TIDMGRP
RNS Number : 5903E
Greencoat Renewables PLC
02 March 2020
Greencoat Renewables 2019 Full Year Results
Dublin, London | 2 March 2020: Greencoat Renewables PLC
("Greencoat Renewables" or the "Company"), the renewable
infrastructure company invested in euro-denominated assets, today
announces its results for the year ended 31 December 2019.
2019 Highlights
-- Further investment in Cloosh Valley and acquisition of 3 new
wind farms increasing the portfolio to 15 wind farms in total, and
increasing net generating capacity to 462MW
-- NAV at year-end of EUR650m; NAV per share of 103.1 cent
-- Generated 1,154GWh of electricity in 2019; 4 per cent below
budget owing to higher than expected curtailment
-- Net generating capacity to 462MW and GAV to EUR1,016.9 million as at 31 December 2019
Strong Cashflow; Consistent Returns
-- Net cash generation of EUR48.8 million[1]
-- Dividend cover for 2019 of 1.7x 1
-- 2019 total dividend per share of 6.03 cent
-- Consistent with progressive dividend policy, dividend per
share of 6.06 cent targeted for 2020
[1] Net cash generation and dividend cover are gross of SPV
level debt repayment and was EUR40.6m and 1.4x net of SPV level
debt repayment
Robust Capital Structure to Drive Growth
-- Raised EUR273 million of new capital to fund growth in two oversubscribed offerings
-- EUR366.9 million outstanding borrowings as at 31 December 2019, equivalent to 36% of GAV
Proposed Change to Investment Policy
-- A special resolution will be proposed at the Company's
forthcoming AGM to amend the investment policy to enable the Group
to invest in Denmark, Norway and Sweden. Further details will be
included in the notice of AGM expected to be published on or around
20 March 2020.
-- In addition to Finland, the additional Nordic countries of
Denmark, Norway and Sweden would provide the Group with the benefit
of a larger pool of potential acquisition targets and facilitate
the Group's diversification opportunities.
Ronan Murphy, Non-Executive Chairman of Greencoat Renewables,
said:
"2019 represented another period of growth and delivery for the
Company as we consolidated our market leading position in Ireland.
I am delighted to present another strong set of results, with all
elements of our strategy delivered upon.
On the operational side, I am pleased by the steps taken to
further enhance performance and availability. As was expected when
we laid out our strategy for aggregation, the increasing size of
our asset base is creating further opportunities for improvement,
and we expect this trend to continue as the market and associated
technologies mature.
The additions to the portfolio this year demonstrate the
strength of our relationships with developers and co-investors, as
well as our ability to transact at all levels of the market. We
continue to find value in Ireland, and increasingly in continental
Europe. The pipeline for further growth looks attractive across a
range of geographies and markets.
Given the performance and outlook, I am pleased to confirm an
increase in our target 2020 dividend to 6.06 cent consistent with
our commitment to a progressive dividend policy.
In addition to announcing our full year results today, we also
publish our second annual ESG report, detailing our activity
throughout 2019. The report demonstrates our commitment to
effective management of environmental, social and governance
matters as we recognise that these are of fundamental importance to
the long-term success of our business".
Key Metrics at 31 December 2019
Market capitalisation EUR747.3 million
Share price 118.5 cent
Dividends with respect to the year EUR33.0 million
Dividends with respect to the year per share 6.03 cent
GAV EUR1,017 million
NAV EUR650.0 million
NAV per share 103.1 cent
TSR 23.5 per cent.
Details of the conference call for analysts and investors:
A conference call for analysts and investors will be held at
10.00 am GMT today, 2 March 2020. To register for the call please
contact FTI Consulting, either by email Greencoat@fticonsulting.com
or by telephone on +353 1 765 0883.
Presentation materials will be posted on the Company's website,
www.greencoat-renewables.com from 7.00 am.
2019 Annual Report
A copy of the 2019 Annual Report has been submitted to the
National Storage Mechanism and will shortly be available for
inspection at www.morningstar.co.uk/uk/NSM. The annual report will
also shortly be available on the Company's website at
www.greencoat-renewables.com where further information on the
Company can also be found.
For further details contact:
Greencoat Capital LLP (Investment Manager)
Bertrand Gautier
Paul O'Donnell
Tom Rayner +44 20 7832 9400
FTI Consulting (Investor Relations & Media)
Jonathan Neilan +353 1 765 0886
Melanie Farrell greencoat@fticonsulting.com
Davy (Broker, NOMAD and Euronext Growth Adviser)
Fergal Meegan
Barry Murphy
Ronan Veale +353 1 679 6363
RBC Capital Markets (Joint Broker)
Matthew Coakes
Jonathan Hardy
Elizabeth Evans +44 20 7653 4000
About Greencoat Renewables PLC
Greencoat Renewables PLC is an investor in euro-denominated
renewable energy infrastructure assets and is focused on the
acquisition and management of operating wind farms in Ireland. It
is managed by Greencoat Capital LLP, an experienced investment
manager in the listed renewable energy infrastructure sector.
---S ---
At a Glance
Summary
Greencoat Renewables PLC is a sector-focused listed renewable
infrastructure company, investing in renewable electricity
generation assets, with an initial focus on wind assets in Ireland.
The Company's aim is to provide investors with an annual dividend
that increases progressively whilst growing the capital value of
its investment portfolio in the long term through reinvestment of
excess cash flow and the prudent use of portfolio leverage.
Highlights
-- The Group's investments generated 1,154GWh of electricity, 4
per cent below budget owing to higher than expected
curtailment.
-- Net cash generation (Group and wind farm SPVs) was EUR48.8
million (gross of SPV level debt prepayment).
-- Further investment in Cloosh Valley and acquisition of 3 new
wind farms increased the portfolio to 15 wind farm investments, net
generating capacity to 462MW and GAV to EUR1,016.9 million as at 31
December 2019.
-- Issuance of 251 million new shares raising EUR273 million in the year.
-- The Company has declared total dividends of 6.03 cent per
share with respect to the year and is targeting a dividend of 6.06
cent per share for 2020.
-- EUR366.9 million Aggregate Group Debt at 31 December 2019, equivalent to 36 per cent of GAV.
Key Metrics
As at 31 December 2019 As at 31 December 2018
---------------------------------------------- ----------------------- -----------------------
Market capitalisation EUR747.3 million EUR391.4 million
Share price 118.5 cent 103.0 cent
Dividends with respect to the year EUR33.0 million EUR19.5 million
Dividends with respect to the year per share 6.03 cent 6.00 cent
GAV EUR1,017 million EUR883.5 million
NAV EUR650.0 million EUR392.8 million
NAV per share 103.1 cent 103.4 cent
TSR 23.5 per cent 3.2 per cent
---------------------------------------------- ----------------------- -----------------------
Defining Characteristics
Greencoat Renewables PLC was designed for investors from first
principles to be simple, transparent and low risk.
1. The Group is initially focused on investing solely in operating Irish wind assets.
2. Wind is the most mature and largest scale renewable technology.
3. Ireland has a long established regulatory regime, high wind
resource and in excess of EUR8 billion of wind farms expected to be
in operation in the short to medium term.
4. The Group is wholly independent and thus avoids conflicts of
interests in its investment decisions.
5. The independent Board governs the Group, actively monitors
the efficient operation of the assets and works in conjunction with
an experienced investment management team.
6. The Group generally invests in wind farms that have an
appropriate operational track record (or price adjustment
mechanism).
7. Low leverage is important to ensure a high level of cash flow
stability and higher tolerance to downside sensitivities.
8. The Group invests only in Euro assets and thus does not incur material currency risk.
Chairman's Statement
I am pleased to present our Company's third annual report since
listing in 2017. This has been another successful year with
continued strong growth, and further improvement to operational
performance. We have continued to consolidate our market-leading
position in Ireland where we are now the second largest owner of
operating wind farms.
Whilst we are exploring the considerable potential in Europe's
secondary market, the Irish market remains our focus for growth,
and across two successful equity placings we raised EUR273m in
2019, allowing us to increase GAV to over EUR1bn in value.
I would like to thank our shareholders for their continued
confidence, as we work to deliver the stable premium returns that
our assets provide.
Performance
Our portfolio of 15 wind farms generated 1,154GWh in the year, 4
per cent below budget, primarily due to higher than expected
curtailment. There were no material unplanned outages or issues
affecting any of the assets in the period. Since listing, our
portfolio has grown by 2.5 times and this increased scale has
provided the opportunity for both portfolio enhancements and
efficiencies, and operational availability was on budget. The
portfolio generated net operating cash flow of EUR48.8 million(1) ,
providing dividend cover of 1.7x, ahead of our 1.4x target.
Dividends and Returns
The Company declared dividends for the year of 6.03 cent per
share, with the final quarterly dividend of 1.5075 cent per share
paid on 28 February 2020. Since listing, the Company has
consistently delivered on its dividend policy, and has achieved TSR
of 33.7 per cent at 31 December 2019.
NAV per share decreased in the year from 101.9 cent per share
(ex dividend) on the 31st December 2018 to 101.6 cent per share (ex
dividend) on 31 December 2019, representing a decrease of 0.3 per
cent, primarily as a result of lower long-term power price
projections.
Our unchanged dividend policy aims to increase our dividend
between 0 and CPI each year. Given our continued strong cashflow
and robust dividend cover, we are pleased to increase the dividend
target for 2020 to 6.06 cent per share. This increase of 0.5 per
cent represents approximately half of Irish CPI in 2019, which
stood at 1.1 per cent.
(1) Net cash generation and dividend cover are gross of SPV
level debt repayment and were EUR40.6m and 1.4x net of SPV level
debt repayment.
Acquisitions
We are very pleased with the market-leading position we have
developed in the Irish market since IPO with aggregate generating
capacity now at 462MW. Our portfolio now comprises more than 10% of
the country's existing fleet of operating wind assets, generating
enough power to supply half of Dublin's homes.
In 2019, the Group acquired 3 new wind farms, Beam Hill,
Gortahile, and Killala, and also increased its existing stake in
Cloosh Valley wind farm from 50 per cent to 75 per cent.
Notably, Beam Hill represents our first merchant wind farm, and
will allow the Group to explore different contracted power price
structures, including the emerging corporate PPA market in Ireland,
which is projected to see considerable growth over the next few
years.
In February 2020, we also acquired Letteragh, a newly
commissioned wind farm, which continues our strategy of
consolidating the small/medium REFIT market in Ireland. The
weighted average remaining REFIT life stands at 10.4 years across
REFIT 1 and 2 assets.
We continue to see many value accretive opportunities for growth
in the Irish secondary market, benefitting from our execution track
record, relationships with developers and potential sellers, and
ability to transact at any scale.
Equity Issuance
Our equity issuance strategy allows us to maintain acquisitional
agility, whilst also maintaining gearing targets, and removing cash
yield drag. In March 2019, we issued 140 million new shares at an
issue price of 105.5 cent per share raising gross proceeds of
EUR148 million, closing out our 250 million share issuance
programme that launched in July 2018.
Given our pipeline strength, we launched a 350 million share
issuance programme in November 2019, and issued 111 million new
shares at an issue price of 113.0 cent per share in December 2019
raising gross proceeds of EUR125 million. Aggregate equity raising
proceeds during the year were EUR273 million.
Both equity raisings were oversubscribed and NAV accretive. The
Group has significant headroom to pursue opportunities in the
secondary market as they arise.
Gearing
As at 31 December 2019, the Group had EUR367 million of debt
outstanding, equating to 36 per cent of GAV with weighted average
gearing during 2019 at 46 per cent, within our target range of 40
to 50 per cent.
Environmental, Social and Governance
Whilst the nature of our business ensures that we are working
towards the benefit of society by reducing carbon emissions from
renewable electricity generation, we also want our Group to be a
good partner in all its interactions and day-to-day operations.
2019 saw us take a more sophisticated approach to ESG reporting,
which will continue to develop over the coming years.
In particular, I am proud that we are able to benefit the local
communities around our wind farms indirectly, by supporting
employment and the economy, as well as directly via our community
benefit schemes through which we committed over EUR675,000 in
2019.
Outlook
The Irish wind market remains an attractive jurisdiction with
both a stable and supportive regulatory regime and broad public
support. The country has over 4.0GW of installed capacity either in
operation or construction under REFIT 1 and REFIT 2, and the Board
continue to view Ireland as an attractive market for further
investment.
In June 2019, the Irish Government announced its Climate Action
Policy committing the country to generating 70 per cent of
electricity from renewables by 2030 and is projected to create more
than EUR12 billion of further investment opportunities. It is
expected that the majority of this new capacity will be delivered
under the new RESS, a competitive auction structure for CFD
support, with such auctions expected to commence in 2020 and run
until 2026. Given the expected CFD structure of RESS, as well as
regular auctions planned until 2026, this should ensure Ireland
remains a very attractive jurisdiction for further investment. In
addition, Ireland is experiencing substantial growth in the demand
for electricity, particularly from the development of a substantial
number of data centres. We expect to see a growing number of large
corporate entities seeking to enter into long term electricity
contracts.
The Group is now able to make acquisitions in Belgium, Finland,
France, Germany and the Netherlands, in line with our existing
investment policy. Continental Europe can provide further
diversification of intra-year generation volumes and gives the
Group access to a considerably larger pool of assets from which to
seek best value. In addition to the above jurisdictions, the Group
is assessing opportunities in the Nordic regions, currently outside
of the investment policy. Special resolution 9 will be proposed at
the forthcoming AGM to amend the investment policy to enable the
Group to invest in Nordic countries in addition to the other
relevant countries.
Many of the operational assets across the continent are owned by
parties with whom the Investment Manager has strong existing
relationships. The Group's position is further improved by the
absence of currency risk when acquiring assets in Europe.
Board and Governance
During 2019, we initiated an external search process with the
assistance of search firm, Korn Ferry, and I am very pleased to
welcome Marco Graziano to the Board. He has considerable expertise
in the energy and renewables industry, and significant experience
of developing and operating European renewable assets in an
executive capacity. My fellow board members and I know he will make
valuable contribution to our governance and growth.
Annual General Meeting
Our AGM will take place on 29 April 2020 at 2:00 pm at the
offices of J&E Davy, Davy House, 49 Dawson Street, Dublin 2,
Ireland. Details of the formal business of the meeting are set out
in the Notice of AGM, which is sent to shareholders with the Annual
Report. We look forward to meeting shareholders on that
occasion.
Conclusion
I would like to thank my fellow directors who served during
2019, Emer Gilvarry and Kevin McNamara, for their stewardship and
advice during the period. Finally, I would like to acknowledge the
substantial efforts of the Investment Manager, which contributed
significantly to our continued staged growth.
Rónán Murphy
Chairman
1 March 2020
Investment Manager's Report
The Investment Manager
The Investment Manager'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 FCA and is a full scope UK AIFM.
The team is led by Bertrand Gautier and Paul O'Donnell.
Bertrand has over 27 years of operational, financial and
investment experience, of which the last 10 years focussed solely
on renewables. He has been a Partner of Greencoat Capital since
joining in 2010 and specialises in investments across the renewable
energy space.
Bertrand joined from Terra Firma Capital Partners where he
managed a variety of LBO and re-financing transactions and oversaw
the management of portfolio businesses, focusing on asset-backed
companies. Before joining Terra Firma in 2007, Bertrand spent five
years at Merrill Lynch as part of the M&A Advisory Group in the
Infrastructure and Industrials team. Prior to that, he gained
extensive operational experience over eight years at Procter &
Gamble in supply chain and purchasing management, as well as in
several French engineering SMEs.
Bertrand holds an MSc in General Engineering from ICAM (France)
and an MBA from Harvard Business School (USA).
Paul has over 17 years of renewables and investment experience,
of which the last 13 have been focussed solely on renewables. He
joined Greencoat Capital in 2009 and has specialised in managing
investments in the wind and solar generation sectors, working
across development, operations, technology, and financing. In that
time, Paul oversaw Airvolution Energy, a UK based wind developer
which has developed and constructed over 60MW of wind assets as
well as Lumicity, a UK solar developer which developed over 60MW of
solar assets.
Paul has been a Partner of Greencoat Capital since 2016 and has
been based in Dublin since 2013.
Paul holds a BBS (Hons) in Finance from Trinity College
Dublin.
Overview
The Investment Manager is very pleased with the Group's
achievements in 2019, which have continued to demonstrate strong
growth and operational efficiency across the business. In the past
twelve months, Greencoat Renewables has developed a market leading
position in Ireland through acquiring value accretive assets in the
secondary market, ensuring the portfolio has exceeded target
availability, and raising further equity in two oversubscribed
issuances.
The value accretive additions during the year have diversified
the portfolio further and brought economies of scale to the
business. Throughout the year we have continued to deliver strong
cashflows from our existing portfolio, demonstrating the resilience
of the dividend cover, despite below budget generation.
Investment Portfolio
The Group's investment portfolio as at 31 December 2019
consisted of interests in SPVs which held the following underlying
operating wind farms:
Wind Farm Turbines Operator PPA Total Ownership Net MW
MW Stake
--------------- ---------- --------------- ---------------- ------ ---------- -------
Ballybane Enercon MOS Group Energia 48.3 100% 48.3
Beam Hill Vestas EneryPro Erova 14.0 100% 14.0
Cloosh Valley Siemens SSE SSE 108.0 75% 81.0
Garranereagh Enercon Statkraft Bord Gáis 9.2 100% 9.2
Glanaruddery Vestas EnergyPro Supplier Lite 36.3 100% 36.3
Gortahile Nordex ABO Wind Energia 20.0 100% 20.0
Killala Siemens EnergyPro Electroroute 17.0 100% 17.0
Killhills Enercon SSE Brookfield 36.8 100% 36.8
Knockacummer Nordex SSE Brookfield 100.0 100% 100.0
Naturgy /
Knocknalour Enercon Wind Prospect Energia 9.2 100% 9.2
Lisdowney Enercon EnergyPro Naturgy 9.2 100% 9.2
Monaincha Nordex Statkraft Bord Gáis 36.0 100% 36.0
Raheenleagh Siemens ESB ESB 35.2 50% 17.6
Sliabh Bawn Siemens Wind Prospect Supplier Lite 64.0 25% 16.0
Tullynamoyle
II Enercon Cabragh Bord Gáis 11.5 100% 11.5
--------------- ---------- --------------- ---------------- ------ ---------- -------
Total 462.1
-------------------------------------------------------------- ------ ---------- -------
Portfolio Performance
The Portfolio generated 1,154GWh in the year, 4 per cent below
budget, primarily due to a higher than expected level of
curtailment. Portfolio availability was on budget in the year.
