TIDMGRP
RNS Number : 0630R
Greencoat Renewables PLC
27 February 2023
Greencoat Renewables 2022 Full Year Results
Dublin, London | 27 February 2023: Greencoat Renewables PLC
("Greencoat Renewables" or the "Company"), today announces its
results for the year ended 31 December 2022.
2022 Highlights
-- The Group's portfolio generated 2,487GWh of electricity in
the period (2021: 1,522GWh).
-- Portfolio increased to 35 assets with the acquisition of 9
wind farms, including our first offshore wind farm and expansion
into Germany, Finland and Spain, increasing net generating capacity
to 1,164MW (2021: 800MW).
-- Net cash generation was EUR215 million [1] (2021: EUR71
million) and gross dividend cover was 3.2x (2021: 1.5x).
-- GAV increased to EUR2,227 million as at 31 December 2022
(2021: EUR1,566 million) and NAV increased to EUR1,282 million
(2021: EUR935.2 million).
-- NAV per share increased by 7.3 cents to 112.4 cent per
share.
-- EUR945 million of Group Debt as at 31 December 2022 (2021:
EUR631 million) equivalent to 42% of GAV (2021: 40%) [2] .
-- Declared dividend of 6.18 cent per share with respect to the
year, with a target of
6.42 cent per share for 2023.
-- Successful capital raising activity in the period with gross
proceeds of EUR281.5 million raised in an oversubscribed
placing.
-- Portfolio produced renewable energy to power 538,958 homes,
saving 685,997 tonnes of CO(2) emissions and committed EUR1 million
to local communities across 202 community projects.
Commenting on the results, Ronan Murphy, Non-Executive Chairman
of Greencoat Renewables, said:
"2022 was another very successful year for Greencoat Renewables
and I am very pleased that the business continued to deliver strong
returns to shareholders.
We achieved a number of significant milestones, with the
acquisition of 9 wind farms, including our first offshore wind
farm, and expansion into Germany, Finland and Spain. We have built
a portfolio of diversified technology across both onshore and
offshore wind, solar, and battery, providing us with a robust
platform from which to capitalise on the opportunities ahead.
I am very pleased with the strong performance of the business
and have great confidence that, as the transition to renewable
energy across the region gathers pace, Greencoat Renewables is very
well positioned to be a leading long-term owner of European
renewable infrastructure assets."
Key Metrics
As at 31 December 2022
------------------------------------------------- -----------------------
Market capitalisation EUR1,295 million
Share price 113.5 cent
Dividends declared with respect to the year EUR70.5 million
Dividends declared per share 6.18 cent
GAV EUR2,227 million
NAV EUR1,282 million
NAV per share 112.4 cent
TSR 49%
Premium to NAV 1.0%
CO(2) emissions reduced 685,997 tonnes
Homes powered 538,958 homes
Funds invested in community and social projects >EUR1.0 million
------------------------------------------------- -----------------------
Conference call for analysts and investors
A conference call for analysts and investors will be held at
10.00 am GMT today, 27 February 2023. To register for the call
please contact FTI Consulting by email at
Greencoat@fticonsulting.com.
Presentation materials are available on the Company's website:
www.greencoat-renewables.com
2022 Annual Report
A copy of the 2022 Annual Report has been submitted to the
National Storage Mechanism and will shortly be available for
inspection at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
. The Annual Report will also be made available shortly on the
Company's website at www.greencoat-renewables.com , where further
information on the Company can also be found.
---S ---
For further information on the Announcement, please contact:
Greencoat Renewables PLC: +44 20 7832 9400
Bertrand Gautier
Paul O'Donnell
Tom Rayner
Davy (Joint Broker, Nomad and Euronext Growth Listing Sponsor)
+353 1 6796363
Ronan Veale
Barry Murphy
RBC (Joint Broker) +44 20 7653 4000
Matthew Coakes
Duncan Smith
Elizabeth Evans
FTI Consulting (Media Enquiries) +353 86 401 5250
Melanie Farrell greencoat@fticonsulting.com
Orla Cox
About Greencoat Renewables PLC
Greencoat Renewables PLC is an investor in euro-denominated
renewable energy infrastructure assets. Initially focused solely on
the acquisition and management of operating wind farms in Ireland,
the Company is now also investing in wind and solar assets in
certain other European countries with stable and robust renewable
energy frameworks. It is managed by Schroders Greencoat LLP, an
experienced investment manager in the listed renewable energy
infrastructure sector.
At a Glance
Summary
Greencoat Renewables PLC is an owner and operator of renewable
infrastructure and storage assets in the Republic of Ireland,
France, Finland, Germany, Spain and Sweden. 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 gearing.
Highlights
-- Net cash generation was EUR215 million(1) (2021: EUR71
million) and gross dividend cover was 3.2x (2021: 1.5x).
-- The Group's investments generated 2,487GWh (2021: 1,522GWh)
of electricity.
-- Acquisition of 9 wind farms, including our first offshore
wind farm and expansion into both Germany and Spain, increasing net
generating capacity to 1,164MW. Agreements to acquire 22.5% in
Butendiek (German offshore wind), 100% Erstrask North (Sweden
onshore wind) and 50% South Meath (Ireland solar).
-- GAV increased to EUR2,227 million as at 31 December 2022
(2021: EUR1,566 million).
-- EUR945 million of Aggregate Group Debt as at 31 December 2022
(2021: EUR631 million) equivalent to 42% of GAV (2021: 40%).
-- Placing of EUR275 million of fixed rate term debt.
-- Issuance of 251.3 million new shares at 112 cent per share,
raising gross proceeds of EUR281.5 million.
-- Company declared total dividends of 6.18 cent per share with
respect to the year.
-- Company classified as Article 9 under EU SFDR.
-- Over EUR1.0 million committed to local communities across 202
community projects.
-- Portfolio generation avoided CO(2) emissions by 685,997
tonnes.
Key Metrics
As at 31 December 2022 As at 31 December 2021
------------------------------------------------- ----------------------- -----------------------
Market capitalisation EUR1,295 million EUR996.7 million
Share price 113.5 cent 112.0 cent
Dividends declared with respect to the year EUR70.5 million EUR49.4 million
Dividends declared per share 6.18 cent 6.06 cent
GAV EUR2,227 million EUR1,566 million
NAV EUR1,282 million EUR935.2 million
NAV per share 112.4 cent 105.1 cent
TSR 49% 40%
Premium to NAV 1.0% 6.6%
CO(2) emissions avoided 685,997 tonnes 608,856 tonnes
Homes powered 538,958 homes 347,630 homes
Funds invested in community and social projects >EUR1.0 million EUR1.0 million
------------------------------------------------- ----------------------- -----------------------
Defining Characteristics
Greencoat Renewables PLC was designed for investors to be
simple, transparent and low risk. Key characteristics include:
-- Investments into geographies with a stable and robust
renewable energy policy framework.
