).
Despite the impact of COVID-19 on many industries, the Ellis
Solar (7.1 MW) and Oliver Solar (4.8 MW) assets achieved mechanical
completion as planned with only relatively minor impacts. Both
projects experienced delays in connecting to the power grid with
utilities citing COVID-19 related impacts on their workforce
availability and scheduling programmes. Nevertheless, Ellis Solar
was placed in service on 31 May 2021 with no negative impact on its
value. Oliver Solar experienced delays (its power purchaser
requested a delay to commencement of operations so that an
enhancement could be made to the combiner box connecting the system
to the grid within its commercial facility) before achieving
utility approval to interconnect. This occurred on 4 July 2021 and
subsequently enabled Oliver Solar to complete commissioning and
commence operations. Similarly, the delay on Oliver Solar had no
negative impact on the project valuation. Finally, Skillman Solar
(2.6 MW) has substantially progressed its construction and is
expected to achieve the conditions for closing in September.
The Company's operating portfolio delivered a solid financial
performance in the first half that enabled the Company to declare
its maiden dividend of 0.4 cents per share in respect of the period
to 31 March 2021 (one quarter earlier than envisaged during the
IPO) and a dividend of 0.6 cents per share in respect of the
quarter to 30 June 2021. The performance of the underlying
operating portfolio combined with its 100% contracted revenue
structure generated revenues of $2.275 million for the Company,
which was ahead of forecast and maintains momentum to achieve the
Company's targeted annual dividend yield of 2-3% (based on the
share price at launch) for the extended year from the IPO through
to 31 December 2021.
Operating project performance (production, in GWh) for the
period ended 30 June 2021(1) :
Actual Budget % Above (Below)
Investment name Sector State (GWh) (GWh) Budget
Beacon Solar Utility Scale
2 Solar California 33.8 34.2 (1.1)
Beacon Solar Utility Scale
5 Solar California 27.2 26.4 3.3
Massachusetts,
SED Solar Portfolio Commercial Solar Connecticut 6.5 6.4 1.8
Ellis Road Solar(2) Commercial Solar Massachusetts 0.7 0.9 (17.7)
Total 68.3 67.8 0.6
Values and totals have been rounded to the nearest decimal.
1. Reflects RNEW's pro rata share of production based on
ownership
2. Operations began 9 June 2021, representing a partial month of
production relative to budget
Revenues
RNEW's portfolio had 100% of its revenue contracted with a
weighted average remaining term of 18.3 years as at 30 June 2021.
Approximately 97% of the portfolio benefits from fixed-price
revenues (many with annual escalators of 1-2%) through PPAs,
contracted renewable energy incentive programs (SREC/ RECs), and
fixed rents under leases. These fixed price contracts mitigate
market price risk for the term of the contracts. Approximately 3%
of the portfolio has a variable form of revenue contract. These
contracts are set at a fixed discount to a defined Massachusetts
utility electric rate which provides an ongoing benefit to the
customer. While the variable rate contract introduces an element of
price volatility it also offers the potential to hedge inflation
risk as utility rates in Massachusetts have appreciated 2.5% on
average per annum from 1990-2019.
Financing
As at 30 June 2021, the Company's only borrowings, through its
investment in Holdco, were at investment level through its 49.5%
ownership of the Beacon Solar 2 and 5 operating solar assets. Its
share of amortising project
term loans totaled $47.6 million, 27.9% of gross asset value (GAV).
As mentioned in note 13 to the financial statements, since the
period end, RNEW Blocker, LLC, a subsidiary of Holdco, has entered
into a term sheet for a senior secured revolving credit facility
with a leading U.S. commercial lender. Additionally, as described
in the report, a subsidiary of Holdco has entered into a term sheet
for a non-recourse construction loan facility related to the Echo
Solar Portfolio, which was committed to in July of 2021. Both
facilities are expected to be finalised before the end of 2021.
U.S. dollar As at
Millions 30 June 2021
NAV 123.1
Debt 47.6
GAV 170.7
Debt (% of GAV) 27.9%
Active management
Ecofin maintains an active approach to managing RNEW's
portfolio. For operating assets, our process involves actively
monitoring production through direct, real-time system access,
review of monthly O&M and asset management reports, and meeting
at least monthly with project operators and asset managers to
review and enhance performance. For construction stage assets, the
process is appropriately structured for more frequent engagement
with the relevant engineering, procurement and construction ("EPC")
firm to review project milestones, troubleshoot issues, and review
and approve payments in accordance with contracts. In addition to
the monthly operating cadence, for the investments that are not
wholly-owned (i.e. Beacon Solar 2 and 5), a quarterly partners'
meeting takes place to review performance and discuss strategic
matters.
During the period, Ecofin worked towards achieving several value
enhancements. In March 2021, a subsidiary of Holdco entered into an
additional fixed-price solar renewable energy credit (SREC)
contract with an investment grade counterparty to add approximately
$450,000 of additional contracted revenue to the SED Solar
Portfolio. We also worked to directly source, structure and close
approximately $8.0 million in tax equity investments for Ellis Road
Solar and Oliver Solar with a sizeable tax equity investor on
customary market terms. In addition, we worked with the operator to
identify and install a weather system (i.e. a pyranometer) for the
SED Solar Portfolio's largest asset in Massachusetts. The weather
system was successfully installed in July and will lead to enhanced
weather-adjusted reporting capabilities and analytics across the
SED Solar Portfolio. Through our ongoing engagement with O&M
providers, we are working to refine the level of equipment spares
to achieve optimal performance and minimise portfolio downtime.