Wind Farm Ownership Stake Period 2019 Budget (GWh) 2019 Actual (GWh)
------------------- ---------------- -------- ------------------ ------------------
Ballybane 100% Jan-Dec 118.7 121.6
Beam Hill 100% Dec 3.9 3.6
Cloosh Valley (1) 75% Jan-Dec 244.7 229.5
Garranereagh 100% Jan-Dec 24.3 26.1
Glanaruddery 100% Jan-Dec 115.0 109.9
Gortahile 100% Oct-Dec 18.3 18.7
Killala 100% Dec 5.0 5.0
Killhills 100% Jan-Dec 89.9 88.7
Knockacummer 100% Jan-Dec 298.9 275.2
Knocknalour 100% Jan-Dec 21.3 21.0
Lisdowney 100% Jan-Dec 31.8 31.7
Monaincha 100% Jan-Dec 100.4 96.7
Raheenleagh 50% Jan-Dec 63.3 61.6
Sliabh Bawn 25% Jan-Dec 43.9 42.3
Tullynamoyle II 100% Jan-Dec 26.9 21.9
Total (2) 1,206.2 1,153.7
------------------- ---------------- -------- ------------------ ------------------
(1) Ownership in Cloosh Valley was 50% until 31 March 2019 when
the Group acquired an additional 25% of the SPV .
(2) Numbers do not cast due to rounding
The failure of a 200kV to 400kV grid transformer at Moneypoint
impeded electricity flows in the south west of Ireland and caused
significant levels of curtailment across the portfolio. This
failure was remedied in Q4 and the transformer returned to
operations at the end of November 2019.
The Investment Manager is actively participating in a dispatch
down working group within the Irish Wind Energy Association, which
now represents over 90 per cent of wind generators in Ireland. The
group are looking to collaboratively address the system-wide issue
of curtailment across the industry in Ireland.
Health and Safety
There were no major incidents in the year to 31 December 2019
and health and safety audits were conducted across 11 sites by an
independent consultant. No material areas of concern were
identified.
2019 has seen significant improvements in health and safety
reporting from operators and there have been numerous hazard
observations during the year across the portfolio that have
resulted in remedial action and improvements. No lost time
incidents were reported in the year.
Environmental, Social and Governance
There has been a focus within the Group to recognise the
fundamental importance of adequate management of ESG matters for
all stakeholders and for the long-term sustainable success of the
business. During the year the Group achieved the following:
-- Environmental - significantly increased generation capacity,
supporting Ireland's transition towards renewable energy and a
carbon net zero economy;
-- Social - expansion of best practice community benefit schemes
and rigorous health and safety approaches that ensure the Group's
wind farms are a valued part of the community. Winner of the Best
Community Programme at the 2019 Chambers Ireland CSR Awards for The
Galway Wind Park project (Cloosh Valley);
-- Governance - adoption of an ESG Policy which sets out the
Group's ESG objectives and a plan to systematise the Investment
Manager's approach to ESG management.
Further details of the Group's ESG initiatives can be found in
the latest ESG report, available on the Company's website
www.greencoat-renewables.com .
Acquisitions
2019 was another busy year in the Irish secondary wind sector
and the opportunity for aggregation was clearly evidenced. We
continued to see many opportunities for value accretive
acquisitions, and during the year priced and assessed 43 wind farms
totalling 529MW in Ireland. Of the wind farms priced, 5 investments
were made by the Group (pre and post year end), 11 were acquired by
other buyers, 23 are no longer being pursued by the Group and 4 are
subject to continuing discussions.
We were delighted to have successfully acquired 3 new wind farms
in 2019 year from separate sellers in separate transactions, as
well as the additional 25% investment in Cloosh Valley.
The following table lists investments in the year (including
additional share of SPV-level debt and acquisition costs, excluding
acquired cash):
EURm
--------------------- ------
Cloosh Valley (25%) 72.0
Gortahile 33.4
Killala 35.7
Beam
Hill 10.5
---------------------- ------
Total 151.6
On 17 February 2020, the Group announced the acquisition of the
14.1MW Letteragh wind farm in County Clare for EUR35.4 million,
bringing net generating capacity of the portfolio to 476MW.
Equity Issuance
In March 2019, the Company issued 140 million new shares at an
issue price of 105.5 cent per share, raising gross proceeds of
EUR148 million in an oversubscribed and NAV-accretive share
placing. This issuance closed the Company's programme to issue 250
million new shares announced in July 2018.
In December 2019, the Company issued 111 million new shares at
an issue price of 113.0 cent per share raising gross proceeds of
EUR125 million in another oversubscribed and NAV-accretive share
placing. This was the first tranche of the Company's programme to
issue 350 million new shares announced in November 2019.
Both share placings during the year demonstrate the Company's
continuing growth strategy.
Gearing
As at 31 December 2019, the Group and wind farm SPVs had
EUR366.9 million outstanding debt, equating to 36 per cent of GAV
(limit 60 per cent).
Debt outstanding as at 31 December 2019 comprised EUR206 million
drawn under the Group's revolving credit facility and EUR160.9
million of the Group's proportionate share of long-term project
finance debt (including the fair value of interest rate swaps) in
Cloosh Valley, Raheenleagh and Sliabh Bawn.
On 17 February 2020, the Group drew down a further EUR34 million
under its revolving credit facility to fund the EUR35.4 million
acquisition of Letteragh wind farm, leaving amounts drawn under the
facility at EUR240 million.
Financial Performance
Dividend cover for the year was 1.4x net of SPV level debt
repayment or 1.7x gross of SPV level debt repayment.
Cash balances (Group and wind farm SPVs) decreased by EUR6.7
million from EUR41.2 million to EUR34.5 million over the year,
demonstrating effective recycling of excess portfolio cashflow into
wind farm acquisitions and debt repayment.
For the year ended
Group and wind farm SPV cashflows 31 December 2019
------------------------------------------------- -----------------------
Net (1) Gross (1)
EUR'000 EUR'000
Net cash generation 40,471 48,683
Dividends paid (29,217) (29,217)
SPV level Capex & PSO cashflow (2) (18,942) (18,942)
SPV level debt repayment - (8,212)
Acquisitions (3) (105,595) (105,595)
Acquisition costs (5,398) (5,398)
Equity issuance 272,700 272,700
Equity issuance costs (4,390) (4,390)
Net drawdown under debt facilities (156,031) (156,031)
Upfront finance costs (327) (327)
Movement in cash (Group and wind farm SPVs) (6,728) (6,728)
Opening cash balance (Group and wind farm SPVs) 41,275 41,275
------------------------------------------------- ---------- -----------
Closing cash balance (Group and wind farm SPVs) 34,547 34,547
Net cash generation (2) 40,471 48,683
Dividends 29,217 29,217
Dividend cover 1.4x 1.7x
------------------------------------------------- ---------- -----------
(1) The dividend cover tables above are shown as 2 scenarios:
the first reflects cash generation net of the Group's share of SPV
level debt repayment at Cloosh Valley, Raheenleagh and Sliabh Bawn
(EUR8,212k), and the second shows net cash generation gross of
these SPV level debt repayments.
(2) Cashflows reflect residual capital expenditure from acquired
SPVs (covered by the vendor of the SPVs) and REFIT working capital
movements with the PSO relating to wind farm SPVs.
(3) Acquisition consideration is net of the acquired SPV cash
(EUR7,200k).
The following 2 tables provide further detail in relation to net
cash generation figures of EUR48.8 million (gross) and EUR40.1
million (net):
For the year ended
Net Cash Generation - Breakdown 31 December 2019
--------------------------------- ---------------------
Net Gross
EUR'000 EUR'000
Revenue 92,878 92,878
Operating expenses (26,305) (26,305)
Tax / VAT (46) (46)
--------------------------------- ---------- ---------
Wind farm operating cashflow 66,527 66,527
SPV level debt interest (4,982) (4,982)
SPV level debt repayment (8,212) -
--------------------------------- ---------- ---------
Wind farm cashflow 53,333 61,545
Management fee (4,689) (4,689)
Operating expenses (1,612) (1,612)
Ongoing finance costs (6,353) (6,353)
VAT (285) (285)
Other 77 77
--------------------------------- ---------- ---------
Group cashflow (12,862) (12,862)
Net cash generation 40,471 48,683
--------------------------------- ---------- ---------
For the year ended
Net Cash Generation - Reconciliation to Net Cash Flows from Operating Activities 31 December 2019
---------------------------------------------------------------------------------- ------------------------
Net Gross
EUR'000 EUR'000
Net cash flows from operating activities (1) 15,269 15,269
Movement in cash balances of wind farm SPVs (2) (16,912) (16,912)
SPV capex & PSO cashflow 18,942 (3) 27,154 (4)
Repayment of shareholder loan investment (1) 29,482 29,482
Finance costs (1) (6,637) (6,637)
Upfront finance costs (cash) (5) 327 327
---------------------------------------------------------------------------------- ----------- -----------
Net cash generation 40,471 48,683
---------------------------------------------------------------------------------- ----------- -----------
(1) Consolidated Statement of Cash Flows.
(2) Note 9 to the Financial Statements (excludes acquired
cash).
(3) EUR18,942k c ashflows reflect residual capital expenditure
from acquired SPVs and REFIT working capital movements with the PSO
relating to wind farm SPVs.
(4) EUR18,942k cashflows reflect residual capital expenditure
from acquired SPVs and REFIT working capital movements with the PSO
relating to wind farm SPVs plus EUR8,212k repayment of SPV level
debt (note 9 to the Financial Statements).
(5) EUR139k facility arrangement fees plus EUR36k professional
fees (note 13 to the Financial Statements) plus EUR152k decrease in
other finance costs payable (note 12 to the Financial
Statements).
Investment Performance
NAV at 31 December 2019 was EUR650 million (103.1 cent per
share):
-- NAV at 31 December 2018 was EUR392.8 million (103.4 cent per share);
-- EUR151.6 million of investments were made in the year
(including the Group's increased share of SPV level debt at Cloosh
Valley following further investment in March 2019) offset by the
EUR2.9 million receipt upon settlement of the Glanaruddery wind
energy true-up;
-- cash balances decreased by EUR6.7 million;
-- other relevant assets/liabilities at Group level increased by
EUR5.5 million from a EUR5.6 million net liability position at 31
December 2018 to a EUR0.1m net liability position at 31 December
2019; and
-- Aggregate Group Debt decreased by EUR123.8 million, which
includes the movement of Group's proportionate share of SPV level
debt positions (including associated interest rate swap fair values
of EUR9.1 million) at Cloosh Valley, Raheenleagh and Sliabh
Bawn.
Total dividends of EUR29.2 million were paid in 2019. Total
dividends of EUR33.0 million have been paid or declared with
respect to 2019 (6.03 cent per share). The target dividend with
respect to 2020 is 6.06 cent per share. The increase of 0.03 cent
(0.5 per cent) is in line with the Company's stated dividend policy
to increase the dividend on a progressive basis. Given that Irish
CPI for 2019 was 1.1 per cent, we have decided to increase the
dividend by approximately half of CPI.
cent per share per cent
--------------------------------------- --------------- ---------
NAV at 31 December 2018 103.4
Less February 2019 dividend (1.5)
NAV at 31 December 2018 (ex dividend) 101.9
NAV at 31 December 2019 103.1
Less February 2020 dividend (1.5)
NAV at 31 December 2019 (ex dividend) 101.6
Movement in NAV (ex dividend) (0.3) (0.3)
Dividends with respect to the year 6.0 5.9
--------------------------------------- --------------- ---------
Total return on NAV 5.7 5.6
--------------------------------------- --------------- ---------
Reconciliation of Statutory Net Assets to Reported NAV
As at As at
31 December 2019 31 December 2018
------------------------------------------------------ ------------------ ------------------
EUR'000 EUR'000
DCF valuation 982,411 856,933
Other relevant assets/(liabilities) (wind farm SPVs) 111 (9,109)
Cash (wind farm SPVs) 28,527 38,239
------------------------------------------------------ ------------------ ------------------
Fair value of investments (1) 1,011,049 886,063
Cash (Group) 6,020 3,036
Other relevant liabilities (127) (5,621)
------------------------------------------------------ ------------------ ------------------
GAV 1,016,942 883,478
Aggregate Group Debt (2) (366,942) (490,695)
------------------------------------------------------ ------------------ ------------------
NAV 650,000 392,783
Reconciling items(3) - 1,171
------------------------------------------------------ ------------------ ------------------
Statutory net assets 650,000 393,954
Shares in issue 630,619,463 380,000,000
NAV per share (cent) 103.1 103.4
------------------------------------------------------ ------------------ ------------------
(1) The fair value of investments are shown gross of EUR160.9
million debt and swap fair values held at wind farm SPV level that
are not included in the equivalent figure in the Consolidated
Statement of Financial Position.
(2) The debt and swap fair values held and wind farm SPV level
are included within the definition of Aggregate Group Debt for NAV
purposes, but are included in the fair value of investments through
profit and loss in the Statement of Financial Position.
(3) The other reconciling item in 2018 item reflects a deferred
tax asset in Holdco, which was written off during the year.
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/liabilities of the Group and wind farm SPVs.
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 long-term
assumptions in relation to energy yield, power prices, inflation,
and asset life.
The base case discount rate is a blend of a lower discount rate
for fixed cash flows and a higher discount rate for merchant cash
flows. The blended discount rate reduced by 0.3 per cent from 31
December 2018 reflecting market valuations observed throughout
2019. The blended discount rate as at 31 December 2019 does remain
within 6 per cent and 7 per cent, which is considered to be an
appropriate base case for sensitivity analysis. A variance of +/-
0.25 per cent is considered to be a reasonable range of alternative
assumptions for discount rate.
The base case long term CPI assumption is 2.0 per cent.
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-up arrangements with compensating purchase price
adjustments).
Long term power price forecasts are provided by a leading market
consultant, updated quarterly and adjusted by the Investment
Manager where more conservative assumptions are considered
appropriate. The independent forecasts are never adjusted upwards.
Base case real power prices increase from approximately EUR54/MWh
(2030) to approximately EUR61/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.
The base case asset life is 30 years. The sensitivity below
assumes that asset life may be 5 years shorter or longer than the
base case, which is impacted by commercial aspects of each
investment, including the renewals of site leases, planning
permission and grid connection agreements.
Outlook
The Group has successfully executed against all facets of its
business plan to date and is well positioned for future growth. The
outlook for the Group remains positive with a growing secondary
wind market in Ireland, a stable policy backdrop for Irish wind
assets underpinned by the REFIT contracts, and an opportunity for
further growth into attractive jurisdictions in Europe.
Irish Wind Market
The Irish wind market remains an attractive jurisdiction with
both a stable and supportive regulatory regime and broad public
support. The country has over 4.0GW of installed capacity either in
operation or construction under REFIT 1 and REFIT 2 representing a
c.EUR8 billion market size.
RESS, a successor scheme to REFIT, has reinforced this further
growth opportunity in the Irish renewables market from 2020
onwards. It is expected that over 13,500GWh per year of additional
renewable generation will be contracted between 2020 and 2026,
which would represent c.4GW of onshore wind capacity if all
13,500GWh was converted to onshore wind. It is expected that RESS
will support a broader range of technology solutions, including
offshore wind and solar.
In June 2019, the Irish Government announced its Climate Action
Policy committing the country to generating 70 per cent of
electricity from renewables by 2030 and is projected to create more
than EUR12 billion of further investment opportunities. It is
expected that the majority of this new capacity will be delivered
under RESS.
Ireland is seeing a substantial growth in the demand for
electricity, particularly from the development of a substantial
number of data centres. The Company anticipates a growing number of
large corporate entities seeking to enter into long term PPA
arrangements to meet their energy obligations.
Market Entry into Continental Europe
In line with the Company's Investment Policy, the Group has the
ability to make acquisitions in Belgium, Finaland, France, Germany,
and the Netherlands. Many of the operational assets across the
continent are owned by parties with whom the Investment Manager has
strong existing relationships. The Group's position is further
improved by the absence of currency risk when acquiring assets in
Europe.
During the year, we have been exploring opportunities in Nordic
countries, in particular Denmark, Norway and Sweden (in addition to
Finland which the Group could already invest in from July 2019
under the Company's current Investment Policy). These additional
jurisdictions provide the Group with the benefit of a larger pool
of potential acquisition targets and facilitates the Group's
diversification opportunities. The Nordics represented a euro
denominated market with power sales into Nord Pool, one of the
world's most liquid power markets. The fundamentals of the market
are positive due to substantial plans for decarbonisation in each
of the countries, increasing demand via electrification of key
industries and new interconnectors to higher priced markets. Given
that electricity in these markets are traded in euros, it is
unlikely that there will be a material impact on currency risk
should the Group invest in these jurisdictions.
The outlook for the Group continues to remain very positive,
with robust operational and financial performance from the existing
portfolio with a healthy pipeline of further attractive investment
opportunities.
Board of Directors
The Directors are of the opinion that the Board, as a whole,
comprises an appropriate balance of skills, experience and
diversity. The Board is comprised of individuals from relevant and
complementary backgrounds offering experience in investment,
financial, and business skills, as well as in the energy sector,
from both an investment and a commercial perspective.