-- Diversification through investing in a growing portfolio of
assets across Continental Europe.
-- Growing mix of renewable technologies, including onshore
wind, offshore wind, solar and battery storage.
-- The Group is wholly independent and thus avoids conflicts of
interests in its investment decisions.
-- The independent Board governs the Group, actively monitors
the efficient operation of the assets and works in conjunction with
an experienced investment management team.
-- Low gearing to ensure a high level of cash flow stability and
higher tolerance to downside sensitivities.
-- The Group invests only in Euro revenue assets and thus does
not incur material currency risk.
Chairman's Statement
I am pleased to present Greencoat Renewables PLC's full year
results for the twelve months ended 31 December 2022 and our fifth
full set of accounts since listing. Backed by the strong support of
shareholders since inception, Greencoat Renewables has expanded
from Ireland across Continental Europe, scaled from 2 assets to 35
and delivered enough clean energy to power 538,958 homes. In the
same period, we diversified into a range of technologies,
established an outstanding team and built the financial foundations
to capture the enormous environmental and financial opportunity
ahead of us. My pride in the achievements of the past five years is
matched and surpassed by our ambition for the next.
Europe continues to be the Company's focus and we are extremely
well placed to support the accelerating plans for renewable
buildout across the continent, where we invested or committed
EUR1,056 million in 2022. Acquisitions in Germany, Finland, France,
Spain and Sweden demonstrate the scale of the pipeline we are now
able to access, with our technologies now spanning wind, solar and
battery. The success of the past five years, complimented by the
strong financial performance of the past 12 months, gives us the
ability to capitalise fully on this significant growth opportunity
where the need for long term capital has never been more
important.
Our European expansion has already demonstrated the value of our
relationships, capitalising on the Investment Manager's strategic
relationships with most of the large scale European utilities and
developers. The ability to transact across a range of countries,
technologies and development stages provides the Company with
access to the most attractive assets across the broader renewables
landscape. Our deep operational experience has proven to add value
across the lifetime of the assets and to bring in technologies,
such as offshore wind and battery storage, when the right market
conditions are met.
The continued pursuit of these opportunities is enabled in turn
by maintaining our leading position in ESG and ensuring our
Portfolio continues to meet and drive standards across the
industry. We are committed to ongoing improvements across the ESG
spectrum and to achieving best practice disclosure, with the
business continuing to disclose in line with SFDR (Article 9), TCFD
and CDP. There are few industries with such an important mission
over the next decade as the renewables sector and we are both proud
of and excited by our potential impact on energy security and the
environment.
In summary, I am very pleased with the strong financial
performance of the business and have great confidence that
Greencoat Renewables is extremely well positioned to be a leading
long term owner of European renewable infrastructure assets.
Performance
The Portfolio generated 2,487GWh for 2022, compared to 1,522GWh
for 2021.
Portfolio generation was 9% below budget. This was primarily a
result of lower wind resource as well as the ongoing adverse
impacts from higher dispatch down in the Irish Portfolio.
As the Portfolio has grown into new geographies, the business
has benefitted from increased diversification both in terms of
weather systems and power markets. Low correlation of wind speeds
between Continental Europe and Ireland increases stability of
cashflows in periods of lower regional wind resource.
Net cash generation in the period was EUR215 million, delivering
a record gross dividend cover of 3.2x. In line with the Company's
strategy, surplus cash generation has been used to prepay debt and
reinvest in the Portfolio.
As we witness significant changes to the inflationary
environment in Europe and globally, we are pleased that 59% of our
cash flows are inflation linked to 2032.
The past two years have emphasised the potential volatility in
power prices and the corresponding importance of a prudent approach
to forward price curves and contracting. The Investment Manager's
in-house expertise in structuring and delivering both corporate and
utility PPAs is an increasingly valuable tool for managing this
power price risk. We now have merchant assets in Finland, Spain,
Sweden and Ireland, providing opportunities for a pan-European
approach to providing renewable PPAs to corporate customers where
required.
Towards the end of the year, price caps were announced in
various European jurisdictions, following a consistent policy
framework and helping to remove short term regulatory uncertainty
in energy markets. As of December 2022, these have been implemented
in the markets that the Group operates in, including Ireland,
Germany, France and Spain.
The introduction of a market price cap has not impacted the
Group's Portfolio valuation due to our conservative approach to
valuations and power price curves and the fact that many of our
assets are contracted under government support schemes.
The Group's optimisation strategy continued with increased
revenues from system services, alongside performance enhancement
measures implemented across the Portfolio.
Following the successful commissioning of our first co-located
battery project at Killala wind farm in Ireland, we remain
conservative regarding the long term viability of large scale
battery projects although we expect this set of opportunities to
expand as battery costs decrease and the technology becomes more
established.
Dividends and Returns
The Company declared dividends for the year of 6.18 cent per
share, with the final quarterly dividend of 1.545 cent per share
paid on 24 February 2023. Since listing in July 2017, the Company
has consistently delivered on its dividend policy and at 31
December 2022 had a TSR of 49%.
Our dividend policy remains unchanged and aims to increase the
dividend each year, by an amount between zero and Irish CPI. As
inflation increased during 2022 to 8%, we are pleased to increase
our target dividend by 4% to 6.42 cent per share for 2023.
NAV per share increased in the period from 105.1 cent per share
on 31 December 2021 to 112.4 cent per share on 31 December 2022.
This increase is attributable to higher power prices in the near
term and adjustments to short term inflation assumptions in Ireland
and Continental Europe.
Reflecting the fact that cost of financing across Europe has
increased and a resetting of long term bond yields, in 2022, the
Investment Manager took the decision to increase its contracted and
merchant discount rates over the period by 0.5%, resulting in a
6.9% unlevered (post tax nominal) blended discount rate at the end
of the period.
Acquisitions and Diversification
The Company's plans for growth and diversification continued
successfully with value accretive opportunities emerging across
Continental Europe and consolidation of our leading position in
Ireland. In aggregate, the Company invested and committed over
EUR1,056 million in 2022. A number of these transactions were
off-market, bilateral processes, demonstrating the Group's ability
to be a trusted partner for developers and utilities.
