TIDMUKW
RNS Number : 3442R
Greencoat UK Wind PLC
28 February 2019
Greencoat UK Wind PLC (UKW)
28 February 2019
Greencoat UK Wind PLC reports results for the year ended 31
December 2018
Greencoat UK Wind Plc today announces the final results for the
year to 31 December 2018 as below. These results were approved by
the Board of Directors on 27 February 2019.
Greencoat UK Wind PLC is the leading listed renewable
infrastructure fund, invested in UK wind farms. The Company's aim
is to provide investors with an annual dividend that increases in
line with RPI inflation while preserving the capital value of its
investment portfolio in the long term on a real basis through
reinvestment of excess cash flow and the prudent use of
gearing.
2018 Highlights
Performance in line with expectations with cash generation on
budget
-- The Group's investments generated 2,003GWh of electricity, 6
per cent. below budget owing to low wind resource.
-- On budget cash generation (Group and wind farm SPVs) of GBP117.3 million.
High quality acquisitions and oversubscribed equity raising
-- Acquisition of 3 further wind farms and an additional
interest in Clyde increased the portfolio to 32 wind farm
investments, net generating capacity to 836MW and GAV to GBP1,872.8
million as at 31 December 2018.
-- Agreement to acquire 75 per cent. of Tom nan Clach and 100
per cent. of Douglas West, the Group's first CFD and subsidy free
investments respectively.
-- Issuance of further shares raising GBP118.8 million in May 2018.
Dividends, returns and balance sheet
-- The Company has declared total dividends of 6.76 pence per
share with respect to the year and is targeting a dividend of 6.94
pence per share for 2019 (increased in line with December 2018
RPI).
-- NAV growth of 11.8 pence per share (adjusting for dividends).
-- GBP480 million outstanding borrowings at 31 December 2018,
equivalent to 26 per cent. of GAV.
Key Metrics
As at 31 December 2018
----------------------------------- -------------------
Market capitalisation GBP1,425.6 million
Share price 126.0 pence
Dividends with respect to the year GBP74.8 million
Dividends with respect to the year 6.76 pence
per share
GAV GBP1,872.8 million
NAV GBP1,392.8 million
NAV per share 123.1 pence
NAV growth per share (adjusting 11.8 pence
for dividends)
Total return (NAV) 17.0 per cent.
TSR 8.3 per cent.
----------------------------------- -------------------
Subsequent events
-- On 1 February 2019, the Company announced a GBP452 million
investment in the Stronelairg and Dunmaglass wind farms with
SSE.
-- Completion to occur at the end of March 2019, increasing
total number of investments to 34 operating UK wind farms with a
net generating capacity of 950MW.
-- On 27 February 2019, the Company issued an additional 103
million new shares at a price of 127p per share, raising gross
proceeds of GBP131 million in an oversubscribed share placing.
Commenting on today's results, Tim Ingram, Chairman of Greencoat
UK Wind, said:
"Today's results represent another year of consistent delivery
with performance in line with expectations, achieving strong NAV
growth of 11.8p. With our continuing strong cashflow and robust
dividend cover we confidently target a dividend of 6.94 pence per
share with respect to 2019, again increased in line with RPI.
"2018 was another active investment year as we committed to
invest over GBP500m across 6 wind farms. We also increased the
number of vendors we have acquired from to 14 (including
commitments), showing the breadth of our relationships.
"Our portfolio is now reducing carbon dioxide emissions by
approximately 1 million tonnes per annum through displacing thermal
generation.
"Our pipeline of acquisition opportunities remains very healthy
and we continue to expect the majority of future investments to be
made from the GBP50bn pool of UK Wind farms accredited under the
ROC regime."
Annual report
A copy of the full annual report has been submitted to the
National Storage Mechanism and will shortly be available for
inspection at www.morningstar.co.uk/uk/NSM. The full annual report
will also shortly be available on the Company's website at
www.greencoat-ukwind.com where all other statutory information on
the Company can also be found.
Details of the conference call for analysts and investors:
A presentation for analysts and investors will take place at
9.30am at Headland, Cannon Green, 1 Suffolk Lane, London EC4R 0AX.
To register for the event please notify Headland, either by email
to ukwind@headlandconsultancy.com or by telephone on +44 (0)20 3805
4822.
For further information, please contact:
Greencoat UK Wind PLC 020 7832 9400
Stephen Lilley
Laurence Fumagalli
Tom Rayner
Headland Consultancy 020 3805 4822
Stephen Malthouse
Rob Walker
Charlie Twigg
Defining Characteristics
Greencoat UK Wind PLC was designed for investors from first
principles to be simple, transparent and low risk.
-- The Group is invested solely in UK wind farms.
-- Wind is the most mature and largest scale renewable technology.
-- The UK has a long established regulatory regime, high wind
resource and will have GBP75 billion of wind farms in operation by
2021.
-- The Group is wholly independent and thus avoids conflicts of
interests in its investment decisions.
-- The UK-based, independent Board is actively involved in key
investment decisions and in monitoring the efficient operation of
the assets, and works in conjunction with the most experienced
investment management team in the sector.
-- Low gearing (including no debt at wind farm level) is
important to ensure a high level of cash flow stability and higher
tolerance to downside sensitivities.
-- The Group invests in sterling assets and thus does not incur material currency risk.
All capitalised terms are defined in the list of defined terms
below unless separately defined.
Chairman's Statement
I am pleased to present the Annual Report of Greencoat UK Wind
PLC for the year ended 31 December 2018.
Performance
During the year, portfolio generation was 6 per cent. below
budget at 2,003GWh. Although wind speed was below the long term
mean, the Group benefitted from robust wholesale power prices, with
net cash generated by the Group and wind farm SPVs being on budget
at GBP117.3 million. Dividends paid in the year totalled GBP72.3
million, thus dividend cover was 1.6x.
By the end of 2018, the portfolio provides sufficient
electricity to power over 750,000 homes and reduces carbon dioxide
emissions by approximately 1 million tonnes per annum by displacing
thermal generation.
Dividends and Returns
Declared dividends for the year total 6.76 pence per share, with
the fourth and final quarterly dividend of 1.69 pence per share to
be paid on 28 February 2019. With our continuing strong cashflow
and robust dividend cover we can confidently target a dividend of
6.94 pence per share with respect to 2019, again increased in line
with December's RPI.
NAV per share increased from 109.6 pence per share (ex dividend)
on 31 December 2017 to 121.4 pence per share (ex dividend) on 31
December 2018, an increase of 11.8 pence (10.8 per cent.) during
the year.
The chart in the Annual Report compares NAV per share with RPI,
showing how, in addition to our policy of increasing the dividend
by RPI, we have been meeting our objective of real capital
preservation since listing.
At the end of 2018, we employed a leading technical consultancy
firm to advise us on the expected life of our assets. Their report
was provided to the Board in January 2019 and, as a result, we have
increased our asset life assumption from 25 to 30 years, having
made appropriate assumptions in relation to the continued good
management of the assets, lease extensions and other factors.
The Total Shareholder Return for the year was 8.3 per cent., and
since listing has been 71.5 per cent..
Acquisitions
2018 has been another active investment year for us. We
completed the acquisition of interests in 3 new wind farms and
further increased our interest in the Clyde wind farm. As a result,
we invested a total of GBP364.4 million, with our net generating
capacity increasing from 694MW to 836MW, and increased the number
of sellers from whom we have acquired wind farms to 12, showing the
breadth of our relationships.
In addition, in October we announced that we had committed to
acquire 75 per cent. of the Tom nan Clach wind farm once it is
constructed, which is expected to be in July 2019. This wind farm
is being built under the Government's CFD regime, which will remove
market electricity price risk in the first 15 years of life.
Consequently, it will have a lower expected return, reflecting this
lower risk.
As part of the same strategy, we also announced in December that
we have agreed to acquire the Douglas West wind farm which is
scheduled to come into operation in July 2021. As Douglas West is
being constructed without Government support, it will be fully
subject to market electricity prices and consequently has an
enhanced expected return, reflecting this higher risk.
On 1 February 2019, we announced a GBP452 million investment in
the Stronelairg and Dunmaglass wind farms with SSE, with completion
occurring at the end of March 2019. These 2 new investments will
increase our investments to 34 operating UK wind farms with a net
generating capacity of 950MW.
Equity Issuance
In order to finance our continuing growth and pursue value
creating opportunities, we issued 102 million new shares in May
2018 at a price of 117 pence per share, raising gross proceeds of
GBP119 million in an oversubscribed share placing.
On 27 February 2019, we issued an additional 103 million new
shares at a price of 127 pence per share, raising gross proceeds of
GBP131 million in an oversubscribed share placing.
Although neither placings were pre-emptive, a strong preference
was given to existing shareholders when allocating shares.
Gearing
In November we reported that we had arranged further long term
fixed rate borrowing such that GBP400 million of our borrowings are
now fixed rate with maturities stretching through to November 2026
at an average interest cost of 3.08 per cent. per annum. During the
year the minimum and average gearing was 19 per cent. and 23 per
cent. of GAV respectively, and we ended the year with GBP480
million of total external borrowings (26 per cent. of GAV).
After the completion of the investment in the Stronelairg and
Dunmaglass wind farms, gearing will be GBP794 million (34 per cent.
of GAV) at an average interest cost of 2.76 per cent. per
annum.
Strategy and Outlook
In 2013, when the Company first listed, 7 per cent of the UK's
electricity demand was supplied by wind energy. By 2018, this
figure has increased to 17 percent.. Wind continues to be the most
mature and widely deployed renewable energy technology in the
UK.
Our financial strategy has remained unchanged over the last 6
years: to provide shareholders with an annual dividend that
increases in line with RPI inflation while preserving the capital
value of the investment portfolio in real terms. This is achieved
through a focused strategy of investing only in wind farms and only
in the UK. Our intention remains to adhere strictly to this core
strategy.
Growth by acquisition brings benefits to shareholders as:
-- a larger scale brings economies and enables better terms to be obtained from suppliers;
-- equity placings following acquisitions provide additional
opportunity for shareholders to increase their investment in the
Company. Although not pre-emptive, a strong preference is given to
existing shareholders when allocating shares in our equity
placings;
-- these equity placings are priced at a premium to NAV per
share thus enhancing overall NAV per share for existing
shareholders; and
-- equity placings increase the liquidity of shares in the
market. During 2018 on average 7.0 million of the Company's shares
were traded weekly on the London Stock Exchange.
During 2018 we made investments and commitments totalling over
GBP500 million, of which approximately 70 per cent. are in ROC
accredited wind farms. Although we are starting to see attractive
CFD and subsidy free assets, we expect that the majority of future
investments will continue to be made from the approximately GBP50
billion pool of onshore and offshore UK wind farms accredited under
the ROC regime. The Stronelairg and Dunmaglass investments are good
examples of that.
The executive management continues to maintain a disciplined
acquisition strategy: if a potential investment is not in line with
the Company's investment objectives, or is otherwise not in the
interests of shareholders, then we will not invest.
With our strong cashflow and robust dividend cover, coupled with
our disciplined approach, we are confident in our ability to
continue to meet the objectives of dividend growth in line with RPI
and capital preservation in real terms.
The Board and Governance
The search firm Heidrick & Struggles has been engaged to
assist the Board in relation to succession planning to secure the
right skills and experience while also seeking to increase
diversity on the Board. This search is now well advanced and we are
hoping to be able to announce such a new appointment by the time of
our forthcoming AGM.
The Company's governance is further described in the Corporate
Governance Report.
Annual General Meeting
Our AGM will take place at 2.00 pm on Friday 26 April 2019 at
the office of the Investment Manager. Details of the formal
business of the meeting are set out in a separate circular which is
sent to shareholders with the Annual Report. We look forward to
meeting with shareholders on that occasion.
Tim Ingram
Chairman
27 February 2019
Strategic Report
Introduction
The Directors present their Strategic Report for the year ended
31 December 2018. Details of the Directors who held office during
the year and as at the date of this report are given in this Annual
Report.
Investment Objective
The Company's aim is to provide investors with an annual
dividend that increases in line with RPI inflation while preserving
the capital value of its investment portfolio in the long term on a
real basis through reinvestment of excess cashflow and the prudent
use of portfolio gearing. The target return to investors is an IRR
net of fees and expenses of 8 per cent. to 9 per cent.. The 2018
dividend of 6.76 pence per annum is targeted to increase in line
with December 2018 RPI to 6.94 pence for 2019. Progress on the
objectives is measured by reference to the key metrics above.
Investment Policy
The Group invests in UK wind farms predominantly with a capacity
of over 10MW, which sell the power produced and associated green
benefits to creditworthy UK offtakers under route-to-market power
purchase agreements.
As the Group has no borrowings at wind farm level, and only
limited borrowing at the Group level, the annual dividend is
sufficiently protected against lower power prices. At the same
time, it has the ability to benefit from higher power prices as the
Group is not required to be locked into long term fixed price
contracts.
The Group has used debt facilities to make additional
investments in the year. This has enhanced the Group's
attractiveness to sellers since execution risk is greatly
diminished, with the Group effectively being a cash buyer. The
Group will continue to use debt facilities to make further
investments.
The Group will look to repay its drawn debt facilities by
refinancing them in the equity markets at appropriate times in
order to refresh its debt capacity. While debt facilities are
drawn, the Group benefits from an increase in investor returns
because borrowing costs are below the underlying return on
investments.
In the renewable infrastructure sector, links to developers are
not important in sourcing new acquisitions as the assets are held
by a large number of owners. Independence is of key importance for
the Company to continue to make acquisitions at the best possible
price. The Investment Manager's relationships across the sector are
also important.
The Group invests in both onshore and offshore wind farms with
the amount invested in offshore wind farms being capped at 40 per
cent. of GAV at acquisition.
The Board believes that there is a significant market in which
the Group can continue to grow over the next few years.
Structure
The Company is a UK registered investment company with a premium
listing on the London Stock Exchange. The Group comprises the
Company and Holdco. Holdco invests in SPVs which hold the
underlying wind farm assets. The Group employs Greencoat Capital
LLP as its Investment Manager.
Discount Control
The Articles of Association require a continuation vote by
shareholders if the share price were to trade at an average
discount to NAV of 10 per cent. or more over a 12 month period.
Notwithstanding this, it is the intention of the Board for the
Company to buy back its own shares in the market if the share price
is trading at a material discount to NAV, providing of course that
it is in the interests of shareholders to do so.
Review of Business and Future Outlook
A detailed discussion of individual asset performance and a
review of the business in the year together with future outlook are
covered in the Investment Manager's Report.
Key Performance Indicators
The Board believes that the key metrics detailed above, which
are typical for investment entities, together with cash generation
will provide shareholders with sufficient information to assess how
effectively the Group is meeting its objectives.
Ongoing Charges
The ongoing charges ratio of the Company is 1.13 per cent. of
the weighted average NAV for the year to 31 December 2018. This is
made up as follows and has been calculated using the AIC
recommended methodology.
31 December 2018 31 December 2017
----------------------
GBP'000 % GBP'000 %
---------------------- ----------- ------ ---------- -------
Total management fee 13,189 1.04% 9,668 1.11%
Directors' fees 233 0.02% 225 0.03%
Ongoing expenses (1) 955 0.07% 858 0.10%
---------------------- ------ -------
Total 14,377 1.13% 10,751 1.24%
---------------------- ----------- ------ ---------- -------
(1) Ongoing expenses do not include GBP743k (2017: GBP550k) of
management and administration fees relating to the wind farm SPVs
that is recharged to them, and GBP42k (2017: GBP89k) of broken deal
costs.
Following the equity placing in February 2019 and assuming no
further change in NAV, the 2019 ongoing charges ratio is expected
to be 1.08 per cent..
The Investment Manager is not paid any performance or
acquisition fees.
Corporate and Social Responsibility
Environmental, Social and Governance Matters
The Group invests in wind farms and the environmental benefits
of renewable energy are widely known.
The Group relies on the Investment Manager to apply appropriate
environmental, social and governance policies to the investments
the Group makes. The Group's approach to responsible investing,
including the environmental standards it aims to meet, are set out
in the policies in place at the Investment Manager. Responsible
investing principles have been applied to each of the investments
made.
These policies require the Group to make reasonable endeavours
to procure the ongoing compliance of its portfolio companies with
its policies on responsible investment. Further details on these
policies may be found on the Company's website:
www.greencoat-ukwind.com.
The Investment Manager monitors compliance at the investment
phase and reports on an ongoing basis to the Board.
Employees and Officers of the Company
The Company does not have any employees and therefore employee
policies are not required. The Directors of the Company are listed
in the Annual Report.
Diversity
The Group's policy on diversity is detailed in the Corporate
Governance Report.
Principal Risks and Uncertainties
In the normal course of business, each investee company has a
rigorous risk management framework with a comprehensive risk
register that is reviewed and updated regularly and approved by its
board. The key risks identified by the Board to the performance of
the Group are detailed below.
The Board maintains a risk matrix setting out the risks
affecting both the Group and the investee companies. This risk
matrix is reviewed and updated at least annually to ensure that
procedures are in place to identify, mitigate and minimise the
impact of risks should they crystallise. This enables the Board to
carry out a robust assessment of the risks facing the Group,
including those principal risks that would threaten its business
model, future performance, solvency or liquidity.
As it is not possible to eliminate risks completely, the purpose
of the Group's risk management policies and procedures is not to
eliminate risks, but to reduce them and to ensure that the Group is
adequately prepared to respond to such risks and to minimise any
impact if the risk develops.
The spread of assets within the portfolio ensures that the
portfolio benefits from a diversified wind resource and spreads the
exposure to a number of potential technical risks associated with
grid connections and with local distribution and national
transmission networks. In addition, the portfolio includes 6
different turbine manufacturers, which diversifies technology and
maintenance risks. Finally, each site contains a number of
individual turbines, the performance of which is largely
independent of other turbines.
Risks Affecting the Group
Investment Manager
The ability of the Group to achieve its investment objective
depends heavily on the experience of the management team within the
Investment Manager and more generally on the Investment Manager's
ability to attract and retain suitable staff. The sustained growth
of the Group depends upon the ability of the Investment Manager to
identify, select and execute further investments which offer the
potential for satisfactory returns.
The Investment Management Agreement includes key man provisions
which would require the Investment Manager to employ alternative
staff with similar experience relating to investment, ownership,
financing and management of wind farms should for any reason any
key man cease to be employed by the Investment Manager. The
Investment Management Agreement ensures that no investments are
made following the loss of key men until suitable replacements are
found and there are provisions for a reduction in the investment
management fee during the loss period. It also outlines the process
for their replacement with the Board's approval. In addition, the
key men are shareholders in the Company.
Financing Risk
The Group will finance further investments either by borrowing
or by issuing further shares. The ability of the Group to deliver
expected real NAV growth is dependent on access to debt facilities
and equity capital markets. There can be no assurance that the
Group will be able to borrow additional amounts or refinance on
reasonable terms or that there will be a market for further
shares.
Investment Returns Become Unattractive
A significantly strengthening economy may lead to higher future
interest rates which could make the listed infrastructure asset
class relatively less attractive to investors. In such
circumstances, it is likely that there will be an increase in
inflation (to which the revenues and costs of the investee
companies are either indexed or significantly correlated) or an
increase in power prices (due to greater consumption of power) or
both. Both would increase the investment return and thus would
provide a degree of mitigation against higher future interest
rates.
Risks Affecting Investee Companies
Regulation
If a change in Government renewable energy policy were applied
retrospectively to current operating projects including those in
the Group's portfolio, this could adversely impact the market price
for renewable energy or the value of the green benefits earned from
generating renewable energy. The Government has evolved the
regulatory framework for new projects being developed but has
consistently stood behind the framework that supports operating
projects as it understands the need to ensure investors can trust
regulation.
Electricity Prices
Other things being equal, a decline in the market price of
electricity would reduce the portfolio companies' revenues.
Approximately 50 per cent. of the Group's revenues are exposed to
the floating power price.
The Group's dividend policy has been designed to withstand
significant short term variability in power prices. A longer period
of power price decline would materially affect the revenues of
investee companies. In general, independent forecasters expect UK
wholesale power prices to rise in real terms from current levels,
driven by higher gas and carbon prices.
Wind Resource
The investee companies' revenues are dependent upon wind
conditions, which will vary across seasons and years within
statistical parameters. The standard deviation of energy production
is 10 per cent. over a 12 month period (2 per cent. over 25 years).
Since long term variability is low, there is no significant
diversification benefit to be gained from geographical
diversification across weather systems.
The Group does not have any control over the wind resource but
has no debt at wind farm level and has designed its dividend policy
such that it can withstand significant short term variability in
production relating to wind. Before investment, the Group carries
out extensive due diligence and relevant historical wind data is
available over a substantial period of time. The other component of
wind energy generation, a wind farm's ability to turn wind into
energy, is mitigated by generally purchasing wind farms with a
proven operating track record.
When acquiring wind farms that have only recently entered into
operation, only limited operational data is available. In these
instances, the acquisition agreements with the vendors of these
wind farms will include a "wind energy true-up" or an appropriate
discount.
Asset Life
In the event that the wind turbines do not operate for the
period of time assumed by the Group or require higher than expected
maintenance expenditure to do so, it could have a material adverse
effect on investment returns.