Rónán Murphy, Chairman
Rónán Murphy, aged 62, was previously Senior Partner of PwC
Ireland, a position he was elected to in 2007 and was re-elected to
for a further 4 year term in July 2011. Rónán joined PwC in 1980,
qualifying in 1982, and was admitted to the partnership in 1992.
Rónán was a member of the PwC EMEA Leadership Board from 2010 to
2015. Rónán is also a non-executive director of Icon Plc and
Davy.
Rónán holds a Bachelor of Commerce degree and Masters in
Business Studies from University College Dublin and is a Fellow of
the Institute of Chartered Accountants.
Kevin McNamara, Chairman of the Audit Committee
Kevin McNamara, aged 65, has more than 25 years' experience in
the energy sector. Kevin enjoyed a long career with ESB
International, including leading the investment division of ESB
International Investments. More recently Kevin was CFO of Amarenco
Solar, a solar business focused on the Irish and French markets and
prior to this CEO of Airvolution Energy, a UK wind development
business.
Kevin holds a Bachelor of Commerce degree from University
College Dublin and is a Fellow of the Institute of Chartered
Accountants.
Emer Gilvarry, Senior Independent Director
Emer Gilvarry, aged 62, is a consultant with Mason Hayes &
Curran. Prior to taking up this position, Emer was the Managing
Partner for two consecutive terms from 2008 to 2014. From 2014
until 2018, Emer took over the role of Chair of the firm. She is
also a former Head of the firm's Litigation Group (2001 to 2008).
Emer is a former Board member of Aer Lingus. She is currently a
board member of The Economic and Social Research Institute and the
Ireland Funds.
Emer holds a Bachelor of Law degree from University College
Dublin (BCL).
Marco Graziano
Marco Graziano, aged 62, has more than 35 years of worldwide
experience in the energy sector, with a demonstrated track record
of driving growth and profitability managing large organisations.
He served as both executive and non-executive director in a number
of companies in Europe, Africa, Middle East and Latin America.
After many years with the French multinationals Alstom and Areva,
more recently he was President of South Europe, MENA and LATAM for
Vestas Wind Systems.
Marco holds a doctorate degree in mechanical engineering from
Genoa University.Marco was appointed to the Board after year end on
30 January 2020.
Other Irish Public Company Directorships
In addition to their directorships of the Company, the below
Directors currently hold the following Irish public company
directorships:
Rónán Murphy Icon 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.
Directors' Report
The Directors present their Annual Report, together with the
consolidated financial statements of Greencoat Renewables PLC for
the year ended 31 December 2019.
Principal Activity and Business Review
A detailed discussion of the individual project performance and
a review of the business in the period are covered in the
Investment Manager's Report.
Results for the Year
The consolidated financial statements for the financial year
ended 31 December 2019 are set out in the financial statements
including the results for the year which are set out in the
Consolidated Statement of Comprehensive Income.
Future Developments
The Group's outlook is discussed in the Investment Manager's
Report.
Investment Objective
The Company's aim is to provide attractive risk-adjusted returns
to shareholders through an annual dividend (6.03 cent per share for
2019) that increases progressively whilst growing the capital value
of its investment portfolio. The Company is targeting an IRR of 7
to 8 per cent (net of expenses and fees) on the issue price of the
ordinary shares to be achieved over the longer term via active
management of the investment portfolio, reinvestment of excess cash
flows and the prudent use of leverage. The Company intends to hold
assets in its investment portfolio for the long term.
Investment Policy
The Group intends to increase its portfolio of renewable energy
generation assets within the Eurozone with a focus on Ireland. Key
investment criteria include:
-- During the first 24 months from listing, the Group was
invested in operational wind energy assets in Ireland.
-- Thereafter, Ireland will remain a key country of focus for
the Group as no less than 60 per cent of GAV will be invested in
Ireland.
-- The Group can also invest, in aggregate, up to 40 per cent of
GAV in operational wind energy or solar assets in other relevant
countries (being Belgium, Finland, France, Germany and the
Netherlands).
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.
Group Structure and Share Capital
The Company is incorporated in the Republic of Ireland. The
Group is wholly independent and is not tied to any particular
utility or developer. All of the ordinary shares in the Company are
quoted on the Euronext Growth Market of Euronext Dublin and on AIM
of the London Stock Exchange. The Group comprises of the Company
and Holdco. Holdco invests in the underlying portfolio companies.
During the year, Holdco 2 was dissolved with a view to
rationalising the Group.
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.
All shareholders have the same voting rights in respect of the
share capital of the Company. Shareholders are entitled to attend
and vote at general meetings of the Company and, on a poll, to one
vote for each ordinary share held.
The rights and obligations to the ordinary shares are set out in
the Company's articles of association which are available on the
Company's website: www.greencoat-renewables.com .
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 every AGM. A special resolution will be proposed at
the forthcoming AGM seeking renewal of such authority until the
next AGM (or 30 June 2021, whichever is earlier). The purchases
will only be made for cash at prices below the estimated prevailing
NAV per share and where the Board believes such purchases will
result in an increase of the NAV per share. 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 the special resolution.
Discount Control
As part of the Company's discount control policies, the Board
intends to propose a continuation vote by shareholders if the share
price trades at a significant discount to NAV. If in any financial
year, the shares have traded on average, at a discount in excess of
10 per cent or more to the NAV per share in any financial year, the
Board will propose a special resolution at the Company's next
annual general meeting that the Company cease to continue in its
present form. Notwithstanding this, the Board could consider buying
back its own shares in the market if the share price is trading at
a material discount to NAV, providing it is in the interests of the
shareholders to do so.
Major Interests in Shares
Significant shareholdings as at 31 December 2019 are detailed
below.
Shareholder Ordinary shares held %
---------------------------------
31 December 2019
--------------------------------- -----------------------
Irish Strategic Investment Fund 12.05
Newton Investment Management 8.64
FIL Investment International 5.78
M&G Investment Management 4.69
Investec Wealth & Investment 4.56
Cantor Fitzgerald 4.13
Foresight Group 3.83
Schroder Investment Management 3.76
Brewin Dolphin Ireland 3.73
Irish Life Investment Managers 3.56
Baillie Gifford & Co. 3.15
Companies Act 2014 Disclosures
The Directors disclose the following information:
-- the Company's capital structure is detailed in note 15 of the
consolidated 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 2014;
-- 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.
Key Performance Indicators
The Board believes that the key metrics detailed within the At a
Glance section, which are typical for renewables infrastructure
investment funds, will provide shareholders with sufficient
information to assess how effectively the Group is meeting its
objectives.
Ongoing Charges
31 December 2019 31 December 2018
---------------------- -------------------- -------------------
EUR000 % EUR 000 %
Management fee 5,221 1.00% 3,035 1.00%
Directors' fees 200 0.04% 200 0.07%
Ongoing expenses (1) 1,176 0.21% 1,054 0.34%
---------------------- -------- ---------- ---------- -------
Total 6,597 1.25% 4,289 1.41%
---------------------- -------- ---------- ---------- -------
Weighted Average NAV 524,558 309,667
(1) Ongoing expenses do not include EUR31k (2018: EUR244k) of
broken deal costs.
Based on the 31 December 2019 NAV of EUR650 million, the ongoing
total management fee is 1.00 per cent. of NAV. Assuming no change
in NAV, the 2020 ongoing charges ratio is expected to be 1.24 per
cent.
The Investment Manager is not paid any performance or
acquisition fees.
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 Ireland and 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.
Corporate and Social Responsibility
Environmental, Social and Governance Matters
The Group currently invests in wind farms and the environmental
benefits of renewable energy are widely known.
Although the non-executive Board has overall responsibility for
the activities of the Company and its investments, the day-to-day
management of the business is delegated to the Investment Manager.
This includes responsibility for ESG matters. The Investment
Manager assesses how ESG should be managed and the Company has
developed its ESG policy in accordance with the Investment
Manager's ESG Framework, and the approach has two streams:
pre-investment and ongoing management. The full ESG policy of the
Company and its ESG report are available on the Company's website:
www.greencoat-renewables.com .
The Group relies on the Investment Manager to apply appropriate
policies to the investments the Group makes. The policies in place
at the Investment Manager outline the Group's approach to
responsible investing, as well as the environmental standards which
it aims to meet. 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.
The Investment Manager monitors compliance at the investment
phase and reports on an ongoing basis to the Board.
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 0.4tn CO2 per
MWh).
Employees and Officers of the Company
The Company does not have any employees but instead engages
experienced third parties to operate the assets that it owns,
therefore employee policies are not required. The Directors of the
Company are listed in the Board of Directors section.
Diversity
The Group's policy on diversity is detailed in the Corporate
Governance Report.
Principal Risks and Risk Management
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 to the performance of the Group, identified by
the Board, are detailed below.
The Board maintains a risk matrix considering the risks
affecting both the Group and the investee companies. This risk
matrix is reviewed and updated annually to ensure that procedures
are in place to identify, mitigate and minimise the impact of risks
should they crystallise and to identify emerging risks and to
determine whether any actions are required. This enables the Board
to carry out a robust assessment of the risks facing the Group,
including those principal risks that would threaten its business
model, future performance, solvency or liquidity.
The risk appetite of the Group is considered in the light of the
principal risks and their alignment with the Company's Investment
Objective. The Board considers the risk appetite of the Group and
the Company's adherence to the Investment Policy in the context of
the regulatory environment taking into account, inter alia, gearing
and financing risk, wind resource risk, the level of exposure to
power prices as well as environmental and health and safety
risks.
As it is not possible to eliminate risks completely, the purpose
of the Group's risk management policies and procedures is not to
eliminate risks, but to reduce them 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 4
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 renewable energy projects 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. The key men are also shareholders in the Company.
Regulatory and Brexit Risk
The Investment Manager is the UK authorised AIFM of the Company,
an Irish AIF. The Company has put in place contingency planning to
cover different Brexit scenarios. Following recent guidance from
the CBI and legal advice, the Company believes the AIFM will be
able to continue to manage the AIF as a non-EU AIFM, although the
AIFM will no longer be able to avail of the marketing passport
under AIFMD and will need to rely on national private placement
regimes.
The Board regularly discusses regulatory risks and the
Investment Manager reports to it on AIFMD compliance matters. The
Investment Manager also consults with its own, and the Company's
legal adviser as well as the Company's NOMAD in relation to its
plans to ensure that the Company can continue to be AIFMD compliant
after Brexit.
If at any point the international community, or the EU, were to
withdraw, reduce or change its support for the increased use of
energy from renewable sources, including generation of electricity
from wind, for whatever reason, this may have a material adverse
effect on the legislative basis for the supports for the promotion
of the use of energy from renewable sources. If this reduces the
value of the green benefits that wind energy generators are
entitled to, it would have a material adverse effect on the
Group.
Financing Risk
The Group will finance further investments either by borrowing
or by issuing further shares. The ability of the Group to deliver
enhanced returns and consequently to realise expected 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. A rise in real
interest rates could have a material impact on the share price. As
most of the revenues and costs of the investee companies are either
indexed or correlated to CPI inflation, the Investment Manager
believes this provides a degree of mitigation against a rise in
interest rates due to inflation.
Risks Affecting Investee Companies
Regulation
As the renewable energy market has matured and costs of new
capacity have reduced, member states have generally revised their
supports for the sector to reduce the benefits available to new
renewable power generation projects. However, in order to maintain
investor confidence, Ireland (and other relevant countries) have to
date largely ensured that benefits already granted to operating
renewable energy generation projects (which the Group is invested
in) are exempt from future regulatory change adversely affecting
those benefits.
If these policies were to change, such that subsidy supports
presently available to the renewable energy sector were to be
reduced or discontinued, it could have a material adverse effect on
the business, financial position, results of operations and future
growth prospects of the Group, as well as returns to investors.
Electricity Prices
A number of factors could cause a decline in the market price of
electricity which could adversely affect the portfolio companies'
revenue and financial condition. Similarly, a decline in the costs
of other sources of electricity generation, such as fossil fuels or
nuclear power, could reduce the wholesale price of electricity and
thus the price achieved for electricity generated by wind farms. At
present, the Group does not hedge its sales of electricity
generated.
Since 1995, Ireland has provided operating wind farms with a
supportive regulatory framework (REFIT 1 and REFIT 2) offering an
inflation-linked floor price up to 15 years, while allowing wind
farms to capture prices above the floor. Under REFIT, wind farms
are provided with pricing certainty and no downside exposure to
electricity price as the REFIT price is c.EUR80/MWh whereas the
2019 Irish wholesale electricity price was c.EUR50/MWh.
When operating outside of REFIT (at the latest December 2027 for
REFIT 1 or December 2030 for REFIT 2 contracted wind farms), the
Group may trade in the relevant electricity market on a merchant
basis and its financial performance would be therefore subject to
the wholesale power price prevalent at the time. In general,
independent forecasters expect Irish wholesale power prices to rise
in real terms from current levels, driven by higher gas and carbon
prices. A difference in the achieved wholesale price of electricity
to that which is expected could have a material adverse effect on
the business, financial position, results of operation and future
growth prospects of the Group, as well as returns to investors.
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 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 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 may include a "wind energy true-up" which would apply
once at least one year's operational data has become available or
the acquisition price would be adjusted to reflect wind
uncertainty. Under this true-up, the net load factor will be
reforecast based on all available data and the purchase price will
be adjusted, subject to de minimis thresholds and caps.
Asset Life
In the event that the wind turbines do not operate for the
period of time assumed by the Group in its business model 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 turbines across the wind farm portfolio.
Regular maintenance ensures the wind turbines are in good working
order, consistent with their expected life-spans.
Market Structure Change (I-SEM)
The island of Ireland previously had a wholesale electricity
market, the SEM, which was a gross mandatory pool market, centrally
dispatched, where the licensed transmission system operators were
responsible for forecasting wind and demand. As a consequence, wind
generators were not "balance responsible". The regulatory
authorities in Ireland and Northern Ireland have developed a new
integrated single electricity market, I-SEM, which aligns SEM with
electricity markets across Europe. This market went live in October
2018 with one of the material changes that it introduces "balance
responsibility" for wind generators. The implication of being
balanced responsible is that it introduces a potential cost to the
wind operators. The Group has contracted a third party service
provider with relevant experience to manage this risk.
It is not known what effect, if any, Brexit will have on the
operation of I-SEM. An adverse effect on I-SEM or the way in which
it might be developed as a result of Brexit could have a material
adverse effect on the business, financial position, results of
operations and future growth prospects of the Company, as well as
returns to investors
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 physical injury or industrial accidents, particularly
if an individual were to fall from height 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 Kevin McNamara 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.
Wind farms have the potential to cause environmental hazards or
nuisances to their local human populations, flora and fauna and the
surrounding natural environment. Wind farms can receive complaints
relating to specific environmental issues, or compliance with
planning consents and other relevant permits. Separately, the
planning regulations in Ireland historically included a planning
exemption for underground grid connections. There have been
challenges to the basis on which this exemption has been determined
and there is currently uncertainty around how the industry will
resolve this challenge. The Group continues to monitor any
development, taking legal advice where necessary, and addresses
these as and when required.
Going Concern and Financial Risk
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. Details of the
financial instruments used, along with 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 consolidated financial
statements.
The Group continues to meet day-to-day liquidity needs through
its cash resources.
As at 31 December 2019, the Group had net current liabilities of
EUR200.1 million (2018: EUR1.4 million) and had cash balances of
EUR6.0 million (2018: EUR3.0 million). This excludes cash balances
within investee companies of EUR28.5 million (2018: EUR38.2.
million), which are sufficient to meet current obligations as they
fall due. The significant net current liabilities position of the
Group at 31 December 2019 is due to the Group's revolving credit
facility coming due for renewal in December 2020 (within 12 months
of the year end) and therefore being classified as a current
liability. The Group expects to refinance the revolving credit
facility during 2020. The major cash outflows of the Group are
payment of dividends and costs relating to the acquisition of new
assets, both of which are discretionary.
The Group had EUR206.0 million (2018: EUR362.0 million) of
amounts drawn under its revolving credit facility as at 31 December
2019. The Group has and 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 consolidated financial
statements.
Disclosure of Information to Independent Auditor
The Directors believe that they have taken all steps necessary
to make themselves aware of any relevant audit information and have
established that the Group's statutory Auditors are aware of that
information. In so far as they are aware at the time that this
report was approved, there is no relevant audit information of
which the Group's statutory Auditors are unaware.
Independent Auditor
BDO, Statutory Audit Firm, have expressed their willingness to
continue in office in accordance with Section 383 (2) of the
Companies Act, 2014.
The Directors will propose the reappointment of BDO as the
Company's Auditor and resolutions concerning this and the
remuneration of the Company's Auditor will be proposed at the
AGM.
Audit Committee
Pursuant to the Company's Articles of Association the Board had
established an Audit Committee that in all material respects meets
the requirements of Section 167 of the Companies Act 2014. The
Audit Committee was fully constituted and active during the year
ended 31 December 2019. For more information, see the Audit
Committee Report.
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 Directors recommend that the Annual Report, the Directors'
Report and the Independent Auditor's Report for the year ended 31
December 2019 are received and adopted by the shareholders and a
resolution concerning this will be proposed at the AGM.
Accounting Records
The Directors believe they have complied with the requirements
of Section 281 to Section 285 of the Companies Act, 2014 with
regard to accounting records by employing accounting personnel with
the appropriate expertise and by providing adequate resources to
the financial function. The accounting records of the Company are
maintained by Northern Trust International Fund Administration
Services (Ireland) Limited at Georges Court, 54-62 Townsend Street,
Dublin 2, Ireland.
Subsequent Events
Significant subsequent events have been disclosed in note 21 to
the consolidated financial statements.
Corporate Governance
The Corporate Governance Report form part of this report.