The past 12 months have seen:
-- 353MW of net operating capacity added to the Portfolio during the period;
-- 175MW agreed acquisitions through our successful forward sale model; and
-- 22.5% of the 288MW Butendiek acquisition signed in December
2022 and completed on 21 February 2023.
This is reflective, of the scale of opportunities we are seeing
in Europe. In October, an EGM to allow a change to the Investment
Policy regarding the 40% GAV limit on non-Ireland investments was
approved by shareholders. This supports the Company's continued
diversification into Europe, enabling the execution of a greater
set of opportunities.
In total, nine operating assets were acquired in 2022:
Germany - 50% stake in the 312MW offshore wind farm Borkum
Riffgrund 1, co-owned alongside Ørsted, benefitting from a
government backed floor price until 2035.
France - Portfolio of 4 wind farms totalling 68MW, each of which
benefit from long term contracts backed by the French
government.
Ireland - Tullahennel wind farm, a 37MW onshore wind farm and
Taghart wind farm, a 25MW onshore wind farm, both of which benefit
from a long term government backed guaranteed floor price.
Finland - Kokkoneva wind farm, a 43MW wind farm with a corporate
PPA in place for the first 10 years of operations.
Spain - Soliedra wind farm, a 24MW wind farm that sells its
power on the merchant market.
In addition, the Group entered into forward sale agreements to
acquire Erstrask North, a 134.4MW onshore wind farm located in
Sweden and a 50% stake in South Meath, an 80.5MW solar farm located
in Ireland.
The expansion into the Nordics last year and into Spain and
Germany this year is indicative of the Group's strategy, unlocking
opportunities to aggregate significant investments in diversified
geographies as we have demonstrated to be a successful business
model in Ireland.
The Company continues to explore new European markets where we
can see low levelized cost of electricity opportunities in both
wind and solar, with underlying Euro denominated cashflows. This
includes opportunities in Portugal, the Baltics and Italy.
As of 31 December 2022, the Group's Portfolio comprised 34
operational wind farms and a co-located battery storage project,
with an aggregate net capacity of 1,164MW, with a further 327MW
contracted to acquire.
Gearing
During the period, the Group entered into a new EUR275 million 5
year term debt facility to fund value accretive acquisitions. This
new term debt is complementary to the existing term debt facilities
bringing total term debt to EUR750 million with bullet payments due
between 2025 and 2028.
The RCF was utilised early in the year to support acquisition
activity and was repaid following the equity raise in early April
in line with the Company's investment model. As at 31 December
2022, the RCF was EUR100 million drawn, with EUR200 million
available. Post year end the Group agreed a new RCF of EUR350
million and extended the repayment date until 13 February 2026.
Total Group debt, including the Company and SPVs, as at 31
December 2022 amounted to EUR944.7 million, which is 42% of GAV.
This does not include the Group's aggregated pro-rated cash
balances of EUR188 million. While interest rates are rising, it is
important to note that the Group has entered into long term
interest rate hedges to minimise this risk. The Group continues its
prudent use of low-cost debt which has further enhanced the Group's
cash yield, while maintaining gearing levels well within the
guidelines detailed in the Company's Investment Policy which limits
debt to 60% of GAV.
Equity Issuance
In line with our longstanding strategy, the Company continued to
issue new equity to maintain agility for acquisitions and growth,
whilst ensuring we remain within our targeted gearing range.
In April 2022, the Company raised EUR281.5 million of new equity
at an issue price of EUR1.12 per share. The issuance was
oversubscribed and accretive to NAV. The Group possesses
significant gearing headroom to pursue further investment
opportunities.
Environmental, Social and Governance
The Company's business model supports a more sustainable future
and every electron generated by the Portfolio removes a need for
thermal generation. With our larger Portfolio, the Group displaced
685,997 tonnes of CO(2) emissions in 2022 and 608,856 tonnes in
2021. This is equivalent to providing sufficient clean energy to
meet the needs of 538,958 households.
The key highlights of our ESG agenda are described below:
-- Our commitment to operating sustainably does not end with our
renewable generation; the Company has contributed over EUR1 million
during the year across 202 projects. These include education,
sports, public amenities, community centres, charities and energy
efficiency to local community schemes. We are also excited to
welcome our first RESS asset with the acquisition of Taghart wind
farm and the community funding initiative of the RESS scheme.
-- As our investments are exclusively focussed on renewable
energy assets, the Company is classified under Article 9 of the EU
SFDR pursuant to which we have complied with all disclosure
requirements which can be found on our website and the Appendices
of the report. The Company has also evolved its disclosures under
TCFD to include risk modelling and will continue its submissions
under CDP.
-- It is important to us that the Health and Safety standards we
maintain are reflected in our operations worldwide. When we start
operating in a new country, we take care to ensure legal compliance
upon entry, the Investment Manager also provides leadership to our
major service providers during operations to ensure that our high
standards are met.
-- The Company proactively monitors the risk of modern slavery
in its supply chains. In line with the commitments in the Company's
Modern Slavery Statement, we completed our first Modern Slavery
audits using an external consultant on a number of major service
providers. The results from the audit showed that the service
providers are in compliance with legislation and best practice
guidance.
-- The Investment Manager on behalf of the Company has completed
its first wind farm recyclability report using an expert renewables
consultant. This report has shown that wind turbine blade recycling
poses the most significant challenge to achieve a circular economy.
In response to this, we have created our first ESG questionnaire to
help engage and inform the discussion with wind turbine companies
in a bid to seek change in their supply chain.
Further details of these and other activities and initiatives
can be found in the latest ESG report on the Company's website:
www.greencoat-renewables.com .
Outlook
The Company's outlook is strong with increased stability and
visibility over the regulatory landscape, strong protection against
the high inflation economic backdrop and a proven ability to
aggregate assets in Continental Europe.
The past 12 months have seen accelerated national deployment
plans for renewables across the areas in which we invest, as
governments recognise renewables as a source of energy security as
well as environmental progress. In order to meet existing net zero
targets alone, Europe needs to more than double its generating
capacity by 2030, equating to a EUR500bn capital requirement by
early 2030. The Group can play an important role in this essential
financing requirement.
In addition to our geographical expansion, the Group's
technology diversification should continue to grow, with offshore
wind, solar and battery storage likely to increase as a proportion
of the Portfolio. We also continue to find ways to maximise the
profitability and generation of our existing assets, including
through hybridization, extending asset life and early repowering
opportunities. Over the medium and long term, we expect these
opportunities to increase in both number and value as technology
progresses and prices decrease.