Portfolio valuation
Valuation of the Company's portfolio is performed on a quarterly
basis. A discounted cash flow ("DCF") valuation methodology is
applied which is customary for valuing privately owned renewable
energy assets. The valuation is performed by Ecofin at 31 March and
30 September, and by a third-party valuation firm at 30 June and 31
December.
At IPO on 22 December 2020, the Company raised $125.0 million
(before costs) by issuing 125,000,000 Shares. Subsequently, 53,497
Shares (27,929 Shares at 30 June 2021) have been issued to Ecofin
in respect of fees payable for the financial period and in
accordance with the Investment Management Agreement.
As set out in the NAV bridge below, the total fair value of the
Company's investments as at 30 June 2021 was $67.4 million,
reflecting predominantly movement in the valuation of investments
and dividends paid. The valuation of investments increased by
approximately $0.9 million (0.7 cents per Share) principally
reflecting increases from Oliver Solar and Ellis Road Solar
substantially completing construction and transitioning from cost
to fair value.
Dividends of $0.5 million (0.4 cents per Share) were paid during
the reporting period in respect of the period to 31 March 2021. In
addition, the Company declared a further dividend of 0.6 cents per
Share in respect to the quarter ended 30 June 2021. Over the
reporting period, the portfolio generated net revenue sufficient to
cover the dividend approximately 1.1 times.
Market outlook
The period since RNEW's IPO has seen a number of positive
developments in the U.S. renewable energy industry. In late
December 2020, the Consolidated Appropriations Act 2021 extended
the existing solar investment tax credit (ITC) for two additional
years and the onshore wind production tax credit (PTC) for one
additional year. Solar projects on which construction starts in
2020, 2021, or 2022 qualify for a 26% ITC, reducing to 22% in 2023,
and all such projects must be placed in service by the end of 2025.
This is alongside the current tax regulations which require that
projects must be completed within four years after construction
starts, thereby providing a multi-year pipeline of solar and wind
opportunities that can begin construction in 2021 and still access
the current year ITC or PTC through 2025.
The inauguration of President Biden in January of this year
marked a further strengthening of the federal government's support
for renewable energy. The climate agenda is a central priority for
President Biden who, on his first day in office, signed an
executive order to bring the U.S. back into the Paris Agreement
(this took effect on 19 February 2021). He also issued a series of
executive actions in support of policies seeking to combat climate
change by using a "whole of government" approach. He established a
goal for the U.S. power sector to be carbon-free by 2035, which is
a very ambitious objective considering the U.S. power grid still
relies on fossil fuel generation for approximately 60% of its power
supply. These orders included directing federal agencies to
eliminate fossil fuel subsidies and procure carbon pollution-free
electricity for federal facilities. More recently, Biden's
Infrastructure Plan includes numerous policies in support of
expanding the use of renewable energy. Of note, he proposes that
the ITC should be extended for 10 years and that legislation for a
direct pay or refundable tax credit be enacted, both of which would
require Congressional approval.
Over the last several months, inflation concerns across many
industries including wind and solar power have garnered attention
as economies emerge from the slack demand related to COVID-19 and
experience supply and demand imbalances. We expect equipment prices
to fluctuate in the near term as they have in the past when various
short-term supply and demand catalysts such as tariffs, tax credit
extension and expiration, pandemics, and other factors occurred. To
date, the Company has not experienced any material impacts due to
inflation across its construction and operating stage assets. As a
general matter, the Company invests predominantly in construction
and operating stage assets where the risks of inflation in
construction costs are mitigated through fixed price EPC contracts
and/or purchase agreements where potential cost overruns and delays
are allocated to the construction firm or vendor. Similarly, the
Company typically structures O&M services under long-term (i.e.
3-10 years) fixed priced contracts with experienced operators to
mitigate temporary price fluctuations. Finally, with the U.S.
renewable energy industry's projected sustained growth through the
coming decade we expect the number of O&M service providers to
increase over time which will continue to increase competition to
service the Company's growing portfolio and offset potential
inflationary pressures.
2021 has also seen substantial capital inflows into sustainable
and renewables-focused investment vehicles. Ecofin's observation is
that the lion's share of fund flows continues to go into large ($
billions) infrastructure funds while acknowledging increasing flows
across the renewable energy spectrum. RNEW's focus is on the
"middle market" of U.S. renewable energy which is characterised by
less deep capital markets relative to the large-scale segment,
which is more heavily targeted by large funds and strategic
investors (i.e., utilities, IPPs, etc.) acquiring assets through
advisor led auctions. Based on Ecofin's experience of evaluating
dozens of solar and wind acquisition opportunities and committing
to new investments for RNEW, our view is that market conditions and
discount rates for U.S. renewables assets remain stable relative to
the past couple of years.
Solar
The U.S. solar industry continues to demonstrate remarkable
growth, with over 5 GW of capacity added in the first quarter of
this year, a 46% increase over the first quarter of 2020, which
brings the cumulative installed base to over 100 GW. The future
looks equally bright with 77 GW of U.S. utility scale projects in
development with revenue contracts. Similarly, there exists strong
interest across the country from corporations, municipalities,
universities, schools, and hospitals to enter into PPAs with
commercial scale solar systems. Investments in contracted solar
assets remain at the core of achieving RNEW's investment
objectives. As of 31 August 2021, Ecofin's pipeline of commercial
and utility scale solar opportunities consisted of more than 40
deals totaling in excess of $1.5 billion. Once the Company
completes the Skillman Solar (New Jersey) and Echo Solar Portfolio
(Minnesota, Virginia, and Delaware) acquisitions, RNEW will have
met its allocation to solar under the investment guidelines set out
in the Prospectus. Looking ahead, we see a substantial supply of
operating and ready-to-build contracted solar opportunities that
provide a clear pathway to fuel RNEW's growth, consistent with its
investment objective.