The Group performs regular reviews and ensures that maintenance
is performed on all wind turbines across the wind farm portfolio.
Regular maintenance ensures the wind turbines are in good working
order, consistent with their expected life-spans.
Health and Safety and the Environment
The physical location, operation and maintenance of wind farms
may, if inappropriately assessed and managed, pose health and
safety risks to those involved. Wind farm operation and maintenance
may result in bodily injury, particularly if an individual were to
fall from height, fall or be crushed in transit from a vessel to an
offshore installation or be electrocuted. If an accident were to
occur in relation to one or more of the Group's investments and if
the Group were deemed to be at fault, the Group could be liable for
damages or compensation to the extent such loss is not covered by
insurance policies. In addition, adverse publicity or reputational
damage could ensue.
The Board reviews health and safety at each of its scheduled
Board meetings and Martin McAdam serves as the appointed Health and
Safety Director. The Group engages an independent health and safety
consultant to ensure the ongoing appropriateness of its health and
safety policies.
The investee companies comply with all regulatory and planning
conditions relating to the environment, including in relation to
noise emissions, habitat management and waste disposal.
Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Investment Manager's Report. The Group faces a
number of risks and uncertainties, as set out above. The financial
risk management objectives and policies of the Group, including
exposure to price risk, interest rate risk, credit risk and
liquidity risk are discussed in note 18 to the financial
statements.
The Group continues to meet day-to-day liquidity needs through
its cash resources.
As at 31 December 2018, the Group had net current assets of
GBP1.6 million (2017: GBP3.3 million) and had cash balances of
GBP3.4 million (2017: GBP5.9 million) (excluding cash balances
within investee companies), which are sufficient to meet current
obligations as they fall due. The major cash outflows of the Group
are the payment of dividends and costs relating to the acquisition
of new assets, both of which are discretionary. The Group had
GBP480 million (2017: GBP265 million) of outstanding debt as at 31
December 2018. The Group is expected to continue to comply with the
covenants of its banking facilities going forward.
The Directors have reviewed Group forecasts and projections
which cover a period of not less than 12 months from the date of
this report, taking into account foreseeable changes in investment
and trading performance, which show that the Group has sufficient
financial resources.
On the basis of this review, and after making due enquiries, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the financial statements.
Longer Term Viability
The Company is a member of the AIC and complies with the AIC
Code. In accordance with the AIC Code, the Directors are required
to assess the prospects of the Group over a period longer than the
12 months associated with going concern. The Directors conducted
this review for a period of 10 years, which it deemed appropriate,
given the long term nature of the Group's investments which are
modelled over 30 years, coupled with its long term strategic
planning horizon.
In considering the prospects of the Group, the Directors looked
at the key risks facing both the Group and the investee companies,
focusing on the likelihood and impact of each risk as well as any
key contracts, future events or timescales that may be assigned to
each key risk. The Directors also tested the Company's ability to
remain viable under several robust downside scenarios.
As a sector-focused infrastructure fund, the Group aims to
produce stable and inflating dividends while preserving the capital
value of its investment portfolio on a real basis. The Directors
believe that the Group is well placed to manage its business risks
successfully over both the short and long term and accordingly, the
Board has a reasonable expectation that the Group will be able to
continue in operation and to meet its liabilities as they fall due
for a period of at least 10 years.
While the Directors have no reason to believe that the Group
will not be viable over a longer period, they are of the opinion
that it would be difficult to foresee the economic viability of any
company with any degree of certainty for a period of time greater
than 10 years.
On behalf of the Board
Tim Ingram
Chairman
27 February 2019
Investment Manager's Report
The Investment Manager
The investment management team's experience covers wind farm
investment, ownership, finance and operation. All the skills and
experience required to manage the Group's investments lie within a
single investment manager. The Investment Manager is authorised and
regulated by the Financial Conduct Authority and is a full scope UK
AIFM.
Since listing in March 2013, the team has been led by Stephen
Lilley and Laurence Fumagalli.
Stephen has 22 years of investment management and financing
experience in addition to 6 years in the nuclear industry. Prior to
joining the Investment Manager in March 2012, Stephen led the
renewable energy infrastructure team at Climate Change Capital
(CCC) from May 2010. Prior to CCC, he was a senior director of
Infracapital Partners LP, M&G's European Infrastructure fund.
During this time, Stephen led over GBP400 million of investments,
including the acquisition of stakes in Kelda Group (Yorkshire
Water), Zephyr (wind farms) and Meter Fit (gas/electricity
metering). He also sat on the boards of these companies after
acquisition. Prior to this, he was a director at Financial Security
Assurance, where he led over GBP2 billion of underwritings in the
infrastructure and utility sectors. He also worked for the
investment companies of the Serco and Kvaerner Groups.
Laurence also has 22 years of investment management and
financing experience. Prior to joining the Investment Manager in
March 2012, Laurence held a number of senior roles within CCC from
2006 to 2011. Initially he co-headed CCC's advisory team before
transferring in 2007 to the carbon finance team. Laurence joined
Stephen in the renewable energy infrastructure team in early 2011.
From 2003-2006, Laurence headed the Bank of Tokyo-Mitsubishi's
London-based renewables team, where he financed and advised on over
1GW of UK wind. Prior to the Bank of Tokyo-Mitsubishi, Laurence
worked in the power project finance team at NatWest.
Investment Portfolio
Portfolio as at 31 December 2018:
Wind Farm Turbines Operator PPA Total Ownership Net
MW Stake MW
---------------- ---------- --------------- ------------- ------ ---------- ------
Bicker Fen Senvion EDF EDF 26.7 80% 21.3
Bin Mountain GE SSE SSE 9.0 100% 9.0
Bishopthorpe Senvion BayWa Axpo 16.4 100% 16.4
Braes of Doune Vestas DNV-GL Centrica 72.0 50% 36.0
Brockaghboy Nordex SSE SSE 47.5 100% 47.5
Carcant Siemens DNV-GL SSE 6.0 100% 6.0
Church Hill Enercon Energia Energia 18.4 100% 18.4
Clyde Siemens SSE SSE 522.4 28.2% 147.3
Corriegarth Enercon Wind Prospect Centrica 69.5 100% 69.5
Cotton Farm Senvion BayWa Sainsbury's 16.4 100% 16.4
Crighshane Enercon Energia Energia 32.2 100% 32.2
Deeping St.
Nicholas Senvion EDF EDF 16.4 80% 13.1
Drone Hill Nordex BayWa Statkraft 28.6 51.6% 14.8
Earl's Hall
Farm Senvion BayWa Sainsbury's 10.3 100% 10.3
Glass Moor Senvion EDF EDF 16.4 80% 13.1
Kildrummy Enercon BayWa Sainsbury's 18.4 100% 18.4
Natural
Langhope Rig GE Power Centrica 16.0 100% 16.0
Lindhurst Vestas RWE RWE 9.0 49% 4.4
Little Cheyne
Court Nordex RWE RWE 59.8 41% 24.5
Maerdy Siemens DNV-GL Statkraft 24.0 100% 24.0
Middlemoor Vestas RWE RWE 54.0 49% 26.5
North Hoyle Vestas RWE RWE 60.0 100% 60.0
North Rhins Vestas DNV-GL E.ON 22.0 51.6% 11.4
Red House Senvion EDF EDF 12.3 80% 9.8
Red Tile Senvion EDF EDF 24.6 80% 19.7
Rhyl Flats Siemens RWE RWE 90.0 24.95% 22.5
Screggagh Nordex SSE Energia 20.0 100% 20.0
Sixpenny Wood Senvion BayWa Statkraft 20.5 51.6% 10.6
Slieve Divena Nordex SSE SSE 30.0 100% 30.0
Stroupster Enercon BayWa BT 29.9 100% 29.9
Tappaghan GE SSE SSE 28.5 100% 28.5
Yelvertoft Senvion BayWa Statkraft 16.4 51.6% 8.5
Total (1) 835.8
------------------------------------------------------------ ------ ---------- ------
(1) Numbers do not cast owing to rounding of (0.2)MW.
Portfolio Performance
Portfolio generation for the year was 2,003GWh, 6 per cent.
below budget owing to low wind resource over the summer.
The following table shows wind speed and portfolio generation
relative to budget since listing:
Wind speed Generation
(variation to long term (variation to budget)
mean)
2013 (adjusted) +3% +8%
------------------------- -----------------------
2014 -2% -3%
------------------------- -----------------------
2015 +5% +8%
------------------------- -----------------------
2016 -6% -6%
------------------------- -----------------------
2017 -1% 0%
------------------------- -----------------------
2018 -4% -6%
------------------------- -----------------------
Variation to budget lies within reasonable statistical
parameters. The annual standard deviation of wind speed is 6 per
cent. and the annual standard deviation of generation is 10 per
cent. (2 per cent. over 25 years).
The following table provides a breakdown of generation by wind
farm:
2018 Budget
Wind Farm Ownership Stake Period (GWh) 2018 Actual (GWh) Variance 2019 Budget (GWh)
------------------ ---------------- ---------- ----------------- ------------------ --------- ------------------
Bicker Fen 80% Jan - Dec 44.0 40.4 -8% 44.0
Bin Mountain 100% Jan - Dec 25.2 22.9 -9% 26.3
Bishopthorpe 100% Jan - Dec 51.1 48.3 -5% 51.1
Braes of Doune 50% Jan - Dec 86.1 83.4 -3% 85.2
Brockaghboy 100% Mar - Dec 135.0 106.3 -21% 175.8
Carcant 100% Jan - Dec 17.4 16.8 -3% 17.4
Church Hill 100% Dec 4.2 3.9 -8% 42.1
Clyde 28.2%(1) Jan - Dec 391.9 384.2(2) -2% 454.1
Corriegarth 100% Jan - Dec 214.6 213.1(2) -1% 214.6
Cotton Farm 100% Jan - Dec 51.3 45.8 -11% 51.7
Crighshane 100% Dec 6.8 6.0 -12% 67.8
Deeping St.
Nicholas 80% Jan - Dec 29.8 28.3 -5% 29.8
Drone Hill 51.6% Jan - Dec 31.0 29.6 -4% 31.0
Earl's Hall Farm 100% Jan - Dec 32.4 29.7 -8% 32.4
Glass Moor 80% Jan - Dec 29.4 26.4 -10% 29.4
Kildrummy 100% Jan - Dec 56.7 49.7 -12% 56.7
Langhope Rig 100% Jan - Dec 46.2 46.5 0% 46.2
Lindhurst 49% Jan - Dec 11.6 10.8 -7% 11.6
Little Cheyne
Court 41% Jan - Dec 59.2 56.2 -5% 59.2
Maerdy 100% Jan - Dec 64.4 52.8 -18% 64.4
Middlemoor 49% Jan - Dec 69.7 57.1 -18% 69.7
North Hoyle 100% Jan - Dec 180.4 175.1 -3% 180.4
North Rhins 51.6% Jan - Dec 37.8 36.6(2) -3% 37.8
Red House 80% Jan - Dec 22.3 21.6 -3% 22.3
Red Tile 80% Jan - Dec 42.9 37.5 -13% 42.5
Rhyl Flats 24.95% Jan - Dec 70.3 66.9 -5% 70.3
Screggagh 100% Jan - Dec 48.2 44.3 -8% 50.2
Sixpenny Wood 51.6% Jan - Dec 28.8 25.7 -11% 28.8
Slieve Divena 100% Jan - Dec 59.2 53.0 -11% 61.7
Stroupster 100% Jan - Dec 97.8 92.3 -6% 96.8
Tappaghan 100% Jan - Dec 73.3 71.8 -2% 77.1
Yelvertoft 51.6% Jan - Dec 21.3 20.0 -6% 21.3
Total 2,140.3 2,003.0 2,349.6
------------------ ---------------- ---------- ----------------- ------------------ --------- ------------------
(1) Ownership in Clyde was 19.775% until 30 May 2018 when the
Group exercised its option to make further investment in Clyde.
(2) Includes curtailed generation.
Notable issues affecting portfolio availability were:
-- blade repairs at Maerdy as a result of a Siemens worldwide
serial defect affecting 3 out of 8 turbines;
-- background noise monitoring at Cotton Farm (completed); and
-- ongoing blade bolt replacements at Little Cheyne Court.
During the year, various turbine operation and maintenance
contracts and operational management agreements were renewed or
replaced at lower than budgeted cost. In addition, Corriegarth and
North Rhins entered into agreements to provide grid services, and
Corriegarth and Braes of Doune initiated participation in the
Balancing Mechanism, providing sources of additional revenue.
Health and Safety
There were no major incidents in the year to 31 December 2018. A
health and safety audit was conducted across 7 sites by an
independent consultant. No material areas of concern were
identified.
Acquisitions
During the year, the Investment Manager priced 63 wind farms
totalling 2,185MW. Of the 63 wind farms priced, 6 investments were
made by the Group (including exercise of the Clyde option, Tom nan
Clach and Douglas West), 26 were acquired by other buyers, 14 are
no longer being pursued by the Group, and 17 are subject to
continuing discussions. In total, secondary market transactions
comprising 47 UK wind farms were completed in 2018.
The following table lists investments in the year (including
acquisition costs, excluding acquired cash):
GBPm
Brockaghboy 163.9
------
Clyde option 113.1
------
Church Hill + Crighshane 87.4
------
Total 364.4
------
In the year, the Group paid GBP0.4 million to EDF as a post
completion working capital adjustment in relation to investments
made in 2017. Total investments in the year thus amounted to
GBP364.8 million.
In addition to the completed investments listed above:
-- on 4 October 2018, the Group entered into an agreement to
acquire Belltown Power's 75 per cent. stake in Tom nan Clach wind
farm for a headline consideration of GBP126 million, with the
investment scheduled to complete in July 2019 once the wind farm is
operational;
-- on 19 December 2018, the Group entered into an agreement to
acquire Blue Energy's Douglas West project, with the investment
scheduled to complete in March 2019 - the Group will then construct
the wind farm, with operations scheduled to commence in July 2021 -
total investment in the region of GBP45 million; and
-- on 1 February 2019, the Group entered into an agreement to
acquire a 35.5 per cent. interest in the Stronelairg and Dunmaglass
operating wind farms from SSE for a headline consideration of
GBP452 million, with the investment scheduled to complete at the
end of March 2019.
Equity Issuance
The Company issued 102 million new shares in May 2018 at a price
of 117 pence per share, raising gross proceeds of GBP119 million in
an oversubscribed share placing.
In February 2019, the Company issued an additional 103 million
new shares at a price of 127 pence per share, raising gross
proceeds of GBP131 million in an oversubscribed share placing.
Gearing
As at 31 December 2018, the Group had GBP480 million of debt
outstanding, equating to 26 per cent. of GAV (limit 40 per cent.).
Average gearing in the year was 23 per cent. of GAV (guidance 20-30
per cent.).
Debt outstanding comprised term debt of GBP400 million (together
with associated interest rate swaps) and GBP80 million drawn under
the Group's revolving credit facility.
All borrowing is at the Company level (no debt at wind farm
level).
Financial Performance
Power prices during the year were above budget. The average N2EX
Day Ahead auction price was GBP57.44/MWh.
Below budget portfolio generation and above budget power prices
contributed to on budget net cash generation.
Dividend cover for the year was 1.6x (versus target of 1.7x,
reflecting below average gearing).
Cash balances (Group and wind farm SPVs) increased by GBP9.1
million from GBP41.7 million to GBP50.8 million over the year.
For the year ended
Group and wind farm SPV cashflows 31 December 2018
------------------------------------------------- -------------------
GBP'000
Net cash generation 117,267
Dividends paid (72,325)
Acquisitions (1) (362,963)
Acquisition costs (1,647)
Equity issuance 118,845
Equity issuance costs (1,950)
Net drawdown under debt facilities 215,000
Upfront finance costs (3,141)
Movement in cash (Group and wind farm SPVs) 9,086
Opening cash balance (Group and wind farm SPVs) 41,696
------------------------------------------------- -------------------
Closing cash balance (Group and wind farm SPVs) 50,782
Net cash generation 117,267
Dividends 72,325
Dividend cover 1.6 x
------------------------------------------------- -------------------
(1) Excludes acquired cash, includes GBP0.4 million EDF working
capital adjustment.
The following 2 tables provide further detail in relation to net
cash generation of GBP117.3 million:
For the year ended
Net Cash Generation - Breakdown 31 December 2018
--------------------------------- -------------------
GBP'000
Revenue 205,505
Operating expenses (54,943)
Tax (5,391)
Other (5,821)
--------------------------------- -------------------
Wind farm cashflow 139,350
Management fee (11,878)
Operating expenses (1,348)
Ongoing finance costs (10,319)
Other 1,255
--------------------------------- -------------------
Group cashflow (22,290)
VAT (Group and wind farm SPVs) 207
Net cash generation 117,267
For the year ended
Net Cash Generation - Reconciliation to Net Cash Flows from Operating Activities 31 December 2018
---------------------------------------------------------------------------------- -------------------
GBP'000
Net cash flows from operating activities (1) 101,829
Movement in cash balances of wind farm SPVs (2) 9,912
Repayment of shareholder loan investment (1) 15,845
Finance costs (1) (13,460)
Upfront finance costs (cash) (3) 3,141
---------------------------------------------------------------------------------- -------------------
Net cash generation 117,267
---------------------------------------------------------------------------------- -------------------
(1) Consolidated Statement of Cash Flows.
(2) Note 9 to the Financial Statements (excludes acquired
cash).
(3) GBP3,050k facility arrangement fees plus GBP109k
professional fees (note 13 to the Financial Statements) less GBP18k
other finance costs payable (note 12 to the Financial
Statements).
Investment Performance
Opening NAV 31 December 2017 GBP1,144.0m
Investments in new assets +GBP364.8m
Movement in DCF valuation +GBP89.1m
Movement in cash (Group and wind
farm SPVs) +GBP9.1m
Movement in other relevant assets
/ liabilities +GBP0.8m
Movement in Aggregate Group Debt -GBP215.0m
Closing NAV 31 December 2018 GBP1,392.8m
The NAV at 31 December 2018 was GBP1,392.8 million (123.1 pence
per share):
-- NAV at 31 December 2017 was GBP1,144.0 million (111.2 pence per share);
-- GBP364.8 million of investments were made in the year as
further described under Acquisitions above;
-- the portfolio DCF valuation increased by GBP89.1 million or
approximately 8 pence per share (7 pence from increased asset life
plus 2 pence from increased RPI plus 1 pence from other assumption
changes less 2 pence depreciation);
-- cash balances increased by GBP9.1 million as noted above;
-- net liabilities at Group level decreased by GBP0.8 million; and
-- Aggregate Group Debt increased by GBP215 million.
Total dividends of GBP72.3 million were paid in 2018. Total
dividends of GBP74.8 million have been paid or declared with
respect to 2018 (6.76 pence per share). The target dividend with
respect to 2019 is 6.94 pence per share (increased in line with
December 2018 RPI).
pence per share per cent.
--------------------------------------- ---------------- ----------
NAV at 31 December 2017 111.2
Less February 2018 dividend (1.6)
NAV at 31 December 2017 (ex dividend) 109.6
NAV at 31 December 2018 123.1
Less February 2019 dividend (1.7)
NAV at 31 December 2018 (ex dividend) 121.4
Movement in NAV (ex dividend) 11.8 10.8
Dividends with respect to the year 6.8 6.2
--------------------------------------- ---------------- ----------
Total return on NAV 18.6 17.0
--------------------------------------- ---------------- ----------
The share price as at 31 December 2018 was 126.0 pence,
representing a 2.4 per cent. premium to NAV. TSR for 2018 was 8.3
per cent. (71.5 per cent. since listing).
Reconciliation of Statutory Net Assets to Reported NAV
As at As at
31 December 2018 31 December 2017
---------------------------- ------------------ ------------------
GBP'000 GBP'000
DCF valuation 1,823,852 1,369,950
Cash (wind farm SPVs) 47,355 35,774
---------------------------- ------------------ ------------------
Fair value of investments 1,871,207 1,405,724
Cash (Group) 3,427 5,922
Other relevant liabilities (1,824) (2,606)
---------------------------- ------------------ ------------------
GAV 1,872,810 1,409,040
Aggregate Group Debt (480,000) (265,000)
---------------------------- ------------------ ------------------
NAV 1,392,810 1,144,040
Reconciling items - -
---------------------------- ------------------ ------------------
Statutory net assets 1,392,810 1,144,040
Shares in issue 1,131,449,780 1,028,514,652
NAV per share (pence) 123.1 111.2
---------------------------- ------------------ ------------------
NAV Sensitivities
NAV is equal to GAV less Aggregate Group Debt.
GAV is the sum of:
-- DCF valuations of the Group's investments;
-- cash (at Group and wind farm SPV level); and
-- other relevant assets and liabilities of the Group.
The DCF valuation of the Group's investments represents the
largest component of GAV and the key sensitivities are considered
to be the discount rate used in the DCF valuation and assumptions
in relation to inflation, energy yield, power price and asset
life.
As there is no debt at wind farm level, the DCF valuation is
produced by discounting the individual wind farm cashflows on an
unlevered basis. The equivalent levered discount rate would be
approximately 2 per cent. higher than the blended portfolio
discount rate.