Directors and Company Secretary
The following Directors held office as at 31 December 2019:
Directors
Rónán Murphy (non-executive Chairman)
Emer Gilvarry (non-executive Director)
Kevin McNamara (non-executive Director)
Company Secretary
Estera Administration (UK) Limited
The biographical details of the Directors are set out in the
Board of Directors section.
Changes in Directors during the year
There were no changes to directors during the year.
Directors' Interests in Shares in the Company
Directors' interests in Company shares as at 31 December 2019
are detailed below.
Shareholder Ordinary shares of EUR0.01 each held as at Ordinary shares of EUR0.01 each held as at
------------------------
31 December 2019 31 December 2018
------------------------ ------------------------------------------- -------------------------------------------
Rónán Murphy 170,571 124,752
Kevin McNamara 68,327 50,000
Emer Gilvarry 67,832 49,505
------------------------ ------------------------------------------- -------------------------------------------
The Company does not have any share option schemes in place.
Dividend
The Board has recommended a total aggregate dividend of
EUR9,506,589, equivalent to 1.5075 cent per share with respect to
the 3 month period ended 31 December 2019.
Political Donations
No political donations were made during the year ended 31
December 2019.
Longer Term Viability
As further disclosed in the Corporate Governance Report 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.
As a sector-focused infrastructure fund, the Group aims to
produce stable and progressive 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 conscious that it
would be difficult to foresee the economic viability of any company
with any degree of certainty for a period of time greater than 10
years.
Directors' Compliance Statement
The Directors, in accordance with Section 225(2)(a) of the
Companies Act 2014, acknowledge that they are responsible for
securing the Company's compliance with its "relevant obligations".
"Relevant obligations" in the context for the Company, are the
Company's obligations under:
-- The Companies Act 2014, where a breach of the obligations
would be a category 1 or category 2 offence.
-- The Companies Act 2014, where a breach of the obligations
would be a serious Market Abuse or Prospectus offence.
-- tax law.
Pursuant to Section 225(2)(b) of the Companies Act 2014, the
Directors confirm that:
-- a compliance policy statement has been drawn up by the
Company in accordance with Section 225(3)(a) of the Companies Act
2014 setting out the Company's policies (that, in the directors'
opinion, are appropriate to the Company) regarding compliance by
the Company with its relevant obligations.
-- appropriate arrangements and structures that in their
opinion, are designed to secure material compliance with the
Company's relevant obligations, have been put in place; and
-- a review has been conducted, during the financial year, of
the arrangements and structures referred to above.
By order of the Board
Rónán Murphy Kevin McNamara
Director Director
1 March 2020 1 March 2020
Directors' Remuneration Report
This report has been prepared by the Directors in accordance
with the requirements of the Companies Act 2014. A resolution to
consider the Directors' Remuneration Report will be proposed at the
AGM.
The Company's Auditor is required to give their opinion on the
information provided on Directors' remuneration and this is
explained further in its report to shareholders within the
Independent Auditor's Report. The remainder of this report is
outside the scope of the external audit.
Annual Statement from the Chairman of the Board
The Board, which is profiled on the Board of Directors section,
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 4 Directors,
all of whom are non-executive. The Company has established a
Remuneration Committee which comprises all of the Directors and the
Chair is Emer Gilvarry.
Each of the Directors was appointed to the Remuneration
Committee with effect to the date of their appointment. The
Committee shall meet at such times as the Committee Chairman shall
require.
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 total
remuneration of non-executive Directors has not exceeded the limit
set out in the Articles of Association of the Company.
The Company's Articles of Association empower the Board to award
a discretionary bonus where any Director has been engaged in
exceptional work on a time spent basis to compensate for the
additional time spent over their expected time commitment.
The Articles of Association provide that Directors retire and
offer themselves for re-election at the first AGM after their
appointment and at least every 3 years thereafter. In accordance
with corporate governance best practice, all of the Directors have
opted to offer themselves for re-election on an annual basis.
All of the Directors have been provided with letters of
appointment which stipulate that their initial term shall be for 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.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company's
registered office.
The Directors do not envisage any changes to the remuneration
policy in the next accounting period.
Annual Report on Remuneration
The table below (audited information) shows all remuneration
earned by each individual Director during the year:
Date of Appointment Directors' fees per Paid in year ended 31 Paid in year ended 31
annum December December
2019 2018
----------------------- --------------------- ---------------------- ---------------------- ----------------------
Rónán Murphy
(chairman) 16 June 2017 EUR100,000 EUR100,000 EUR100,000
Kevin McNamara 16 June 2017 EUR50,000 EUR50,000 EUR50,000
Emer Gilvarry 16 June 2017 EUR50,000 EUR50,000 EUR50,000
----------------------- --------------------- ---------------------- ---------------------- ----------------------
Total EUR200,000 EUR200,000
---------------------------------------------- ---------------------- ---------------------- ----------------------
None of the Directors received any other remuneration or
additional discretionary payments during the year from the
Company.
On behalf of the Board,
Emer Gilvarry
Chair of the Remuneration Committee
1 March 2020
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the consolidated financial statements in accordance with
applicable law and regulations.
Irish 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 consolidated 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 of the
Group for that period.
In preparing these consolidated 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 consolidated financial statements;
-- prepare the consolidated financial statements on the going
concern basis unless it is inappropriate to presume that the
Company and the Group will continue in business;
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 consolidated financial statements comply with the Companies Act
2014 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 consolidated financial statements are made available on a
website. Financial statements are published on the Company's
website in accordance with legislation in Ireland and 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 consolidated financial
statements contained therein.
On behalf of the Board,
Rónán Murphy Kevin McNamara
Director Director
1 March 2020 1 March 2020
Corporate Governance Report
This Corporate Governance Report forms part of the Report of the
Directors disclosed in the Directors' Report.
Corporate Governance Framework
The Company is committed to high standards of corporate
governance and the Board is responsible for ensuring those high
standards are achieved. Companies admitted to trading on AIM or
Euronext Growth Market are not required to comply with the UK Code
or Irish Annex, however they are required to disclose the corporate
governance code which they have decided to apply. For the year
ended 31 December 2019, the Company was a member of the AIC and
adopted the AIC Code. The AIC Code provides boards with a framework
of best practice in respect of the governance of investment
companies. While the Company is not an "investment company" under
the Companies Act, the Company shares key important characteristics
with such companies e.g. it has no employees and the tasks of
portfolio management and risk management are delegated to the
Investment Manager. The FRC has confirmed that investment companies
who report against the AIC Code and follow its requirements will
also be meeting their obligations under the UK Code and the Irish
Annex. The Board considers that reporting against the principles
and recommendations of the AIC Code, by reference to the AIC Guide,
provides better information to Shareholders. A summary of the
Company's compliance with the AIC code is provided on the Company's
website.
The text of 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 .
Statement of Compliance
The Board confirms that the Company has complied with the AIC
Code during the year ended 31 December 2019.
Purpose, Culture and Values
The Company's purpose remains clear; to provide shareholders
with an annual dividend that increases progressively whilst growing
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 leverage.
During the year, the Board discussed the Company's culture and
values. As an investment trust with no employees, it was agreed
that the culture and values of the Board should be aligned with
those of the Investment Manager and centred on long term
relationships with the Company's key stakeholders and sustainable
investment as follows.
-- integrity is at the heart of every activity, with the
importance of being transparent, trustworthy and dependable being
well understood.
-- the trust of stakeholders is key to maintaining the Company's
high reputation, in particular with regard to execution certainty
for asset sellers and delivery of investment promises to
investors.
-- respect for differing opinions is to be shown across all conversation and communication.
-- individual empowerment is sought with growth in
responsibility and autonomy being actively encouraged.
-- collaboration and effectively utilising the collective skills
of all participants is important to ensure ideas and information
are best shared.
The Board
As at the date of this report, the Board comprises of 4
non-executive Directors, all of whom, are considered to be
independent of the Investment Manager and free from any business or
other relationship that could materially interfere with the
exercise of their independent judgement.
The Board appointed Marco Graziano as Director of the Company
with effect from 30 January 2020. Mr Graziano was introduced to the
Company by the independent search firm, Korn Ferry . The Board felt
it was beneficial to the growth and development of the Company to
enhance the Board's breadth of experience and skillset,
particularly in advance of the Group looking to invest in European
jurisdictions, as well as enhance the diversity of the Board.
Directors' details are detailed in the Board of Directors
section, which sets out the range of investment, financial and
business skills and experience represented.
Director Re-election and Appointment
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. Any Director,
who has held office with the Company for three consecutive 3 year
terms shall retire from office. 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.
However, all of the Directors, in accordance with best practice,
have opted to offer themselves for re-election on an annual basis.
Having considered their effectiveness, demonstration of commitment
to the role, attendance at meetings and contribution to the Board's
deliberations, the Board approves the nomination for re-election of
all Directors.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company's
registered office.
The Chairman
The Chairman's primary responsibility is to lead the Board and
to ensure its effectiveness both collectively and individually. The
Chairman of the Board is Rónán Murphy. 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. Murphy is an Independent Director. The Company has no employees
and therefore there is no requirement for a chief executive.
Senior Independent Director
During the year, Emer Gilvarry was appointed as Senior
Independent Director, which involves working closely with the
Chairman and providing support where required, holding annual
meetings with the other non-executive directors to appraise the
performance of the Chairman and be available to shareholders if
they have any reason for concern.
Diversity Policy and Independence
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 on boards of listed
companies, in financial and legal services as well as in the energy
sector. As at the date of this report, the Board comprised 3 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.
During the year, the Nominations Committee engaged search firm
Korn Ferry to assist the Board in the appointment of a new
non-executive Director. This process resulted in the appointment of
Marco Graziano with effect from 30 January 2020.
The Investment Manager operates an equal opportunities policy
and its partners and employees comprised 36 men and 14 women.
Board Responsibilities
The Board will meet, on average, 4 times in each calendar year
for scheduled quarterly Board meetings and on an ad hoc basis where
necessary. At each meeting, the Board follows a formal agenda that
will cover the business to be discussed including, but not limited
to, strategy, performance and the framework of internal controls,
as well as review of its own performance and composition. Between
meetings there is regular contact with the Investment Manager. The
Board requires to be supplied, in a timely manner, with information
by the Investment Manager, the Administrator, the Depositary and
other advisers in a form and of a quality appropriate to enable it
to discharge its duties.
The Board is responsible for the determination of the Company's
Investment Objective and Policy and has overall responsibility for
the Company's activities. The Company has entered into the
Investment Management Agreement with the Investment Manager
pursuant to which the Investment Manager is responsible for the
day-to-day management of the Company.
The Board also 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 interim and other price-sensitive
public reports.
The Board has established procedures which provide a reasonable
basis for the Directors to make proper judgement on an ongoing
basis as to the financial position and prospects of the
Company.
The Investment Manager will at all times act within the
parameters set out in the Investment Policy. The Investment Manager
reports to the Board and keeps the Board appraised of material
developments on an ongoing basis.
The Investment Manager is responsible for, among other
things:
-- management of the Portfolio and further investments;
-- identifying, evaluating and executing possible further investments;
-- risk management;
-- reporting to the Board;
-- calculating and publishing NAV, with the assistance of the Administrator;
-- assisting the Company in complying with its ongoing
obligations as a company whose shares are admitted to trading on
AIM and Euronext Growth Market; and
-- directing, managing, supervising and co-ordinating the
Company's third-party service providers, including the Depositary
and the Administrator, in accordance with industry best
practice.
The Board has the ability to specify from time to time specific
matters that require prior Board approval ("Reserved Matters") or
specific matters that it believes ought to be brought to the
Board's attention as part of the general reporting process between
the Investment Manager and the Board. The initial list of Reserved
Matters specified by the Board includes entry into markets other
than those located in the Republic of Ireland, entry into
transactions other than those involving operational onshore wind
assets, entry into any acquisitions increasing GAV by more than 50%
and entry into material new financing facilities.
The Investment Manager shall, once every calendar quarter,
submit to the Board a report of activities, investments and
performance of the Company, including progress of all investments,
details of the pipeline of acquisitions and any disposals and, in
addition, shall promptly report to the Board any other information
which could reasonably be considered to be material.
Committees of the Board
The Company's Audit Committee is chaired by Kevin McNamara and
consists of a minimum of 2 members. Emer Gilvarry and Marco
Graziano are the other members of the Audit Committee as the date
of this report. 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, included in the Audit Committee Report,
describes the work of the Audit Committee.
The Company has established a Management Engagement Committee,
which comprises all the Directors and the Chair is Rónán Murphy.
The Management Engagement Committee's main function is to keep
under review the performance of the Investment Manager and review
and make recommendations on any proposed amendment to the
Investment Management Agreement. The Management Engagement
Committee will also perform a review of the performance of other
key service providers to the Group. The Management Engagement
Committee will meet at least once a year.
In accordance with the AIC Code, the Company has also set up
Remuneration and Nomination Committees. The Remuneration Committee
comprises of all the Directors and the Chair is Emer Gilvarry. The
Remuneration Committee's main functions are to determine and agree
the Board policy for the remuneration of the Directors and review
and consider any additional ad hoc payments in relation to duties
undertaken over and above normal business. The Remuneration
Committee will meet at least once a year.
The Nomination Committee comprises all of the Directors and the
Chair is Rónán Murphy. The Nomination Committee's main function is
to review the structure, size and composition of the Board
regularly and to consider succession planning for Directors. The
Nomination Committee will meet at least once a year. The committee
worked closely with the search firm Korn Ferry to identify
candidates who displayed the relevant skills and experience, while
also seeking to increase diversity on the Board. This process
resulted in the appointment of Marco Graziano to the Board.
Terms of reference for the Management Engagement, Nominations
and Remuneration Committees have been approved by the Board and are
available on the Company's website.
Board Meetings, Committee Meetings and Directors' Attendance
A schedule of Board and Audit Committee meetings is circulated
to the Board one year ahead including the key agenda items for each
meeting. Other Committees meetings are arranged as and when
required. The number of meetings of the full Board of the Company
attended in the year to 31 December 2019 by each Director is set
out below:
2019 Scheduled Board Meetings (Total of 6) Additional Board Meetings (Total of 10)
------------------------ -------------------------------------- ----------------------------------------
Rónán Murphy 6 9
Emer Gilvarry 6 10
Kevin McNamara 6 10
Marco Graziano (1) n/a n/a
------------------------ -------------------------------------- ----------------------------------------
(1) Appointed with effect from 30 January 2020.
During the year, there were also 10 meetings of sub-committees
of the Board. The number of meetings of the Committees attended in
the year by each Committee member is set out below.
2019 Audit Committee Management Nomination Committee Remuneration
Meetings (Total of 4) Engagement Committee Meetings (Total of 3) Committee Meetings
Meetings (Total of (Total of 1)
2)
----------------------- ---------------------- --------------------- ---------------------- ----------------------
Rónán Murphy 4 2 3 1
Emer Gilvarry 4 2 3 1
Kevin McNamara 4 2 3 1
Marco Graziano (1) n/a n/a n/a n/a
----------------------- ---------------------- --------------------- ---------------------- ----------------------
(1) Appointed with effect from 30 January 2020.
Board Performance and Evaluation
Regarding performance and evaluation pursuant to Provision 26 of
the AIC Code, the Board undertakes a formal and rigorous evaluation
of its performance each financial year.
Each individual Directors' training and development needs are
reviewed annually. All new Directors receive an induction,
including being provided with information about the Company and
their responsibilities and meetings with the Investment Manager. In
addition, each Director will visit operational sites and specific
Board training days are arranged involving presentations on
relevant topics.
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 Ireland and 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.
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 for an initial term of 5
years from the admission date (25 July 2017). The Investment
Management Agreement may be terminated by either party on the
conclusion of the initial term provided the party purporting to
terminate provides not less than 12 months prior written notice of
its intention to terminate the agreement. 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.
Risk Management and 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
below. As further explained in the Director's 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 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, the Depositary 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; and
-- authorisation limits over expenditure incurred by the Group;
Information and Support
The Board can seek independent professional advice on a matter,
at the Company's expense, where they judge it necessary to
discharge their responsibilities as Directors. The Committees of
the Board are provided with sufficient resources to undertake their
duties. The Directors have access to the services of the Company
Secretary who is responsible for ensuring that Board procedures are
followed.
Whistleblowing
The Board has considered the 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).
General Meetings
The Company shall hold in each year a general meeting as its
annual general meeting in addition to any other meeting in that
year and shall specify the meeting as such in the notice calling
it. All general meetings other than annual general meetings shall
be called extraordinary general meetings. The Directors may convene
general meetings. Extraordinary general meetings may also be
convened on such requisition, or in default, may be convened by
such requisitionists as provided by the Companies Act 2014.
All business shall be deemed special that is transacted at an
extraordinary general meeting. All business that is transacted at
an annual general meeting shall also be deemed special, with the
exception of the consideration of the Company's statutory financial
statements and reports of the Directors and Auditors, the review by
the members of the Company's affairs, the appointment of Directors
in the place of those retiring (whether by rotation or otherwise),
the appointment and re-appointment of the Auditors and the fixing
of the remuneration of the Auditors.
Every member entitled to attend and vote at a general meeting
may appoint a proxy to attend, speak and vote on his or her behalf
provided, however, that a member may appoint more than one proxy
provided that each proxy is appointed to exercise the rights
attached to shares held in different securities accounts. The
holders of ordinary shares have the right to receive notice of and
attend and vote at all general meetings of the Company and they are
entitled, on a poll or a show of hands, to one vote for every
ordinary share they hold.
Votes may be given either personally or by proxy. Subject to any
rights or restrictions for the time being attached to any class or
classes of shares and subject to any suspension or abrogation of
rights pursuant to the Articles, on a show of hands every member
present in person and every proxy shall have one vote, so, however,
that no individual shall have more than one vote, and on a poll
every member shall have one vote for every share carrying rights of
which he is the holder. On a poll a member entitled to more than
one vote need not cast all his votes or cast all the votes he uses
in the same way.