Wind
U.S. onshore wind had a record 2020 with 16.9 GW of new wind
projects built across 26 states. Of this total, 2.9 GW consisted of
repowering older wind farms with larger and more efficient
components such as longer blades and updated controls to enhance
performance and re-access available PTCs. At the end of 2020, 17.4
GW was also in advanced development, pointing to a multi--year
pipeline. In 2021, it is expected that there will be a similarly
robust pace of installations (approximately 15 GW) to access the
one-year PTC extension. Ecofin has originated, screened and
evaluated many wind opportunities since the IPO, but by the
half-year we had not found a suitable asset for RNEW. As of 31
August 2021, Ecofin's pipeline of wind investment opportunities
comprised 19 deals totaling over $1.5 billion. Within this
pipeline, Ecofin recently submitted an approximately $50 million
bid (on an unlevered acquisition basis), which was accepted, and
obtained exclusivity on an operating wind project with a long-term
utility PPA. Subject to completing satisfactory due diligence,
negotiating acceptable transaction documentation, and obtaining
investment committee approval, this investment should satisfy
RNEW's portfolio diversification requirements and deploy all
remaining IPO proceeds. Based on the wind investment opportunities
in the pipeline and screened this year, we remain convinced about
wind's role in providing meaningful diversification benefits,
particularly as RNEW grows and broadens its access to larger wind
assets and portfolios readily accessible in the market.
In summary, we believe that the Company's investment strategy
remains differentiated and Ecofin is uniquely positioned to access
the sustained growth of U.S. renewables and to directly contribute
to decarbonising the U.S. power system while achieving RNEW's
investment objective.
Ecofin Advisors, LLC
7 September 2021
INTERIM MANAGEMENT REPORT
The Directors are required to provide an Interim Management
Report in accordance with the Financial Conduct Authority ("FCA")
Disclosure Guidance and Transparency Rules. They consider that the
Chair's Statement and the Investment Manager's Report in this
interim report provide details of the important events which have
occurred during the period and their impact on the financial
statements. The following statements on related party transactions,
going concern and the Directors' Responsibility Statement below,
together with the Chair's Statement and Investment Manager's
Report, constitute the Interim Management Report for the Company
for the period from incorporation on 12 August 2020 to 30 June
2021.
The Directors have identified the following as the Company's
principal risks and uncertainties. These are described in the
Company's Prospectus published in November 2020 (pages 13-43):
1. Cyber risk
2. Electricity price risk
3. Interest rate risk
4. Investment performance risk
5. Investment valuation risk
6. Political and regulatory risk
7. Premium/discount risk
8. Service provider risk
9. COVID-19 risk
10. Counterparty risk
Since the publication of the Prospectus, the Directors have
identified an additional principal risk:
11. Climate and ESG risk
a. The Company is exposed to impacts of climate change
i. Climate risks address the impacts of rising temperatures,
climate-related policy, and emerging technologies on companies. A
push for greater disclosure of climate-related risks is gaining
momentum among many governmental legislatures, regulators, and
non-governmental stakeholders across many developed countries.
While the Company is aligned in the cause of combatting climate
change through its renewable energy investments, analysing and
reporting on climate risk is still pertinent, in particular,
developing risk management strategies and related disclosures
related to the physical risks and transition risks posed by climate
change and incorporating these into the investment process and
Company reporting.
b. Environmental, Social and Governance
i. In addition to climate change impacts, ESG risks such as
health and safety, respect for human rights, bribery , corruption,
environmental management practices and duty of care, and compliance
with relevant laws and regulations, may arise. If the Company fails
to adhere to good ESG policies and practices, this could adversely
affect the Company. To mitigate these risks, when conducting due
diligence on new investments, Ecofin uses its ESG Risk Assessment
to evaluate the impacts of each of the following risks:
l Environmental - CO (2) emissions, endangered species, wastewater, wetlands, etc.
l Social - health, safety and wellbeing, social and local impacts, community benefits, etc.
l Governance -anti-bribery/corruption, forced labour, board
composition, audit/tax practices, etc.
c. Risks relating to weather conditions and performance of equipment
i. Renewable Assets are dependent upon factors such as available
solar resource, wind conditions, other weather conditions and power
generating and/or other equipment reliability that may
significantly impact the performance of Renewable Assets. Weather
conditions generally have natural variations from season to season
and from year to year and may also change permanently because of
climate change or other factors. Solar and wind energy is highly
dependent on weather conditions and, in particular, on available
solar and wind conditions. Moreover, power generating equipment
used generally by renewable energy companies is exposed to the
attendant costs of maintaining such equipment while in use and is
subject to risks of obsolescence associated with emerging and
disruptive new technologies.
ii. If weather conditions and/or performance of equipment were
to negatively affect the performance of the Renewable Assets, this
could have an adverse effect on the value of the portfolio, the
Company's target returns, the Company's financial condition,
results of operations and prospects, with a consequential adverse
effect on the returns to Shareholders and the market value of the
Shares.
Since the publication of the Prospectus, the Directors have
identified the following emerging risk:
Chinese Solar Materials Tied to Forced Labour
a. In June 2021, the White House announced steps to crack down
on forced labour in the supply chain for solar panels in China,
including a ban on imports from a silicon producer there. A
significant portion of the world's polysilicon, which is used to
make solar panels, comes from China. The U.S. has accused China of
committing genocide through its repression of Uyghurs and other
Muslim minorities.
b. In order to help ensure that the solar supply chain is free
of forced labour and to raise awareness within the industry, the
Solar Energy Industries Association ("SEIA") issued a letter
stating that SEIA supports the development of an industry-led solar
supply chain traceability protocol as a tool for identifying the
source of primary raw materials and inputs and tracking their
incorporation into finished products, including solar modules.
c. The Company works with reputable engineering, procurement and
construction firms to reduce the risk that any materials sourced
from vendors employing the use of forced labour end up in the
Company's proje cts.