For the year end DCF valuation, we have applied an upgraded
discounting methodology. Previously, each wind farm's cashflows
were discounted at a single discount rate, irrespective of their
nature. We now apply different discount rates, tailored to the
nature of the underlying cashflows; for example, one discount rate
for fixed ROC cashflows and a higher discount rate for merchant
power cashflows. The blended portfolio discount rate, assuming a 25
year asset life (see below), remains unchanged from 31 December
2017 at 7.7 per cent..
In addition to (but separate from) the upgraded discounting
methodology, we have increased the asset life assumption used in
the year end DCF valuation from 25 to 30 years, following a third
party technical assessment of the portfolio. The technical asset
life for many wind farms significantly exceeds 30 years and we have
made appropriate assumptions in relation to the continued good
management of the assets, lease extensions and other factors. We
consider that the 30 year asset life assumption is a more
appropriate assumption to be used to determine the fair value of
the portfolio.
Amending the asset life and associated assumptions increased NAV
per share by 6.7 pence. It also means that the blended portfolio
discount rate has increased from 7.7 per cent. to 8.1 per cent. as
a result of including a higher proportion of higher discount rate
merchant power cashflows in years 26-30.
A variance of +/- 0.5 per cent. is considered to be a reasonable
range of alternative assumptions for discount rate.
The base case long term RPI assumption is 3.0 per cent. (1.0 per
cent. above the long term 2.0 per cent. CPI target). The assumption
was increased from 2.75 per cent. during the year.
Base case energy yield assumptions are P50 (50 per cent.
probability of exceedance) forecasts produced by expert consultants
based on long term wind data and operational history. The P90 (90
per cent. probability of exceedance over a 10 year period) and P10
(10 per cent. probability of exceedance over a 10 year period)
sensitivities reflect the future variability of wind and the
uncertainty associated with the long term data source being
representative of the long term mean. Given their basis on long
term operating data, it is not anticipated that base case energy
yield assumptions will be adjusted (other than any wind energy
true-ups with compensating purchase price adjustments).
Long term power price forecasts are provided by a leading market
consultant, updated quarterly and may be adjusted by the Investment
Manager where more conservative assumptions are considered
appropriate. Base case real power prices increase from
approximately GBP48/MWh (2020) to approximately GBP58/MWh (2040).
The sensitivity below assumes a 10 per cent. increase or decrease
in power prices relative to the base case for every year of the
asset life, which is relatively extreme (a 10 per cent. variation
in short term power prices, as reflected by the forward curve,
would have a much lesser effect).
Outlook
There are currently 21GW of operating UK wind farms (13GW
onshore plus 8GW offshore). Installed capacity is set to grow to
14GW onshore plus 12GW offshore by 2021. In monetary terms, the
secondary market for operating UK wind farms is approximately GBP50
billion, increasing to GBP75 billion by 2021. The Group currently
has a market share of approximately 4 per cent.. The average age of
the portfolio is 5.7 years (versus 5 years at listing in March
2013).
In the year, the Group entered into agreements to acquire Tom
nan Clach, its first CFD wind farm and Douglas West, its first
subsidy free wind farm. While it is anticipated that the majority
of the Group's future investments will continue to be ROC wind
farms, CFD and subsidy free wind farms provide diversified further
pipeline opportunities. At all times, the Group will maintain a
balanced portfolio, in line with the Company's investment
objective.
The key value driver affecting operating UK wind farms is the
wholesale power price. In general, independent forecasters expect
the UK wholesale power price to rise in real terms, driven by
higher gas and carbon prices. The long term power price forecast is
updated each quarter and reflected in the reported NAV.
The Company does not expect any material change to its business
as a result of the UK exiting the European Union. Being solely UK
focused and deliberately low risk, all of the Group's assets and
liabilities are within the UK and sterling denominated. In
addition, the regulatory regime under which the assets operate is
robust, longstanding and rooted in UK legislation.
In general, the outlook for the Group is very encouraging, with
proven operational and financial performance from the existing
portfolio combined with a healthy pipeline of attractive further
investment opportunities.
Board of Directors
The Board comprises individuals from relevant and complementary
backgrounds and the Directors are of the opinion that the Board as
a whole comprises an appropriate balance of skills, experience and
diversity.
Tim Ingram, Chairman (appointed 4 December 2012)
Tim Ingram (Chairman), aged 71, is an experienced chairman and
chief executive, with a long executive career in financial services
and a non-executive portfolio spanning a variety of sectors,
including business management software and services, real estate,
manufacturing, investment trusts, insurance and commercial and
investment banking.
Tim's early executive career was in international banking with
Grindlays Bank and ANZ Banking Group. He was an executive Director
of Abbey National plc (now part of Santander) from 1996 to 2002.
After leaving Abbey National, he became Chief Executive of
Caledonia Investments plc from 2002 until his retirement in July
2010.
He was Chairman of Collins Stewart Hawkpoint plc from 2010 until
it was acquired by Canaccord Financial Inc. in March 2012. From
October 2012 until July 2017 he was Chairman of the Wealth
Management Association and from April 2011 to September 2017 he was
Chairman of Fulham Palace Trust. He was Chairman of RSM Tenon plc
from May 2012 to August 2013. He was a non-executive Director, and
later Senior Independent Director, of Sage plc from 2002 to 2011, a
non-executive Director, and later Senior Independent Director, of
Savills plc from 2002 to 2012, a non-executive Director of Alliance
Trust plc from 2010 to 2012, a non-executive Director of Alok
Industries Ltd, an Indian quoted company, from 2005 to 2015 and a
non-executive Director of Fastjet plc from September 2015 to March
2016. He has also been a non-executive Director of the board of the
European subsidiaries of QBE Insurance Group Ltd since March 2014
and is now its Chairman. He has been a trustee of the London
Community Foundation since September 2017.
Shonaid Jemmett-Page, Chairman of the Audit Committee (appointed
5 December 2012)
Shonaid Jemmett-Page, FCA, aged 58, is an experienced
non-executive director in the energy and financial sectors. Shonaid
spent the first 20 years of her career at KPMG in London and Tokyo,
rising to the position of Partner, Financial Services. In 2001, she
moved to Unilever, where she was Senior Vice President, Finance and
Information for Asia, based in Singapore, before returning to the
UK as Finance Director for Unilever's global non-food business. In
2009, Shonaid joined CDC Group as Chief Operating Officer, a
position she held until 2012.
Since then, Shonaid has focused on non-executive appointments
and is currently a non-executive Director of Caledonia Investments
plc and a member of the governance, nomination and remuneration
committees, non-executive Chairman of MS Amlin plc and Chairman of
the remuneration and nominations committees and a member of the
risk and solvency committee, Senior Independent Director and
Chairman of the audit and remuneration committees and a member of
the nomination and risk committees at ClearBank Ltd. Until October
2017, she was non-executive Chairman of Origo Partners plc and
until April 2018 was non-executive Director of GKN plc where she
served as Chairman of the audit committee and was a member of the
remuneration and nominations committees. She is also the examiner
of the UK branch of an Indian children's cancer charity.
William Rickett C.B., Senior Independent Director (appointed 4
December 2012)
William Rickett C.B., aged 66, is a former Director General of
the Department of Energy & Climate Change within the UK
Government (2006-2009) with considerable experience as
non-executive director of private sector companies. William is
Chairman of Cambridge Economic Policy Associates Ltd, an economic,
financial and public policy consultancy with a strong energy
practice and was Chairman of the governing board of the
International Energy Agency from 2007 to 2009. He is currently a
non-executive Director of Impax Environmental Markets plc, a listed
investment trust specialising in the alternative energy, waste and
water sectors and Smart DCC Ltd, the company procuring the shared
infrastructure needed for the roll out of smart gas and electricity
meters across the country. William was previously a non-executive
Director of Eggborough Power Ltd, an electricity generating
company, Helius Energy plc, an AIM listed developer of new
dedicated biomass power stations, and the National Renewable Energy
Centre Limited, which helps to develop renewable energy
technologies.
William's Whitehall career included 15 years of board-level
experience in 5 government departments focusing on energy and
transport. In the late 1980s he led the privatisation of the
electricity industry creating the first competitive electricity
market in the world. Later as Director General of Energy he drove
the transformation of the UK energy policy to re-establish a
nuclear power programme as well as developing strategies for the
deployment of renewable energy.
Dan Badger (appointed 1 July 2013)
Dan Badger, aged 72, has had a long career in the energy sector
and has significant experience in wind farm transactions. He is
currently a consultant to Hideal Partners, a renewables advisory
firm, and was previously a member of the UK/European renewables
M&A team at Babcock & Brown.
Dan worked for 10 years at the U.S. Department of Energy and the
International Energy Agency in economic and policy development
roles before moving onto project development within the gas-fired
generation and then renewables sectors. Whilst at Babcock &
Brown, Dan was involved with and led a number of significant
renewables acquisitions across Europe of both development pipeline
and operational capacity, a number of these through innovative
framework agreements. Dan also led the 200MW development of the
Robin Rigg offshore wind farm, in the Solway Firth, now owned by
E.ON.
Martin McAdam (appointed 1 March 2015)
Martin McAdam, aged 57, is an accomplished executive with
significant experience in the energy and renewables sector. He was
formerly Chief Executive Officer of Aquamarine Power. Prior to
that, Martin was President and Chief Executive Officer of the US
subsidiary of Airtricity, a role in which he constructed over 400MW
of wind farm capacity.
Martin spent his early career at ESB, the Irish utility,
involved in a number of activities including power station
construction and generation planning. After a number of years in
information services, he returned to the power industry and joined
Airtricity, a significant developer and constructor of wind farms
throughout the UK and Ireland, managing construction of new wind
farms. Martin's role expanded into operations and ultimately to
take responsibility for the growing US business. He led the
integration of the Airtricity generation business unit into the SSE
Renewables Division after its sale.
Martin is a Chartered Engineer and a Fellow of Engineers Ireland
and a Fellow of the Royal Society for the Encouragement of Arts,
Manufactures and Commerce.
Other UK Public Company Directorships
In addition to their directorships of the Company, the below
Directors currently hold the following UK listed public company
directorships:
Shonaid Jemmett-Page William Rickett C.B.
Caledonia Investments plc Impax Environmental Markets plc
The Directors have all offered themselves for re-election and
resolutions concerning this will be proposed at the AGM.
Conflicts of Interest
The Directors have declared any conflicts or potential conflicts
of interest to the Board of Directors which has the authority to
approve such situations. The Company Secretary maintains the
Register of Directors' Conflicts of Interests which is reviewed
quarterly by the Board and when changes are notified. The Directors
advise the Company Secretary and the Board as soon as they become
aware of any conflicts of interest. Directors who have conflicts of
interest do not take part in discussions which relate to any of
their conflicts.
Report of the Directors
The Directors present their Annual Report, together with the
consolidated financial statements of Greencoat UK Wind PLC for the
year to 31 December 2018. The Corporate Governance Report forms
part of this report.
Details of the Directors who held office during the year and as
at the date of this report are given above.
Capital Structure
The Company has one class of ordinary shares which carry no
rights to fixed income. Shareholders are entitled to all dividends
paid by the Company and, on a winding up, provided the Company has
satisfied all of its liabilities, the shareholders are entitled to
all of the surplus assets of the Company.
Shareholders will be entitled to attend and vote at all general
meetings of the Company and, on a poll, to one vote for each
ordinary share held.
Authority to Purchase Own Shares
The current authority of the Company to make market purchases of
up to 14.99 per cent. of its issued share capital expires at the
conclusion of the 2019 AGM. Special resolution 14 will be proposed
at the forthcoming AGM seeking renewal of such authority until the
next AGM (or 30 June 2020, whichever is earlier). The price paid
for the shares will not be less than the nominal value or more than
the maximum amount permitted to be paid in accordance with the
rules of the UK Listing Authority in force at the date of purchase.
This power will be exercised only if, in the opinion of the
Directors, a repurchase would be in the best interests of
shareholders as a whole. Any shares repurchased under this
authority will either be cancelled or held in treasury at the
discretion of the Board for future resale in appropriate market
conditions.
The Directors believe that the renewal of the Company's
authority to purchase shares, as detailed above, is in the best
interests of shareholders as a whole and therefore recommend
shareholders to vote in favour of special resolution 14.
The Directors also recommend shareholders to vote in favour of
resolutions 12 and 13, which renew their authority to allot equity
securities for the purpose of satisfying the Company's obligations
to pay the equity element of the Investment Manager's fee, and also
their authority to allot equity securities for cash either pursuant
to the authority conferred by resolution 12 or by way of a sale of
treasury shares.
Major Interests in Shares
Significant shareholdings as at 15 February 2019 are detailed
below.
Shareholder Ordinary shares held %
---------------------------------------
15 February 2019
--------------------------------------- -----------------------
Newton Investment Management 8.88
Investec Wealth & Investment 5.96
Legal & General Investment Management 4.91
FIL Investment International 4.70
Insight Investment Management 4.01
Rathbones Investment Management 3.77
Baillie Gifford & Co 3.47
Aviva Investors 3.44
--------------------------------------- -----------------------
Significant shareholdings as at 31 December 2018 are detailed
below.
Shareholder Ordinary shares held %
---------------------------------------
31 December 2018
--------------------------------------- -----------------------
Newton Investment Management 9.19
Investec Wealth & Investment 5.90
Legal & General Investment Management 4.90
FIL Investment International 4.48
Insight Investment Management 4.01
Rathbones Investment Management 3.63
Baillie Gifford & Co 3.44
Aviva Investors 3.14
--------------------------------------- -----------------------
Companies Act 2006 Disclosures
In accordance with Schedule 7 of the Large and Medium Sized
Companies and Groups (Accounts and Reports) Regulations 2008 the
Directors disclose the following information:
-- the Company's capital structure is detailed in note 15 to the
financial statements and all shareholders have the same voting
rights in respect of the share capital of the Company. There are no
restrictions on voting rights that the Company is aware of, nor any
agreement between holders of securities that result in restrictions
on the transfer of securities or on voting rights;
-- there exist no securities carrying special rights with regard to the control of the Company;
-- the Company does not have an employees' share scheme;
-- the rules concerning the appointment and replacement of
Directors are contained in the Company's Articles of Association
and the Companies Act 2006;
-- there exist no agreements to which the Company is party that
may affect its control following a takeover bid; and
-- there exist no agreements between the Company and its
Directors providing for compensation for loss of office that may
occur because of a takeover bid.
Investment Trust Status
The Company has been approved as an investment trust under
sections 1158 and 1159 of the Corporation Taxes Act 2010. As an
investment trust, the Company is required to meet relevant
eligibility conditions and ongoing requirements. In particular, the
Company must not retain more than 15 per cent. of its eligible
investment income. The Company has conducted and monitored its
affairs so as to enable it to comply with these requirements.
Diversity and Business Review
A business review is detailed in the Investment Manager's Report
and the Group's policy on diversity is detailed in the Corporate
Governance Report.
Directors' Indemnity
Directors' and Officers' liability insurance cover is in place
in respect of the Directors. The Company's Articles of Association
provide, subject to the provisions of UK legislation, an indemnity
for Directors in respect of costs which they may incur relating to
the defence of any proceedings brought against them arising out of
their positions as Directors, in which they are acquitted or
judgement is given in their favour by the Court.
Except for such indemnity provisions in the Company's Articles
of Association and in the Directors' letters of appointment, there
are no qualifying third party indemnity provisions in force.
Global Greenhouse Gas Emissions
As the Group has outsourced operations to third parties, there
are no significant greenhouse gas emissions to report from the
operations of the Group.
In relation to the Group's investee companies, the level of
greenhouse gas emissions arising from the low volume of electricity
imports and from operation and maintenance activity is not
considered material for disclosure purposes. Further, as the assets
are renewable energy generators, they reduce carbon dioxide
emissions on a net basis (at a rate of approximately 0.4t CO(2) per
MWh).
Risks and Risk Management
The Group is exposed to financial risks such as price risk,
interest rate risk, credit risk and liquidity risk and the
management and monitoring of these risks are detailed in note 18 to
the financial statements.
Independent Auditor
The Directors will propose the reappointment of BDO LLP as the
Company's Auditor and resolutions concerning this and the
remuneration of the Company's Auditor will be proposed at the
AGM.
So far as each of the Directors at the time that this report was
approved are aware:
-- there is no relevant audit information of which the Auditor is unaware; and
-- they have taken all the steps they ought to have taken to
make themselves aware of any audit information and to establish
that the Auditor is aware of that information.
Annual Accounts
The Board is of the opinion that the Annual Report, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the performance,
strategy and business model of the Company.
The Board recommends that the Annual Report, the Report of the
Directors and the Independent Auditor's Report for the year ended
31 December 2018 are received and adopted by the shareholders and a
resolution concerning this will be proposed at the AGM.
Dividend
The Board recommended an interim dividend of GBP19,126,100,
equivalent to 1.69 pence per share with respect to the 3 month
period ended 31 December 2018, bringing total dividends with
respect to the year to GBP74,757,381, equivalent to 6.76 pence per
share as disclosed in note 8 to the financial statements.
Subsequent Events
Significant subsequent events have been disclosed in note 21 to
the financial statements.
Strategic Report
A review of the business and future outlook, going concern
statement and the principal risks and uncertainties of the Group
have not been included in this report as they are disclosed in the
Strategic Report.
On behalf of the Board
Tim Ingram
Chairman
27 February 2019
Directors' Remuneration Report
This report has been prepared by the Directors in accordance
with the requirements of the Companies Act 2006 and the Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008. A resolution to approve the Directors'
Remuneration Report will be proposed at the AGM. At the AGM on 30
April 2018, shareholders voted 99.89 per cent. in favour to approve
the Directors' Remuneration Report for the year ended 31 December
2017.
The Company's Auditor is required to give their opinion on the
information provided on Directors' remuneration on page 29 of the
Annual Report and this is explained further in its report to
shareholders. The remainder of this report is outside the scope of
the external audit.
Annual Statement from the Chairman of the Board
The Board consists solely of non-executive Directors and is
considered to be entirely independent. The Board considers at least
annually the level of the Board's fees, in accordance with the AIC
Code.
Remuneration Policy
As at the date of this report, the Board comprised 5 Directors,
all of whom are non-executive. The Board does not have a separate
Remuneration Committee as, being wholly comprised of non-executive
Directors, the whole Board considers these matters.
Each Director receives a fixed fee per annum based on their
roles and responsibility within the Company and the time commitment
required. It is not considered appropriate that Directors'
remuneration should be performance related and none of the
Directors are eligible for pension benefits, share options, long
term incentive schemes or other benefits in respect of their
services as non-executive Directors of the Company.
The maximum annual limit of aggregate fees payable to the
Directors was set at the time of its incorporation on 4 December
2012 at GBP300,000 per annum. Although the Company has grown very
considerably since its listing in March 2013, there has been no
increase to this annual limit. Accordingly the Directors are
seeking shareholder approval as an Ordinary Resolution at the AGM
that the aggregate remuneration cap on fees payable to Directors be
increased to GBP400,000 per annum.
The Company's Articles of Association empower the Board to award
a discretionary bonus where any Director has been engaged in
exceptional work on a time spent basis to compensate for the
additional time spent over their expected time commitment.
The Articles of Association provide that Directors retire and
offer themselves for re-election at the first AGM after their
appointment and at least every 3 years thereafter. In accordance
with corporate governance best practice the Company expects
Directors to be re-elected annually.
All of the Directors have been provided with letters of
appointment for a term of 3 years, subject to re-election.
A Director's appointment may at any time be terminated by and at
the discretion of either party upon 6 months' written notice. A
Director's appointment will automatically end without any right to
compensation whatsoever if they are not re-elected by the
shareholders. A Director's appointment may also be terminated with
immediate effect and without compensation in certain other
circumstances. Being non-executive Directors, none of the Directors
have a service contract with the Company.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company's
registered office.
Annual Report on Remuneration
The table below (audited information) shows all remuneration
earned by each individual Director during the year:
Paid in the year to 31 December 2018 Paid in the year to 31 December 2017
---------------------------------------- ------------------------------------- -------------------------------------
Tim Ingram (Chairman) GBP70,000 GBP70,000
Shonaid Jemmett-Page (Audit Committee GBP47,000 GBP45,000
Chairman)
William Rickett C.B. (Senior GBP42,000 GBP40,000
Independent Director)
Dan Badger GBP37,000 GBP35,000
Martin McAdam GBP37,000 GBP35,000
---------------------------------------- ------------------------------------- -------------------------------------
Total GBP233,000 GBP225,000
---------------------------------------- ------------------------------------- -------------------------------------
None of the Directors received any other remuneration or
additional discretionary payments during the year from the Company
(2017: GBPnil).
As mentioned in the Chairman's Statement, the search firm
Heidrick & Struggles has been engaged to assist the Board in
relation to succession planning to secure the right skills and
experience while also seeking to increase diversity on the Board.