Engagement with Stakeholders
The Directors are responsible for acting in a way that they
consider, in good faith, is the most likely to promote the success
of the Company for the benefit of its members. In doing so, they
should have regard for the needs of stakeholders and the wider
society. The Company's objective is to provide investors with an
annual dividend that increases progressively while preserving the
capital value of its investment portfolio in the long term through
reinvestment of excess cashflow and the prudent use of portfolio
leverage.
Key decisions are those that are either material to the Company
or are significant to any of the Company's key stakeholders. The
below key decisions were made during the year, with the overall aim
of promoting the success of the Company while considering the
impact on its members and wider stakeholders.
Dividends
The Board has approved total dividends of 6.03 cent per share
with the respect to the year. The Board are confident that with the
Company's continuing strong cashflow and robust dividend cover, the
Company can target a dividend of 6.06 cent per share for 2020,
which the Board expect to contribute to the Company's target return
to investors of an IRR in excess of 7 per cent, net of fees and
expenses.
Acquisitions
During the year, the Company acquired 3 new wind farms, and
invested in an increased interest in an existing wind farm in the
Portfolio. The Board and the Investment Manager considered each
investment in the context of the Company's Investment Policy,
availability of financing and the potential returns to
investors.
Share Issues
During the year, the Company issued 251 million further shares,
raising EUR273 million, through 2 oversubscribed share placings.
The Investment Manager engaged with analysts and investors
throughout each share issuance process.
The Company is committed to maintaining good communications and
building positive relationships with all stakeholders, including
shareholders, debt providers, analysts, potential
investors, suppliers and the wider communities in which the
Group and its investee companies operate. This includes regular
engagement with the Company's shareholders and other stakeholders
by the Board, the Investment Manager and the Administrator. Regular
feedback is provided to the Board to ensure they understand the
views of stakeholders.
Relations with Shareholders
The Company welcomes the views of shareholders and places great
importance on communication with its shareholders. The Investment
Manager is available at all reasonable times to meet with principal
shareholders and key sector analysts. The Chairman, the Senior
Independent Director and other Directors are also available to meet
with shareholders if required.
All shareholders have the opportunity to put questions to the
Company at 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 at all quarterly Board meetings
and regularly monitors the views of shareholders and the
shareholder profile of the Company. The Board is also kept fully
informed of all relevant market commentary on the Company by the
Investment Manager.
Relations with Other Stakeholders
The Company values its relationships with its debt providers.
The Investment Manager ensures the Company continues to meet its
debt covenants and reporting requirements.
The Investment Manager conducts presentations with analysts and
investors to coincide with the announcement of the Company's annual
and interim results, providing an opportunity for discussions and
queries on the Company's activities, performance and key metrics.
In addition to these semi-annual presentations, the Investment
Manager meets regularly with analysts and investors to provide
further updates with how the Company and the investment portfolio
are performing.
The Directors and Investment Manager receive informal feedback
from analysts and investors, which is presented to the Board by the
Company's Euronext Growth Advisor, NOMAD and Broker. The Company
Secretary also receives informal feedback via queries submitted
through the Company's website and these are addressed by the Board,
the Investment Manager or the Company Secretary, where
applicable.
The Company recognises that relationships with suppliers are
enhanced by prompt payment and the Company's Administrator ensures
all payments are processed within the contractual terms agreed with
the individual suppliers.
The Company, via its Investment Manager, has long-term important
relationships with its operational site managers and turbine
operations and maintenance managers and reviews performance,
including health and safety, on a monthly basis. Representatives of
the site manager and SPV Board directors, from the Investment
Manager, visit all operational sites on a regular basis and carry
out safety walks at least once a year on each site.
Similarly, environmental protection issues are reported on every
month by the site managers and annual habitat management plans are
agreed by each SPV board for all sites to ensure that the
environment in and surrounding each wind farm is carefully
protected.The Directors recognise that the long-term success of the
Company is linked to the success of the communities in which the
Group, and its investee companies, operate. During the year, a
number of community projects were supported by the Company's
investment portfolio companies, further details of which can be
found in the latest ESG report, available on the Company's website:
www.greencoat-renewables.com .
Shareholders may also find Company information or contact the Company through its website.
On behalf of the Board
Ronán Murphy
Chairman of the Board
1 March 2020
Audit Committee Report
At the date of this report, the Audit Committee comprised of
Kevin McNamara (Chairman), Emer Gilvarry, and Marco Graziano (with
effect from 30 January 2020). 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 the Board of Directors section.
The Audit Committee operates within clearly defined terms of
reference which were reviewed during the financial year. The
revised terms have been approved by the Board, and include all
matters indicated by the AIC Code and are available for inspection
on the Company's website: www.greencoat-renewables.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.
Meetings
The Audit Committee met 4 times up to 31 December 2019. A
breakdown of Director attendance is set out in the Corporate
Governance Report. BDO attended 2 of the 4 formal Audit Committee
meetings held during the year ended 31 December 2019.
Summary of the Role and Responsibilities of the Audit
Committee
The duties of the Audit Committee include reviewing the Interim
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 Interim Report). 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, and the
Administrator. These meetings and discussions focused on, but were
not limited to:
-- 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 potential incidents of fraud and the Company's response thereto;
-- 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 Interim
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
period;
-- 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 Interim 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
consolidated 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 attended 2 of the 4 formal Audit Committee meetings held
during the year and have presented their audit findings to the
Audit Committee. 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 fair value of investments as a key area of
risk of misstatement in the Company's financial statements.
Assessment of the Fair 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 accounts 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 consolidated financial statements.
The Investment Manager is responsible for calculating the NAV with
the assistance of the Administrator, in accordance with its
valuation policy and is subject to the approval of its independent
valuation committee.
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. The Audit Committee
considers and challenges this analysis and the rationale of any
changes made. The Committee has satisfied itself that the key
estimates and assumptions used in the valuation model, which are
disclosed in note 2 to the consolidated financial statements, 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.
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 and has a
process in place to identify emerging risks and to determine
whether any actions are required. A residual risk rating has been
applied to each risk. The Audit Committee is responsible for
reviewing the risk matrix and associated controls before
recommending to the Board for consideration and approval,
challenging the Investment Manager's assumptions to ensure a robust
internal risk management process.
The Audit Committee considers risk and strategy regularly, and
formally reviewed the updated risk matrix in Q1 2020 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 2019, to determine that these were
unchanged from those disclosed in the Company's 2018 Annual Report
and remained the most likely to affect the Group in the second half
of the year.
During the year, the Audit Committee also discussed and reviewed
the internal controls framework in place at the Investment Manager
and the Administrator in depth. Discussions focused on 3 lines of
defence: assurances at operational level; internal oversight; and
independent objective assurance.
The Audit Committee concluded that these frameworks were
appropriate for the identification, assessment, management and
monitoring of financial and regulatory 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 Investment Manager is full scope AIFM, regulated by
the FCA in the UK and has a robust framework of internal controls
and an independent compliance function.
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 shall meet investors in relation to the
Company's financial reporting and internal controls, should it be
deemed appropriate.
External Auditor
Effectiveness of the Audit Process
The Audit Committee assessed the effectiveness of the audit
process by considering BDO's fulfilment of the agreed audit plan
through the reporting presented to the Audit Committee by BDO 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 during the year are disclosed in
note 5 to the consolidated 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 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 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 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 has been the Company's Auditor from its incorporation on 15
February 2017. The Auditor proposes to rotate the audit partner
responsible for the Group audit every 5 years. Therefore, the lead
partner may rotate after the completion of the 2022 year end
audit.
The external audit contract is intended 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
remain 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 be proposed for re-appointment as the Company's Auditor at the
2020 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.
Kevin McNamara
Chairman of the Audit Committee
1 March 2020
Independent Auditor's Report
To the members of Greencoat Renewables PLC
Opinion
We have audited the financial statements of Greencoat Renewables
PLC ("Company") and its subsidiaries ("Group") for the financial
year ended 31 December 2019, which comprise the Consolidated
Statement of Comprehensive Income, Consolidated and Company
Statement of Financial Position, Consolidated and Company Statement
of Changes in Equity, Consolidated and Company Statement of Cash
Flows, and the related notes including the summary of significant
accounting policies set out in note 1. The financial reporting
framework that has been applied in their preparation is Irish Law
and International Financial Reporting Standards ("IFRS") as adopted
by the European Union and, as regards the Company financial
statements, as applied in accordance with the provisions of the
Companies Act 2014.
In our opinion:
-- the Group financial statements give a true and fair view of
the assets, liabilities and financial position of the Group as at
31 December 2019 and of its profit for the financial year then
ended;
-- the Company Statement of Financial Position gives a true and
fair view of the assets, liabilities and financial position of the
Company as at 31 December 2019;
-- the Group financial statements have been properly prepared in
accordance with IFRS as adopted by the European Union;
-- the Company financial statements have been properly prepared
in accordance with IFRS as adopted by the European Union as applied
in accordance with the provisions of the Companies Act 2014;
and
-- the Group financial statements and Company financial
statements have been properly prepared in accordance with the
requirements of the Companies Act 2014 and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (Ireland) ("ISAs (Ireland)") and applicable
law. Our responsibilities under those standards are further
described in the Auditor's Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of
the Group and Company in accordance with ethical requirements that
are relevant to our audit of financial statements in Ireland,
including the Ethical Standard as applied to public interest
entities issued by the Irish Auditing and Accounting Supervisory
Authority ("IAASA"), and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current financial year and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Related disclosures
Refer to:
-- Note 1 - Significant accounting policies;
-- Note 2 - critical accounting judgments, estimates and assumptions;
-- Note 4 - return on investments; and
-- Note 9 - investments at fair value through profit or loss;
of the accompanying financial statements.
Key Audit Matters
The valuation of investments is a subjective accounting estimate
where there is an inherent risk of management override arising
from the investment valuations being prepared by the Investment
Manager, who is remunerated based on the Net Asset Value ("NAV")
of the Company.
The entire investment portfolio is represented by unquoted equity
and loan investments and all investments are individually material
to the financial statements.
Related Disclosures
Refer to:
* Note 1 - Significant accounting policies;
* Note 2 - critical accounting judgments, estimates and
assumptions;
* Note 4 - return on investments; and
* Note 9 - investments at fair value through profit or
loss;
of the accompanying financial statements.
Audit Response
For investments valued using a discounted cash flow model we performed
the following procedures:
* Challenged the appropriateness of the selection and
application of key assumptions in the discounted cash
flow model including discount rate, energy yield,
power price, inflation rate and asset life by
benchmarking to available industry data and
consulting with our internal valuation specialists;
* Agreed energy yield, power price, inflation rate and
asset life used in the model to independent reports;
* For new investments we obtained and reviewed all key
agreements and contracts and considered if they were
accurately reflected in the valuation model;
* For existing investments we analysed changes in
significant assumptions compared with assumptions
audited in previous periods and vouched these to
independent evidence including available industry
data;
* Used spreadsheet analysis tools to assess the
integrity of the valuation models and track changes
to inputs or structure;
* Agreed cash and other net assets to bank statements
and investee company management accounts;
* Considered the accuracy of forecasting by comparing
previous forecasts to actual results;
* We critically evaluated and challenged management's
assessment as to the recoverability of the loan
investments;
* We vouched to loan agreements and verified the terms
of the loan; and
* We have reviewed the performance of the loan
investments during the financial year under review.
Our application of materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our
audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
-- For the purpose of our audit we used overall materiality of
EUR13m, which represents approximately 2% of the Group and
Company's NAV.
-- We applied this threshold, together with qualitative
considerations, to determine the scope of our audit and the nature,
timing and extent of our audit procedures and to evaluate the
effect of misstatements on the Financial Statements as a whole.
-- We chose NAV as the benchmark because of the Group and
Company's asset based structure. We selected 2% based on our
professional judgment, noting that it is also within the range of
commonly accepted asset-related benchmarks.
-- In addition, we used a specific materiality for the purpose
of testing transactions and balances which impact on the Group's
realised return. Specific materiality of EUR1.7m represents
approximately 10% of the profit for the year.
We agreed with the Audit Committee that we would report to the
Audit Committee all audit differences in excess of EUR0.65m, as
well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which ISAs (Ireland) require us to report to you
where;
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the Group and the Company's ability to continue to
adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are
authorised for issue.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report other than the financial statements and our auditor's report
thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2014
Based solely on the work undertaken in the course of the audit,
we report that:
-- in our opinion, the information given in the Directors'
report is consistent with the financial statements; and
-- in our opinion, the Directors' report has been prepared in
accordance with the Companies Act 2014.
We have obtained all the information and explanations which we
consider necessary for the purposes of our audit.
In our opinion, the accounting records of the Company were
sufficient to permit the financial statements to be readily and
properly audited and the Company Statement of Financial Position is
in agreement with the accounting records.
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and the
Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the Directors'
report.
We are also required to review:
-- the Directors' statement in relation to going concern and longer-term viability;
-- the part of the Corporate Governance Statement relating to
the Company's compliance with the provisions of the AIC Code
specified for our review; and
-- certain elements of disclosures in the report to shareholders
by the Board of Directors' remuneration committee.
In addition, the Companies Act 2014 requires us to report to you
if, in our opinion, the disclosures of directors' remuneration and
transactions required by sections 305 to 312 of the Act are not
made.
We have nothing to report in this regard.
Respective responsibilities
Responsibilities of directors for the financial statements
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as they determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are
responsible for assessing the Group and Company's ability to
continue as going concerns, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Group
or the Company or to cease operations, or has no realistic
alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (Ireland) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the IAASA's website at:
http://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Desc
ription_of_auditors_responsiblities_for_audit.pdf
This description forms part of our Auditor's report.
The purpose of our audit work and to whom we owe our
responsibilities
Our report is made solely to the Company's members, as a body,
in accordance with section 391 of the Companies Act 2014. Our audit
work has been undertaken so that we might state to the Company's
members those matters we are required to state to them in an
auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members, as a body,
for our audit work, for this report, or for the opinions we have
formed.
Brian Hughes
For and on behalf of BDO,
Dublin,
Ireland
Statutory Audit Firm
AI223876
1 March 2020
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2019
For the year ended For the year ended
Note 31 December 2019 31 December 2018
EUR'000 EUR'000
--------------------------------------------------------------------- ----- ------------------- -------------------
Return on investments 4 29,475 56,429
Other income 19 3,015 2,004
--------------------------------------------------------------------- ----- ------------------- -------------------
Total income and gains 32,490 58,433
Operating expenses 5 (6,734) (4,533)
Investment acquisition costs (1,397) (6,170)
--------------------------------------------------------------------- ----- ------------------- -------------------
Operating profit 24,359 47,730
Finance expense 13 (6,025) (4,166)
--------------------------------------------------------------------- ----- ------------------- -------------------
Profit for the year before tax 18,334 43,564
Taxation 6 (1,237) -
--------------------------------------------------------------------- ----- ------------------- -------------------
Profit for the year after tax 17,097 43,564
Profit and total comprehensive income attributable to:
Equity holders of the Company 17,097 43,564
Earnings per share
--------------------------------------------------------------------- ----- ------------------- -------------------
Basic and diluted earnings from continuing operations in the year
(cent) 7 3.46 13.81
--------------------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the consolidated
financial statements.
Consolidated Statement of Financial Position
As at 31 December 2019
Note 31 December 2019 31 December 2018
EUR'000 EUR'000
-------------------------------------------------- ----- ----------------- -----------------
Non current assets
Investments at fair value through profit or loss 9 850,107 757,399
-------------------------------------------------- ----- ----------------- -----------------
850,107 757,399
Current assets
Receivables 11 3,343 3,486
Cash and cash equivalents 6,020 3,036
-------------------------------------------------- ----- ----------------- -----------------
9,363 6,522
Current liabilities
Loans and borrowings 13 (206,000) -
Payables 12 (3,470) (7,936)
-------------------------------------------------- ----- ----------------- -----------------
Net current liabilities (200,107) (1,414)
Non current liabilities
Loans and borrowings 13 - (362,031)
Net assets 650,000 393,954
-------------------------------------------------- ----- ----------------- -----------------
Capital and reserves
Called up share capital 15 6,306 3,800
Share premium account 15 385,669 120,009
Other distributable reserves 199,936 229,153
Retained earnings 58,089 40,992
-------------------------------------------------- ----- ----------------- -----------------
Total shareholders' funds 650,000 393,954
-------------------------------------------------- ----- ----------------- -----------------
Net assets per share (cent) 16 103.1 103.7
-------------------------------------------------- ----- ----------------- -----------------
Authorised for issue by the Board on 1 March 2020 and signed on
its behalf by:
Rónán Murphy Kevin McNamara
Chairman Director
The accompanying notes form an integral part of the consolidated
financial statements.
Company Statement of Financial Position
As at 31 December 2019
Note 31 December 2019 31 December 2018
EUR'000 EUR'000
-------------------------------------------------- ----- ----------------- -----------------
Non current assets
Investments at fair value through profit or loss 9 648,797 392,534
-------------------------------------------------- ----- ----------------- -----------------
648,797 392,534
Current assets
Receivables 11 3,015 2,025
Cash and cash equivalents 188 759
-------------------------------------------------- ----- ----------------- -----------------
3,203 2,784
Current liabilities
Payables 12 (2,000) (1,364)
-------------------------------------------------- ----- ----------------- -----------------
Net current assets 1,203 1,420
Net assets 650,000 393,954
-------------------------------------------------- ----- ----------------- -----------------
Capital and reserves
Called up share capital 15 6,306 3,800
Share premium account 15 385,669 120,009
Other distributable reserves 199,936 229,153
Retained earnings 58,089 40,992
-------------------------------------------------- ----- ----------------- -----------------
Total shareholders' funds 650,000 393,954
-------------------------------------------------- ----- ----------------- -----------------
Net assets per share (cent) 16 103.1 103.7
-------------------------------------------------- ----- ----------------- -----------------
The Company has taken advantage of the exemption under section
304 of the Companies Act 2014 and accordingly has not presented a
Statement of Comprehensive Income for the Company alone. The profit
after tax of the Company for the year was EUR17,097,394 (2018:
EUR43,563,872).