Board and Governance
The Board places significant emphasis on reviewing its
composition and skills; and ensuring that the Board's diversity -
including gender, background, expertise and ethnicity, among other
considerations - meets the needs of the business; matches the
expectations of stakeholders; and brings fresh thinking to Board
deliberations.
The Board has been engaged in a process to identify an
additional candidate to appoint as a non-executive Director over
the past year, with the support of an independent executive search
agency. The Board was pleased to appoint Eva Lindqvist as an
independent Director on 7 July 2022.
Eva, a Swedish national, is an experienced company chair and
non-executive director with international experience in telecoms
and infrastructure, having worked for more than 30 years across
these sectors. She brings valuable senior experience to the Board
and her appointment raised female representation on the Board to
40%, an important metric for the Company.
An external evaluation of the Board concluded that the Board
operates effectively. As further described in the Corporate
Governance Report, the Board met seven times during the year.
The Group's governance is further described in the Corporate
Governance Report.
Annual General Meeting
Our AGM will take place at 09:30 on Friday 28 April 2023 at Davy
House, 49 Dawson Street, Dublin, D02 PY05, Ireland. Details of the
formal business of the meeting will be set out in a separate
circular which will be sent to shareholders with the Annual
Report.
Conclusion
In conclusion, the year has been a very successful one and the
opportunity for the industry to deliver a positive benefit to our
communities has never been greater. The Group is well positioned to
lead in this endeavour and I am very positive about the Company's
short and long term prospects as we build one of Europe's leading
renewable energy infrastructure groups.
I would like to thank my fellow directors, Emer Gilvarry, Marco
Graziano, Kevin McNamara and Eva Lindqvist for their valued
dedication, stewardship and counsel. I would also like to
acknowledge the Board's appreciation of the considerable expertise,
skill and ambition of our Investment Manager.
Rónán Murphy
Chairman
26 February 2023.
Investment Manager's Report
The Investment Manager's experience covers renewable investment,
ownership, finance and operations. All the skills and experience
required to manage the Group's investments lie within a single
Investment Manager. The Investment Manager has over EUR10 billion
of funds under management, invested in renewables infrastructure
portfolios in the UK, Ireland, Continental Europe and the United
States of America. The Investment Manager is authorised and
regulated by the FCA and is a full scope UK AIFM. In April 2022,
Schroders plc (with over GBP700 billion of AUM) acquired a 75%
interest in the Investment Manager, which continues to operate as
an independent business.
The Investment Manager has a dedicated team, focussed solely on
the Group and the underlying Portfolio of investments and is led by
Bertrand Gautier and Paul O'Donnell. The team is comprised of over
20 investment and asset management professionals with significant
experience across European markets, including technical asset
management and extensive debt and equity capital markets
experience.
Bertrand has over 30 years of operational, financial and
investment experience, including 13 years focussed on renewables.
He has been a Partner of Schroders Greencoat LLP since joining in
2010. Prior to this, Bertrand held senior positions at Terra Firma
Capital Partners, Merrill Lynch and Procter & Gamble. Bertrand
holds an MSc in General Engineering from ICAM (France) and an MBA
from Harvard Business School (USA).
Paul has 20 years of renewables and investment experience, of
which the last 16 have been focussed on renewables. He joined
Schroders Greencoat LLP, in 2009 and has specialised in managing
investments in the wind and solar generation sectors, working
across development, operations, technology and financing. Prior to
joining Schroders Greencoat LLP, he worked with Libertas Capital,
the specialist renewable energy investment bank and PwC Ireland.
Paul has been a Partner of Schroders Greencoat LLP since 2016 and
holds a BBS (Hons) in Finance from Trinity College Dublin.
Overview
The Investment Manager is pleased to report on another
successful year of financial performance, generating EUR215 million
of net cashflow and providing dividend cover of 3.2x, as it
continues to build one of Europe's leading renewable infrastructure
groups.
2022 was a transformative year for the Company and for the wider
renewables sector in general. The recent growth of the European
renewables sector is projected to continue in the medium term, with
today's market estimated at a total of EUR500 billion and is
expected to grow to EUR1 trillion by early 2030. As regional
priorities evolve with national governments increasing focus on
energy security, previous growth expectations are likely to
accelerate underpinning significant opportunity to investors.
In the past year, we bolstered our market leading position in
Europe, by expanding the regional presence of our team and now
enjoy a local presence across the continent with offices in Dublin,
London, Copenhagen, Madrid, Frankfurt and Amsterdam. This regional
scale affords us continuous access to deal flow and major
stakeholders across the region. This leaves the Group well
positioned to take advantage of the substantial regional growth
opportunity as well as selecting the most attractive investment
opportunities.
During the year, the installed capacity of the Group increased
to 1,164 MW with over EUR1,056 million invested or committed into
Ireland, Germany, Finland, France, Spain and Sweden.
In addition to further geographic diversification and expansion
of our team over the period, we continued to diversify our
technology mix, with the acquisition of the Group's first offshore
wind farm along with further commitments into solar farms as well
as the commencement of operations of our first co-located battery
project.
Portfolio Generation Performance
Net portfolio generation for the year was 2,487GWh, 9% below
budget primarily due to lower wind resource and higher dispatch
down level in Ireland.
2022 saw significant growth across Europe. The diversification
of the Portfolio in terms of weather systems underpins low
correlation of wind resources within Europe, which enhances the
stability of the cashflows.
European power price markets
The year saw significant upheaval in European energy markets,
resulting from both the global economic recovery from the pandemic
and the Ukraine war. The impact of this was a continued spike in
European power prices.
In Ireland, the average baseload power price for 2022 was
EUR226/MWh. A number of our Irish REFIT projects have the ability
to capture higher market prices while being insulated from power
price downside through the effective REFIT floor.
In line with European wide policy framework, price caps were
announced in various European jurisdictions, reducing short term
regulatory uncertainty in energy markets. As of December 2022,
these have been implemented in the following markets that the
Company operates in; Ireland, Germany, France and Spain.
The introduction of a market cap has minimal impact on the
portfolio valuation, due to our conservative approach to valuations
and power price curves and the fact that many of our assets are
contracted. In Ireland, the Company's NAV continues to not include
any potential revenues in excess of the REFIT tariff level on a
forward looking basis.