As part of this work, views were sought from this firm on
appropriate levels of fees for non-executive Directors of the
Company. In light of this, it has been decided, as from 1 January
2019, to increase the basic fee of non-executive Directors by
GBP3,000 per annum from GBP37,000 to GBP40,000 per annum. No change
is planned to the Chairman's basic fee of GBP70,000 per annum, nor
to the supplements paid to the Senior Independent Director and to
the Audit Committee Chair (of GBP5,000 and GBP10,000 per annum
respectively). In addition, and in line with the practice of some
other companies in the sector, it has been decided that in future
where significant additional work and responsibility is incurred by
Directors in the raising of further equity, appropriate additional
fees of no more than GBP10,000 per annum per Director will be
paid.
Directors' Interests (audited information)
Directors who held office during the year and had interests in
the shares of the Company as at 31 December 2018 are given in the
table below. There were no changes to the interests of each
Director as at the date of this report.
Ordinary shares of 1p each held at 31 Ordinary shares of 1p each held at 31
December 2018 December 2017
-------------------------- ------------------------------------------- -------------------------------------------
Tim Ingram (1) 409,636 376,803
Shonaid Jemmett-Page (2) 55,842 55,842
William Rickett C.B. (3) 37,500 37,500
Dan Badger 12,010 25,425
Martin McAdam 78,670 75,270
-------------------------- ------------------------------------------- -------------------------------------------
(1) includes 82,106 ordinary shares legally and beneficially
owned by his spouse and 177,827 ordinary shares which are held in
trust arrangements with Lloyd's of London in respect of security
for certain underwriting activities.
(2) includes 29,381 ordinary shares legally and beneficially
owned by her spouse.
(3) includes 30,000 ordinary shares legally and beneficially
owned by members of his family.
Relative Importance of Spend on Pay
The remuneration of the Directors with respect to the year
totalled GBP233,000 (2017: GBP225,000) in comparison to dividends
paid or declared to shareholders with respect to the year of
GBP74,757,381 (2017: GBP57,312,248).
Company Performance
Due to the positioning of the Company in the market as a
sector-focused infrastructure fund investing in UK wind farms to
produce stable and inflating dividends for investors while aiming
to preserve capital value, the Directors consider that a listed
infrastructure fund has characteristics of both an equity index and
a bond index. As the Company listed on 27 March 2013, historical
data for the past 10 years is not yet available.
On behalf of the Board
Tim Ingram
Chairman
27 February 2019
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements, and have
elected to prepare the Company financial statements, in accordance
with IFRS as adopted by the EU. Under company law the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and Company and of the profit or loss for the Group for that
period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with IFRS
as adopted by the EU, subject to any material departures disclosed
and explained in the financial statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business; and
-- prepare a Report of the Directors, a Strategic Report and
Directors' Remuneration Report which comply with the requirements
of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities. The
Directors are responsible for ensuring that the Annual Report,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group's
performance, business model and strategy.
Website Publication
The Directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the UK governing the preparation and
dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibilities also extend to the ongoing
integrity of the financial statements contained therein.
Directors' Responsibilities Pursuant to DTR4
The Directors confirm to the best of their knowledge that:
-- the Group financial statements have been prepared in
accordance with IFRS as adopted by the EU and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the Group;
and
-- the Annual Report includes a fair review of the development
and performance of the business and the financial position of the
Group and the parent company, together with a description of the
principal risks and uncertainties that they face.
On behalf of the Board
Tim Ingram
Chairman
27 February 2019
Corporate Governance Report
This Corporate Governance Report forms part of the Report of the
Directors. The Board operates under a framework for corporate
governance which is appropriate for an investment company. All
companies with a premium listing of equity shares in the UK are
required under the UK Listing Rules to report on how they have
applied the UK Code in their Annual Report and financial
statements.
The Company became a member of the AIC with effect from 27 March
2013 and has therefore put in place arrangements to comply with the
AIC Code and, in accordance with the AIC Code, complies with the UK
Code.
The AIC Code, as explained by the AIC Guide, addresses all the
principles set out in the UK Code, as well as setting out
additional principles and recommendations on issues that are of
specific relevance to investment companies such as the Company.
The AIC Code and the AIC Guide are available on the AIC's
website, www.theaic.co.uk. The UK Code is available on the FRC's
website, www.frc.org.uk.
The Company has complied with the recommendations of the AIC
Code throughout the year.
The Board
As at the date of this report, the Board consists of 5
non-executive Directors and represents a range of investment,
financial and business skills and experience. The Chairman of the
Board is Tim Ingram. In considering the independence of the
Chairman, the Board took note of the provisions of the AIC Code
relating to independence, and has determined that Mr Ingram is an
independent Director. The Senior Independent Director is William
Rickett C.B.. The Company has no employees and therefore there is
no requirement for a chief executive.
The Articles of Association provide that Directors shall retire
and offer themselves for re-election at the first AGM after their
appointment and at least every 3 years thereafter. However, the AIC
Code requires the Directors of FTSE 250 companies to be subject to
an annual election by shareholders, and the Directors comply with
this requirement. All of the Directors shall offer themselves for
re-election at the forthcoming AGM. Having considered their
effectiveness, demonstration of commitment to the role, length of
service, attendance at meetings and contribution to the Board's
deliberations, the Board approves the nomination for re-election of
all of the Directors.
Any Director, who has held office with the Company for a
continuous period of 9 years or more at the date of the AGM, shall
retire from office but may offer themselves for re-appointment.
This will allow for phased Board appointments and retirements and
enable the Board to consider whether there is any risk that such
Director might reasonably be deemed to have lost independence
through such long service.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company's
registered office.
Diversity Policy
The Board has a policy to base appointments on merit and against
objective criteria, with due regard for the benefits of diversity,
including gender diversity. Its objective is to attract and
maintain a Board that, as a whole, comprises an appropriate balance
of skills and experience.
The Board consists of individuals from relevant and
complementary backgrounds offering experience in the investment
management of listed funds, as well as in the energy sector from
both a public policy and a commercial perspective. As at the date
of this report, the Board comprised 4 men and 1 woman, all
non-executive Directors who are considered to be independent of the
Investment Manager and free from any business or other relationship
that could materially interfere with the exercise of their
independent judgement. There were no changes to the Board members
during the year.
The search firm Heidrick & Struggles has been engaged to
assist the Board in relation to succession planning to secure the
right skills and experience while also seeking to increase
diversity on the Board. This process is now at an advanced
stage.
The Investment Manager operates an equal opportunities policy
and its partners and employees comprise 29 men and 10 women.
Performance and Evaluation
Pursuant to Principle 7 of the AIC Code, the Board undertakes a
formal and rigorous evaluation of its performance each financial
year. As a FTSE 250 company, in keeping with the provisions of the
AIC Code, it is the Company's policy that every 3 years an external
consultant, who has no connection with the Company, carries out a
formal review of the Board's performance. This was conducted in
late 2016.
Since then, internal evaluations of the Board, the Audit
Committee and individual Directors have been conducted in the form
of annual performance appraisals, questionnaires and discussions to
determine effectiveness and performance in various areas, as well
as the Directors' continued independence and tenure. This process
was facilitated by the Company Secretary. The reviews concluded
that the overall performance of the Board and Audit Committee was
satisfactory and the Board was confident in its ability to continue
to govern the Company.
The next full external review will commence during 2019 and the
results of this review will be reported in the next Annual Report.
This will enable the necessary rigour of evaluation, and
consideration thereafter, as anticipated by the Code.
Each individual Directors' training and development needs are
reviewed annually. All new Directors receive an induction from the
Investment Manager, which includes the provision of information
about the Company and their responsibilities. In addition, each
Director visits portfolio wind farms and specific Board training
days are arranged involving presentations on relevant topics.
Board Responsibilities
The Board will meet, on average, 4 times in each calendar year
for scheduled Board meetings and on an ad hoc basis as and when
necessary. At each meeting the Board follows a formal agenda that
will cover the business to be discussed. Between meetings there is
regular contact with the Investment Manager and the Administrator.
The Board requires to be supplied with information by the
Investment Manager, the Administrator and other advisers in a form
appropriate to enable it to discharge its duties.
The Board has responsibility for ensuring that the Company keeps
proper accounting records which disclose with reasonable accuracy
at any time the financial position of the Company and which enable
it to ensure that the financial statements comply with applicable
regulation. It is the Board's responsibility to present a fair,
balanced and understandable Annual Report, which provides the
information necessary for shareholders to assess the performance,
strategy and business model of the Company. This responsibility
extends to the half year and other price-sensitive public
reports.
Committees of the Board
The Company's Audit Committee is chaired by Shonaid
Jemmett-Page, and consists of a minimum of 3 members. In accordance
with best practice, the Company's Chairman is not a member of the
Audit Committee however he does attend Audit Committee meetings as
and when deemed appropriate. The Audit Committee Report describes
the work of the Audit Committee.
The Company has established a Communications and Disclosure
Committee which is required to meet at least once a year. The
committee has responsibility for, amongst other things, determining
on a timely basis the disclosure treatment of material information,
and assisting in the design, implementation and periodic evaluation
of disclosure controls and procedures. The committee also has
responsibility for the identification of inside information for the
purpose of maintaining the Company's insider list.
Terms of reference for the Communications and Disclosure
Committee have been approved by the Board and membership consists
of Tim Ingram (or one other Director) and one of Stephen Lilley and
Laurence Fumagalli. Additional members of the committee may be
appointed and existing members removed by the committee. The
membership of the committee is reviewed by the Board on a periodic
basis and at least once a year.
The Company has established a Management Engagement Committee
which comprises all of the Directors and is required to meet at
least once per year. The chairman of the Management Engagement
Committee is Tim Ingram and its main function is to keep under
review the performance of the Investment Manager and make
recommendations on any proposed amendment to the Investment
Management Agreement. Terms of reference for the Management
Engagement Committee have been approved by the Board.
The Company has established a Nominations Committee which
comprises all of the Directors and is required to meet at least
once per year. The chairman of the Nominations Committee is Tim
Ingram and its main function is to plan for board succession and to
review annually the structure, size and composition of the Board
and make recommendation to the Board with regard to any changes
that are deemed necessary. Terms of reference for the Nominations
Committee have been approved by the Board.
The AIC Code recommends that companies appoint a Remuneration
Committee, however the Board has not deemed this necessary, as
being wholly comprised of non-executive Directors, the whole Board
considers these matters.
The Investment Manager
The Board has entered into the Investment Management Agreement
with the Investment Manager under which the Investment Manager is
responsible for developing strategy and the day-to-day management
of the Group's investment portfolio, in accordance with the Group's
investment objective and policy, subject to the overall supervision
of the Board. A summary of the fees paid to the Investment Manager
are given in note 3 to the financial statements.
The Investment Manager's appointment is terminable by the
Investment Manager or the Company on not less than 12 months'
notice. The Investment Management Agreement may be terminated with
immediate effect and without compensation, by either the Investment
Manager or the Company if the other party has gone into
liquidation, administration or receivership or has committed a
material breach of the Investment Management Agreement.
The Board as a whole reviewed the Company's compliance with the
UK Corporate Governance Code, the Listing Rules, the Disclosure
Guidance and Transparency Rules and the AIC Code. In accordance
with the Listing Rules, the Directors confirm that the continued
appointment of the Investment Manager under the current terms of
the Investment Management Agreement is in the interests of
shareholders. The Board also reviewed the performance of other
service providers and examined the effectiveness of the Company's
internal control systems during the year.
Board Meetings, Committee Meetings and Directors' Attendance
The number of meetings of the full Board attended in the year to
31 December 2018 by each Director is set out below:
Scheduled Board Meetings (Total of 4) Additional Board Meetings (Total of 8)
---------------------- -------------------------------------- ---------------------------------------
Tim Ingram 4 8
Shonaid Jemmett-Page 4 7
William Rickett C.B. 4 7
Dan Badger 4 7
Martin McAdam 4 8
---------------------- -------------------------------------- ---------------------------------------
During the year, there were also 13 meetings of sub-committees
of the Board.
The number of meetings of the Audit Committee attended in the
year to 31 December 2018 by each Audit Committee member is set out
below:
Audit Committee Meetings (Total of 4)
---------------------- --------------------------------------
Shonaid Jemmett-Page 4
William Rickett C.B. 4
Dan Badger 4
Martin McAdam 4
----------------------- --------------------------------------
Internal Control
The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness. The Board confirms
that it has an ongoing process for identifying, evaluating and
managing the significant risks faced by the Company. This process
has been in place throughout the year and has continued since the
year end.
The Company's principal risks and uncertainties are detailed in
the Strategic Report. As further explained in the Audit Committee
Report, the risks of the Company are outlined in a risk matrix
which was reviewed and updated during the year. The Board
continually reviews its policy setting and updates the risk matrix
at least annually to ensure that procedures are in place with the
intention of identifying, mitigating and minimising the impact of
risks should they crystallise. The Board relies on reports
periodically provided by the Investment Manager and the
Administrator regarding risks that the Company faces. When
required, experts are employed to gather information, including tax
and legal advisers. The Board also regularly monitors the
investment environment and the management of the Company's
portfolio, and applies the principles detailed in the internal
control guidance issued by the FRC.
The principal features of the internal control systems which the
Investment Manager and the Administrator have in place in respect
of the Group's financial reporting include:
-- internal reviews of all financial reports;
-- review by the Board of financial information prior to its publication;
-- authorisation limits over expenditure incurred by the Group;
-- review of valuations; and
-- authorisation of investments.
Whistleblowing
The Board has considered the AIC Code recommendations in respect
of arrangements by which staff of the Investment Manager or
Administrator may, in confidence, raise concerns within their
respective organisations about possible improprieties in matters of
financial reporting or other matters. It has concluded that
adequate arrangements are in place for the proportionate and
independent investigation of such matters and, where necessary, for
appropriate follow-up action to be taken within their
organisation.
Amendment of Articles of Association
The Company's Articles of Association may be amended by the
members of the Company by special resolution (requiring a majority
of at least 75 per cent. of the persons voting on the relevant
resolution).
Relations with Shareholders
The Company welcomes the views of shareholders and places great
importance on communication with its shareholders. The Investment
Manager is available at all reasonable times to meet with principal
shareholders and key sector analysts. The Chairman, the Senior
Independent Director and other Directors are also available to meet
with shareholders if required.
All shareholders have the opportunity to put questions to the
Company at the registered address. The AGM of the Company will
provide a forum for shareholders to meet and discuss issues with
the Directors and Investment Manager.
The Board receives comprehensive shareholder reports from the
Company's Registrar and regularly monitors the views of
shareholders and the shareholder profile of the Company. The Board
is also kept fully informed of all relevant market commentary on
the Company by the Investment Manager.
Shareholders may also find Company information or contact the
Company through its website: www.greencoat-ukwind.com.
On behalf of the Board
Tim Ingram
Chairman of the Board
27 February 2019
Audit Committee Report
During the year, the Audit Committee comprised Shonaid
Jemmett-Page (Chairman), William Rickett C.B., Dan Badger and
Martin McAdam. The AIC Code has a requirement that at least one
member of the Audit Committee should have recent and relevant
financial experience and the Audit Committee as a whole shall have
competence relevant to the sector. The Board is satisfied that the
Audit Committee is properly constituted in these respects. The
qualifications and experience of all Audit Committee members are
disclosed in this Annual Report.
The Audit Committee operates within clearly defined terms of
reference which were reviewed during the financial year and
approved by the Board, and include all matters indicated by
Disclosure Guidance and Transparency Rule 7.1 and the AIC Code and
are available for inspection on the Company's website:
www.greencoat-ukwind.com.
Audit Committee meetings are scheduled at appropriate times in
the reporting and auditing cycle. The Chairman, other Directors and
third parties may be invited to attend meetings as and when deemed
appropriate.
Summary of the Role and Responsibilities of the Audit
Committee
The duties of the Audit Committee include reviewing the
Company's quarterly NAV, half year report, Annual Report and
financial statements and any formal announcements relating to the
Company's financial performance.
The Audit Committee is the forum through which the external
Auditor reports to the Board and is responsible for reviewing the
terms of appointment of the Auditor, together with their
remuneration. On an ongoing basis, the Audit Committee is
responsible for reviewing the objectivity of the Auditor along with
the effectiveness of the audit and the terms under which the
Auditor is engaged to perform non-audit services (restricted to the
limited scope review of the half year report and reporting
accountant services in relation to equity raises). The Audit
Committee is also responsible for reviewing the Company's corporate
governance framework, system of internal controls and risk
management, ensuring they are suitable for an investment
company.
The Audit Committee reports its findings to the Board,
identifying any matters on which it considers that action or
improvement is needed, and make recommendations on the steps to be
taken.
Overview
During the year, the Audit Committee's discussions have been
broad ranging. In addition to the 4 formally convened Audit
Committee meetings during the year, the Audit Committee has had
regular contact and meetings with the Investment Manager, the
Administrator and the Auditor. These meetings and discussions
focused on, but were not limited to:
-- a detailed analysis of the Company's quarterly NAVs;
-- reviewing the updated risk matrix of the Company;
-- reviewing the Company's corporate governance framework;
-- reviewing the internal controls framework for the Company,
the Administrator and the Investment Manager, considering the need
for a separate internal audit function;
-- considering any incidents of internal control failure or fraud and the Company's response;
-- considering the ongoing assessment of the Company as a going concern;
-- considering the principal risks and period of assessment for
the longer term viability of the Company;
-- monitoring the ongoing appropriateness of the Company's
status as an investment entity under IFRS 10, in particular
following an acquisition;
-- monitoring compliance with AIFMD, the AIC code and other
regulatory and governance frameworks;
-- reviewing and approving the audit plan in relation to the
audit of the Company's Annual Report and financial statements;
-- monitoring compliance with the Company's policy on the
provision of non-audit services by the Auditor; and
-- reviewing the effectiveness, resources, qualifications and independence of the Auditor.
Financial Reporting
The primary role of the Audit Committee in relation to financial
reporting is to review with the Investment Manager, the
Administrator and the Auditor the appropriateness of the half year
report and Annual Report and financial statements, concentrating
on, amongst other matters:
-- the quality and acceptability of accounting policies and practices;
-- the clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance reporting
requirements;
-- amendments to legislation and corporate governance reporting
requirements and accounting treatment of new transactions in the
year;
-- the impact of new and amended accounting standards on the Company's financial statements;
-- whether the Audit Committee believes that proper and
appropriate processes and procedures have been followed in the
preparation of the half year report and Annual Report and financial
statements;
-- consideration and recommending to the Board for approval of
the contents of the annual financial statements and reviewing the
Auditors' report thereon including consideration of whether the
financial statements are overall fair, balanced and
understandable;
-- material areas in which significant judgements have been
applied or there has been discussion with the Auditor; and
-- any correspondence from regulators in relation to the Company's financial reporting.
BDO LLP attended 2 of the 4 formal Audit Committee meetings held
during the year. The Audit Committee has also held private meetings
with the Auditor to provide additional opportunities for open
dialogue and feedback. Matters typically discussed include the
Auditor's assessment of the transparency and openness of
interactions with the Investment Manager and the Administrator,
confirmation that there has been no restriction in scope placed on
them, the independence of their audit and how they have exercised
professional scepticism.
Significant Issues
The Audit Committee discussed the planning, conduct and
conclusions of the external audit as it proceeded. At the Audit
Committee meeting in advance of the year end, the Audit Committee
discussed and approved the Auditor's audit plan. The Audit
Committee identified the carrying value of investments as a key
area of risk of misstatement in the Company's financial
statements.
FRC Letter
During the year, the Company received a letter from the FRC
which raised questions on certain aspects of its Annual Report for
the year ended 31 December 2017. The Company responded fully to the
matters raised in the letter, enabling the FRC to conclude its
enquiry. As a result of the FRC's enquiry, the Company has made
improvements to the disclosures in this annual report, principally
in respect of its judgement that the Company meets the IFRS 10
'Consolidated Financial Statements' definition of an investment
entity. The FRC's enquiry did not result in any change to profit,
net assets or net cashflow reported in respect of the 2017
financial year.
Scope and limitations of the FRC's review
The Audit Committee recognises that the FRC's review was based
on a review of the Company's Annual Report for the year ended 31
December 2017 and did not benefit from detailed knowledge of the
Group's business or an understanding of the underlying transactions
entered into but that it was conducted by staff of the FRC who have
an understanding of the relevant legal and accounting framework.
The conclusion of the FRC's review does not provide any assurance
that the Company's Annual Report is correct in all material
respects; the FRC's role is not to verify the information provided
but to consider compliance with reporting requirements. The FRC's
letters are written on the basis that it (and its officers,
employees and agents) accepts no liability for reliance on them by
the Company or any third party, including but not limited to
investors and shareholders.
Assessment of the Carrying Value of Investments
The Group's accounting policy is to designate investments at
fair value through profit or loss. Therefore, the most significant
risk in the Group's financial statements is whether its investments
are fairly valued due to the uncertainty involved in determining
the investment valuations. There is also an inherent risk of
management override as the Investment Manager's fee is calculated
based on NAV as disclosed in note 3 to the financial statements.
The Investment Manager is responsible for calculating the NAV with
the assistance of the Administrator, prior to approval by the
Board.
On a quarterly basis, the Investment Manager provides a detailed
analysis of the NAV highlighting any movements and assumption
changes from the previous quarter's NAV. This analysis and the
rationale for any changes made is considered and challenged by the
Chairman of the Audit Committee and subsequently approved by the
Board. The Audit Committee has satisfied itself that the key
estimates and assumptions used in the valuation model are
appropriate and that the investments have been fairly valued.