Risk Management
Risks are managed and mitigated by the Board through continual
review, policy setting, and regular reviews of the Company's risk
matrix by the Board's Risk Committee to ensure that procedures are
in place with the intention of minimising the impact of the
above-mentioned risks. The Risk Committee carried out a formal
review of the Company's risks at its meeting held on 29 July 2021.
The Board relies on periodic reports provided by Ecofin regarding
risks that the Company faces. When required, experts are employed
to gather information, including legal advisors, tax advisors and
technical advisors.
Related Party Transactions
The Company's Investment Manager, Ecofin, is considered a
related party under the Listing Rules. Details of the amounts paid
to the Company's Investment Manager and the Directors during the
period are detailed in the Note 12 to the Financial Statements.
Going Concern
The Directors have adopted the going concern basis in preparing
the interim financial statements. The following is a summary of the
Directors' assessment of the going concern status of the
Company.
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for at
least twelve months from the date of this report. In reaching this
conclusion, the Directors have considered the liquidity of the
Company's portfolio of investments as well as its cash position,
income and expense flows. As at 30 June 2021, the Company held
$54.7 million in cash and $67.4 million in investments at fair
value through profit or loss. The Company's net assets at 30 June
2021 were $123.1 million.
In light of the COVID-19 pandemic, the Board has considered the
Company's investment portfolio and does not foresee any immediate
material risk to the Company's investment portfolio and the income
from underlying investments. The Directors have assessed available
funds as well as future cash flow requirements and have a
reasonable expectation that the Company has adequate operational
resources to continue in operational existence and to be able to
meet current and any future obligations for at least twelve months
from the date of approval of these interim financial
statements.
In addition, the Board believes that the Company and its key
service providers have in place appropriate business continuity
plans and will continue to maintain service levels throughout the
pandemic. The Directors have considered the impact of COVID-19 on
the Company's portfolio of investments and that any future
prolonged and deep market decline in power prices would likely lead
to falling values for the Company's investments and/or reduced
income receipts. However, as explained above, the Company has
sufficient liquidity available to meet its expected future
obligations.
At the date of approval of this document, based on the aggregate
of investments and cash held, the Company has substantial cover for
its operating expenses.
Directors' Statement of Responsibility for the Interim
Report
The Directors confirm to the best of their knowledge that:
l The condensed set of financial statements contained within the
interim financial report has been prepared in accordance with FRS
104 Interim Financial Reporting; and
l The Interim Management Report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the FCA's Dis closure
Guidance and Transparency Rules.
Patrick O'D Bourke
Chair
For and on behalf of the Board of Directors
7 September 2021
FINANCIAL STATEMENTS
Unaudited Condensed Statement of Comprehensive Income
Period from Incorporation on 12 August 2020 to 30 June 2021
Revenue Capital Total
Notes $'000 $'000 $'000
Losses on investments 4 - (8) (8)
Net foreign exchange losses - (333) (333)
Income 5 2,285 - 2,285
Investment management fees 6 (352) - (352)
Other expenses (506) - (506)
Profit/(loss) on ordinary activities before taxation 1,427 (341) 1,086
Taxation - - -
Profit/(loss) on ordinary activities after taxation 1,427 (341) 1,086
Earnings per Share 7 1.93c (0.46c) 1.47c
The total column of the Condensed Statement of Comprehensive
Income is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the period.
Profit on ordinary activities after taxation is also the "Total
comprehensive profit for the period".
Unaudited Condensed Statement of Financial Position
As at 30 June 2021
Notes $'000
Non-current assets
Investments at fair value through profit or loss 4 67,419
Current assets
Cash and cash equivalents 54,743
Trade and other receivables 1,287
56,030
Current liabilities: amounts falling due within one year
Trade and other payables (336)
(336)
Net current assets 55,694
Total assets less current liabilities 123,113
Capital and reserves: equity
Share capital 8 1,250
Share premium account 26
Special distributable reserve 9 121,250
Capital reserve (341)
Revenue reserve 928
Shareholders' funds 123,113
Net assets per Share 10 98.47c
Approved and authorised by the Board of directors for issue on 7
September 2021.
Unaudited Condensed Statement of Changes in Equity
Period from Incorporation on 12 August 2020 to 30 June 2021
Special
Share Share premium distributable Capital Revenue
capital account reserve reserve reserve Total
Notes $'000 $'000 $'000 $'000 $'000 $'000
Opening equity as
at
12 August 2020 - - - - - -
Shares issued in period 8 1,250 123,778 - - - 125,028
Share issue costs - (2,502) - - - (2,502)
Transfer to special
distribution
reserve 9 - (121,250) 121,250 - - -
(Loss)/profit for
the period - - - (341) 1,427 1,086
Dividends paid - - - - (499) (499)
Closing equity as
at
30 June 2021 1,250 26 121,250 (341) 928 123,113
The Company's distributable reserves consist of the Special
distributable reserve, Capital reserve and Revenue reserve.