Contracted Portfolio's revenue benefitting from high levels of
inflation protection
Over 70% of the Portfolio's revenue to 2032 is underpinned by
government support mechanisms or corporate PPAs with strong
counterparties, a number of which have underlying contracted
tariffs that are partially or fully inflation-linked. The past year
saw significant rises in inflation across Europe, a trend which has
continued and accelerated throughout 2022, as average inflation
across the geographies in which the Group operates sat at c. 8% in
2022. As inflation has increased, the portfolio value continues to
benefit from this protection with many of the underlying contracts
benefitting from either full or partial inflation linkage.
Active portfolio management continues to deliver value
The Investment Manager has continued to effectively manage the
portfolio with a number of key deliverables during the year,
including the following initiatives:
-- Active PPA strategy:
o Amended a number of PPA agreements in Ireland to maximise
constraint revenue payments and improve balancing services pricing;
and
o Participated in a number of PPA tenders and bi lateral
negotiations with corporate offtakers and utilities in Ireland,
Germany, Spain and Sweden to enhance knowledge on market price and
terms.
-- Realising generation increases through:
o Continued turbine enhancement program with upgrades carried
out on five wind farms ranging from 0.5% to 1.5% energy yield
increase; and
o Active management of grid outages with local utilities to
minimise downtime and move the outages to lower wind periods.
-- Grid ancillary services:
o Continued management of DS3 services in the Irish market,
contributing revenues of approximately EUR4 million during the
year:
-- Achieved through a range of technology upgrades to the
portfolio, capitalising on the technical expertise of the portfolio
management team; and
-- Working closely with wind turbine manufacturers,
incentivising them to develop software solutions to allow DS3
services to be provided and continue on-going discussions to
provide similar services in other EU markets.
-- Asset management:
o Ensuring continued good governance of assets through
consolidating portfolio, technical and commercial management
services to high quality, local providers in all markets; and
o Maintaining active communication channels with senior
management of key turbine and electrical maintenance contractors to
optimise the standards of maintenance services, maximising site
availability.
-- Co-located 11MW battery project at Killala
o Battery went live in January 2022 ahead of schedule and on
budget. Battery went through successful DS3 testing with Eirgrid in
February with the DS3 contract commencing on 1st April 2022;
o Actively engaged with the regulator and Eirgrid to modify the
market systems, to further improve and increase the range of
services that batteries can provide to the grid, which would unlock
further revenue streams; and
o We continue to see large-scale battery technology as having a
key part to play in the energy transition and an increasingly
investible opportunity.
Health and Safety
Health and safety is of paramount importance for both the Group
and the Investment Manager. The Investment Manager reviews
comprehensive health and safety reports provided by the operations
managers on a monthly basis. This information is then discussed and
reviewed by the SPV directors at the monthly asset management
meeting. General safety items and industry trends are discussed and
recorded. Any relevant information is then disseminated back to our
operations managers to ensure all relevant stakeholders are as
informed as possible. Across the Portfolio, there have been in
excess of 405 audits and site inspections carried out to ensure
best practice is being maintained.
The Investment Manager is pleased to report that there were no
Lost Time Incidents in the year ended 31 December 2022, with plans
in place to further enhance health and safety reporting over the
course of 2023.
As the Group moves into new jurisdictions, it has focussed on
assessing location specific risks prior to commencing operations in
a new country.
Environmental, Social and Governance
The Group's number one contribution to sustainability is the
clean carbon free energy it produces. The carbon savings from
energy generated by the Portfolio has increased year on year,
accelerating progress towards a net zero future. Our ESG ambitions
go further than the reduction of CO(2) in the atmosphere. The
following summarises our accomplishments in 2022 as we continued to
deliver on the ESG Standards set out in our ESG Policy.
-- As our investments are exclusively focussed on renewable
energy assets, the Company is classified under Article 9 of the EU
SFDR pursuant to which we have complied with all disclosure
requirements which can be found on our website and the Appendices
of the Report. The Company engaged an experienced legal firm to
support the implementation, to ensure ongoing compliance by making
disclosures and updating the Company website.
-- The Company also evolved its disclosures under TCFD in 2022
to include risk modelling. The Company completed a full suite of
physical risk modelling for ten representative assets in the
Portfolio. The chosen hazard modelling reflects the climate related
change in the level of hazard exposure of an asset over time (2030
to 2090) relative to a historical baseline. The output from the
analysis showed that albeit a low risk, the highest physical risks
to the Portfolio were temperature extremes and fluvial flooding in
the various time horizons.
-- In 2022, the Company submitted its second full environmental
data disclosure to CDP for the reporting period of 2021. The
Company will further develop its approach to CDP for the next
reporting year, pursuing continuous improvement of our rating.
-- Using an industry leading consultant, we have for the second
time calculated our full carbon footprint in 2022, with Scope 1, 2
and 3 emissions calculated in line with the GHG Protocol.
-- The Company proactively monitors the risk of modern slavery
in its supply chains. In line with the commitments in the Company's
Modern Slavery Statement, we completed our first Modern Slavery
audits using an external consultant on a number of major service
providers. The results from the audit showed that the service
providers are in compliance with legislation and best practice
guidance.
We believe that effective management of ESG factors produces the
best results for our shareholders and other stakeholders across
society. Therefore, ESG is at the core of how we operate the
business. Some highlights for 2022 include:
-- Supported a range of local community projects, committing
more than EUR1 million to community funds across 202 projects in
2022. These include education, sports, public amenities, community
centres, charities and energy efficiency.
-- Continuous improvement of environmental management which
included external audits by an experienced consultant on management
systems and compliance.
-- I t is important to us that the H&S standards we maintain
are reflected in our operations worldwide. When we start operating
in a new country, we take care to ensure legal compliance upon
entry, the Investment Manager also provides leadership to our
material service providers during operations to ensure that our
standards are met.
-- The Investment Manager on behalf of the Company has completed
its first wind farm recyclability report using an expert renewables
consultant. This report has shown that wind turbine blade recycling
poses the most significant challenge to achieve a circular economy.
In response to this, we have created our first ESG questionnaire to
help engage and inform the discussion with wind turbine companies
in a bid to seek change in their supply chain.
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
The Company continued to execute against its growth strategy in
2022 with value accretive opportunities emerging across Continental
Europe and consolidation of our leading position in Ireland. In
aggregate, the Company invested and committed over EUR1,056 million
in 2022. A number of these transactions were off market, bilateral
processes, demonstrating the Group's ability to be a trusted
partner for developers and utilities.