Authorised for issue by the Board on 1 March 2020 and signed on
its behalf by:
Rónán Murphy Kevin McNamara
Chairman Director
The accompanying notes form an integral part of the consolidated
financial statements.
Consolidated and Company Statement of Changes in Equity
For the year ended 31 December 2019
Other
Distributable Retained
Share capital Share premium Reserves earnings Total
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------ ----- ---------------- ----------------- ----------------- ---------------- ---------
Opening net
assets
attributable to
shareholders (1
January 2019) 3,800 120,009 229,153 40,992 393,954
Issue of share
capital 15 2,506 - - - 2,506
Issue of share
premium 15 - 270,194 - - 270,194
Share issue costs 15 - (4,534) - - (4,534)
Dividends 8 - - (29,217) - (29,217)
Profit and total
comprehensive
income for the
year - - - 17,097 17,097
------------------ ----- ---------------- ----------------- ----------------- ---------------- ---------
Closing net
assets
attributable to
shareholders 6,306 385,669 199,936 58,089 650,000
------------------ ----- ---------------- ----------------- ----------------- ---------------- ---------
After taking account of cumulative unrealised gains of
EUR68,074,313, the total reserves distributable by way of a
dividend as at 31 December 2019 were EUR189,950,913.
For the year ended 31 December 2018
Other
Distributable Retained
Share capital Share premium Reserves earnings Total
Note EUR000 EUR000 EUR'000 EUR'000 EUR'000
------------------ ----- ---------------- ----------------- ----------------- ---------------- ---------
Opening net
assets
attributable to
shareholders (1
January 2018) 2,700 11,958 250,000 (2,572) 262,086
Issue of share
capital 15 1,100 - - - 1,100
Issue of share
premium 15 - 110,000 - - 110,000
Share issue costs 15 - (1,949) - - (1,949)
Dividends 8 - - (20,847) - (20,847)
Profit and total
comprehensive
income for the
year - - - 43,564 43,564
------------------ ----- ---------------- ----------------- ----------------- ---------------- ---------
Closing net
assets
attributable to
shareholders 3,800 120,009 229,153 40,992 393,954
------------------ ----- ---------------- ----------------- ----------------- ---------------- ---------
After taking account of cumulative unrealised gains of
EUR54,465,313, the total reserves distributable by way of a
dividend as at 31 December 2018 were EUR215,679,690.
The accompanying notes form an integral part of the consolidated
financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2019
For the year ended For the year ended
Note 31 December 2019 31 December 2018
EUR'000 EUR'000
------------------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from operating activities 17 15,269 3,298
Cash flows from investing activities
Acquisition of investments (112,794) (411,312)
Investment acquisition costs (5,398) (1,933)
Repayment of shareholder loan investments 9 29,482 22,624
------------------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from investing activities (88,710) (390,621)
Cash flows from financing activities
Issue of share capital 15 272,700 111,100
Payment of issue costs (4,390) (2,051)
Dividends paid 8 (29,217) (20,847)
Amounts drawn down on loan facilities 13 80,900 400,292
Amounts repaid on loan facilities 13 (236,931) (109,430)
Finance costs (6,637) (3,499)
------------------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from financing activities 76,425 375,565
Net increase/(decrease) in cash and cash equivalents during the
year 2,984 (11,758)
Cash and cash equivalents at the beginning of the year 3,036 14,794
Cash and cash equivalents at the end of the year 6,020 3,036
------------------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the consolidated
financial statements.
Company Statement of Cash Flows
For the year ended 31 December 2019
For the year ended For the year ended
Note 31 December 2019 31 December 2018
EUR'000 EUR'000
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from operating activities 17 (3,886) 1,460
Cash flows from investing activities
Loans advanced to Group companies 9 (268,447) (109,384)
Repayment of loans advanced to Group companies 9 29,450 6,700
Repayment of shareholder loan investments 9 3,294 -
Investment acquisition costs - (324)
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from investing activities (235,703) (103,008)
Cash flows from financing activities
Issue of share capital 15 272,700 111,100
Payment of issue costs (4,390) (2,051)
Dividends paid 8 (29,217) (20,847)
Finance costs (75) (409)
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from financing activities 239,018 87,793
Net decrease in cash and cash equivalents during the year (571) (13,755)
Cash and cash equivalents at the beginning of the year 759 14,514
Cash and cash equivalents at the end of the year 188 759
----------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the consolidated
financial statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019
1. Significant accounting policies
Basis of accounting
The consolidated nancial statements have been prepared in
accordance with IFRS to the extent that they have been adopted by
the EU and with those parts of the Companies Act 2014 applicable to
companies reporting under IFRS.
These consolidated nancial statements are presented in Euro
("EUR") which is the currency of the primary economic environment
in which the Group operates and are rounded to the nearest
thousand, unless otherwise stated.
The consolidated nancial statements have been prepared on the
historical cost basis, as modi ed for the measurement of certain
nancial instruments at fair value through pro t or loss. The
nancial statements have been prepared on the going concern basis.
The principal accounting policies are set out below.
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 2019 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 16 "Leases" sets out the principles for the recognition,
measurement, presentation and disclosure of leases on or after 1
January 2019. As the Group's investments are held at fair value
through profit or loss and leases are held at SPV level, the
introduction of IFRS 16 has not had a material impact on the
reported results and financial position of the Group.
As tax legislation can be difficult and judgemental to apply,
uncertainties over tax are common. In the absence of specific
guidance, there has been diversity in how companies account for
uncertainties over income tax treatments. A new interpretation,
IFRIC 23 "Uncertainty over Income Tax Treatments", clarifies the
requirements and is likely to result in changes for some companies
for periods beginning on or after 1 January 2019. The introduction
of IFRIC 23 has had no impact on the reported results and financial
position of the Group.
New and amended standards and interpretations not applied
Other accounting standards and interpretations have been
published and will be mandatory for the Company's accounting
periods beginning on or after 1 January 2020 or later periods. The
impact of these standards is not expected to be material to the
reported results and financial position of the Group.
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 satis es the criteria to be regarded as an investment
entity as de ned 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.
Notwithstanding this, IFRS 10 requires subsidiaries that provide
services that relate to the investment entity's investment
activities but are not themselves investment entities to be
consolidated. Accordingly, the annual financial statements include
the consolidated financial statements of the Company and Holdco. 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
consolidated 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.
Subsidiaries are therefore measured at fair value through pro t
or loss, in accordance with IFRS 13 "Fair Value Measurement" and
IFRS 9 as permitted by IAS 27. The nancial support provided by the
Group to its unconsolidated subsidiaries is disclosed in note
9.
Consolidation
Subsidiaries are all entities (including structured entities)
over which the Company has control. The Company controls an entity
when the Company has power over the entity, is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Company. They are derecognised
from the date that control ceases.
The Company applies the acquisition method to account for
business combinations. The consideration transferred for the
acquisition of a subsidiary (for accounting purposes) is the fair
value of the assets transferred, the liabilities incurred to the
former owners of the acquiree and the equity interests issued by
the Company. The consideration transferred includes the fair value
of any asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition
date.
The Company recognises any non-controlling interest in the
acquiree on an acquisition-by-acquisition basis, either at fair
value or at the non-controlling interest's proportionate share of
the recognised amounts of the acquiree's identifiable net
assets.
The following table outlines the consolidated entities.
Registered Owner-ship % Country of
Investment Date of Control Office Incorporation Place of Business
------------------------ ---------------- ------------------- ------------- --------------- ------------------
GR Wind Farms 1 Limited 9 March 2017 Riverside One, Sir 100% Ireland Ireland
John Rogerson's
Quay, Dublin 2
Based on control, the results of Holdco are consolidated into
the Consolidated Financial Statements. Holdco 2 was dissolved in
the year and is no longer consolidated into the Consolidated
Financial Statements.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated on
consolidation. Unrealised losses are also eliminated. When
necessary, amounts reported by subsidiaries have been adjusted to
conform to the Company's accounting policies. During the year, no
such adjustments have been made, given all subsidiaries have
uniform accounting policies.
Acquisition method
The acquisition method is used for all business
combinations.
Steps in applying the acquisition method are:
-- Identification of the acquirer.
-- Determination of the acquisition date.
-- Recognition and measurement of the identifiable assets
acquired, the liabilities assumed and any non-controlling interest
(NCI, formerly called minority interest) in the acquiree.
-- Recognition and measurement of goodwill or a gain from a bargain purchase.
The guidance in IFRS 10 "Consolidated Financial Statements" is
used to identify an acquirer in a business combination, i.e. the
entity that obtains control of the acquiree. An acquirer considers
all pertinent facts and circumstances when determining the
acquisition date, i.e. the date on which it obtains control of the
acquiree. The acquisition date may be a date that is earlier or
later than the closing date.
Financial instruments
Financial assets and nancial liabilities are recognised in the
Group's Statement of Financial Position when the Group becomes a
party to the contractual provisions of the instrument. Financial
assets and nancial liabilities are only offset and the net amount
reported in the Consolidated Statement of Financial Position when
there is a currently enforceable legal right to offset the
recognised amounts and the Group intends to settle on a net basis
or realise the asset and liability simultaneously.
At 31 December 2019 and 2018, the carrying amounts of cash and
cash equivalents, receivables, payables and borrowings re ected in
the nancial 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 classi cation of nancial assets at initial recognition
depends on the purpose for which the nancial asset was acquired and
its characteristics.
All nancial assets are initially recognised at fair value. All
purchases of nancial assets are recorded at the date on which the
Group and the Company became party to the contractual requirements
of the nancial asset.
Loans and receivables
These assets are non-derivative nancial assets with xed 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
provision for impairment. Transaction costs are recognised in the
Consolidated Statement of Comprehensive Income as incurred. The
Group and Company assesses whether there is any objective evidence
that nancial 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 ows,
discounted at the original effective interest rate. The amount of
any impairment is recognised in the Consolidated Statement of
Comprehensive Income. 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 at Fair Value Through Pro t or Loss
Investments are designated upon initial recognition as held at
fair value through pro t or loss. Movements in fair value are
recognised in the Consolidated Statement of Comprehensive Income
during the reporting period. 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 pro t 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.
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.
Financial assets are recognised/derecognised at the date of the
purchase/disposal.
Fair value is de ned 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
cash ow basis in accordance with IFRS 13 and IFRS 9. Gains or
losses resulting from the revaluation of investments are recognised
in the Consolidated Statement of Comprehensive Income.
De-recognition 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 cash flow has expired.
Financial liabilities
Financial liabilities are classi ed according to the substance
of the contractual agreements entered into.
All nancial liabilities are initially recognised at fair value
net of transaction costs incurred. All nancial liabilities are
recorded on the date on which the Group becomes party to the
contractual requirements of the nancial 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 re ect amortised cost, as the
amounts are not materially different from the outstanding
balances.
The Group's other nancial 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 nancial 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 de-recognition is taken to the
Consolidated Statement of Comprehensive Income.
Finance expenses
Borrowing costs are recognised in the Consolidated Statement of
Comprehensive Income in the period to which they relate on an
accruals basis using the effective interest rate method.
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 classi ed as equity instruments.
Share issue costs of the Company directly attributable to the
issue and listing of shares are charged to the share premium
account. Share issue 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 insigni
cant 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
consolidated financial statements when the Company's obligation to
make payment has been established.
Income recognition
Interest income on shareholder loan investments is recognised
when the Group's entitlement to receive payment is established.
Other income is accounted for on an accruals basis.
Gains or losses resulting from the movement in fair value of the
Group's and Company's investments held at fair value through pro t
and loss are recognised in the Consolidated Statement of
Comprehensive Income at each valuation point.
Expenses
Expenses are accounted for on an accruals basis.
Taxation
Under the current system of taxation in Ireland, the Company is
liable to taxation on its operations in Ireland.
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 nancial statements and the corresponding tax
bases used in the computation of taxable pro t. 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 pro ts 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 pro t nor the accounting pro t. Deferred
tax liabilities are recognised for taxable temporary differences
arising on investments, except where the Company 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 Company 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 consolidated 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 Ireland. All of
the Group's non-current assets are located in Ireland.
2. Critical accounting judgements, estimates and assumptions
The preparation of the nancial statements requires the
application of estimates and assumptions which may affect the
results reported in the nancial statements. Estimates, by their
nature, are based on judgement and available information.
Classification of an investment entity
One area of judgement relates to the Company's classi cation as
an investment entity as de ned in IFRS 10, IFRS 12 and IAS 27. IFRS
10 requires that a Company has to ful l 3 criteria to be an
investment entity:
-- Obtains funds from one or more investors for the purpose of
providing those investor(s) with investment management
services;
-- Commits to its investor(s) that its business purpose is to
invest funds solely for returns from capital appreciation,
investment income, or both; and
-- Measures and evaluates the performance of substantially all
of its investments on a fair value basis.
IFR S 10 also determines that an investment entity would have
the following typical characteristics:
-- It has more than one investment;
-- It has more than one investor;
-- It has investors that are not related parties; and
-- It has ownership interest in the form of equity or similar interests.
An entity that does not display all of the above characteristics
could, nevertheless, meet the de nition of an investment
entity.
The Directors have concluded that the Company meets the de
nition of an investment entity.
Fair value of investments
The key assumptions that have a signi cant impact on the
carrying value of investments that are valued by reference to the
discounted value of future cash ows are the useful life of the
assets, the discount factors, the level of wind resource, the rate
of in ation, the price at which the power and associated bene ts
can be sold and the amount of electricity the assets are expected
to produce. A sensitivity analysis of these assumptions is included
in note 9.
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 standard
assumption used for the useful life of a wind farm is 30 years,
which is commonly used by similar investment companies that invest
in operating wind farms. Other factors for consideration are the
lengths of site leases and planning permission of the wind farms,
which the Investment Manager monitors closely. The weighted average
lease length across the portfolio is 29 years with many leases
having options to extend and planning permission across the
portfolio is between 20 and 25 years from commissioning. The
Investment Manager fully expects to be able to renew leases and
planning
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 cash ows 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 in ation will increase at a long-term
rate.
The price at which the output from the revenue 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 .
Speci cally 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.
Going concern
After making enquiries and noting the Group is in a net current
liabilities position of EUR200.1 million as at 31 December 2019,
the Directors have a reasonable expectation that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future. The Directors expect the
Group's loan facilities to be renewed before its final maturity
date. Accordingly, they continue to adopt the going concern basis
of accounting in preparing the Consolidated Financial
Statements.
3. Investment management fees
Under the terms of the Investment Management Agreement, the
Investment Manager is entitled to a management fee from the
Company, which is calculated quarterly in arrears in accordance
with the Investment Management Agreement.
The Fee shall be calculated in respect of each quarter and in
each case based upon the NAV:
-- on that part of the NAV up to and including EUR1 billion, an
amount equal to 0.25 per cent of such part of the NAV; and
-- on that part of the NAV in excess of EUR1 billion, an amount
equal to 0.2 per cent of such part of the NAV.
Investment management fees paid or accrued in the years ended 31
December 2019 and 31 December 2018 were as follows:
For the year ended For the year ended
31 December 2019 31 December 2018
EUR'000 EUR'000
---------------------------- ------------------- -------------------
Investment management fees 5,221 3,035
---------------------------- ------------------- -------------------
5,221 3,035
---------------------------- ------------------- -------------------
As at 31 December 2019, EUR1,409,550 was payable in relation to
investment management fees (2018: EUR928,073).
4. Return on investments
For the year ended For the year ended
31 December 2019 31 December 2018
EUR'000 EUR'000
-------------------------------------------------------------- ------------------- -------------------
Interest on shareholder loan investment (note 19) 11,917 9,665
Dividends received (note 19) 3,950 -
Unrealised movement in fair value of investments (note 9) 10,685 46,764
Gain on adjustment to purchase price of investments (note 9) 2,923 -
-------------------------------------------------------------- ------------------- -------------------
29,475 56,429
-------------------------------------------------------------- ------------------- -------------------
5. Operating expenses
For the year ended For the year ended
31 December 2019 31 December 2018
EUR'000 EUR'000
---------------------------------------------------- ------------------- -------------------
Investment management fees (note 3) 5,221 3,035
Other expenses 928 1,035
Group and SPV administration fees 327 194
Non-executive Directors' remuneration 200 200
Fees to the Company's Auditor:
for audit of the statutory financial statements 55 66
for other services 3 3
---------------------------------------------------- ------------------- -------------------
6,734 4,533
---------------------------------------------------- ------------------- -------------------
The fees to the Company's Auditor include EUR3,000 (2018:
EUR3,000) payable in relation to a limited review of the Interim
Report during the year.
6. Taxation
For the year ended For the year ended
31 December 2019 31 December 2018
EUR'000 EUR'000
---------- ------------------- -------------------
Taxation 1,237 -
---------- ------------------- -------------------
The tax reconciliation is explained below.