Unaudited Condensed Statement Of Cash Flows
Period from Incorporation on 12 August 2020 to 30 June 2021
Notes $'000
Operating activities
Profit on ordinary activities before
taxation 1,086
Adjustment for unrealised gain on investments (95)
Increase in trade and other receivables (1,287)
Increase in trade and other payables 336
Net cash flow from operating activities 40
Investing activities
Purchase of investments 4 (67,324)
Net cash flow used in investing (67,324)
Financing activities
Proceeds of share issues 8 125,028
Share issue costs (2,502)
Dividends paid (499)
Net cash flow from financing 122,027
Increase in cash 54,743
Cash and cash equivalents at start
of period -
Cash and cash equivalents at end of
period 54,743
Notes to the Interim Financial Statements
Period from incorporation on 12 August 2020 to 30 June 2021
1. General Information
Ecofin U.S. Renewables Infrastructure Trust PLC ("RNEW" or the
"Company") is a public company limited by shares incorporated in
England and Wales on 12 August 2020 with registered number
12809472. The Company is a closed-ended investment company with an
indefinite life. The Company commenced operations on 22 December
2020 when its Shares were admitted to trading on the London Stock
Exchange. The Directors intend, at all times, to conduct the
affairs of the Company as to enable it to qualify as an investment
trust for the purposes of section 1158 of the Corporation Tax Act
2010, as amended.
The registered office and principal place of business of the
Company is 1(st) Floor, Senator House, 85 Queen Victoria Street,
London EC4V 4AB.
On 22 December 2020, the Company's 125,000,001 Shares were
admitted to the premium segment of the London Stock Exchange, upon
raising gross proceeds of $125.0 million.
The Company's investment objective is to provide Shareholders
with an attractive level of current distributions, by investing in
a diversified portfolio of mixed renewable energy and sustainable
infrastructure assets predominantly located in the U.S. with
prospects for modest capital appreciation over the long term.
2. Basis of Preparation
The condensed financial statements included in this Interim
Report have been prepared in accordance with IAS 34 "Interim
Financial Reporting". The interim financial statements have been
prepared in accordance with IFRS to the extent that they have been
adopted by the EU and with those parts of the Companies Act 2014
(including amendments by the Companies (Accounting) Act 2017)
applicable to companies under IFRS. The financial statements have
been prepared on the historical cost basis, as modified for the
measurement of certain financial instruments at fair value through
profit or loss("FVTPL").
The interim financial statements have also been prepared as far
as is relevant and applicable to the Company in accordance with the
Statement of Recommended Practice ("SORP") issued by the
Association of Investment Companies ("AIC") issued in April
2021.
These condensed financial statements do not include all
information and disclosures required in the annual financial
statements. The financial information for the period ended 30 June
2021 has not been audited.
The currency of the primary economic environment in which the
Company operates and where its investments are located (the
functional currency) is U.S. Dollar. The financial statements are
presented in U.S. Dollars and rounded to the nearest thousand
dollars.
Estimates and underlying assumptions are reviewed on an on-going
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected. The significant estimates, judgements or assumptions for
the period are set out in the interim report.
There are no comparatives as this is the Company's first
accounting period.
Basis of consolidation
The Company has adopted the amendments to IFRS 10 which state
that investment entities should measure all of their subsidiaries
that are themselves investment entities at fair value.
The Company owns 100% of its subsidiary RNEW Holdco, LLC
("Holdco"). The Company invests in SPVs through its investment in
Holdco. The Company and Holdco meet the definition of an investment
entity as described by IFRS 10. Under IFRS 10, investment entities
measure subsidiaries at fair value rather than being consolidated
on a line-by-line basis, meaning Holdco's cash, debt and working
capital balances are included in investments held at fair value
rather than in the Company's current assets. Holdco has one
investor, which is the Company. In substance, Holdco is investing
the funds of the investors of the Company on its behalf and is
effectively performing investment management services on behalf of
such unrelated beneficiary investors.
Going concern
The Directors have adopted the going concern basis in preparing
the financial statements. Details of the Directors' assessment of
the going concern status of the Company, which considered the
adequacy of the Company's resources and the impacts of the COVID-19
pandemic.
Critical accounting judgements, estimates and assumptions
Preparation of the financial statements requires management to
make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amount of
assets, liabilities, income and expenses. Estimates are, by their
nature, based on judgement and available information, hence actual
results may differ from these judgements, estimates and
assumptions. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying value of
assets and liabilities are those used to determine the fair value
of the investments as disclosed in note 4 to the financial
statements.
The Company's investments in unquoted investments are valued by
reference to valuation techniques approved by the Directors and in
accordance with the International Private Equity and Venture
Capital Valuation ("IPEV") Guidelines.
The Company has adopted the following valuation technique:
Discounted cash flow ("DCF") models are used to determine the fair
value of the underlying assets in Holdco. The value of Holdco
includes any working capital not accounted for in the DCF models
(cash plus any receivables or payables at the entity and not at the
asset level). Unobservable inputs used within the DCF models
include the discount rate. An increase (decrease) in the discount
rate would lead to a corresponding decrease (increase) in the fair
value of the investments. The Company's investments at fair value
are not traded in active markets.
Segmental reporting
The Chief Operating Decision Maker, which is the Board, is of
the opinion that the Company is engaged in a single segment of
business, being investment in renewable energy infrastructure
assets to generate investment returns whilst preserving capital.
The financial information used by the Chief Operating Decision
Maker to manage the Company presents the business as a single
segment.
Adoption of new and revised standards
At the date of approval of these financial statements, there
were no new or revised standards or interpretations relevant to the
Company which had come into effect.
3. Significant Accounting Policies
IFRS 9 Classification of Financial Assets and Financial
Liabilities
Financial assets and financial liabilities
Financial assets and financial liabilities are recognised in the
Company's Statement of Financial Position when the Company becomes
a party to the contractual provisions of the instrument. Financial
assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities at FVTPL)
are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at FVTPL
are recognised immediately in profit or loss.