The key estimates and assumptions include the useful life of the
assets, the discount factors, the level of wind resource, the rate
of inflation, the price at which the power and associated benefits
can be sold and the amount of electricity the assets are expected
to produce. In particular, the Audit Committee carefully considered
external technical advice in relation to the change in the asset
life assumption from 25 years to 30 years and associated
assumptions in relation to the continued good management of the
assets, lease extensions and other factors, that has been included
in the 31 December 2018 valuation.
Internal Control
The Audit Committee has established a set of ongoing processes
designed to meet the particular needs of the Company in managing
the risks to which it is exposed.
The process is one whereby the Investment Manager has identified
the key risks to which the Company is exposed, and recorded them on
a risk matrix together with the controls employed to mitigate these
risks. A residual risk rating has been applied to each risk. The
Audit Committee is responsible for reviewing the risk matrix and
associated controls before recommending to the Board for
consideration and approval, challenging the Investment Manager's
assumptions to ensure a robust internal risk management
process.
The Audit Committee formally reviewed the updated risk matrix in
Q1 2019 and will continue to do so at least annually. By their
nature, these procedures provide a reasonable, but not absolute,
assurance against material misstatement or loss. Regular reports
will be provided to the Audit Committee highlighting material
changes to risk ratings.
The Audit Committee reviewed the Group's principal risks and
uncertainties as at 30 June 2018, to determine that these were
unchanged from those disclosed in the Company's 2017 Annual Report
and remained the most likely to affect the Group in the second half
of the year.
During the year, the Audit Committee discussed and reviewed in
depth the internal controls frameworks in place at the Investment
Manager and the Administrator. Discussions were centred around 3
lines of defence: assurances at operational level; internal
oversight; and independent objective assurance. The Administrator
holds the International Standard on Assurance Engagements (ISAE)
3402 Type 2 certification. This entails an independent rigorous
examination and testing of their controls and processes.
The Audit Committee concluded that these frameworks were
appropriate for the identification, assessment, management and
monitoring of financial, regulatory and other risks, with
particular regard to the protection of the interests of the
Company's shareholders.
Internal Audit
The Audit Committee continues to review the need for an internal
audit function and has decided that the systems, processes and
procedures employed by the Company, Investment Manager and
Administrator, including their own internal controls and
procedures, provide sufficient assurance that an appropriate level
of risk management and internal control is maintained. In addition
to this, the Company's external Depositary provides cash
monitoring, asset verification and oversight services to the
Company.
The Audit Committee has therefore concluded that shareholders'
investments and the Company's assets are adequately safeguarded and
an internal audit function specific to the Company is considered
unnecessary.
The Audit Committee is available on request to meet investors in
relation to the Company's financial reporting and internal
controls.
External Auditor
Effectiveness of the Audit Process
The Audit Committee assessed the effectiveness of the audit
process by considering BDO LLP's fulfilment of the agreed audit
plan through the reporting presented to the Audit Committee by BDO
LLP and the discussions at the Audit Committee meeting, which
highlighted the major issues that arose during the course of the
audit. In addition, the Audit Committee also sought feedback from
the Investment Manager and the Administrator on the effectiveness
of the audit process. For this financial year, the Audit Committee
was satisfied that there had been appropriate focus and challenge
on the primary areas of audit risk and assessed the quality of the
audit process to be good.
Non-Audit Services
Details of fees paid to BDO LLP during the year are disclosed in
note 5 to the financial statements. The Audit Committee approved
these fees after a review of the level and nature of work to be
performed, and are satisfied that they are appropriate for the
scope of the work required. The Audit Committee seeks to ensure
that any non-audit services provided by the external Auditor do not
conflict with their statutory and regulatory responsibilities, as
well as their independence, before giving written approval prior to
their engagement. The Audit Committee was satisfied that BDO LLP
had adequate safeguards in place and that provision of these
non-audit services did not provide threats to the Auditor's
independence.
The Audit Committee has a policy regarding the provision of
non-audit services by the external Auditor which precludes the
external Auditor from providing any of the prohibited non-audit
services as listed in Article 5 of the EU Directive Regulation (EU)
No 537/2014. The Audit Committee monitors the Group's expenditure
on non-audit services provided by the Company's Auditor who should
only be engaged for non-audit services where they are deemed to be
the most commercially viable supplier and prior approval of the
Audit Committee has been sought.
Independence
The Audit Committee is required to consider the independence of
the external Auditor. In fulfilling this requirement, the Audit
Committee has considered a report from BDO LLP describing its
arrangements to identify, report and manage any conflict of
interest and the extent of non-audit services provided by them.
The Audit Committee has concluded that it considers BDO LLP to
be independent of the Company and that the provision of the
non-audit services described above is not a threat to the
objectivity and independence of the conduct of the audit.
Re-appointment
BDO LLP has been the Company's Auditor from its incorporation on
4 December 2012. The Auditor is required to rotate the audit
partner responsible for the Group audit every 5 years. A new lead
partner was appointed in 2015 and therefore the lead partner will
be required to rotate after the completion of the 2019 year end
audit.
The external audit contract is required to be put to tender at
least every 10 years. The Audit Committee shall give advance notice
of any retendering plans within the Annual Report. The Audit
Committee has considered the re-appointment of the Auditor and
decided not to put the provision of the external audit out to
tender at this time. As described above, the Audit Committee
reviewed the effectiveness and independence of the Auditor and
remains satisfied that the Auditor provides effective independent
challenge to the Board, the Investment Manager and the
Administrator. The Audit Committee will continue to monitor the
performance of the Auditor on an annual basis and will consider
their independence and objectivity, taking account of appropriate
guidelines.
The Audit Committee has therefore recommended to the Board that
BDO LLP be proposed for re-appointment as the Company's Auditor at
the AGM of the Company.
Annual General Meeting
The Chairman of the Audit Committee will be present at the
Company's AGM to answer questions on the Audit Committee's activity
and matters within the scope of the Audit Committee's
responsibilities.
Shonaid Jemmett-Page
Chairman of the Audit Committee
27 February 2019
Non-Statutory Accounts
The financial information set out below does not constitute the
Company's statutory accounts for the years ended 31 December 2018
or 31 December 2017 but is derived from those accounts. Statutory
accounts for the year ended 31 December 2017 have been delivered to
the Registrar of Companies and statutory accounts for the year
ended 31 December 2018 will be delivered to the Registrar of
Companies in due course. The Auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include
a reference to any matters to which the Auditor drew attention by
way of emphasis without qualifying their report and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies
Act 2006. The text of the Auditor's reports can be found in the
Company's full Annual Report and Accounts at
www.greencoat-ukwind.com.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2018
For the year ended For the year ended
Note 31 December 2018 31 December 2017
GBP'000 GBP'000
--------------------------------------------------------------------- ----- ------------------- -------------------
Return on investments 4 231,461 81,137
Other income 775 607
--------------------------------------------------------------------- ----- ------------------- -------------------
Total income and gains 232,236 81,744
Operating expenses 5 (15,162) (11,390)
Investment acquisition costs (1,910) (2,672)
--------------------------------------------------------------------- ----- ------------------- -------------------
Operating profit 215,164 67,682
Finance expense 13 (14,486) (9,196)
--------------------------------------------------------------------- ----- ------------------- -------------------
Profit for the year before tax 200,678 58,486
Tax credit 6 1,703 1,382
--------------------------------------------------------------------- ----- ------------------- -------------------
Profit for the year after tax 202,381 59,868
Profit and total comprehensive income attributable to:
Equity holders of the Company 202,381 59,868
Earnings per share
--------------------------------------------------------------------- ----- ------------------- -------------------
Basic and diluted earnings from continuing operations in the year
(pence) 7 18.54 7.59
--------------------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the financial
statements.
Consolidated Statement of Financial Position
As at 31 December 2018
Note 31 December 2018 31 December 2017
GBP'000 GBP'000
-------------------------------------------------- ----- ----------------- -----------------
Non current assets
Investments at fair value through profit or loss 9 1,871,207 1,405,724
-------------------------------------------------- ----- ----------------- -----------------
1,871,207 1,405,724
Current assets
Receivables 11 1,615 1,482
Cash and cash equivalents 3,427 5,922
-------------------------------------------------- ----- ----------------- -----------------
5,042 7,404
Current liabilities
Payables 12 (3,439) (4,088)
-------------------------------------------------- ----- ----------------- -----------------
Net current assets 1,603 3,316
Non current liabilities
Loans and borrowings 13 (480,000) (265,000)
Net assets 1,392,810 1,144,040
-------------------------------------------------- ----- ----------------- -----------------
Capital and reserves
Called up share capital 15 11,314 10,285
Share premium account 15 946,211 828,526
Other distributable reserves 32,386 104,711
Retained earnings 402,899 200,518
-------------------------------------------------- ----- ----------------- -----------------
Total shareholders' funds 1,392,810 1,144,040
-------------------------------------------------- ----- ----------------- -----------------
Net assets per share (pence) 16 123.1 111.2
-------------------------------------------------- ----- ----------------- -----------------
Authorised for issue by the Board on 27 February 2019 and signed
on its behalf by:
Tim Ingram Shonaid Jemmett-Page
Chairman Director
The accompanying notes form an integral part of the financial
statements.
Statement of Financial Position - Company
As at 31 December 2018
Note 31 December 2018 31 December 2017
GBP'000 GBP'000
-------------------------------------------------- ----- ----------------- -----------------
Non current assets
Investments at fair value through profit or loss 9 1,875,709 1,411,378
-------------------------------------------------- ----- ----------------- -----------------
1,875,709 1,411,378
Current assets
Receivables 11 100 85
Cash and cash equivalents 36 79
-------------------------------------------------- ----- ----------------- -----------------
136 164
Current liabilities
Payables 12 (3,035) (2,502)
-------------------------------------------------- ----- ----------------- -----------------
Net current liabilities (2,899) (2,338)
Non current liabilities
Loans and borrowings 13 (480,000) (265,000)
Net assets 1,392,810 1,144,040
-------------------------------------------------- ----- ----------------- -----------------
Capital and reserves
Called up share capital 15 11,314 10,285
Share premium account 15 946,211 828,526
Other distributable reserves 32,386 104,711
Retained earnings 402,899 200,518
-------------------------------------------------- ----- ----------------- -----------------
Total shareholders' funds 1,392,810 1,144,040
-------------------------------------------------- ----- ----------------- -----------------
Net assets per share (pence) 16 123.1 111.2
-------------------------------------------------- ----- ----------------- -----------------
The Company has taken advantage of the exemption under section
408 of the Companies Act 2006 and accordingly has not presented a
Statement of Comprehensive Income for the Company alone. The profit
after tax of the Company alone for the year was GBP202,381,000
(2017: GBP59,868,000).
Authorised for issue by the Board on 27 February 2019 and signed
on its behalf by:
Tim Ingram Shonaid Jemmett-Page
Chairman Director
The accompanying notes form an integral part of the financial
statements.
Consolidated and Company Statement of Changes in Equity
For the year ended 31 December 2018
For the year ended Other distributable
31 December 2018 Note Share capital Share premium reserves Retained earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ----- -------------- -------------- ---------------------- ------------------ ----------
Opening net assets
attributable to
shareholders (1
January 2018) 10,285 828,526 104,711 200,518 1,144,040
Issue of share capital 15 1,029 119,366 - - 120,395
Share issue costs 15 - (1,681) - - (1,681)
Profit and total
comprehensive income
for the year - - - 202,381 202,381
Interim dividends paid
in the year 8 - - (72,325) - (72,325)
Closing net assets
attributable to
shareholders 11,314 946,211 32,386 402,899 1,392,810
----------------------- ----- -------------- -------------- ---------------------- ------------------ ----------
Other distributable reserves were created through the
cancellation of the share premium account on 5 June 2013. This
amount is capable of being applied in any manner in which the
Company's profits available for distribution, as determined in
accordance with the Companies Act 2006, are able to be applied.
After taking account of cumulative unrealised gains of
GBP163,704,725, the total reserves distributable by way of a
dividend as at 31 December 2018 were GBP271,580,244.
For the year ended Other distributable
31 December 2017 Note Share capital Share premium reserves Retained earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ----- -------------- -------------- ---------------------- ------------------ ----------
Opening net assets
attributable to
shareholders (1
January 2017) 7,367 495,110 157,011 140,650 800,138
Issue of share capital 15 2,918 338,422 - - 341,340
Share issue costs 15 - (5,006) - - (5,006)
Profit and total
comprehensive income
for the year - - - 59,868 59,868
Interim dividends paid
in the year 8 - - (52,300) - (52,300)
Closing net assets
attributable to
shareholders 10,285 828,526 104,711 200,518 1,144,040
----------------------- ----- -------------- -------------- ---------------------- ------------------ ----------
After taking account of cumulative unrealised gains of
GBP47,010,325, the total reserves distributable by way of a
dividend as at 31 December 2017 were GBP258,218,229.
The accompanying notes form an integral part of the financial
statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
For the year ended For the year ended
Note 31 December 2018 31 December 2017
GBP'000 GBP'000
--------------------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from operating activities 17 101,829 60,083
Cash flows from investing activities
Acquisition of investments 9 (364,633) (511,995)
Investment acquisition costs (1,647) (2,672)
Cash received for adjustment to purchase price of investments 9 - 2,600
Repayment of shareholder loan investments 9 15,845 12,877
--------------------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from investing activities (350,435) (499,190)
Cash flows from financing activities
Issue of share capital 15 118,845 340,000
Payment of issue costs (1,949) (4,912)
Amounts drawn down on loan facilities 13 480,000 500,000
Amounts repaid on loan facilities 13 (265,000) (335,000)
Finance costs (13,460) (8,619)
Dividends paid 8 (72,325) (52,300)
--------------------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from financing activities 246,111 439,169
Net (decrease)/increase in cash and cash equivalents during the year (2,495) 62
Cash and cash equivalents at the beginning of the year 5,922 5,860
Cash and cash equivalents at the end of the year 3,427 5,922
--------------------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the financial
statements.
Statement of Cash Flows - Company
For the year ended 31 December 2018
For the year ended For the year ended
Note 31 December 2018 31 December 2017
GBP'000 GBP'000
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from operating activities 17 (12,138) (13,680)
Cash flows from investing activities
Loans advanced to Group companies 9 (331,735) (493,738)
Repayment of loans to Group companies 9 97,719 67,755
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from investing activities (234,016) (425,983)
Cash flows from financing activities
Issue of share capital 15 118,845 340,000
Payment of issue costs (1,949) (4,912)
Amounts drawn down on loan facilities 13 480,000 500,000
Amounts repaid on loan facilities 13 (265,000) (335,000)
Finance costs (13,460) (8,619)
Dividends paid 8 (72,325) (52,300)
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from financing activities 246,111 439,169
Net decrease in cash and cash equivalents during the year (43) (494)
Cash and cash equivalents at the beginning of the year 79 573
Cash and cash equivalents at the end of the year 36 79
----------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the financial
statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2018
1. Significant accounting policies
Basis of accounting
The consolidated annual 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 2006 applicable
to companies under IFRS.
The annual financial statements have been prepared on the
historical cost basis, as modified for the measurement of certain
financial instruments at fair value through profit or loss. The
principal accounting policies are set out below.
These consolidated financial statements are presented in pounds
sterling, which is the currency of the primary economic environment
in which the Group operates and are rounded to the nearest
thousand, unless otherwise stated.
Accounting for subsidiaries
The Directors have concluded that the Group has all the elements
of control as prescribed by IFRS 10 "Consolidated Financial
Statements" in relation to all its subsidiaries and that the
Company continues to satisfy the three essential criteria to be
regarded as an investment entity as defined in IFRS 10, IFRS 12
"Disclosure of Interests in Other Entities" and IAS 27
"Consolidated and Separate Financial Statements". The three
essential criteria are such that the entity must:
1. Obtain funds from one or more investors for the purpose of
providing these investors with professional investment management
services;
2. Commit to its investors that its business purpose is to
invest its funds solely for returns from capital appreciation,
investment income or both; and
3. Measure and evaluate the performance of substantially all of
its investments on a fair value basis.
In satisfying the second essential criteria, the notion of an
investment time frame is critical. An investment entity should not
hold its investments indefinitely but should have an exit strategy
for their realisation. Although the Company has invested in equity
interests in wind farms that have an indefinite life, the
underlying wind farm assets that it invests in have an expected
life of 30 years. The Company intends to hold these wind farms for
the remainder of their useful life to preserve the capital value of
the portfolio. However, as the wind farms are expected to have no
residual value after their 30 year life, the Directors consider
that this demonstrates a clear exit strategy from these
investments.
Subsidiaries are therefore measured at fair value through profit
or loss, in accordance with IFRS 13 "Fair Value Measurement" and
IFRS 9 "Financial Instruments". The financial support provided by
the Company to its unconsolidated subsidiaries is disclosed in note
10.
Notwithstanding this, IFRS 10 requires subsidiaries that provide
services that relate to the investment entity's investment
activities to be consolidated. Accordingly, the annual financial
statements include the consolidated financial statements of
Greencoat UK Wind PLC and Greencoat UK Wind Holdco Limited (a 100
per cent. owned UK subsidiary). In respect of these entities,
intra-Group balances and any unrealised gains arising from
intra-Group transactions are eliminated in preparing the
consolidated financial statements. Unrealised losses are eliminated
unless the costs cannot be recovered. The financial statements of
subsidiaries that are included in the consolidated financial
statements are included from the date that control commences until
the dates that control ceases.
In the parent company financial statements, investments in
subsidiaries are measured at fair value through profit or loss in
accordance with IFRS 9, as permitted by IAS 27.
Accounting for associates and joint ventures
The Group has taken the exemption permitted by IAS 28
"Investments in Associates and Joint Ventures" and IFRS 11 "Joint
Arrangements" for entities similar to investment entities and
measures its investments in associates and joint ventures at fair
value. The Directors consider an associate to be an entity over
which the Group has significant influence, through an ownership of
between 20 per cent. and 50 per cent.. The Group's associates and
joint ventures are disclosed in note 10.
New and amended standards and interpretations applied
There were no new standards or interpretations effective for the
first time for periods beginning on or after 1 January 2018 that
had a significant effect on the Group or Company's financial
statements. Furthermore, none of the amendments to standards that
are effective from that date had a significant effect on the
financial statements.
IFRS 9 was issued to replace IAS 39 "Financial Instruments:
Recognition and Measurement" and became effective for accounting
periods beginning on or after 1 January 2018 and has been first
adopted in these financial statements. The Group has chosen not to
restate comparatives. The Group's financial instruments
predominantly comprise equity investments held at fair value. The
accounting treatment for these financial instruments is consistent
under both IAS 39 and IFRS 9, therefore the introduction of IFRS 9
has had no impact on the reported results and financial position of
the Group.
IFRS 15 "Revenue from contracts with customers" was issued and
became effective for accounting periods beginning on or after 1
January 2018. As the Group's investments are held at fair value
through profit or loss and the revenue contracts are held at SPV
level, the introduction of IFRS 15 has had no impact on the
reported results and financial position of the Group.
New and amended standards and interpretations not applied
At the date of authorisation of these financial statements, IFRS
16 "Leases" was issued but will not become effective until
accounting periods beginning on or after 1 January 2019. As the
Group's investments are held at fair value through profit or loss
and the leases are held at SPV level, the introduction of IFRS 16
is not expected to have a material impact on the reported results
and financial position of the Group.
Other accounting standards and interpretations have been
published and will be mandatory for the Company's accounting
periods beginning on or after 1 January 2019 or later periods. The
impact of these standards is not expected to be material to the
reported results and financial position of the Group.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's Consolidated Statement of Financial Position when the Group
becomes a party to the contractual provisions of the
instrument.
At 31 December 2018 and 2017 the carrying amounts of cash and
cash equivalents, receivables, payables, accrued expenses and short
term borrowings reflected in the financial statements are
reasonable estimates of fair value in view of the nature of these
instruments or the relatively short period of time between the
original instruments and their expected realisation. The fair value
of advances and other balances with related parties which are
short-term or repayable on demand is equivalent to their carrying
amount.
Financial assets
The classification of financial assets at initial recognition
depends on the purpose for which the financial asset was acquired
and its characteristics.
All financial assets are initially recognised at fair value. All
purchases of financial assets are recorded at the date on which the
Group became party to the contractual requirements of the financial
asset.
The Group's and Company's financial assets comprise of only
investments held at fair value through profit or loss and loans and
receivables.
Loans and receivables (2017)
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
principally comprise cash and trade and other receivables and they
are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest rate method, less
provisions for impairment. Transaction costs are recognised in the
Consolidated Statement of Comprehensive Income as incurred.
The Group and the Company assess whether there is any objective
evidence that financial assets are impaired at the end of each
reporting period. If any such evidence exists, the amount of the
impairment loss is measured as the difference between the asset's
carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. The
amount of the loss is recognised in profit or loss.
Loans and receivables at amortised cost (2018)
Impairment provisions for loans and receivables are recognised
based on a forward looking expected credit loss model. All
financial assets assessed under this model are immaterial to the
financial statements.