For the year ended For the year ended
31 December 2019 31 December 2018
EUR'000 EUR'000
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year before taxation 18,334 43,564
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year multiplied by the standard rate of corporation tax of
12.5 per cent 2,292 5,446
Movement in deferred tax asset 1,237 -
Fair value movements (not subject to taxation) (1,701) (5,846)
Dividends received (not subject to taxation) (494) -
Expenditure not deductible for tax purposes 230 812
Receipt of tax losses from unconsolidated subsidiaries (327) (412)
---------------------------------------------------------------------------- ------------------- -------------------
1,237 -
---------------------------------------------------------------------------- ------------------- -------------------
7. Earnings per share
For the year ended For the year ended
31 December 2019 31 December 2018
-------------------------------------------------------------------------- ------------------- -------------------
Profit attributable to equity holders of the Company - EUR'000 17,097 43,564
Weighted average number of ordinary shares in issue 493,861,074 315,506,849
-------------------------------------------------------------------------- ------------------- -------------------
Basic and diluted earnings from continuing operations in the year (cent) 3.46 13.81
-------------------------------------------------------------------------- ------------------- -------------------
8. Dividends declared with respect to the year
Interim dividends paid during the year ended 31 December 2019 Dividend per Total
Share cent Dividend
--------------------------------------------------------------- ------------- ----------
With respect to the quarter ended 31 December 2018 1.5000 5,700
With respect to the quarter ended 31 March 2019 1.5075 7,839
With respect to the quarter ended 30 June 2019 1.5075 7,839
With respect to the quarter ended 30 September 2019 1.5075 7,839
--------------------------------------------------------------- ------------- ----------
6.0225 29,217
--------------------------------------------------------------- ------------- ----------
Interim dividends declared after 31 December 2019 and not accrued in the year Dividend per Total
Share cent Dividend
------------------------------------------------------------------------------- ------------- ----------
With respect to the quarter ended 31 December 2019 1.5075 9,507
------------------------------------------------------------------------------- ------------- ----------
1.5075 9,507
------------------------------------------------------------------------------- ------------- ----------
On 30 January 2020, the Company announced a dividend of 1.5075
cent per share with respect to the quarter ended 31 December 2019,
bringing the total dividend declared with respect to the year to 31
December 2019 to 6.03 cent per share. The record date for the
dividend was 7 February 2020 and the payment date was 28 February
2020.
The following table shows dividends paid in the prior year.
Interim dividends paid during the year ended 31 December 2018 Dividend per Total
Share cent Dividend
--------------------------------------------------------------- ------------- ----------
With respect to the period from IPO to 31 December 2017 2.61 7,047
With respect to the quarter ended 31 March 2018 1.50 4,050
With respect to the quarter ended 30 June 2018 1.50 4,050
With respect to the quarter ended 30 September 2018 1.50 5,700
--------------------------------------------------------------- ------------- ----------
7.11 20,847
--------------------------------------------------------------- ------------- ----------
9. Investments at fair value through profit or loss
Group as at 31 December 2019 Loans Equity interest Total
EUR'000 EUR'000 EUR'000
-------------------------------------------------------------- --------- ---------------- ---------
Opening balance 419,016 338,383 757,399
Additions 49,704 65,703 115,407
Repayment of shareholder loan investments (note 19) (29,482) - (29,482)
Adjustment to purchase price of investments (note 14) - (2,923) (2,923)
Gain on adjustment to purchase price of investment (note 14) - 2,923 2,923
Unrealised movement in fair value of investments (note 4) (3,902) 10,685 6,783
-------------------------------------------------------------- --------- ---------------- ---------
435,336 414,771 850,107
-------------------------------------------------------------- --------- ---------------- ---------
Group as at 31 December 2018 Loans Equity interest Total
EUR'000 EUR'000 EUR'000
----------------------------------------------------------- --------- ---------------- ---------
Opening balance 171,651 145,145 316,796
Additions 265,997 146,474 412,471
Repayment of shareholder loan investments (22,624) - (22,624)
Unrealised movement in fair value of investments (note 4) 3,992 46,764 50,756
----------------------------------------------------------- --------- ---------------- ---------
419,016 338,383 757,399
----------------------------------------------------------- --------- ---------------- ---------
The unrealised movement in fair value of investments of the
Group during the year were made up as follows:
For the year
ended
For the year ended 31 December
31 December 2019 2018
EUR'000 EUR'000
--------------------------------------------------------- ----------------------- ------------------------------
(Decrease)/increase in valuation of investments (14,008) 29,633
Movement in swap fair values within SPVs (1,627) (6,918)
Repayment of debt at SPV level 8,212 -
Repayment of shareholder loan investments 29,482 22,624
Movement in cash balances of SPVs (16,912) (753)
Investment acquisition costs (1) 1,636 6,170
--------------------------------------------------------- ----------------------- ------------------------------
6,783 50,756
--------------------------------------------------------- ----------------------- ------------------------------
(1) EUR239k of acquisition costs were not related to investments acquired in the current
year.
Company as at 31 December 2019 Loans Equity interest Total
EUR'000 EUR'000 EUR'000
--------------------------------------------------------- ----------------------- ---------------- ------------
Opening balance 316,265 76,269 392,534
Loans advanced to Holdco (note 19) 268,447 - 268,447
Loans repaid by Holdco (note 19) (29,450) - (29,450)
Loans repaid by Wind Farm SPVs (note 19) (3,294) - (3,294)
Unrealised movement in fair value of investments - 20,560 20,560
--------------------------------------------------------- ----------------------- ---------------- ------------
551,968 96,829 648,797
--------------------------------------------------------- ----------------------- ---------------- ------------
Company as at 31 December 2018 Loans Equity interest Total
EUR'000 EUR'000 EUR'000
--------------------------------------------------------- ----------------------- ---------------- ------------
Opening balance 213,581 29,743 243,324
Loans advanced to Holdco (note 19) 109,384 - 109,384
Loans repaid by to Holdco (note 19) (6,700) - (6,700)
Unrealised movement in fair value of investments - 46,526 46,526
--------------------------------------------------------- ----------------------- ---------------- ------------
316,265 76,269 392,534
--------------------------------------------------------- ----------------------- ---------------- ------------
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level.
The level of fair value hierarchy which the financial assets or
financial liabilities are recognised is 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
investments 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 2019.
Any transfers between the levels would be accounted for on the
last day of each financial period.
The Investment Manager carries out the asset valuations, which
form part of the NAV calculation. These asset valuations are based
on discounted cash flow methodology in line with IPEV Valuation
Guidelines and adjusted where appropriate, given the special nature
of wind farm investments.
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 long-term
assumptions in relation to inflation, energy yield, power prices,
and asset life.
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.
The base case discount rate is a blend of a lower discount rate
for fixed cash flows and a higher discount rate for merchant cash
flows. The blended discount rate reduced by 0.3 per cent from 31
December 2018 reflecting market valuations observed throughout
2019. The blended discount rates as at 31 December 2019 does remain
between 6 per cent and 7 per cent, which is considered to be an
appropriate base case for sensitivity analysis.
A variance of +/- 0.25 per cent is considered to be a reasonable
range of alternative assumptions for discount rate.
The base case long-term CPI assumption is 2.00 per cent.
Base case energy yield assumptions are P50 (50 per cent
probability of exceedance over a 10 year period) 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 adjusted by the Investment
Manager where more conservative assumptions are considered
appropriate. Base case real power prices increase from
approximately EUR54/MWh (2030) to approximately EUR61/MWh (2040).
The sensitivity analysis assumes a 10 per cent increase or decrease
in power prices relative to the base case for every year of the
asset life'
The base case asset life is 30 years. The sensitivity below
assumes the asset life may be 5 years shorter or longer than the
base case, which is impacted by commercial aspects of each
investment, the renewals of site leases, planning permission and
grid connection agreements.
Sensitivity analysis
The fair value of the Group's investments is EUR850,106,884
(2018: EUR757,398,839). The following analysis is provided to
illustrate the sensitivity of the fair value of investments to a
change in 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
Input Base case Change in input of investments Change in NAV per share
---------------- ------------------------- ---------------------- ----------------------- ------------------------
EUR'000 cent
Discount rate 6 - 7 per cent + 0.25 per cent (19,356) (3.1)
- 0.25 per cent 20,027 3.2
Energy yield P50 10 year P90 (53,738) (8.5)
10 year P10 53,457 8.5
Forecast by leading
Power price consultant - 10 per cent (41,640) (6.6)
+ 10 per cent 41,655 6.6
Inflation rate 2.00 per cent - 0.5 per cent (30,950) (4.9)
+ 0.5 per cent 33,031 5.2
Asset Life 30 years - 5 years (72,517) (11.5)
+ 5 years 58,339 9.3
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 consolidated financial statements:
Registered Ownership Interest as at
Investment Place of Business Office 31 December 2019
---------------------------------- ------------------- ---------------------------------- -------------------------
Riverside One, Sir John
Ballybane Windfarms Limited Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Beam Wind Limited Ireland Rogerson's Quay, Dublin 2 100%
Cloosh Valley Wind Farm Holdings 6(th) Floor, South Bank House,
DAC Ireland Barrow Street, Dublin 4 75%
Riverside One, Sir John
Gortahile Windfarm Limited Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Killala Community Wind Farm DAC Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Killhills Windfarm Limited Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Lisdowney Wind Farms Limited Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Knockacummer Wind Farm Limited Ireland Rogerson's Quay, Dublin 2 100%
Knocknalour Wind Farm Holdings Riverside One, Sir John
Limited Ireland Rogerson's Quay, Dublin 2 100%
Riverside One, Sir John
Kostroma Holdings Limited (1) Ireland Rogerson's Quay, Dublin 2 100%
Monaincha Sigatoka Wind Holdings Riverside One, Sir John
DAC (2) Ireland Rogerson's Quay, Dublin 2 100%
Two Gateway, East Wall Road,
Raheenleagh Power DAC Ireland Dublin 3 50%
Registered Ownership Interest as at
Investment Place of Business Office 31 December 2019
---------------------------------- ------------------- ---------------------------------- -------------------------
Dublin Road, Newtownmountkennedy,
Sliabh Bawn Wind Holdings DAC Ireland Co. Wicklow 25%
Tullynamoyle Wind Farm II Riverside One, Sir John
Limited Ireland Rogerson's Quay, Dublin 2 100%
(1) The Group's investment in Glanaruddery is held through
Kostroma Holdings Limited
(2) The Group's investments in Monaincha and Garrenereagh are
held through Monaincha Sigatoka Wind Holdings DAC
Security deposits and guarantees provided by the Group on behalf
of its investments are as follows:
Provider of security Investment Beneficiary Nature Purpose Amount
EUR'000
--------------------------------------------------------------------- --------
The Company Killhills AIB Cash Planning 100
---------------------- ------------ ------------- -------- ---------- --------
100
--------------------------------------------------------------------- --------
The fair value of cash security deposits are as disclosed in the
table above.
11. Receivables
31 December 2019 31 December 2018
Group EUR'000 EUR'000
-------------------- ----------------- -----------------
Accrued income 2,959 1,980
Sundry receivables 180 47
VAT receivable 127 190
Prepayments 77 32
Deferred tax asset - 1,237
3,343 3,486
-------------------- ----------------- -----------------
31 December 2019 31 December 2018
Company EUR'000 EUR'000
-------------------------- ----------------- -----------------
Due from wind farm SPV's 2,939 1,955
Prepayments 28 32
Accrued income 26 25
VAT receivable 22 13
3,015 2,025
-------------------------- ----------------- -----------------
The Company has reviewed the receivable from wind farm SPV's in
accordance with IFRS 9 "Financial Instruments" and has not
accounted for any expected credit losses. At the 1 March 2020, the
current balance outstanding is EURnil.
12. Payables
31 December 2019 31 December 2018
Group EUR'000 EUR'000
------------------------------------ ----------------- -----------------
Investment management fees payable 1,410 928
Acquisition costs 1,007 5,421
Other payables 722 849
Share issue costs payable 171 14
Loan interest payable 124 536
Other finance costs payable 36 188
3,470 7,936
------------------------------------ ----------------- -----------------
31 December 2019 31 December 2018
Company EUR'000 EUR'000
------------------------------------ ----------------- -----------------
Investment management fees payable 1,409 928
Other payables 420 422
Share issue costs payable 171 14
2,000 1,364
------------------------------------ ----------------- -----------------
13. Loans and borrowings
31 December 2019 31 December 2018
Group at 31 December 2019 EUR'000 EUR'000
---------------------------- ---------- -----------------
Opening balance 362,031 71,169
Revolving Credit Facility
Drawdowns 80,900 400.292
Repayments (236,931) (109,430)
---------------------------- ---------- -----------------
Closing balance 206,000 362,031
---------------------------- ---------- -----------------
Reconciled as:
Current liabilities 206,000 -
============================ ========== =================
Non-current liabilities - 362,031
============================ ========== =================
The Company did not hold any loans or borrowings at 31 December
2019 (2018: EURnil).
For the year ended For the year ended
31 December 2019 31 December 2018
EUR'000 EUR'000
--------------------------- ------------------- -------------------
Loan interest 5,266 2,551
Commitment fees 584 819
Facility arrangement fees 139 140
Professional fees 36 656
Finance expense 6,025 4,166
--------------------------- ------------------- -------------------
The loan balance as at 31 December 2019 and 31 December 2018 has
not been adjusted to reflect amortised cost, as the amount is not
materially different from the outstanding balances.
In relation to loans and borrowings, the Directors are 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 loans and borrowings at the
end of the reporting periods is not significantly different from
their carrying amounts.
As at 31 December 2019, the Group had a revolving credit
facility with AIB, BNP Paribas, Commerzbank, RBC and Santander. The
facility has a margin of 1.8 per cent plus EURIBOR (at zero per
cent floor) per annum with a final maturity date of 19 December
2020. The Directors expect the Group's revolving credit facility to
be refinanced before its final maturity date.
The Group is obliged to pay a quarterly commitment fee of 0.63
per cent per annum of the undrawn commitment available under the
facility. Lenders' security consists of comprehensive debentures
incorporating a fixed and floating charge over the Group including
a charge over the Group's bank accounts and shares in the
underlying investments.
As at 31 December 2019, the principal balance of the facility
was EUR206,000,000 (2018: EUR362,030,526), accrued interest was
EUR123,600 (2018: EUR536,179) and the outstanding commitment fee
was EUR36,540 (2018: EUR28,135).
14. Contingencies & Commitments
At the time of acquisition, wind farms which had less than 12
months' operational data may have 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 operational
data has become available.
As disclosed in note 9, the Group agreed an amount of EUR2.9
million to be received from Impax in settlement of the Glanaruddery
wind energy true-up. Also, during the year the Group agreed the
wind energy true-up for Lisdowney, which resulted in no net
payment.
During the year, the Group acquired Killala wind farm for an
initial consideration of EUR37.2 million for the 5 operating
turbines on the site. An additional turbine is currently under
construction and the Group has agreed to pay further consideration
to the existing developer contingent on the final turbine becoming
operational, which is expected to be in the final quarter of
2020.
The following wind energy true-ups remain outstanding and the
maximum adjustments are as follows: Killala: EUR2,000,000 and
Knocknalour EUR489,000.
15. Share capital - ordinary shares
At 31 December 2019, the Company had authorised share capital of
2,000,000,000 ordinary shares of EUR0.01 each.
Date Issued and fully paid Number of shares issued Share capital Share premium Total
EUR'000 EUR'000 EUR'000
-------------------------------------------- ------------------------ -------------- -------------- --------
1 January 2019 Opening balance 380,000,000 3,800 120,009 123,809
22 March 2019 Issued and paid 140,000,000 1,400 146,300 147,700
22 March 2019 Less share issue costs - - (2,431) (2,431)
17 December 2019 Issued and paid 110,619,469 1,106 123,894 125,000
17 December 2019 Less share issue costs - - (2,103) (2,103)
31 December 2019 630,619,469 6,306 385,669 391,975
--------------------------------------------- ------------------------ -------------- -------------- --------
Date Issued and fully paid Number of shares issued Share capital Share premium Total
EUR'000 EUR'000 EUR'000
------------------------------------------------- ------------------------ -------------- -------------- --------
1 January 2018 Opening balance 270,000,000 2,700 11,958 14,658
2017 IPO share issue
Period to 30 June 2018 costs - - (7) (7)
2 August 2018 Issued and paid 110,000,000 1,100 110,000 111,100
2 August 2018 Less share issue costs - - (1,942) (1,942)
31 December 2018 380,000,000 3,800 120,009 123,809
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.
16. Net assets per share
Group and Company 31 December 2019 31 December 2018
Net assets - EUR'000 650,000 393,954
Number of ordinary shares issued 630,619,469 380,000,000
Total net assets - cent 103.1 103.7
17. Reconciliation of operating profit for the year to net cash
from operating activities
For the year ended For the year ended
Group 31 December 2019 31 December 2018
EUR'000 EUR'000
Operating profit for the year 24,359 47,730
Adjustments for:
Unrealised movement in fair value of investments (note 4) (10,685) (46,764)
Gain on adjustment to purchase price of investments (note 4) (2,923) -
Investment acquisition costs 1,397 6,170
Decrease/(increase) in receivables 2,858 (4,501)
Increase in payables 263 663
Net cash flows from operating activities 15,269 3,298
For the year ended For the year ended
Company 31 December 2019 31 December 2018
EUR'000 EUR'000
Operating profit for the year 17,172 43,971
Adjustments for:
Movement in fair value of investments (note 9) (20,560) (46,526)
Investment acquisition costs - 324
(Increase)/decrease in receivables (990) 3,195
Increase in payables 492 496
Net cash flows from operating activities (3,886) 1,460
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 of Directors.
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 cash flow basis. Therefore, the value of
these investments will be (amongst other risk factors) a function
of the discounted value of their expected cash flows and, as such,
will vary with movements in interest rates and competition for such
assets. Note 9 details sensitivity analysis on the impact of
changes to the inputs used on the fair value of the
investments.
Interest rate risk
The Group's most significant exposure to interest rate risk is
due to floating interest rates required to service external
borrowings through the revolving credit facility. An increase of
0.5 per cent represents the Investment Manager's assessment of a
reasonably possible change in interest rates. Should the EURIBOR
rate increase from 0 per cent to 0.5 per cent, the annual interest
due on the facility would increase by EUR1,030,000. The Investment
Manager regularly monitors interest rates to ensure the Group has
adequate provisions in place in the event of significant
fluctuations.
In accordance with the Company's investment policy, it may enter
into hedging transactions in relation to interest rates for the
purposes of efficient financial risk management. The Company will
not enter into derivative transactions for speculative
purposes.