Classification of investments
Fair value through profit or loss ("FVTPL")
Investments are measured at FVTPL. Once invested, the Company's
investments in SPVs are designated at FVTPL, as SPVs are themselves
considered to be investment entities and exist only to hold
underlying assets in line with the overarching AIFM agreement, and
therefore are not consolidated but held at FVTPL in line with IFRS
10.
Financial instruments and equity
Financial assets such as trade receivables, loans and other
receivables that are non-derivative financial assets and that have
fixed or determinable payments that are not quoted in an active
market are classified as loans and other receivables. As at the
period end, the Company had no such loans.
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement. An equity instrument is any contract that
evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the
Company are recognised as the amount of proceeds received, net of
direct issue costs. Repurchase of the Company's own equity
instruments is recognised and deducted directly in equity. No gain
or loss is recognised in profit or loss on the purchase, sale,
issue or cancellation of the Company's own equity instruments.
Recognition, derecognition and measurement
Purchases and sales of investments are recognised on the trade
date - the date on which the Company commits to purchase or sell
the investment and the contract to purchase or sell is wholly
unconditional. Financial assets and financial liabilities at FVTPL
are initially recognised at fair value. Transaction costs are
expensed as incurred in the Statement of Comprehensive Income.
Financial assets are derecognised when the rights to receive cash
flows from the investments have expired or the Company has
transferred substantially all risks and rewards of ownership. Loans
and other receivables are measured at amortised cost using the
effective interest method, less any impairment. They are included
in current assets, except where maturities are greater than 12
months after the period end date in which case they are classified
as non-current assets. Subsequent to initial recognition, all
financial assets and financial liabilities at FVTPL are measured at
fair value. Gains and losses arising from changes in the fair value
of the 'financial assets or financial liabilities at FVTPL'
category are presented in the Statement of Comprehensive Income.
Income from financial assets at FVTPL is recognised in the
Statement of Comprehensive Income within income when the Company's
right to receive payments is established. Financial liabilities,
including borrowings, are initially measured at fair value, net of
transaction costs. Financial liabilities are subsequently measured
at amortised cost using the effective interest method, with
interest expense recognised on an effective yield basis.
4. Investments Held at Fair Value through Profit or Loss
As at 30 June 2021, the Company had one investment, being
Holdco. As described in the Prospectus, Holdco has acquired the
Seed Assets as at 30 June 2021. The Seed Assets comprise a
diversified portfolio of operating and construction-stage solar
photovoltaic projects that serve utility and commercial offtakers
across three states in the U.S. As at 30 June 2021, the investment
is shown at a cost of $67,324,000.
Total
(a) Summary of valuation $'000
Analysis of closing balance:
Investments at fair value through profit or loss 67,419
Total investments as at 30 June 2021 67,419
(b) Movements during the period:
Opening balance of investments, at cost -
Additions, at cost 67,324
Cost of investments as at 30 June 2021 67,324
Revaluation of investments to fair value:
Unrealised movement in fair value of investments 95
Fair value of investments as at 30 June 2021 67,419
(c) Losses on investments in period
Unrealised movement in fair value of investments 95
Seed asset acquisition costs (103)
Losses on investments (8)
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level.
The level of fair value hierarchy within financial assets or
financial liabilities is determined on the basis of the lowest
level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in their
entirety into only one of the following 3 levels:
Level 1
The unadjusted quoted price in an active market for identical
assets or liabilities that the entity can access at the measurement
date.
Level 2
Inputs other than quoted prices included within Level 1 that are
observable (i.e. developed using market data) for the asset or
liability, either directly or indirectly.
Level 3
Inputs are unobservable (i.e. for which market data is
unavailable) for the asset or liability.
30 June 2021
Level 1 Level 2 Level 3 Total
$'000 $'000 $'000 $'000
Investments at fair value through profit
and loss
Equity investment in Holdco - - 67,419 67,419
Total investments as at 30 June 2021 - - 67,419 67,419
Due to the nature of the underlying investments held by Holdco,
the Company's investment in Holdco is always expected to be
classified as Level 3. There have been no transfers between levels
during the period ended 30 June 2021.The movement on the Level 3
unquoted investments during the period is shown below:
As at 30 June
2021
$'000
Opening balance -
Additions during the year 67,324
Unrealised gain on investment 95
Closing balance 67,419
5. Income
For the period
ended 30 June
2021
Income from investments $'000
Dividends from Holdco 2,275
Deposit interest 10
Total income 2,285
6. Investment Management Fee
For the period ended 30 June 2021
Revenue Capital Total
$'000 $'000 $'000
Investment management fee 352 - 352
The Investment Management Agreement ("IMA") dated 11 November
2020 between the Company and Ecofin Advisors, LLC ("the AIFM" or
"Investment Manager"), appointed the AIFM to act as the Company's
Investment Manager for the purposes of the AIFM Directive.
Accordingly, the AIFM is responsible for providing portfolio
management and risk management services to the Company.
Under the IMA, the Investment Manager receives a management fee
of 1.00% per annum of NAV up to and including $500 million; 0.90%
per annum of NAV in excess of $500 million up to and including $1
billion; and 0.80% per annum of NAV in excess of $1 billion,
invoiced quarterly in arrears. Until such time as 90 per cent. of
the Net Initial Proceeds of the Company's IPO has been committed to
investments, the Investment Manager fee will only be charged on the
committed capital of the Company. No performance fee or asset level
fees are payable to the AIFM under the IMA.
The Investment Manager reinvests 15 per cent. of its annual
management fee in Shares (the "Management Fee Shares"), subject to
a rolling lock-up of up to two years, subject to certain limited
exceptions. The Management Fee Shares are issued on a quarterly
basis. The calculation of the number of Management Fee Shares to be
issued is based upon the NAV as at the relevant quarter concerned.