Investments held at fair value through profit or loss
Investments are designated upon initial recognition as held at
fair value through profit or loss. Gains or losses resulting from
the movement in fair value are recognised in the Consolidated
Statement of Comprehensive Income at each valuation point. As
shareholder loan investments form part of a managed portfolio of
assets whose performance is evaluated on a fair value basis, loan
investments are designated at fair value in line with equity
investments.
The Company's loan and equity investments in Holdco are held at
fair value through profit or loss. Gains or losses resulting from
the movement in fair value are recognised in the Company's
Statement of Comprehensive Income at each valuation point.
Financial assets are recognised / derecognised at the date of
the purchase / disposal. Investments are initially recognised at
cost, being the fair value of consideration given. Transaction
costs are recognised in the Consolidated Statement of Comprehensive
Income as incurred.
Fair value is defined as the amount for which an asset could be
exchanged between knowledgeable willing parties in an arm's length
transaction. Fair value is calculated on an unlevered, discounted
cashflow basis in accordance with IFRS 13 and IFRS 9.
Derecognition of financial assets
A financial asset (in whole or in part) is derecognised
either:
-- when the Group has transferred substantially all the risks and rewards of ownership; or
-- when it has neither transferred or retained substantially all
the risks and rewards and when it no longer has control over the
assets or a portion of the asset; or
-- when the contractual right to receive cashflow has expired.
Financial liabilities
Financial liabilities are classified according to the substance
of the contractual agreements entered into and are recorded on the
date on which the Group becomes party to the contractual
requirements of the financial liability.
All loans and borrowings are initially recognised at cost, being
fair value of the consideration received, less issue costs where
applicable. After initial recognition, all interest-bearing loans
and borrowings are subsequently measured at amortised cost using
the effective interest rate method. Loan balances as at the year
end have not been discounted to reflect amortised cost, as the
amounts are not materially different from the outstanding
balances.
The Group's other financial liabilities measured at amortised
cost include trade and other payables and other short term monetary
liabilities which are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest rate method.
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
Consolidated Statement of Comprehensive Income.
Embedded derivatives
Embedded derivatives are treated as separate derivatives when
their economic characteristics and risks are not closely related to
those of the host contract, which is a financial liability, the
terms of the embedded derivative would meet the definition of a
stand-alone derivative if they were contained in a separate
contract and the combined contract is not held for trading or
designated at fair value. Embedded derivatives are measured at fair
value with changes in fair value recognised in the Consolidated
Statement of Comprehensive Income. Embedded derivatives which are
closely related to the host contract are not separated from the
host instrument.
Finance expenses
Borrowing costs are recognised in the Consolidated Statement of
Comprehensive Income in the period to which they relate on an
accruals basis.
Share capital
Financial instruments issued by the Company are treated as
equity if the holder has only a residual interest in the assets of
the Company after the deduction of all liabilities. The Company's
ordinary shares are classified as equity instruments.
Incremental costs directly attributable to the issue of new
shares are shown in share premium as a deduction from proceeds.
Incremental costs include those incurred in connection with the
placing and admission which include fees payable under a placing
agreement, legal costs and any other applicable expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held
on call with banks and other short-term highly liquid deposits with
original maturities of 3 months or less, that are readily
convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Foreign currencies
Transactions in foreign currencies are translated at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
reporting date are translated at the foreign exchange rate ruling
at that date. Foreign exchange differences arising on translation
are recognised in the Consolidated Statement of Comprehensive
Income.
Dividends
Dividends payable are recognised as distributions in the
financial statements when the Company's obligation to make payment
has been established.
Income recognition
Dividend income and interest income on shareholder loan
investments are recognised when the Group's entitlement to receive
payment is established.
Other income is accounted for on an accruals basis using the
effective interest rate method.
Gains or losses resulting from the movement in fair value of the
Group's and Company's investments held at fair value through profit
and loss are recognised in the Consolidated or Company Statement of
Comprehensive Income at each valuation point.
Expenses
Expenses are accounted for on an accruals basis. Share issue
expenses of the Company directly attributable to the issue and
listing of shares are charged to the share premium account.
The Company issues shares to the Investment Manager in exchange
for receiving investment management services. The fair value of the
investment management services received in exchange for shares is
recognised as an expense at the time at which the investment
management fees are earned, with a corresponding increase in
equity. The fair value of the investment management services is
calculated by reference to the definition of investment management
fees in the Investment Management Agreement.
Taxation
Under the current system of taxation in the UK, the Group is
liable to taxation on its operations in the UK.
Payment received or receivable from the Group or Group owned
SPVs for losses surrendered are recognised in the financial
statements and form part of the tax credit. In some situations, it
might not be appropriate to recognise the tax credit until the
Group's and Group owned SPVs' tax affairs have been finalised and
the losses elections have been made.
Current tax is the expected tax payable on the taxable income
for the period, using tax rates that have been enacted or
substantively enacted at the date of the Consolidated Statement of
Financial Position.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.
Deferred tax assets and liabilities are not recognised if the
temporary differences arise from goodwill or from the initial
recognition of other assets and liabilities in a transaction that
affects neither the tax profit or the accounting profit. Deferred
tax liabilities are recognised for taxable temporary differences
arising on investments, except where the Group is able to control
the timing of the reversal of the difference and it is probable
that the temporary difference will not reverse in the foreseeable
future. Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is settled or
the asset is realised. Deferred tax is charged or credited to the
Consolidated Statement of Comprehensive Income except when it
relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off tax assets against tax
liabilities and when they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis. Deferred tax assets and
liabilities are not discounted.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors, as a
whole. The key measure of performance used by the Board to assess
the Group's performance and to allocate resources is the total
return on the Group's net assets, as calculated under IFRS, and
therefore no reconciliation is required between the measure of
profit or loss used by the Board and that contained in the
financial statements.
For management purposes, the Group is organised into one main
operating segment, which invests in wind farm assets.
All of the Group's income is generated within the UK.
All of the Group's non-current assets are located in the UK.
2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires the
application of estimates and assumptions which may affect the
results reported in the financial statements. Estimates, by their
nature, are based on judgement and available information.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying value of assets and
liabilities are those used to determine the fair value of the
investments as disclosed in note 9 to the financial statements.
As disclosed in note 1, the Directors have concluded that the
Company meets the definition of an investment entity as defined in
IFRS 10, IFRS 12 and IAS 27. This conclusion involved a degree of
judgement and assessment as to whether the Company met the criteria
outlined in the accounting standards.
The key assumptions that have a significant impact on the
carrying value of investments that are valued by reference to the
discounted value of future cashflows are the useful life of the
assets, the discount factors, the level of wind resource, the rate
of inflation, the price at which the power and associated benefits
can be sold and the amount of electricity the assets are expected
to produce.
Useful lives are based on the Investment Manager's estimates of
the period over which the assets will generate revenue which are
periodically reviewed for continued appropriateness. The assumption
used for the useful life of the wind farms is 30 years. The actual
useful life may be a shorter or longer period depending on the
actual operating conditions experienced by the asset.
The discount factors are subjective and therefore it is feasible
that a reasonable alternative assumption may be used resulting in a
different value. The discount factors applied to the cashflows are
reviewed annually by the Investment Manager to ensure they are at
the appropriate level. The Investment Manager will take into
consideration market transactions, where of similar nature, when
considering changes to the discount factors used.
The revenues and expenditure of the investee companies are
frequently partly or wholly subject to indexation and an assumption
is made that inflation will increase at a long term rate.
The price at which the output from the generating assets is sold
is a factor of both wholesale electricity prices and the revenue
received from the Government support regime. Future power prices
are estimated using external third party forecasts which take the
form of specialist consultancy reports. The future power price
assumptions are reviewed as and when these forecasts are updated.
There is an inherent uncertainty in future wholesale electricity
price projection.
Specifically commissioned external reports are used to estimate
the expected electrical output from the wind farm assets taking
into account the expected average wind speed at each location and
generation data from historical operation. The actual electrical
output may differ considerably from that estimated in such a report
mainly due to the variability of actual wind to that modelled in
any one period. Assumptions around electrical output will be
reviewed only if there is good reason to suggest there has been a
material change in this expectation.
3. Investment management fees
Under the terms of the Investment Management Agreement, the
Investment Manager is entitled to a combination of a Cash Fee and
an Equity Element from the Company.
The Cash Fee is based upon the NAV as at the start of the
quarter in question on the following basis:
-- on that part of the then most recently announced NAV up to
and including GBP500 million, an amount equal to 0.25 per cent. of
such part of the NAV;
-- on that part of the then most recently announced NAV over
GBP500 million and up to and including GBP1,000 million, an amount
equal to 0.225 per cent. of such part of the NAV; and
-- on that part of the then most recently announced NAV over
GBP1,000 million, an amount equal to 0.2 per cent. of such part of
the NAV.
The Equity Element is calculated quarterly in advance and has a
value as set out below:
-- on that part of the then most recently announced NAV up to
and including GBP500 million, 0.05 per cent.; and
-- on that part of the then most recently announced NAV over
GBP500 million up to and including GBP1,000 million, 0.025 per
cent.
The ordinary shares issued to the Investment Manager under the
equity element are subject to a 3 year lock up starting from the
quarter in which they are due to be paid.
As at 31 December each year, the Cash Fee and Equity Element
shall be subject to a true-up to the value that would have been
deliverable had they been calculated quarterly in arrears.
Investment management fees paid or accrued in the year were as
follows:
For the year ended For the year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
---------------- ------------------- -------------------
Cash Fee 11,689 8,312
Equity Element 1,500 1,356
---------------- -------------------
13,189 9,668
---------------- ------------------- -------------------
The value of the Equity Element and the Cash Fee detailed in the
table above include the true-up amount for the year calculated in
accordance with the Investment Management Agreement.
4. Return on investments
For the year ended For the year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
-------------------------------------------------------------- ------------------- -------------------
Dividends received (note 19) 108,613 63,254
Interest on shareholder loan investment received (note 19) 6,153 3,468
Gain on adjustment to purchase price of investments (note 9) - 2,600
Unrealised movement in fair value of investments (note 9) 116,695 11,815
-------------------------------------------------------------- ------------------- -------------------
231,461 81,137
-------------------------------------------------------------- ------------------- -------------------
5. Operating expenses
For the year ended For the year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
--------------------------------------------------- ------------------- -------------------
Management fees (note 3) 13,189 9,668
Group and SPV administration fees 621 522
Non-executive Directors' fees 233 225
Other expenses 1,038 895
Fees to the Company's Auditor:
for audit of the statutory financial statements 77 76
for other audit related services 4 4
--------------------------------------------------- ------------------- -------------------
15,162 11,390
--------------------------------------------------- ------------------- -------------------
The fees to the Company's Auditor include GBP3,700 (2017:
GBP3,700) payable in relation to a limited review of the half year
report. During the year, BDO was paid GBPnil (2017: GBP22,000) in
relation to capital raises of the Company. Total fees payable to
BDO for non-audit services during the year were GBP3,700 (2017:
GBP25,700).
6. Taxation
For the year ended For the year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
--------------------------- ------------------- -------------------
UK Corporation Tax credit (1,703) (1,382)
--------------------------- ------------------- -------------------
(1,703) (1,382)
--------------------------- ------------------- -------------------
The tax credit for the year shown in the Statement of
Comprehensive Income is lower than the standard rate of corporation
tax of 19 per cent. (2017: 19.25 per cent.). The differences are
explained below.
For the year ended For the year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year before taxation 200,678 58,486
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year multiplied by the standard rate of corporation tax of
19 per cent. (2017:
19.25 per cent.) 38,129 11,256
Fair value movements (not subject to taxation) (22,172) (2,774)
Dividends received (not subject to taxation) (20,637) (12,174)
Expenditure not deductible for tax purposes 1,997 518
Surrendering of tax losses to unconsolidated subsidiaries 2,683 3,174
Payments for current year losses surrendered (219) (195)
Payments for prior year losses surrendered (1,484) (1,187)
---------------------------------------------------------------------------- ------------------- -------------------
Total tax credit (1,703) (1,382)
---------------------------------------------------------------------------- ------------------- -------------------
7. Earnings per share
For the year ended For the year ended
31 December 2018 31 December 2017
--------------------------------------------------------------------------- ------------------- -------------------
Profit attributable to equity holders of the Company - GBP'000 202,381 59,868
Weighted average number of ordinary shares in issue 1,091,314,663 789,115,278
--------------------------------------------------------------------------- ------------------- -------------------
Basic and diluted earnings from continuing operations in the year (pence) 18.54 7.59
--------------------------------------------------------------------------- ------------------- -------------------
Dilution of the earnings per share as a result of the Equity
Element of the investment management fee as disclosed in note 3
does not have a significant impact on the basic earnings per
share.
8. Dividends declared with respect to the year
Interim dividends paid in the year ended 31 December 2018 Dividend per share Total dividend
pence GBP'000
-------------------------------------------------------------------------------- ------------------- ---------------
With respect to the quarter ended 31 December 2017 1.6225 16,694
With respect to the quarter ended 31 March 2018 1.6900 17,394
With respect to the quarter ended 30 June 2018 1.6900 19,116
With respect to the quarter ended 30 September 2018 1.6900 19,121
6.6925 72,325
-------------------------------------------------------------------------------- ------------------- ---------------
Interim dividends declared after 31 December 2018 and not accrued in the year Dividend per share Total dividend
pence GBP'000
-------------------------------------------------------------------------------- ------------------- ---------------
With respect to the quarter ended 31 December 2018 1.6900 19,126
------------------- ---------------
1.6900 19,126
-------------------------------------------------------------------------------- ------------------- ---------------
On 18 January 2019, the Company announced a dividend of 1.69
pence per share with respect to the quarter ended 31 December 2018,
bringing the total dividend declared with respect to the year to 31
December 2018 to 6.76 pence per share. The record date for the
dividend was 1 February 2019 and the payment date is 28 February
2019.
The following table shows dividends paid in the prior year.
Total
Interim dividends paid in the year ended 31 December 2017 Dividend per share dividend
pence GBP'000
----------------------------------------------------------- ------------------- ----------
With respect to the quarter ended 31 December 2016 1.5850 11,682
With respect to the quarter ended 31 March 2017 1.6225 11,963
With respect to the quarter ended 30 June 2017 1.6225 11,968
With respect to the quarter ended 30 September 2017 1.6225 16,687
------------------------------------------------------------ ----------
6.4525 52,300
----------------------------------------------------------- ------------------- ----------
9. Investments at fair value through profit or loss
Group - for the year ended 31 December 2018 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
-------------------------------------------------------------- --------- ---------------- ----------
Opening balance 114,559 1,291,165 1,405,724
Additions 45,945 318,688 364,633
Repayment of shareholder loan investments (note 19) (15,845) - (15,845)
Unrealised movement in fair value of investments (note 4) 446 116,249 116,695
-------------------------------------------------------------- --------- ---------------- ----------
145,105 1,726,102 1,871,207
-------------------------------------------------------------- --------- ---------------- ----------
Group - For the year ended 31 December 2017 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
-------------------------------------------------------------- --------- ---------------- ----------
Opening balance 107,673 787,118 894,791
Additions 16,181 495,814 511,995
Repayment of shareholder loan investments (note 19) (12,877) - (12,877)
Adjustment to purchase price of investments - (2,600) (2,600)
Gain on adjustment to purchase price of investments (note 4) - 2,600 2,600
Dilution 1,945 (1,945) -
Unrealised movement in fair value of investments (note 4) 1,637 10,178 11,815
-------------------------------------------------------------- --------- ---------------- ----------
114,559 1,291,165 1,405,724
-------------------------------------------------------------- --------- ---------------- ----------
The unrealised movement in fair value of investments of the
Group during the year and the prior year was made up as
follows:
For the year ended For the year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
------------------------------------------------------- ------------------- -------------------
Increase / (decrease) in DCF valuation of investments 89,119 (17,413)
Repayment of shareholder loan investments (note 19) 15,845 12,877
Movement in cash balances of SPVs 9,912 13,679
Acquisition costs (1) 1,819 2,672
------------------------------------------------------- ------------------- -------------------
116,695 11,815
------------------------------------------------------- ------------------- -------------------
(1) Excludes GBP91,000 in relation to Tom nan Clach wind
farm.
The unrealised movement in fair value of investments of the
Company during the year and the prior year was made up as
follows:
Company - for the year ended 31 December 2018 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
-------------------------------------------------- --------- ---------------- ----------
Opening balance 672,517 738,861 1,411,378
Loan advanced to Holdco (note 19) 331,735 - 331,735
Repayment of loan to Holdco (note 19) (97,719) - (97,719)
Unrealised movement in fair value of investments - 230,315 230,315
-------------------------------------------------- --------- ---------------- ----------
906,533 969,176 1,875,709
-------------------------------------------------- --------- ---------------- ----------
Company - for the year ended 31 December 2017 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
-------------------------------------------------- --------- ---------------- ----------
Opening balance 246,534 659,998 906,532
Loan advanced to Holdco (note 19) 493,738 - 493,738
Repayment of loan to Holdco (note 19) (67,755) - (67,755)
Unrealised movement in fair value of investments - 78,863 78,863
-------------------------------------------------- --------- ---------------- ----------
672,517 738,861 1,411,378
-------------------------------------------------- --------- ---------------- ----------
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level.
The level of fair value hierarchy within the financial assets or
financial liabilities is determined on the basis of the lowest
level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in their
entirety into only one of the following 3 levels:
-- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the assets or liabilities, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
-- Level 3 - inputs for assets or liabilities that are not based
on observable market data (unobservable inputs).
The determination of what constitutes 'observable' requires
significant judgement by the Group. The Group considers observable
data to be market data that is readily available, regularly
distributed or updated, reliable and verifiable, not proprietary,
and provided by independent sources that are actively involved in
the relevant market.
The only financial instruments held at fair value are the
instruments held by the Group in the SPVs, which are fair valued at
each reporting date. The Group's investments have been classified
within level 3 as the investments are not traded and contain
unobservable inputs. The Company's investments are all considered
to be level 3 assets. As the fair value of the Company's equity and
loan investments in Holdco is ultimately determined by the
underlying fair values of the SPV investments, the Company's
sensitivity analysis of reasonably possible alternative input
assumptions is the same as for the Group.
Due to the nature of the investments, they are always expected
to be classified as level 3. There have been no transfers between
levels during the year ended 31 December 2018.
Any transfers between the levels would be accounted for on the
last day of each financial period.
Valuations are derived using a discounted cashflow methodology
in line with IPEV Valuation Guidelines and take into account, inter
alia, the following:
-- due diligence findings where relevant;
-- the terms of any material contracts including PPAs;
-- asset performance;
-- power price forecast from a leading market consultant; and
-- the economic, taxation or regulatory environment.
The DCF valuation of the Group's investments represents the
largest component of GAV and the key sensitivities are considered
to be the discount rate used in the DCF valuation and assumptions
in relation to inflation, energy yield, power price and asset
life.
As there is no debt at wind farm level, the DCF valuation is
produced by discounting the individual wind farm cashflows on an
unlevered basis. The equivalent levered discount rate would be
approximately 2 per cent. higher than the blended portfolio
discount rate.
For the year end DCF valuation, an upgraded discounting
methodology has been applied. Previously, each wind farm's
cashflows were discounted at a single discount rate, irrespective
of their nature. Different discount rates are now applied, tailored
to the nature of the underlying cashflows; for example, one
discount rate for fixed ROC cashflows and a higher discount rate
for merchant power cashflows. The blended portfolio discount rate,
assuming a 25 year asset life (see below), remains unchanged from
31 December 2017 at 7.7 per cent..
In addition to (but separate from) the upgraded discounting
methodology, the asset life assumption used in the year end DCF
valuation has been increased from 25 to 30 years, following a third
party technical assessment of the portfolio. The technical asset
life for many wind farms significantly exceeds 30 years and
appropriate assumptions have been made in relation to the continued
good management of the assets, lease extensions and other factors.
A 30 year asset life assumption is a more appropriate assumption to
be used to determine the fair value of the portfolio.
Amending the asset life and associated assumptions increased NAV
per share by 6.7 pence. It also means that the blended portfolio
discount rate has increased from 7.7 per cent. to 8.1 per cent. as
a result of including a higher proportion of higher discount rate
merchant power cashflows in years 26-30.
A variance of +/- 0.5 per cent. is considered to be a reasonable
range of alternative assumptions for discount rate.
The base case long term RPI assumption is 3.0 per cent. (1.0 per
cent. above the long term 2.0 per cent. CPI target). The assumption
was increased from 2.75 per cent. during the year.
Base case energy yield assumptions are P50 (50 per cent.
probability of exceedance) forecasts produced by expert consultants
based on long term wind data and operational history. The P90 (90
per cent. probability of exceedance over a 10 year period) and P10
(10 per cent. probability of exceedance over a 10 year period)
sensitivities reflect the future variability of wind and the
uncertainty associated with the long term data source being
representative of the long term mean. Given their basis on long
term operating data, it is not anticipated that base case energy
yield assumptions will be adjusted (other than any wind energy
true-ups with compensating purchase price adjustments).
Long term power price forecasts are provided by a leading market
consultant, updated quarterly and may be adjusted by the Investment
Manager where more conservative assumptions are considered
appropriate. Base case real power prices increase from
approximately GBP48/MWh (2020) to approximately GBP58/MWh (2040).