The Directors consider shareholder loan investments to be
similar in nature to equity investments and, as these loans bear
interest at a fixed rate, they do not carry an interest rate
risk.
The Group's interest and non-interest bearing assets and
liabilities as at 31 December 2019 are summarised below:
Interest bearing
Group Fixed rate floating rate Non-interest bearing Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Cash at bank - 5,920 100 6,020
Other receivables (note 11) - - 3,266 3,266
Investments (note 9) 331,965 - 518,142 850,107
331,965 5,920 521,508 859,393
Liabilities
Other payables (note 12) - - (3,470) (3,470)
Loans and borrowings (note 13) - (206,000) - (206,000)
- (206,000) (3,470) (209,470)
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
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Cash at bank - 2,936 100 3,036
Other receivables (note 11) - - 2,217 2,217
Investments (note 9) 328,758 - 428,641 757,399
328,758 2,936 430,958 762,652
Liabilities
Other payables (note 12) - - (7,936) (7,936)
Loans and borrowings (note 13) - (362,031) - (362,031)
- (362,031) (7,936) (369,967)
The Company's interest and non-interest bearing assets and
liabilities as at 31 December 2019 are summarised below:
Interest bearing
Company Fixed rate floating rate Non-interest bearing Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Cash at bank - 88 100 188
Other receivables (note 11) - - 2,987 2,987
Investments (note 9) - - 648,797 648,797
- 88 651,884 651,972
Liabilities
Other payables (note 12) - - (2,000) (2,000)
- - (2,000) (2,000)
The Company's interest and non-interest bearing assets and
liabilities as at 31 December 2018 are summarised below:
Interest bearing
Company Fixed rate floating rate Non - interest bearing Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Cash at bank - 659 100 759
Other receivables (note 11) - - 1,993 1,993
Investments (note 9) - - 392,534 392,534
- 659 394,627 395,286
Liabilities
Other payables (note 12) - - (1,364) (1,364)
- - (1,364) (1,364)
Foreign currency risk
Foreign currency risk is defined as the risk that the fair
values of future cash flows will fluctuate because of changes in
foreign exchange rates. The Group's financial assets and
liabilities are denominated in EUR and substantially all of its
revenues and expenses are in EUR. 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 and cash at
bank. The Group minimises its credit risk exposure by dealing with
financial institutions with investment grade credit ratings and
making loan investments which are equity in nature.
The table below details the Group's maximum exposure to credit
risk:
31 December 2019 31 December 2018
Group EUR'000 EUR'000
Other receivables (note 11) 3,266 2,217
Cash at bank 6,020 3,036
Loan investments (note 9) 435,336 419,016
444,622 424,269
The table below details the Company's maximum exposure to credit
risk:
31 December 2019 31 December 2018
Company EUR'000 EUR'000
Other receivables (note 11) 2,987 1,993
Cash at bank 188 759
Loan investments (note 9) 551,968 316,265
555,143 319,017
The tables below shows the cash balances of the Group and credit
rating for each counterparty:
Rating 31 December 2019
Group EUR'000
Northern Trust A+ 51
AIB BBB+ 5,969
6,020
Rating 31 December 2018
Group EUR'000
Northern Trust A+ 63
AIB BBB+ 2,973
3,036
The table below shows the cash balances of the Company and the
credit rating for each counterparty:
Rating 31 December 2019
Company EUR'000
Northern Trust A+ 51
AIB BBB+ 137
188
Rating 31 December 2018
Company EUR'000
Northern Trust A+ 63
AIB BBB+ 696
759
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 cash flows 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 13, the Group's revolving credit facility is due
to mature in December 2020. The Directors expect this to be
refinanced within 12 months after year end.
As disclosed in note 14, the purchase price of wind farms
acquired with less than 12 months' operational data may be adjusted
subject to a wind energy true-up based on a 2 years' operational
record once the operational data has become available.
The following tables detail the Group's expected maturity for
its financial assets (excluding equity) and liabilities together
with the contractual undiscounted cash flow amounts as at 31
December 2019 and 31 December 2018:
Group -
31 December 2019 Less than 1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables (note 11) 3,266 - - 3,266
Cash at bank 6,020 - - 6,020
Loan investments 12,802 51,105 435,336 499,243
Liabilities
Other payables (note 12) (3,470) - - (3,470)
Loan and borrowings (209,708) - - (209,708)
(191,090) 51,105 435,336 295,351
Group -
31 December 2018 Less than 1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables (note 11) 2,217 - - 2,217
Cash at bank 3,036 - - 3,036
Loan investments 16,201 48,418 419,016 483,635
Liabilities
Other payables (note 12) (7,936) - - (7,936)
Loan and borrowings (6,517) (375,064) - (381,581)
7,001 (326,646) 419,016 99,371
The following tables detail the Company's expected maturity for
its financial assets (excluding equity) and liabilities together
with the contractual undiscounted cash flow amounts as at 31
December 2019 and 31 December 2018:
Company - 31 December 2019 Less than 1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables 2,987 - - 2,987
Cash at bank 188 - - 188
Loan investments - - 551,968 551,968
Liabilities
Other payables (2,000) - - (2,000)
----------------
1,175 - 551,968 553,143
Company - 31 December 2018 Less than 1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables 1,993 - - 1,993
Cash at bank 759 - - 759
Loan investments - - 316,265 316,265
Liabilities
Other payables (1,364) - - (1,364)
1,388 - 316,265 317,653
The Group and Company will use cash flow generation, equity
raisings, 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 by a combination of current cash, debt and
equity.
19. Related party transactions
During the year, the Company advanced interest-free loans to
Holdco of EUR268,446,764 (2018: EUR109,383,821), and Holdco made
repayments of EUR29,450,000 (2018: EUR6,700,000). During the year,
the Company also received shareholder loan repayments from
Knockacummer of EUR1,846,867 (2018: EURnil) and Killhills of
EUR1,447,246 (2018: EURnil).
During the year, the Company also paid remuneration to the
Directors as disclosed in the Directors' Remuneration Report. The
Directors interests in Company Shares as at 31 December 2019 are
also disclosed in the Directors' Report. The table below shows the
number of Company shares acquired by the Directors:
For the year ending 31 December 2019 For the year ending 31 December 2018
------------------------
Rónán Murphy 45,819 24,752
Kevin McNamara 18,327 -
Emer Gilvarry 18,327 49,505
Marco Graziano (1) n/a n/a
------------------------------------- -------------------------------------
82,473 74,257
------------------------ ------------------------------------- -------------------------------------
(1) Appointed with effect from 30 January 2020.
The below tables shows the Group's dividend and management fee
income:
For the year ending 31 December 2019 For the year ending 31 December 2018
Management Management
Fee income Dividend Income Fee income Dividend Income
EUR000 EUR000 EUR000 EUR000
Cloosh Valley - 3,950 - -
Knockacummer 871 - 677 -
Ballybane 434 - 332 -
Killhills 336 - 259 -
Glanaruddery 307 - 239 -
Monaincha 305 - 238 -
Gortahile 169 - - -
Killala 144 - - -
Beam 118 - - -
Tullynamoyle II 97 - 76 -
Knocknalour 78 - 61 -
Garranereagh 78 - 61 -
Lisdowney 78 - 61 -
3,015 3,950 2,004 -
The table below shows the Group's shareholder loans with the
wind farm investments
Loans Loans advanced Loan repayments Loans Accrued Total 2019 interest
at 1 in the at 31 December interest on shareholder
January year 2019 at 31 December loan investment
2019 2019
(1)
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Knockacummer 127,170 - (6,841) 120,329 - 120,329 3,400
Monaincha 73,376 - (3,708) 69,668 - 69,668 2,347
Glanaruddery 52,129 - (819) 51,310 51,310 1,319
Ballybane 48,250 - (6,477) 41,773 - 41,773 1,485
Killala - 27,006 - 27,006 90 27,096 90
Killhills 28,157 - (3,211) 24,946 - 24,946 1,109
Gortahile - 19,803 (171) 19,632 - 19,632 187
Kostroma 16,473 - - 16,473 - 16,473 422
Tullynamoyle
II 16,964 - (725) 16,239 - 16,239 513
Garranereagh 14,798 - (1,139) 13,659 - 13,659 470
Lisdowney 12,726 - (1,444) 11,282 - 11,282 363
Sliabh Bawn 9,824 - (600) 9,224 - 9,224 -
Cloosh Valley 5,791 2,895 (1,671) 7,015 - 7,015 -
Knocknalour 7,348 - (826) 6,522 - 6,522 212
Raheenleagh 2,018 - (1,850) 168 - 168 -
49,70
415,024 4 (29,482) 435,246 90 435,336 11,917
(1) Excludes accrued interest at 31 December 2018 of EUR3,992,420.
20. Ultimate controlling party
In the opinion of the Directors, on the basis of the
shareholdings advised to them, the Company has no ultimate
controlling party.
21. Subsequent events
On 30 January 2020, the Company announced a dividend of EUR9.5
million, equivalent to 1.5075 cent per share with respect to the
quarter ended 31 December 2019, bringing total dividend declared
with respect to the year to 31 December 2019 to 6.03 cent per
share. The record date for the dividend was 7 February 2020 and the
payment date was 28 February 2020.
On 30 January 2020, the Company announced the appointment of
Marco Graziano as a non-executive director to the board of the
Company.
On 17 February 2020, the Group announced the acquisition of the
14.1MW Letteragh wind farm in County Clare for EUR35.4 million.
Company Information
Directors (all non-executive) Registered Company Number
Rónán Murphy 598470
Emer Gilvarry
Kevin McNamara
Marco Graziano (appointed 30 January 2020) Registered Office
Riverside One
Investment Manager Sir John Rogerson's Quay
Greencoat Capital LLP Dublin 2
4(th) Floor The Peak
5 Wilton Road
London SW1V 1AN Registered Auditor
BDO
Beaux Lane House
Company Secretary Mercer Street Lower
Estera Administration (UK) Limited Dublin 2
Unit 18 Innovation Centre
Northern Ireland Science Park
Queens Road
Belfast BT3 9DT Legal Advisers
McCann Fitzgerald
Riverside One
Administrator Sir John Rogerson's Quay
Northern Trust International Fund Dublin 2
Administration Services (Ireland) Limited
Georges Court
54-62 Townsend Street Euronext Growth Advisor, NOMAD and Broker
Dublin 2 J&E Davy
Davy House
49 Dawson Street
Depositary Dublin 2
Northern Trust International Fiduciary
Services (Ireland) Limited
Georges Court Account Banks
54-62 Townsend Street Allied Irish Banks plc.
Dublin 2 40/41 Westmoreland Street
Dublin 2
Registrar Northern Trust International Fiduciary
Computershare Investor Services Services (Ireland) Limited
(Ireland) Limited Georges Court
Heron House, Corrig Road 56-62 Townsend Street
Sandyford Industrial Estate Dublin 2
Dublin 18
Supplementary Information (unaudited)
Disclosure required under the Alternative Investment Fund
Managers Directive ("AIFMD") for annual reports of alternative
investment funds ("AIFs")
Alternative Investment Fund Manager's Directive
Under the Alternative Investment Fund Manager Regulations 2013
(as amended) the Company is an Irish AIF and the Investment Manager
is a full scope UK AIFM.
Northern Trust International Fiduciary Services (Ireland)
Limited provide depositary services under the AIFMD. Northern Trust
International Fund Administration Services (Ireland) Limited
provide accounting and administration services to the Company.
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 within a schedule of
disclosures on the Company's website at
www.greencoat-renewables.com.
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 49 staff for the financial year ending 31 December
2019 was GBP8.9 million, consisting of GBP6.6 million fixed and
GBP2.3 million variable remuneration. The aggregate amount of
remuneration for the 6 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 GBP1.3
million.
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.
Defined Terms
Admission Document means the Admission Document of the Company
published on 25 July 2017
Aggregate Group Debt means the Group's proportionate share of
outstanding third party debt.
AIB means Allied Irish Bank plc
AIC means the Association of Investment Companies
AIC Code of Corporate Governance sets out a framework of best
practice in respect of the governance of investment companies. It
has been endorsed by the Financial Reporting Council as an
alternative means for our members to meet their obligations in
relation to the UK Corporate Governance Code
AIC Guide means the AIC's Corporate Governance Guide for
Investment Companies
AIF means Alternative Investment Funds (as defined in AIFMD)
AIFM means Alternative Investment Fund Manager (as defined in
AIFMD)
AIFMD means Alternative Investment Fund Managers Directive
AGM means Annual General Meeting of the Company
Ballybane means Ballybane Windfarms Limited
BDO means the Company's Auditor as at the reporting date
Beam Hill means Beam Wind Limited
Brexit mean the withdrawal of the United Kingdom from the
European Union
BNP Paribas means BNP Paribas Fortis N.V / S.A
Board means the Directors of the Company
Cloosh Valley means Cloosh Valley Wind Farm Holdings DAC and
Cloosh Valley Wind Farm DAC
Company means Greencoat Renewables PLC
CBI means the Central Bank of Ireland
CFD means Contract For Difference
CPI means Consumer Price Index
DCF means Discounted Cash Flow
ESG means the Environmental, Social and Governance
EU means the European Union
Euronext means the Euronext Dublin, formerly the Irish Stock
Exchange
EURIBOR means the Euro Interbank Offered Rate
Eurozone means the area comprising 19 of the 28 Member States
which have adopted the euro as their common currency and sole legal
tender
FCA means Financial Conduct Authority
FRC means Financial Reporting Council
GAV means Gross Asset Value as defined in the Admission
Document
Garranereagh means Sigatoka Limited
Glanaruddery means Glanaruddery Windfarms Limited and
Glanaruddery Energy Supply Limited
Gortahile means Gortahile Windfarm Limited
Group means Greencoat Renewables PLC and GR Wind Farms 1
Limited
Holdco means GR Wind Farms 1 Limited
Holdco 2 means GR Wind Farms 2 Limited
IAS means International Accounting Standards
IFRS means International Financial Reporting Standards
Investment Management Agreement means the agreement between the
Company and the Investment Manager
Investment Manager means Greencoat Capital LLP
IPEV means the International Private Equity and Venture Capital
Valuation Guidelines
IPO means Initial Public Offering
Irish Corporate Governance Annex is a corporate governance annex
addressed to companies with a primary equity listing on the Main
Securities Market of Euronext
IRR means internal rate of return
I-SEM means the Integrated Single Electricity Market, which is
the wholesale electricity market arrangement for Ireland and
Northern Ireland
Killala means Killala Community Wind Farm DAC
Killhills means Killhills Windfarm Limited
Knockacummer means Knockacummer Wind Farm Limited
Knockalour means Knockalour Wind Farm Holdings Limited and
Knockalour Wind Farm Limited
Kostroma Holdings means Kostroma Holdings Limited
Lisdowney means Lisdowney Wind Farm Limited
Monaincha means Monaincha Wind Farm Limited
NAV means Net Asset Value as defined in the Admission
Document
NAV per Share means the Net Asset Value per Ordinary Share
NOMAD means a company that has been approved as a nominated
advisor for the Alternative Investment Market (AIM), by Euronext
Dublin and London Stock Exchange
PPA means Power Purchase Agreement entered into by the Group's
wind farms
PSO means Public Support Obligation
Raheenleagh means Raheenleagh Power DAC
RBC means Royal Bank of Canada
REFIT means Renewable Energy Feed-In Tariff
RESS means Renewable Energy Support Scheme
Review Section means the front end review section of this report
(including but not limited to the Chairman's Statement and the
Investment Manager's Report)
Santander means Abbey National Treasury Services Plc (trading as
Santander Global Corporate Banking)
SEM means the Single Electricity Market, which is the wholesale
electricity market operating in the Republic of Ireland and
Northern Ireland
Sliabh Bawn means Sliabh Bawn Holding DAC, Sliabh Bawn Supply
DAC and Sliabh Bawn Power DAC
Société Générale means Société Générale, London Branch
Solar PV means a solar photovoltaic system, which is a power
system designed to supply usable solar power by means of
photovoltaics.
SPVs means the Special Purpose Vehicles, which hold the Group's
investment portfolio of underlying operating wind farms
TSR means Total Shareholder Return
Tullynamoyle II means Tullynamoyle Wind Farm II Limited
UK means United Kingdom of Great Britain and Northern
Ireland
UK Code means UK Corporate Governance Code issued by the FRC
Forward Looking Statements and other Important Information
This document 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", "plans", "projects",
"will", "explore" or "should" or, in each case, their negative or
other variations or comparable terminology or by discussions of
strategy, plans, objectives, goals, future events or
intentions.
These forward-looking statements include all matters that are
not historical facts. They may appear in a number of places
throughout this document and may include, but are not limited to,
statements regarding the intentions, beliefs or current
expectations of the Company, the Directors and/or 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 future 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, or described in or
suggested by, the forward-looking statements contained in this
document.
In addition, even if actual investment performance, results of
operations, financial condition, liquidity, distribution policy and
the development of its financing strategies, are consistent with
any forward looking statements contained in this document, those
results or developments may not be indicative of results or
developments in subsequent periods. A number of factors could cause
results and developments of the Company to differ materially from
those expressed or implied by the forward looking statements
including, without limitation, general economic and business
conditions, global renewable energy market conditions, industry
trends, competition, changes in law or regulation, changes in
taxation regimes, the availability and cost of capital, currency
fluctuations, changes in its business strategy, political and
economic uncertainty. Any forward-looking statements herein speak
only at the date of this document.
As a result, you are cautioned not to place any reliance on any
such forward-looking statements and neither the Company nor any
other person accepts responsibility for the accuracy of such
statements.
Subject to their legal and regulatory obligations, the Company,
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, this document may include target figures for future
financial periods. Any such figures are targets only and are not
forecasts. Nothing in this document should be construed as a profit
forecast or a profit estimate.
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 GZGGFRMKGGZM
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