The Investment Manager is also entitled to be reimbursed for
out-of-pocket expenses reasonably and properly incurred in respect
of the performance of its obligations under the IMA.
Unless otherwise agreed by the Company and the Investment
Manager, the IMA may be terminated by the Company or the Investment
Manager on not less than 12 months' notice to the other party, such
notice not to expire earlier than 36 months from the Effective Date
of the IMA (11 November 2020). The IMA may be terminated by the
Company with immediate effect from the time at which notice of
termina-tion is given or, if later, the time at which such notice
is expressed to take effect in accordance with the conditions set
out in the IMA.
7. Earnings per Share
Earnings per Share is based on the profit for the period of
$1,086,000 attributable to the weighted average number of Shares in
issue of 73,920,041 in the period from incorporation on 12 August
2020 to 30 June 2021. Revenue profit and capital losses were
$1,427,000 and ($341,000) respectively.
8. Share Capital
Nominal value Nominal value
of of
shares Shares
Allotted, issued and fully paid: No. of shares GBP $
Opening balance as at 12 August 2020 - - -
Allotted upon incorporation
Shares of 1c each 1 - 0.01
Initial Redeemable Preference Shares
paid up to one quarter of their nominal
value ('Initial Redeemable Preference
Shares') 50,000 12,500.00 -
Allotted/redeemed following admission
to LSE
Shares issued 125,000,000 - 1,250,000.00
Initial Redeemable Preference Shares
redeemed (50,000) (12,500.00) -
Management fee shares
Shares issued 27,929 279.29
Closing balance As at 30 June 2021 125,027,930 - 1,250,279.30
The Shares have attached to them full voting, dividend and
capital distribution (including on winding-up) rights. They confer
rights of redemption. The Initial Redeemable Preference Shares did
not carry a right to receive notice of or attend or vote at any
general meeting of the Company unless no other shares were in issue
at that time. The Initial Redeemable Preference Shares were treated
as equity in accordance with the requirements of IFRS. The Initial
Redeemable Preference Shares did not confer the right to
participate in any surplus remaining following payment of such
amount.
In accordance with the Prospectus, the Company has the right to
issue C Shares of nominal value $0.01 each pursuant to any
Subsequent Issue under the Share Issuance Programme. The Company
did not issue any C Shares during the period to 30 June 2021.
On incorporation, the issued share capital of the Company was
$0.01 represented by one Share, which was subscribed for by Ecofin
Advisors, LLC. On 22 October 2020, the 50,000 Initial Redeemable
Preference Shares were allotted to Ecofin Advisors, LLC. The
Initial Redeemable Preference Shares were paid up as to one quarter
of their nominal value and were redeemed immediately following
Admission out of the proceeds of the Initial Issue.
On 22 December 2020, the Company was admitted to the premium
segment of the main market of the London Stock Exchange and to the
premium segment of the Official List of the Financial Conduct
Authority ("Admission"). Pursuant to the Initial Issue, 125,000,000
Shares were issued at a price of $1.00 per Share.
On 20 May 2021, the Company issued a further 27,929 Shares at a
price of $0.9906 per Share.
The Company's issued share capital at 30 June 2021 comprised
125,027,930 Shares (and this is the total number of Shares with
voting rights in the Company).
9. Special Distributable Reserve
As indicated in the Prospectus, following admission of the
Company's Shares to trading on the London Stock Exchange, the
Directors applied to the Court and obtained a judgement on 29
January 2021 to cancel the amount standing to the credit of the
share premium account of the Company. The amount of the share
premium account cancelled and credited to the Company's Special
distributable reserve was $121,250,000, which can be utilised to
fund distributions to the Company's Shareholders.
10. Net Assets per Share
Net assets per Share is based on $123,113,000 of net assets of
the Company as at 30 June 2021 attributable to the 125,027,930
Shares in issue as at the same date.
11. Financial Risk Management
The Investment Manager, AIFM and the Administrator report to the
Board on a quarterly basis and provide information to the Board,
which allows it to monitor and manage financial risks relating to
its operations. The Company's activities expose it to a variety of
financial risks: market risk (including price risk, interest rate
risk and foreign currency risk), credit risk and liquidity risk.
These risks are monitored by the AIFM. Each risk and the management
thereof are summarised below.
(i) Currency Risk
Foreign currency risk is defined as the risk that the fair
values of future cash flows will fluctuate because of changes in
foreign exchange rates. The Company's financial assets and
liabilities are denominated in U.S. Dollars and substantially all
of its revenues and expenses are in U.S. Dollars. The Company is
not considered to be materially exposed to foreign currency
risk.
(ii) Interest Rate Risk
The Company's interest rate risk on interest bearing financial
assets is limited to interest earned on cash. The Board considers
that, as loan investments will bear interest at a fixed
pre-determined rate, they do not carry any interest rate risk.
The Company's interest and non-interest bearing assets and
liabilities as at 30 June 2021 are summarised below:
Interest Non-interest
bearing bearing Total
Assets $'000 $'000 $'000
Cash and cash equivalents 54,641 102 54,743
Trade and other receivables - 1,287 1,287
Investments at fair value through profit
or loss - 67,419 67,419
Total assets 54,641 68,808 123,449
Liabilities
Trade and other payables - (336) (336)
Total liabilities - (336) (336)
(iii) Price Risk
Price risk is defined as the risk that the fair value of a
financial instrument held by the Company will fluctuate.