The sensitivity below assumes a 10 per cent. increase or decrease
in power prices relative to the base case for every year of the
asset life, which is relatively extreme (a 10 per cent. variation
in short term power prices, as reflected by the forward curve,
would have a much lesser effect).
Sensitivity analysis
The fair value of the Group's investments is GBP1,871,207,321
(2017: GBP1,405,724,491). The analysis below is provided to
illustrate the sensitivity of the fair value of investments to an
individual input, while all other variables remain constant. The
Board considers these changes in inputs to be within reasonable
expected ranges. This is not intended to imply the likelihood of
change or that possible changes in value would be restricted to
this range.
Change in fair value of
Input Base case Change in input investments Change in NAV per share
---------------- --------------------- ----------------- -------------------------------- ------------------------
GBP'000 pence
Discount rate 8.1 per cent. + 0.5 per cent. (64,598) (5.7)
- 0.5 per cent. 68,595 6.1
Energy yield P50 10 year P90 (114,646) (10.1)
10 year P10 114,566 10.1
Power price - 10 per cent. (119,528) (10.6)
Forecast by
leading consultant + 10 per cent. 118,901 10.5
Long term - 0.5 per cent. (67,438) (6.0)
inflation rate 3.0 per cent. + 0.5 per cent. 71,294 6.3
Asset life 30 years - 5 years (76,216) (6.7)
+ 5 years 61,166 5.4
The sensitivities above are assumed to be independent of each
other. Combined sensitivities are not presented.
10. Unconsolidated subsidiaries, associates and joint
ventures
The following table shows subsidiaries of the Group. As the
Company is regarded as an Investment Entity as referred to in note
1, these subsidiaries have not been consolidated in the preparation
of the financial statements:
Ownership interest as at Ownership interest as at
Investment Place of business 31 December 2018 31 December 2017
------------------------------------- ------------------- ------------------------- -------------------------
Bin Mountain Northern Ireland 100% 100%
Bishopthorpe England 100% 100%
Brockaghboy Northern Ireland 100% -
Carcant Scotland 100% 100%
Church Hill Northern Ireland 100% -
Corriegarth Scotland 100% 100%
Corriegarth Holdings(1) Scotland 100% 100%
Cotton Farm England 100% 100%
Crighshane Northern Ireland 100% -
Crighshane & Church Hill Holdco(2) Northern Ireland 100% -
Crighshane & Church Hill Funding(2) Northern Ireland 100% -
Earl's Hall Farm England 100% 100%
Kildrummy Scotland 100% 100%
Langhope Rig Scotland 100% 100%
Maerdy Wales 100% 100%
North Hoyle Wales 100% 100%
Screggagh Northern Ireland 100% 100%
Slieve Divena Northern Ireland 100% 100%
Stroupster Scotland 100% 100%
Tappaghan Northern Ireland 100% 100%
Bicker Fen England 80% 80%
Deeping St. Nicholas England 80% 80%
Glass Moor England 80% 80%
Red House England 80% 80%
Red Tile England 80% 80%
Fenlands(3) England 80% 80%
Drone Hill Scotland 51.6% 51.6%
North Rhins Scotland 51.6% 51.6%
Sixpenny Wood England 51.6% 51.6%
Yelvertoft England 51.6% 51.6%
SYND Holdco(4) UK 51.6% 51.6%
------------------------------------- ------------------- ------------------------- -------------------------
(1) The Group's investment in Corriegarth is held through
Corriegarth Holdings.
(2) The Group's investments in Crighshane and Church Hill are
held through Crighshane & Church Hill Funding, which is held
through Crighshane & Church Hill Holdco.
(3) The Group's investments in Deeping St. Nicholas, Glass Moor,
Red House and Red Tile are held through Fenlands.
(4) The Group's investments in Drone Hill, North Rhins, Sixpenny
Wood and Yelvertoft are held through SYND Holdco.
There are no restrictions on the ability of the Group's
unconsolidated subsidiaries to transfer funds in the form of cash
dividends.
The following table shows associates and joint ventures of the
Group which have been recognised at fair value as permitted by IAS
28 "Investments in Associates and Joint Ventures":
Ownership interest as at Ownership interest as at
Investment Place of business 31 December 2018 31 December 2017
--------------------- ------------------- ------------------------- -------------------------
Braes of Doune Scotland 50% 50%
ML Wind(1) England 49% 49%
Little Cheyne Court England 41% 41%
Clyde Scotland 28.2% 19.775%
Rhyl Flats Wales 24.95% 24.95%
--------------------- ------------------- ------------------------- -------------------------
(1) The Group's investments in Middlemoor and Lindhurst are 49
per cent. (2017: 49 per cent.). These are held through ML Wind.
As disclosed in note 19, during the year, Holdco advanced a loan
to Clyde of GBP45,945,307 (2017: GBP16,181,374). The loan accrues
interest at a rate of 5.8 per cent. per annum.
Security deposits and guarantees provided by the Group on behalf
of its investments are as follows:
Provider
of security Investment Beneficiary Nature Purpose Amount
GBP'000
-------------- --------------- -------------------- --------------------- ---------------------------- --------
Grid, radar,
Holdco Clyde SSE Counter-indemnity decommissioning 21,771
The Crown
The Company Rhyl Flats Estate Guarantee Decommissioning 4,291
Braes
The Company of Doune Land owner Guarantee Decommissioning 2,000
The Company Bishopthorpe MOD Guarantee Radar 1,206
The Company Stroupster RBS Counter-indemnity Decommissioning 366
Cotton
The Company Farm Land owner Guarantee Decommissioning 165
Sixpenny
The Company Wood Land owner Payment undertaking Community fund 150
Daventry
The Company Yelvertoft District Council Guarantee Decommissioning 82
Langhope
The Company Rig Barclays Counter-indemnity Decommissioning 81
The Company Maerdy Natural Resource Guarantee Access rights to n/a
Wales neighbouring land
The Company North The Crown Guarantee Decommissioning n/a
Hoyle Estate
30,112
------------------------------------------------------------------------------------------------------ --------
The fair value of these guarantees, payment undertakings and
counter-indemnities provided by the Group are considered to be
GBPnil.
11. Receivables
Group 31 December 2018 31 December 2017
GBP'000 GBP'000
------------------------------------------------------------------------ ----------------- -----------------
Amounts due as consideration for investee company tax losses (note 19) 1,326 1,011
VAT receivable 125 369
Other receivables 83 29
Prepayments 81 73
------------------------------------------------------------------------ ----------------- -----------------
1,615 1,482
------------------------------------------------------------------------ ----------------- -----------------
Company 31 December 2018 31 December 2017
GBP'000 GBP'000
---------------- ----------------- -----------------
Prepayments 81 73
VAT receivable 19 12
100 85
---------------- ----------------- -----------------
12. Payables
Group 31 December 2018 31 December 2017
GBP'000 GBP'000
----------------------------------- ----------------- -----------------
Loan interest payable 2,070 1,193
Commitment fee payable 279 147
Other finance costs payable 18 -
Investment management fee payable 366 606
Acquisition costs payable 263 -
Other payables 443 679
Amounts due to SPVs (note 19) - 994
Share issue costs payable - 268
VAT payable - 201
3,439 4,088
----------------------------------- ----------------- -----------------
Company 31 December 2018 31 December 2017
GBP'000 GBP'000
----------------------------------- ----------------- -----------------
Loan interest payable 2,070 1,193
Commitment fee payable 279 147
Other finance costs payable 18 -
Investment management fee payable 366 606
Other payables 302 288
Share issue costs payable - 268
3,035 2,502
----------------------------------- ----------------- -----------------
13. Loans and borrowings
Group and Company 31 December 2018 31 December 2017
GBP'000 GBP'000
--------------------------- ----------------- -----------------
Opening balance 265,000 100,000
Revolving credit facility
Drawdowns 180,000 500,000
Repayments (265,000) (335,000)
Term debt facilities
Drawdowns 300,000 -
Closing balance 480,000 265,000
--------------------------- ----------------- -----------------
For the year ended For the year ended
Group and Company 31 December 2018 31 December 2017
GBP'000 GBP'000
--------------------------- ------------------- -------------------
Loan interest 10,554 5,990
Facility arrangement fees 3,050 2,000
Commitment fees 633 1,018
Other facility fees 140 140
Professional fees 109 48
--------------------------- ------------------- -------------------
Finance expense 14,486 9,196
--------------------------- ------------------- -------------------
The loan balance as at 31 December 2018 has not been adjusted to
reflect amortised cost, as the amounts are not materially different
from the outstanding balances.
In relation to non-current loans and borrowings, the Board is of
the view that the current market interest rate is not significantly
different to the respective instrument's contractual interest
rates, therefore the fair value of the non-current loans and
borrowings at the end of the reporting periods is not significantly
different from their carrying amounts.
As at 31 December 2018, the Company had a revolving credit
facility with RBS, RBC and Santander of up to GBP300,000,000 with a
margin of 1.75 per cent. per annum. The final maturity date of the
revolving credit facility was 18 August 2020 which was the third
anniversary of the amended and restated facility agreement. The
Company was obliged to pay a quarterly commitment fee of 0.65 per
cent. per annum on the undrawn commitment available under the
revolving credit facility.
As at 31 December 2018, the balance of this facility was
GBP80,000,000 (2017: GBP165,000,000), accrued interest was
GBP103,277 (2017: GBP613,688) and the outstanding commitment fee
was GBP278,521 (2017: GBP146,651).
During the year, the Company entered into new term debt
arrangements with NAB and CIBC. The Company's term debt facilities
and associated interest rate swaps now have various maturity dates,
as set out in the below table:
Provider Maturity date Loan margin Swap fixed rate Loan principal Accrued interest at 31 December 2018
% % GBP'000 GBP'000
---------- ---------------- ------------ ---------------- --------------- -------------------------------------
CBA 29/07/2022 1.65 1.9410 75,000 465
CBA 29/07/2022 1.65 1.2260 25,000 124
NAB 01/11/2023 1.25 1.4280 75,000 303
CBA 06/03/2025 1.55 1.5265 50,000 265
CIBC 03/11/2025 1.50 1.5103 100,000 454
NAB 01/11/2026 1.55 1.5980 75,000 356
---------- ---------------- ------------ ---------------- --------------- -------------------------------------
400,000 1,967
---------------- ------------ ---------------- --------------- -------------------------------------
The swaps are embedded derivatives closely related to their host
contracts. Accordingly they have been treated as single fixed rate
loan agreements which effectively set interest payable at fixed
rates.
All borrowing ranks pari passu and is secured by a debenture
over the assets of the Company, including its shares in Holdco, and
a floating charge over Holdco's bank accounts.
14. Contingencies and commitments
At the time of acquisition, wind farms which had less than 12
months' operational data may have had a wind energy true-up
applied, whereby the purchase price for these wind farms may be
adjusted so that it is based on a 2 year operational record, once
the operational data has become available.
The following 2 wind energy true-ups remain outstanding and the
maximum adjustment under each are as follows: Clyde Extension
GBP4,747,094; and Corriegarth GBP9,069,293.
The Board and the Investment Manager are of the opinion that the
estimate of the energy yield utilised at acquisition for the
remaining assets is the most appropriate unbiased estimate of the
yield following 2 years' operational data. Any variances of actual
energy production from the date of acquisition to the date of
signing this report are attributable to weather fluctuations and
other short term operational factors rather than more fundamental
factors that might influence the long term assessment. Therefore it
is not appropriate to recognise an asset or liability in respect of
these acquisitions.
On 4 October 2018, the Group entered into an agreement to
acquire Belltown Power's 75 per cent. stake in Tom nan Clach wind
farm for a headline consideration of GBP126 million, with the
investment scheduled to complete in July 2019 once the wind farm is
operational.
On 19 December 2018, the Group entered into an agreement to
acquire Blue Energy's Douglas West project, with the investment
scheduled to complete in March 2019. The Group will then construct
the wind farm, with operations scheduled to commence in July 2021
and a total investment in the region of GBP45 million.
15. Share capital - ordinary shares of GBP0.01
Date Issued and fully paid Number of shares issued Share capital Share premium Total
GBP'000 GBP'000 GBP'000
------------------ ------------------------------ ------------------------ -------------- -------------- --------
1 January 2018 1,028,514,652 10,285 828,526 838,811
Shares issued to the Investment Manager
True-up of 2017 Equity
1 February 2018 Element 38,526 1 49 50
1 February 2018 Q1 2018 Equity Element 337,133 3 372 375
8 May 2018 Q2 2018 Equity Element 327,980 3 372 375
1 August 2018 Q3 2018 Equity Element 328,741 3 372 375
7 November 2018 Q4 2018 Equity Element 326,053 3 372 375
1,358,433 13 1,537 1,550
Other
22 May 2018 Capital raise 101,576,695 1,016 117,829 118,845
22 May 2018 Less share issue costs - - (1,681) (1,681)
------------------------------ ------------------------ -------------- --------
31 December 2018 1,131,449,780 11,314 946,211 957,525
-------------------------------------------------- ------------------------ -------------- -------------- --------
Date Issued and fully paid Number of shares issued Share capital Share premium Total
GBP'000 GBP'000 GBP'000
------------------ ------------------------------ ------------------------ -------------- -------------- --------
1 January 2017 736,700,850 7,367 495,110 502,477
Shares issued to the Investment Manager
True-up of 2016 Equity
2 February 2017 Element 21,163 - 34 34
2 February 2017 Q1 2017 Equity Element 299,268 3 322 325
5 May 2017 Q2 2017 Equity Element 298,127 3 324 327
3 August 2017 Q3 2017 Equity Element 298,151 3 324 327
26 October 2017 Q4 2017 Equity Element 298,798 3 324 327
------------------ ------------------------------ ------------------------ -------------- -------------- --------
1,215,507 12 1,328 1,340
Other
1 January 2017 Less share issue costs(1) - - (24) (24)
27 October 2017 Capital raise 290,598,295 2,906 337,094 340,000
27 October 2017 Less share issue costs - - (4,982) (4,982)
------------------ ------------------------------ ------------------------ -------------- --------
31 December 2017 1,028,514,652 10,285 828,526 838,811
-------------------------------------------------- ------------------------ -------------- -------------- --------
(1) Share issue costs recognised in the year in relation to the
capital raise on 22 November 2016.
Shareholders are entitled to all dividends paid by the Company
and, on a winding up, provided the Company has satisfied all of its
liabilities, the shareholders are entitled to all of the residual
assets of the Company.
Pursuant to the terms of the Investment Management Agreement,
the Investment Manager receives an Equity Element as part payment
of its investment management fee as disclosed in note 3 to the
financial statements. The figures given in the table in note 3
include the true-up amount of the investment management fee for the
periods calculated in accordance with the Investment Management
Agreement and issued subsequent to 31 December 2018.
16. Net assets per share
Group and Company 31 December 2018 31 December 2017
---------------------------------- ----------------- -----------------
Net assets - GBP'000 1,392,810 1,144,040
Number of ordinary shares issued 1,131,449,780 1,028,514,652
---------------------------------- ----------------- -----------------
Total net assets - pence 123.1 111.2
---------------------------------- ----------------- -----------------
17. Notes supporting the Statement of Cash Flows
Reconciliation of operating profit for the year to net cash from
operating activities
For the year ended For the year ended
Group 31 December 2018 31 December 2017
GBP'000 GBP'000
------------------------------------------------------ ------------------- -------------------
Operating profit for the year 215,164 67,682
Adjustments for:
Movement in fair value of investments (notes 4 & 9) (116,695) (11,815)
Adjustment to purchase price of investments (note 9) - (2,600)
Investment acquisition costs 1,910 2,672
Decrease in receivables 182 2,464
Decrease in payables (1,620) (944)
Equity Element of Investment Manager's fee (note 3) 1,500 1,356
Consideration for investee company tax losses 1,388 1,268
Net cash flows from operating activities 101,829 60,083
------------------------------------------------------ ------------------- -------------------
For the year ended For the year ended
Company 31 December 2018 31 December 2017
GBP'000 GBP'000
----------------------------------------------------- ------------------- -------------------
Operating profit for the year 216,867 69,064
Adjustments for:
Movement in fair value of investments (note 9) (230,315) (78,863)
(Increase)/decrease in receivables (15) 2,702
Decrease in payables (175) (7,939)
Equity Element of Investment Manager's fee (note 3) 1,500 1,356
-----------------------------------------------------
Net cash flows from operating activities (12,138) (13,680)
----------------------------------------------------- ------------------- -------------------
Reconciliation of cash flows and non-cash flow changes in
liabilities arising from financing activities
Group and Company Loans and borrowings Other liabilities
GBP'000 GBP'000
---------------------------------------------------------- --------------------- ------------------
As at 1 January 2018 265,000 1,295
Cash flows (net) 215,000 (13,460)
Movements in Statement of Comprehensive Income (note 13) - 14,486
As at 31 December 2018 480,000 2,321
---------------------------------------------------------- --------------------- ------------------
Group and Company Loans and borrowings Other liabilities
GBP'000 GBP'000
---------------------------------------------------------- --------------------- ------------------
As at 1 January 2017 100,000 718
Cash flows (net) 165,000 (8,619)
Movements in Statement of Comprehensive Income (note 13) - 9,196
As at 31 December 2017 265,000 1,295
---------------------------------------------------------- --------------------- ------------------
18. Financial risk management
The Investment Manager and the Administrator report to the Board
on a quarterly basis and provide information to the Board which
allows it to monitor and manage financial risks relating to its
operations. The Group's activities expose it to a variety of
financial risks: market risk (including price risk, interest rate
risk and foreign currency risk), credit risk and liquidity
risk.
The Group's market risk is managed by the Investment Manager in
accordance with the policies and procedures in place. The Group's
overall market positions are monitored on a quarterly basis by the
Board.
Price risk
Price risk is defined as the risk that the fair value of a
financial instrument held by the Group will fluctuate. Investments
are measured at fair value through profit or loss and are valued on
an unlevered, discounted cashflow basis. Therefore, the value of
these investments will be (amongst other risk factors) a function
of the discounted value of their expected cashflows and, as such,
will vary with movements in interest rates and competition for such
assets. As disclosed in note 9, the discount factors are subjective
and therefore it is feasible that a reasonable alternative
assumption may be used resulting in a different valuation for these
investments.
Interest rate risk
The Group's interest rate risk on interest bearing financial
assets is limited to interest earned on cash. The Group's only
other exposure to interest rate risk is due to floating interest
rates required to service external borrowings through the revolving
credit facility. An increase of 1 per cent. represents the
Investment Manager's assessment of a reasonably possible change in
interest rates. Should the LIBOR rate increase from 0.7 per cent.
to 1.7 per cent. (2017: increase from 0.5 per cent. to 1.5 per
cent.), the annual interest due on the facility would increase by
GBP800,000 (2017: GBP1,650,000). The Investment Manager regularly
monitors interest rates to ensure the Group has adequate provisions
in place in the event of significant fluctuations.
The associated interest rate swaps on amounts drawn under the
CBA, CIBC and NAB term debt facilities effectively sets interest
payable at a fixed rate for the full term of the loans, thereby
mitigating the risks associated with the variability of cashflows
arising from interest rate fluctuations.
The Board considers that, as shareholder loan investments bear
interest at a fixed rate, they do not carry any interest rate
risk.
The Group's interest and non-interest bearing assets and
liabilities as at 31 December 2018 are summarised below:
Interest bearing Non-interest
Group Fixed rate Floating rate bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- -------------- ------------- ----------
Assets
Cash at bank - - 3,427 3,427
Other receivables (note 11) - - 1,534 1,534
Investments (note 9) 145,105 - 1,726,102 1,871,207
-------------------------------- ----------- -------------- ------------- ----------
145,105 - 1,731,063 1,876,168
-------------------------------- ----------- -------------- ------------- ----------
Liabilities
Other payables (note 12) - - (3,439) (3,439)
Loans and borrowings (note 13) (400,000) (80,000) - (480,000)
-------------------------------- ----------- -------------- ------------- ----------
(400,000) (80,000) (3,439) (483,439)
-------------------------------- ----------- -------------- ------------- ----------
The Group's interest and non-interest bearing assets and
liabilities as at 31 December 2017 are summarised below:
Interest bearing Non-interest
Group Fixed rate Floating rate bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- -------------- ------------- ----------
Assets
Cash at bank - 5,802 120 5,922
Other receivables (note 11) - - 1,409 1,409
Investments (note 9) 114,559 - 1,291,165 1,405,724
-------------------------------- ----------- -------------- ------------- ----------
114,559 5,802 1,292,694 1,413,055
-------------------------------- ----------- -------------- ------------- ----------
Liabilities
Other payables (note 12) - - (4,088) (4,088)
Loans and borrowings (note 13) (100,000) (165,000) - (265,000)
-------------------------------- ----------- -------------- ------------- ----------
(100,000) (165,000) (4,088) (269,088)
-------------------------------- ----------- -------------- ------------- ----------
The Company's interest and non-interest bearing assets and
liabilities as at 31 December 2018 are summarised below:
Interest bearing Non-interest
Company Fixed rate Floating rate bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- -------------- ------------- ----------
Assets
Cash at bank - - 36 36
Other receivables (note 11) - - 19 19
Investments (note 9) - - 1,875,709 1,875,709
-------------------------------- ----------- -------------- ------------- ----------
- - 1,875,764 1,875,764
-------------------------------- ----------- -------------- ------------- ----------
Liabilities
Other payables (note 12) - - (3,035) (3,035)
Loans and borrowings (note 13) (400,000) (80,000) - (480,000)
-------------------------------- ----------- -------------- ------------- ----------
(400,000) (80,000) (3,035) (483,035)
-------------------------------- ----------- -------------- ------------- ----------
The Company's interest and non-interest bearing assets and
liabilities as at 31 December 2017 are summarised below:
Interest bearing Non-interest
Company Fixed rate Floating rate bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- -------------- ------------- ----------
Assets
Cash at bank - 78 1 79
Other receivables (note 11) - - 12 12
Investments (note 9) - - 1,411,378 1,411,378
-------------------------------- ----------- -------------- ------------- ----------
- 78 1,411,391 1,411,469
-------------------------------- ----------- -------------- ------------- ----------
Liabilities
Other payables (note 12) - - (2,502) (2,502)
Loans and borrowings (note 13) (100,000) (165,000) - (265,000)
-------------------------------- ----------- -------------- ------------- ----------
(100,000) (165,000) (2,502) (267,502)
-------------------------------- ----------- -------------- ------------- ----------
Foreign currency risk
Foreign currency risk is defined as the risk that the fair
values of future cashflows will fluctuate because of changes in
foreign exchange rates. The Group's financial assets and
liabilities are denominated in GBP and substantially all of its
revenues and expenses are in GBP. The Group is not considered to be
materially exposed to foreign currency risk.