The past 12 months have seen :
-- 353MW of net operating capacity added to the Portfolio during
the period;
-- 175MW agreed to be acquired through our successful forward
sale model; and
-- 65MW Butendiek acquisition signed on 29 December 2022 and
completed on 21 February 2023.
Bolstering the Company's strong footprint, our team also grew
significantly and we now have a local presence across the continent
with offices in Dublin, London, Copenhagen, Madrid, Frankfurt and
Amsterdam. This is a material advantage in terms of access to deal
flow and reinforces our partnerships with major utilities and
vendors across the region.
We continued to see many opportunities for value accretive
investments in the Group's target jurisdictions and during the year
priced and assessed over 170 projects totalling over 6GW of
installed capacity.
During the year ended 31 December 2022, the Group completed the
acquisition of nine operational assets across six individual
transactions including:
-- The 24MW Soliedra wind farm, located in Soria, Castilla y
Leon, Spain comprising six GE-137 turbines. The site has been
operational since May 2021 and was developed by Alfanar. The wind
farm is operated on a fully merchant basis, however has flexibility
in the future to be contracted via a corporate PPA.
-- The 67.7MW Portfolio of four wind farms from Axpo, in France
including the Arcy-Précy windfarm in the Burgundy region, the Butte
de Menonville, the Genonville wind farm and the Grande Pièce wind
farms in the Centre Val-de-Loire region. The assets all benefit
from government backed, long term fixed price contracts, with an
average contracted duration of 17.5 years from acquisition
date.
-- A 50% stake in the 312MW Borkum Riffgrund 1 offshore wind
farm, located in the German exclusive economic zone in the North
Sea. The asset was acquired from Kirkbi and William Demant Invest,
Orsted remains as a 50% shareholder. The site has been operational
since 2015 and benefits from a fixed price support mechanism until
September 2024 with a government backed floor price until May
2035.
-- The 43.2MW Kokkoneva wind farm in Northern Ostrobothnia,
Finland, comprising nine Nordex N149 4.8MW turbines. Construction
was overseen by Abo Wind and the acquisition was originally signed
in March 2021.
The Group's aggregation strategy in the Irish secondary market
also continued in 2022 with the acquisition of two Irish operating
wind farms. The Group continues to be the largest owner of
operating wind farms in the country, having acquired its first
Irish wind farms in 2017:
-- The 37.05MW Tullahennel wind farm, located in County Kerry,
Ireland comprising thirteen GE 2.85MW turbines. The site has been
operational since September 2018 and was acquired from Apollo
Global Management, Inc. The wind farm benefits from a REFIT 2
tariff, providing inflation-linked revenue until 2032;
-- The 25.2MW Taghart wind farm located in County Cavan, Ireland
comprising 7 Vestas V117 turbines. Construction was overseen by
Statkraft and the acquisition was originally signed in December
2020.
The Group has also entered 3 agreements to acquire the following
assets:
-- Under a forward sale structure, the Group agreed to acquire
the Ersträsk North windfarm located in Norrbotten County, Northern
Sweden. The site will comprise 32 Enercon E-138 turbines with a
generation capacity of 134.4MW. Construction is being overseen by
Enercon and the project is expected to reach commercial operations
in Q4 2023.
-- Under a forward sale structure, the Group agreed to acquire a
50% stake in the 80.5MW South Meath solar park located in County
Meath, Ireland. The remaining 50% will be acquired through another
fund also investing through the Investment Manager. Construction
will be overseen by Statkraft and the project is expected to reach
commercial operations in Q4 2023.
-- In December 2022, the Group signed an agreement to acquire
22.5% of the Butendiek offshore wind farm, located in Germany's
exclusive economic zone in the North Sea, from Marguerite Pantheon.
Developed by wpd AG, the Butendiek offshore wind farm has a total
capacity of 288MW and has been operational since 2015. Butendiek
benefits from a fixed-price FIT until December 2023. This
transaction completed on 21 February 2023, following regulatory
approval .
Gearing
Aggregate Group Debt as at 31 December 2022 was EUR945 million,
which is well within our acceptable medium term range and below the
60% Investment Policy limit. In 2022, we secured an additional
EUR275 million, 5 year tranche of fixed rate term debt which was
provided by our existing lenders highlighting the strong support
the Group has from its syndicate of relationship banks and
institutional lenders.
The Group continues to benefit from a scalable debt structure.
As at 31 December 2022, EUR750 million of the EUR945 million
comprised 5 and 7 year bullet term loans. This non amortising debt
is either fixed rate or has an interest rate swap in place
providing a fixed weighted average cost of debt of 2.1%. The
remainder of the Group's share of longer term debt is structured as
project finance debt at the SPV level.
As at 31 December 2022, the Group had drawn EUR100 million under
the RCF, leaving EUR200 million undrawn. On 13 February 2023, the
Group finalised the terms of a new EUR350 million 3 year RCF that
provides funding flexibility for the Group's active pipeline of
investment opportunities.
Equity Issuance
In April 2022, the Company issued 251,351,351 new shares at an
issue price of 112.0 cent per share raising gross proceeds of
EUR281.5 million in an oversubscribed and NAV accretive share
placing. A portion of the net proceeds from the equity raise were
used to fully repay the Group's RCF.
Financial Performance
Despite below budget wind generation, dividend cover remained
robust. Net cash generated by the Group and wind farm SPVs was
EUR215.0 million (gross of SPV level debt repayment) or EUR201.5
million (net of SPV level debt repayment), underpinning dividend
cover of 3.2x (gross) or 3.0x (net).
Cash balances (Group and wind farm SPVs) increased by EUR114.7
million from EUR73.5 million to EUR188.1 million over the year.