Investments are measured at FVTPL. As of 30 June 2021, the Company
held one investment, being its shareholding in Holdco, which is
measured at fair value. The value of the underlying renewable
energy investments held by Holdco varies according to a number of
factors, including discount rate, asset performance, solar
irradiation, wind speeds and forecast power prices.
(iv) Credit Risk
Credit risk is the risk of loss due to the failure of a borrower
or counterparty to fulfil its contractual obligations. The Company
is exposed to credit risk in respect of trade and other
receivables, cash at bank and any loan investments.
The Company's credit risk exposure is minimised by dealing with
financial institutions with investment grade credit ratings and
making loan investments, which are equity in nature. The
counterparties with which the SPVs held by Holdco contract to sell
electricity are generally of investment grade or equivalent credit
status. The Company may advance loans to Holdco. However, it does
not consider these loans a risk as they are intra-Group. As at the
period end, no loans had been advanced to Holdco or any other
counterparty.
The Company's credit risk exposure as at 30 June 2021 is
summarised below:
As at 30 June
2021
$'000
Cash and cash equivalents 54,743
Trade and other receivables 1,287
Total 56,030
(v) Liquidity Risk
Liquidity risk is the risk that the Company may not be able to
meet a demand for cash or fund an obligation when due. The
Investment Manager, AIFM and the Board continuously monitor
forecast and actual cashflows from operating, financing and
investing activities to consider payment of dividends, repayment of
the Company's liabilities or the funding of further investing
activities.
Financial assets and liabilities by maturity at the period end
are shown below:
Less than
1 year 1-2 years 2-5 years Total
$'000 $'000 $'000 $'000
Assets
Cash and cash equivalents 54,743 - - 54,743
Trade and other receivables 1,287 - - 1,287
Liabilities
Trade and other payables (336) - - (336)
Net financial assets 55,694 - - 55,694
Capital management
The Company considers its capital to comprise Share capital,
distributable reserves and retained earnings. The Company is not
subject to any externally imposed capital requirements.
The Company's primary capital management objectives are to
ensure the sustainability of its capital to support continuing
operations, meet its financial obligations and allow for growth
opportunities. Generally, acquisitions are anticipated to be funded
with a combination of current cash and equity.
12. Related Party Transactions with the Investment Manager and
the Directors
Investment Manager
Fees payable to the Investment Manager by the Company under the
IMA are shown in the Statement of Comprehensive Income. As at 30
June 2021, the fee outstanding to the Investment Manager was
$168,000.
As at the 30 June 2021, the Investment Manager's total holding
of Shares in the Company was 8,553,498.
Directors
The Company is governed by a Board of Directors (the "Board"),
all of whom are non-executive and independent, and it has no
employees. Each of the Directors were appointed on 22 October
2020.
Each of the Directors is entitled to receive a fee from the
Company at such rate as may be determined in accordance with the
Articles. Each Director receives a fee payable by the Company at
the rate of GBP40,000 per annum.
The Chair of the Board receives an additional GBP10,000 per
annum. The Chair of the Audit Committee, the Chair of the
Management Engagement Committee and the Chair of the Risk Committee
each receive an additional GBP6,000 per annum.
The Chair was entitled to and received an additional one-off
payment of GBP10,000 and the other Directors were entitled to and
received an additional one-off payment of GBP7,500 each in
consideration of their work undertaken in connection with the IPO,
paid by the Company shortly after Admission.
The aggregate remuneration and benefits in kind of the Directors
in respect of the Company's initial accounting period ending on 31
December 2021 which will be payable out of the assets of the
Company are not expected to exceed GBP230,500. The Directors are
also entitled to out-of-pocket expenses incurred in the proper
performance of their duties.
The Directors had the following shareholdings in the Company,
all of which were beneficially owned.
Shares
At 30 June
Director 2021
Patrick O'Donnell Bourke 54,436
Tammy Richards 25,000
Louisa Vincent 27,323
David Fletcher 40,984
13. Post Balance Sheet Events
On 13 August 2021, RNEW Blocker, LLC, a subsidiary of Holdco,
entered into a term sheet with a leading U.S renewable energy
commercial lender for a senior secured revolving credit facility
("RCF") that is envisaged to facilitate the Company's operating
flexibility and ongoing growth. Finalisation of the RCF is subject
to customary conditions including completion of satisfactory due
diligence, documentation, and final credit approval of the lender.
The quantum of the RCF will be determined through a combination of
factors including the lender's underwriting process along with the
Company's consideration of near-term liquidity needs, RCF costs,
and compliance with its gearing policy.
ALTERNATIVE PERFORMANCE MEASURES
Premium
The amount, expressed as a percentage, by which the share price
is more than the NAV per Share.
As at
30 June 2021
NAV per Share (cents) a 98.5
Share price (cents) b 101.0
Premium (b÷a)-1 2.5%
Total return
A measure of performance that includes both income and capital
returns. This takes into account capital gains and the assumed
reinvestment of dividends paid out by the Company into its Shares
on the ex-dividend date. The total return is shown below,
calculated on both a share price and NAV basis.
For the period ended 30 June 2021 Share price NAV
Opening at IPO a 100.00 98.00
Closing at 30 June 2021 b 101.00 98.47
Dividend paid c 0.40 0.40
Adjusted closing (d = b + c) d 101.40 98.87
Total return d÷a-1 1.4% 0.9%
Contact information:
Brian Smith/Maria Matheou 020 4513 9260
PraxisIFM Fund Services (UK) Limited
The interim report will be made available to the public at the
registered office of the Company. The report will be available in
electronic format on the Investment Manager's website
(www.ecofininvest/rnew).
A copy of the interim report will be submitted to the National
Storage Mechanism and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
-END-
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September 08, 2021 02:00 ET (06:00 GMT)
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