Credit risk
Credit risk is the risk of loss due to the failure of a borrower
or counterparty to fulfil its contractual obligations. The Group is
exposed to credit risk in respect of other receivables, cash at
bank and loan investments. The Group's credit risk exposure is
minimised by dealing with financial institutions with investment
grade credit ratings and making loan investments which are equity
in nature. The Company has advanced loans to Holdco, however does
not consider these loans a risk as they are intra-Group. No
balances are past due or impaired.
The table below details the Group's maximum exposure to credit
risk:
Group 31 December 2018 31 December 2017
GBP'000 GBP'000
----------------------------- ----------------- -----------------
Other receivables (note 11) 1,534 1,409
Cash at bank 3,427 5,922
Loan investments (note 9) 145,105 114,559
150,066 121,890
----------------------------- ----------------- -----------------
The table below details the Company's maximum exposure to credit
risk:
Company 31 December 31 December
2018 2017
GBP'000 GBP'000
----------------------------- ------------ ------------
Other receivables (note 11) 19 12
Cash at bank 36 79
Loan investments (note 9) 906,533 672,517
----------------------------- ------------ ------------
906,588 672,608
----------------------------- ------------ ------------
The table below shows the cash balances of the Group and the
Standard & Poor's credit rating for each counterparty:
Group Rating 31 December 2018 31 December 2017
GBP'000 GBP'000
------------------- -------- ----------------- -----------------
RBS International BBB- 3,427 5,922
3,427 5,922
---------------------------- ----------------- -----------------
The table below shows the cash balances of the Company and the
Standard & Poor's credit rating for each counterparty:
Company Rating 31 December 2018 31 December 2017
GBP'000 GBP'000
------------------- -------- ----------------- -----------------
RBS International BBB- 36 79
------------------- -----------------
36 79
---------------------------- ----------------- -----------------
Liquidity risk
Liquidity risk is the risk that the Group and the Company may
not be able to meet a demand for cash or fund an obligation when
due. The Investment Manager and the Board continuously monitor
forecast and actual cashflows from operating, financing and
investing activities to consider payment of dividends, repayment of
the Company's outstanding debt or further investing activities.
As disclosed in note 14, the purchase price of wind farms
acquired which have less than 12 months' operational data, may be
adjusted once 2 years of operational data becomes available.
The following tables detail the Group's expected maturity for
its financial assets (excluding equity) and liabilities together
with the contractual undiscounted cashflow amounts:
Group - 31 December 2018 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------------- ------------ ---------- ----------
Assets
Other receivables (note 11) 1,534 - - 1,534
Cash at bank 3,427 - - 3,427
Loan investments (note 9) - - 145,105 145,105
Liabilities
Other payables (note 12) (3,439) - - (3,439)
Loans and borrowings (15,720) (301,296) (239,068) (556,084)
(14,198) (301,296) (93,963) (409,457)
----------------------------- ----------------- ------------ ---------- ----------
Group - 31 December 2017 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------------- ------------ --------- ----------
Assets
Other receivables (note 11) 1,409 - - 1,409
Cash at bank 5,922 - - 5,922
Loan investments (note 9) - - 114,559 114,559
Liabilities
Other payables (note 12) (4,088) - - (4,088)
Loans and borrowings (8,416) (285,346) - (293,762)
----------------------------- ----------------- ------------ --------- ----------
(5,173) (285,346) 114,559 (175,960)
----------------------------- ----------------- ------------ --------- ----------
The following tables detail the Company's expected maturity for
its financial assets (excluding equity) and liabilities together
with the contractual undiscounted cashflow amounts:
Company - 31 December 2018 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------------- ------------ ---------- ----------
Assets
Other receivables (note 11) 19 - - 19
Cash at bank 36 - - 36
Loan investments (note 9) - - 906,533 906,533
Liabilities
Other payables (note 12) (3,035) - - (3,035)
Loans and borrowings (15,720) (301,296) (239,068) (556,084)
----------------------------- ----------------- ------------ ---------- ----------
(18,700) (301,296) 667,465 347,469
----------------------------- ----------------- ------------ ---------- ----------
Company - 31 December 2017 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------------- ------------ --------- ----------
Assets
Other receivables (note 11) 12 - - 12
Cash at bank 79 - - 79
Loan investments (note 9) - - 672,517 672,517
Liabilities
Other payables (note 12) (2,502) - - (2,502)
Loans and borrowings (8,416) (285,346) - (293,762)
----------------------------- ----------------- ------------ --------- ----------
(10,827) (285,346) 672,517 376,344
----------------------------- ----------------- ------------ --------- ----------
The Group and Company will use cashflow generation, equity
placings, debt refinancing or disposal of assets to manage
liabilities as they fall due in the longer term.
Capital risk management
The Company considers its capital to comprise ordinary share
capital, distributable reserves and retained earnings. The Company
is not subject to any externally imposed capital requirements.
The Group's and the Company's primary capital management
objectives are to ensure the sustainability of its capital to
support continuing operations, meet its financial obligations and
allow for growth opportunities. Generally, acquisitions are
anticipated to be funded with a combination of current cash, debt
and equity.
19. Related party transactions
During the year, the Company increased its loan to Holdco by
GBP331,735,406 (2017: GBP493,738,402) and Holdco made repayments of
GBP97,719,585 (2017: GBP67,755,512). The amount outstanding at the
year end was GBP906,533,086 (31 December 2017: GBP672,517,265).
During the year, Holdco increased its shareholder loan to Clyde
by GBP45,945,307 (2017: GBP16,181,374). The loan accrues interest
at a rate of 5.8 per cent. per annum. The Group received loan
capital repayments of GBP15,845,320 (2017: GBP12,876,474) and loan
interest repayments of GBP6,153,489 (2017: GBP3,468,221) during the
year from Clyde and the balance at 31 December 2018 was
GBP143,006,034 (2017: GBP112,906,047).
During the year, GBP417,000 (2017: GBP371,000) was received from
Little Cheyne Court, GBP873,835 (2017: GBP897,321) was received
from Braes of Doune and GBP97,374 (2017: GBPnil) was received from
SYND Holdco, as compensation for corporation tax losses surrendered
via consortium relief through the Group.
As at 31 December 2018, GBP742,228 (2017: GBP873,835) was due
from Braes of Doune, GBP232,480 (2017: GBP97,374) was due from SYND
Holdco, GBP351,026 (2017: GBPnil) was due from North Rhins and
GBPnil (2017: GBP39,484) was due from Little Cheyne Court as
disclosed in note 11, in relation to corporation tax losses
surrendered through the Group.
During the year, Holdco received GBP2,655,957 (2017: GBP994,430)
in relation to renewables obligation proceeds on behalf of Bin
Mountain, Carcant and Tappaghan. Amounts due to these investee
companies as at 31 December 2018 were GBPnil (2017:
GBP994,430).
Under the terms of a Management Services Agreement with Holdco,
the Company receives GBP800,000 per annum in relation to management
and administration services. During the year, GBP800,000 (2017:
GBP800,000) was paid from Holdco to the Company under this
agreement and amounts due to the Company at the year end were
GBPnil (2017: GBPnil).
Holdco has Management Service Agreements with Braes of Doune,
Tappaghan, Bin Mountain, Carcant, Cotton Farm, Earl's Hall Farm,
Kildrummy, Maerdy, North Rhins, Drone Hill, Sixpenny Wood and
Yelvertoft for which Holdco receives GBP33,937 (2017: GBP32,595)
per wind farm per annum, of which GBP11,312 (2017: GBP10,865) is
payable to the Investment Manager in relation to administration and
management services. Holdco also has Management Service Agreements
with Stroupster, Screggagh, Bishopthorpe, Corriegarth Holdings,
Slieve Divena, North Hoyle, Langhope Rig and Brockaghboy for which
Holdco receives GBP45,250 (2017: GBP43,460) per wind farm per
annum, of which GBP22,625 (2017: GBP21,730) is payable to the
Investment Manager. Amounts due to Holdco in respect of these fees
as at 31 December 2018 were GBPnil (2017: GBPnil).
The table below shows dividends receivable in the year from the
Group's investments.
For the year ended For the year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
-------------------------- ------------------- -------------------
Fenlands (1) 9,600 -
Corriegarth Holdings (2) 9,495 3,166
ML Wind (3) 7,105 5,067
SYND Holdco (4) 6,966 6,564
Rhyl Flats 6,686 5,065
Stroupster 6,181 6,787
Maerdy 4,879 3,244
Brockaghboy 4,825 -
Braes of Doune 4,774 5,187
Tappaghan 4,633 3,414
Kildrummy 4,585 4,476
Little Cheyne Court 4,428 3,169
North Hoyle 4,300 -
Cotton Farm 4,147 3,411
Bicker Fen 3,936 -
Bishopthorpe 3,635 1,238
Clyde 3,502 2,855
Langhope Rig 3,431 1,694
Slieve Divena 3,043 1,130
Earl's Hall Farm 2,837 1,935
Screggagh 2,488 2,375
Bin Mountain 1,711 1,539
Carcant 1,426 938
108,613 63,254
-------------------------- ------------------- -------------------
(1) The Group's investments in Deeping St. Nicholas, Glass Moor,
Red House and Red Tile are held through Fenlands.
(2) The Group's investment in Corriegarth is held through
Corriegarth Holdings.
(3) The Group's investments in Middlemoor and Lindhurst are held
through ML Wind.
(4) The Group's investments in Drone Hill, North Rhins, Sixpenny
Wood and Yelvertoft are held through SYND Holdco.
20. Ultimate controlling party
In the opinion of the Board, on the basis of the shareholdings
advised to them, the Company has no ultimate controlling party.
21. Subsequent events
On 18 January 2019, the Company announced a dividend of GBP19.1
million, equivalent to 1.69 pence per share with respect to the
quarter ended 31 December 2018, bringing the total dividend
declared with respect to the year to 31 December 2018 to 6.76 pence
per share. The record date for the dividend was 1 February 2019 and
the payment date was 28 February 2019.
On 1 February 2019, the Company amended and restated its
revolving credit facility with RBS, RBC and Santander comprising a
GBP300 million tranche A facility with a refreshed 3 year tenor and
a GBP225 million tranche B facility with a 1 year tenor.
On 1 February 2019, the Company entered into an agreement to
acquire 35.5 per cent. of Stronelairg and Dunmaglass wind farms
from SSE for a total consideration of GBP452 million, with
completion occurring at the end of March 2019.
On 27 February 2019, the Company issued 102,946,483 further
shares at a price of 127 pence per share, raising gross proceeds of
GBP131 million.
Company Information
Directors (all non-executive) Registered Company Number
Tim Ingram (Chairman) 08318092
Shonaid Jemmett-Page
William Rickett C.B. Registered Office
Dan Badger 27-28 Eastcastle Street
Martin McAdam London
W1W 8DH
Investment Manager Registered Auditor
Greencoat Capital LLP BDO LLP
3(rd) Floor, Burdett House 55 Baker Street
15-16 Buckingham Street London
London W1U 7EU
WC2N 6DU
Legal Adviser
Administrator and Company Secretary Norton Rose Fulbright
LLP
Estera Administration (UK) Limited 3 More London Riverside
The Innovation Centre London
Northern Ireland Science Park SE1 2AQ
Queen's Road
Belfast Broker
BT3 9DT RBC Capital Markets
Riverbank House
Depositary 2 Swan Lane
Estera Depositary (UK) Limited London
The Innovation Centre EC4R 3BF
Northern Ireland Science Park
Queen's Road Account Bank
Belfast RBS International
BT3 9DT 280 Bishopsgate
London
Registrar EC2M 4RB
Link Market Services Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Supplementary Information (unaudited)
Under the Alternative Investment Fund Manager Regulations 2013
(as amended) the Company is a UK AIF and the Investment Manager is
a full scope UK AIFM.
Estera Depositary (UK) Limited provides depositary services
under the AIFMD.
The AIFMD outlines the required information which has to be made
available to investors prior to investing in an AIF and directs
that material changes to this information be disclosed in the
Annual Report of the AIF. There were no material changes in the
year.
All information required to be disclosed under the AIFMD is
either disclosed in this Annual Report or is detailed within a
schedule of disclosures on the Company's website at
www.greencoat-ukwind.com.
The Investment Manager covers the potential professional
liability risks resulting from its activities by holding
professional indemnity insurance in accordance with Article 9(7)(b)
of AIFMD.
The information in this paragraph relates to the Investment
Manager, the AIFM, and its subsidiary company providing services to
the AIFM and it does not relate to the Company. The total amount of
remuneration paid by the Investment Manager, in its capacity as
AIFM, to its 39 staff for the financial year ending 31 December
2018 was GBP6.3 million, consisting of GBP5.2 million fixed and
GBP1.1 million variable remuneration. The aggregate amount of
remuneration for the 5 staff members of the Investment Manager
constituting senior management and those staff whose actions have a
material impact on the risk profile of the Company was GBP1.0
million.
Defined Terms
Adjusted Portfolio Value means Gross Asset Value
Aggregate Group Debt means the Group's proportionate share of
outstanding third party borrowings
AGM means Annual General Meeting of the Company
AIC means the Association of Investment Companies
AIC Code means the AIC's Code of Corporate Governance by way of
reference to the AIC Guide
AIC Guide means the AIC's Corporate Governance Guide for
Investment Companies
AIF means an Alternative Investment Fund as defined under the
AIFMD
AIFM means an Alternative Investment Fund Manager as defined
under the AIFMD
AIFMD means the Alternative Investment Fund Managers
Directive
Balancing Mechanism means the system by which electricity demand
and supply is balanced by National Grid in close to real time
BDO LLP means the Company's Auditor as at the reporting date
Bicker Fen means Bicker Fen Windfarm Limited
Bin Mountain means Bin Mountain Wind Farm (NI) Limited
Bishopthorpe means Bishopthorpe Wind Farm Limited
Board means the Directors of the Company
Braes of Doune means Braes of Doune Wind Farm (Scotland)
Limited
Brockaghboy means Brockaghboy Windfarm Limited
Carcant means Carcant Wind Farm (Scotland) Limited
Cash Fee means the cash fee that the Investment Manager is
entitled to under the Investment Management Agreement
CBA means Commonwealth Bank of Australia
CFD means Contract For Difference
Church Hill means Church Hill Wind Farm Limited
CIBC means Canadian Imperial Bank of Commerce
Clyde means Clyde Wind Farm (Scotland) Limited
Clyde Extension means the Clyde extension wind farm developed by
SSE adjacent to the original Clyde wind farm
Company means Greencoat UK Wind PLC
Corriegarth means Corriegarth Wind Energy Limited
Corriegarth Holdings means Corriegarth Wind Energy Holdings
Limited
Cotton Farm means Cotton Farm Wind Farm Limited
CPI means the Consumer Price Index
Crighshane means Crighshane Wind Farm Limited
Crighshane & Church Hill Funding means Crighshane and Church
Hill Funding Limited
Crighshane & Church Hill Holdco means Crighshane and Church
Hill Holdco Limited
DCF means Discounted Cash Flow
Deeping St. Nicholas means Deeping St. Nicholas wind farm
Drone Hill means Drone Hill Wind Farm Limited
DTR means the Disclosure Guidance and Transparency Rules
sourcebook issued by the Financial Conduct Authority
Earl's Hall Farm means Earl's Hall Farm Wind Farm Limited
Equity Element means the ordinary shares issued to the
Investment Manager under the Investment Management Agreement
EU means the European Union
Fenlands means Fenland Windfarms Limited
FRC means the Financial Reporting Council
GAV means Gross Asset Value
Glass Moor means Glass Moor wind farm
GLIL means GLIL Corporate Holdings Limited, the infrastructure
investment vehicle of certain local authority pension funds,
originally founded by the Greater Manchester Pension Fund and the
London Pensions Fund Authority
Group means Greencoat UK Wind PLC and Greencoat UK Wind Holdco
Limited
Holdco means Greencoat UK Wind Holdco Limited
IAS means International Accounting Standard
IFRS means International Financial Reporting Standards
Investment Management Agreement means the agreement between the
Company and the Investment Manager
Investment Manager means Greencoat Capital LLP
IPEV Valuation Guidelines means the International Private Equity
and Venture Capital Valuation Guidelines
IRR means Internal Rate of Return
Kildrummy means Kildrummy Wind Farm Limited
KPI means Key Performance Indicator
Langhope Rig means Langhope Rig Wind Farm Limited
Lindhurst means Lindhurst Wind Farm
Listing Rules means the listing rules made by the UK Listing
Authority under Section 73A of the Financial Services and Markets
Act 2000
Little Cheyne Court means Little Cheyne Court Wind Farm
Limited
Maerdy means Maerdy Wind Farm Limited
Middlemoor means Middlemoor Wind Farm
ML Wind means ML Wind LLP
NAB means National Australia Bank
NAV means Net Asset Value
NAV per Share means the Net Asset Value per Ordinary Share
North Hoyle means North Hoyle Wind Farm Limited
North Rhins means North Rhins Wind Farm Limited
PFI means Private Finance Initiative
PPA means Power Purchase Agreement entered into by the Group's
wind farms
RBC means the Royal Bank of Canada
RBS means the Royal Bank of Scotland PLC
RBS International means the Royal Bank of Scotland International
Limited
Red House means Red House wind farm
Red Tile means Red Tile wind farm
Review Section means the front end review section of this report
(including but not limited to the Chairman's Statement, Strategic
Report, Investment Manager's Report and Report of the
Directors)
Rhyl Flats means Rhyl Flats Wind Farm Limited
RPI means the Retail Price Index
Santander means Santander Global Banking and Markets
Screggagh means Screggagh Wind Farm Limited
Sixpenny Wood means Sixpenny Wood Wind Farm Limited
Slieve Divena means Slieve Divena Wind Farm Limited
SPVs means the Special Purpose Vehicles which hold the Group's
investment portfolio of underlying wind farms
Stroupster means Stroupster Caithness Wind Farm (Scotland)
Limited
SYND Holdco means SYND Holdco Limited
Tappaghan means Tappaghan Wind Farm (NI) Limited
TSR means Total Shareholder Return
UK means the United Kingdom of Great Britain and Northern
Ireland
UK Code means the UK Corporate Governance Code issued by the
FRC
Yelvertoft means Yelvertoft Wind Farm Limited
Cautionary Statement
The Review Section of this report has been prepared solely to
provide additional information to shareholders to assess the
Company's strategies and the potential for those strategies to
succeed. These should not be relied on by any other party or for
any other purpose.
The Review Section may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "may", "will" or "should" or,
in each case, their negative or other variations or comparable
terminology.
These forward-looking statements include all matters that are
not historical facts. They appear in a number of places throughout
this document and include statements regarding the intentions,
beliefs or current expectations of the Directors and the Investment
Manager concerning, amongst other things, the investment objectives
and Investment Policy, financing strategies, investment
performance, results of operations, financial condition, liquidity,
prospects, and distribution policy of the Company and the markets
in which it invests.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Company's actual investment performance, results
of operations, financial condition, liquidity, distribution policy
and the development of its financing strategies may differ
materially from the impression created by the forward-looking
statements contained in this document.
Subject to their legal and regulatory obligations, the Directors
and the Investment Manager expressly disclaim any obligations to
update or revise any forward-looking statement contained herein to
reflect any change in expectations with regard thereto or any
change in events, conditions or circumstances on which any
statement is based.
In addition, the Review Section may include target figures for
future financial periods. Any such figures are targets only and are
not forecasts.
This Annual Report has been prepared for the Company as a whole
and therefore gives greater emphasis to those matters which are
significant in respect of Greencoat UK Wind PLC and its subsidiary
undertakings when viewed as a whole.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEFFWWFUSEIE
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