For the year ended
Group and wind farm SPV cashflows 31 December 2022
------------------------------------------------- ----------------------
Net() Gross
EUR'000 EUR'000
Net cash generation 201,548 215,030
Dividends paid (66,378) (66,378)
SPV level Capex & PSO cashflow 20,494 20,494
SPV level debt repayment 0 (13,482)
Acquisitions (684,967) (684,967)
Acquisition costs (4,895) (4,895)
Equity issuance 281,514 281,514
Equity issuance costs (4,496) (4,496)
Net drawdown under debt facilities 375,000 375,000
Upfront finance costs (3,145) (3,145)
Movement in cash (Group and wind farm SPVs) 114,674 114,674
Opening cash balance (Group and wind farm SPVs) 73,464 73,464
------------------------------------------------- ---------- ----------
Closing cash balance (Group and wind farm SPVs) 188,138 188,138
Net cash generation 201,548 215,030
Dividends 66,378 66,378
Dividend cover 3.0x 3.2x
------------------------------------------------- ---------- ----------
The following 2 tables provide further detail in relation to net
cash generation figures of EUR215.0 million (gross) and
EUR201.5million (net):
For the year ended
Net Cash Generation - Breakdown 31 December 2022
----------------------------------- ---------------------
Net Gross
EUR'000 EUR'000
Revenue 330,550 330,550
Operating expenses (86,585) (86,585)
Tax / VAT (7,839) (7,839)
Other 9,670 9,670
----------------------------------- ---------- ---------
Wind farm operating cashflow 245,796 245,796
SPV level debt interest (4,602) (4,602)
SPV level debt repayment (13,482) 0
----------------------------------- ---------- ---------
Wind farm cashflow 227,712 241,194
Management fee (10,606) (10,606)
Operating expenses (2,324) (2,324)
Ongoing finance costs (13,264) (13,264)
VAT 31 31
Other (1) (1)
----------------------------------- ---------- ---------
Group cashflow (26,164) (26,164)
Net cash generation 201,548 215,030
----------------------------------- ---------- ---------
For the year ended
Net Cash Generation - Reconciliation to Net Cash Flows from Operating Activities 31 December 2022
---------------------------------------------------------------------------------- ---------------------
Net Gross
EUR'000 EUR'000
Net cash flows from operating activities 101,841 101,841
Movement in cash balances of wind farm SPVs 56,793 56,793
Cash used by GR PLC for SPV Bonds (35,651) (35,651)
SPV capex & PSO cashflow (20,188) (20,188)
Repayment of debt at SPV level - 13,482
Repayment of shareholder loan investment 118,306 118,306
Finance costs (16,409) (16,409)
Upfront finance costs (cash) (3,145) (3,145)
---------------------------------------------------------------------------------- ---------- ---------
Net cash generation 201,548 215,030
---------------------------------------------------------------------------------- ---------- ---------
NAV as at 31 December 2022 was EUR1,282.5 million (112.4 cent
per share), which is an increase from the NAV as at 31 December
2021, which was EUR935.2 million (105.1 cent per share).
During the year, the 7.3 cent per share NAV increase is
attributable to:
-- Cash generated over the period (minus dividend paid) of +13.8
cent;
-- Depreciation of the Portfolio (and other movement) of -7.0
cent;
-- Impact of short-term CPI increase of +6.2 cent;
-- Power price mid to long term assumptions of -0.4 cent;
and
-- Increase of discount rates (+0.5%) of -5.3 cent.
cent per share %
NAV at 31 December 2021 105.1
Less February 2022 dividend (1.5)
NAV at 31 December 2021 (ex-dividend) 103.6
NAV at 31 December 2022 112.4
Less February 2023 dividend (1.5)
NAV at 31 December 2022 (ex-dividend) 110.9
Movement in NAV (ex-dividend) 7.3 7.0
Dividends declared with respect to the year 6.2 6.0
--------------------------------------------- --------------- -----
Total return on NAV 13.5 13.0
--------------------------------------------- --------------- -----
The share price at 31 December 2022 was 113.5 cent per share,
representing a 1% premium to NAV.
Reconciliation of Statutory Net Assets to Reported NAV
As at As at
31 December 2022 31 December 2021
---------------------------------------- ------------------ ------------------
EUR'000 EUR'000
DCF valuation 2,037,227 1,470,117
Other relevant assets (wind farm SPVs) 5,703 20,397
Cash (wind farm SPVs) 161,297 68,419
---------------------------------------- ------------------ ------------------
Fair value of investments 2,204,227 1,558,933
Cash (Group) 26,841 5,045
Other relevant assets (3,951) 2,302
---------------------------------------- ------------------ ------------------
GAV 2,227,117 1,566,280
Aggregate Group Debt (944,660) (631,080)
---------------------------------------- ------------------ ------------------
NAV 1,282,457 935,200
Reconciling items 0 0
---------------------------------------- ------------------ ------------------
Statutory net assets 1,282,457 935,200
Shares in issue 1,141,238,938 889,887,587
NAV per share (cent) 112.4 105.1
---------------------------------------- ------------------ ------------------
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 Portfolio's blended unlevered discount rate as at 31
December 2022 was 6.9%, which includes a 0.5% increase in the
underlying discount rates during the year.
The DCF valuation is produced by discounting the individual wind
farm cash flows on an unlevered basis. The equivalent levered
discount rate (assuming 40% gearing) is approximately 9%.
Base case long term CPI assumption is 2.0% for all countries
based on long term targets of the ECB and European central banks.
Higher inflation assumptions are used for 2023.
Base case energy yield assumptions are P50 (50% probability of
exceedance) forecasts based on long term wind data and operational
history. The P90 (90% probability of exceedance over a 10 year
period) and P10 (10% 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.
Long term power price forecasts are provided by leading market
consultants, updated quarterly and may be adjusted by the
Investment Manager where more conservative assumptions are
considered appropriate.
In 2023, contracted cash flows (underpinned by fixed electricity
price per MWh) are forecasted to contribute 92% of total cash flows
(8% merchant). Over the 2020's decade the fixed cash flows are
expected to contribute 72% of total cash flows (28% merchant). Over
the life of the portfolio, contracted cash flows are forecasted to
contribute 56% of the total DCF value of the Portfolio (44%
merchant).
The base case asset life depends on the technology which is
underpinned by different design lives. As a result, the Portfolio's
onshore wind assets' lifetime is typically 30 years whilst the
Portfolio's offshore wind assets' lifetime is based on 35 years.
There is no terminal value assumed at the end of operating
life.
In 2023, contracted cash flows (underpinned by fixed electricity
price per MWh) are forecasted to contribute 92% of total cash flows
(8% merchant). Over the 2020's decade the contracted cash flows are
expected to contribute 73% of total cash flows (28% merchant). Over
the life of the Portfolio, contracted cash flows are forecasted to
contribute 56% of the total DCF value of the Portfolio (44%
merchant).
The sensitivity below assumes that asset life may be 5 years
shorter or longer than the base case, which is impacted by
technical durability of the wind farm components and commercial
aspects of each investment, including the renewals of site leases,
planning permission and grid connection agreements.
Dividend
Total dividends of EUR70.5m have been declared with respect to
2022 (6.18 cent per share). The target dividend for 2023 is
expected to increase by 4% to 6.42 cent per share in line with the
Company's dividend policy.
Outlook
The outlook for the Group remains very positive. As governments
across Europe pursue national deployment plans for renewables,
driven by net zero targets and heightened energy security concerns
across the continent, there is a substantial opportunity for
specialist investors with the expertise and pan European reach.
To reach the EU's net zero ambitions, which involve the phasing
out of fossil fuel generation while meeting increasing electricity
demand, the region needs to more than double its renewable
generating capacity by early 2030. The past year has seen
deployment plans brought forward as national energy security
debates have intensified.
Our European pipeline is strong and provides an excellent range
of investment opportunities, benefitted by the Investment Manager's
scale and longstanding relationships with major European utilities.
This has made us the partner of choice for many of Europe's largest
renewables owners, in a period where their requirement to recycle
capital is set to intensify.
Our ability to capitalise on these relationships and access to
deal flow has been strengthened by the acquisition of the
Investment Manager by Schroders plc and the Investment Manager's on
the ground presence in 6 countries across Europe.
The additional resources resulting from this relationship were
especially useful during the acquisition of the Group's first
offshore wind asset, Borkum Riffgrund 1, a significant milestone as
we continue to explore the huge opportunities presented by the
European offshore wind market.
In Ireland, where the Group is already the largest owner of
operating wind farms, we expect to continue our strategy of market
consolidation and see continued drivers for expansion and value
enhancement in the future.
The Group continues to deliver on its key objectives of
delivering for investors a stable dividend, strong inflation
protection and robust cashflows. We look forward to continuing to
execute on our strategy of building one of Europe's leading
renewable infrastructure companies.
Board of Directors
The Directors are of the opinion that the Board 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 65, 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 68, 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 focussed 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 65, was the Managing Partner of Mason Hayes
& Curran 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. Emer is also a
non-executive director of Kerry Group PLC and a Patron of Chapter
Zero (a chapter for the education of non-executive directors in
sustainability).
Emer holds a Bachelor of Law degree from University College
Dublin (BCL).
Marco Graziano
Marco Graziano, aged 65, 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 Syst.
Marco holds a doctorate degree in mechanical engineering from
Genoa University.
Eva Lindqvist
Eva, aged 65, has more than 30 years extensive international
experience in telecoms and infrastructure, having worked for more
than 30 years across these sectors. She spent the majority of her
career at Ericsson where she held a number of senior management
positions. In 2007, she was appointed CEO of Xelerated Holdings AB,
an international technology company specializing in
semi-conductors, where she held the position until 2011. Since
then, she has held a number of Chair and non-executive director
roles, including Bodycote plc, Keller Group plc and Tele2 AB.
Eva graduated with a Master of Science in Engineering and
Applied Physics from the Linkoping Institute of Technology and
holds an MBA from the University of Melbourne, along with being a
member of the Royal Swedish Academy of Engineering Sciences.
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
Emer Gilvarry Kerry Group 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 2022.
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 2022 are set out in detail 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 (target of 6.42 cent per
share for 2023) that increases progressively whilst growing the
capital value of its investment portfolio. The Company is targeting
an IRR of 7% to 8 % (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 gearing. 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 across Continental Europe while maintaining a
continued focus on Ireland, with the 60% minimum GAV requirement
for investments in Ireland no longer applying.
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 revolving credit debt
facility by either raising capital in the equity markets at
appropriate times or introducing additional term debt on favourable
terms in order to refresh overall 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 the
AIM of the London Stock Exchange. The Group comprises of the
Company, Holdco, Holdco 1 and Holdco 2. Holdco invests in the
underlying portfolio companies and Holdco 2 is the borrowing entity
of all third-party debt facilities at Group level.
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% 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 date of
the next AGM (or the date which is 15 months after the passing of
such resolution, 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% 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 2022 are detailed
below:
Shareholder Ordinary shares held %
----------------------------------
31 December 2022
---------------------------------- -----------------------
BlackRock Inc 10.1%
KBI Global Investors 8.0%
FIL Investment International 6.6%
Newton Investment Management 5.7%
Brewin Dolphin Wealth Management 5.1%
Abrdn Standard Capital 4.9%
Irish Life Investment Managers 4.8%
Foresight Group 4.3%
M&G Investment Management 3.5%
Davy Stockbroker 3.2%
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 are 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; and
-- there are 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 2022 31 December 2021
---------------------- ------------------- -------------------
EUR000 % EUR000 %
Management fee 11,913 1.00% 7,944 1.00%
Directors' fees 358 0.03% 325 0.04%
Ongoing expenses 2,082 0.18% 1,182 0.16%
---------------------- ----------- ------ ---------- -------
Total 14,353 1.21% 9,451 1.21%
---------------------- ----------- ------ ---------- -------
Weighted Average NAV 1,187,324 778,777
Based on the 31 December 2022 NAV of EUR1,282 million, the total
ongoing charges ratio is 1.12% of NAV. Assuming no change in NAV,
the 2023 ongoing charges ratio is expected to be 1.20%.
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
The Group invests in renewable assets and the environmental
benefits of renewable energy are proven. As the largest owner of
wind farms in Ireland, the Company continues to prove the viability
of renewable energy as a robust sector for investment.
The Company is proud to be playing a critical role in helping to
achieve key renewable energy targets as well as contributing to the
broader net zero economy. The Company recognises that its long term
success is tied to the effective management of ESG factors
associated to its business, including those that are important to
its shareholders and stakeholders.
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. In collaboration, the
Board and the Investment Manager assess how ESG should be managed
and the Company has developed its ESG policy in accordance with the
Investment Manager's ESG policy.
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, which require the Group to make reasonable endeavours to
procure the ongoing compliance of its investee companies with its
policies on responsible investment.
The Company's full ESG policy and its ESG report are available
on the Company's website: www.greencoat-renewables.com .
Task Force on Climate Related Disclosures ("TCFD")
TCFD was established in 2015, with the goal of developing
consistent disclosure standards for companies, in order to enable
investors and other stakeholders to assess the companies' climate
related financial risk.
The premise of such climate related financial disclosures is
that financial markets need clear, comprehensive, high-quality
information on the impacts of climate change. This includes the
risks and opportunities presented by rising temperatures, climate
related policy and emerging technologies in a changing world.
The Company made its first disclosure under TCFD in its 2020
Annual Report. Having officially become a supporter of the TCFD
recommendations in 2021, the Company continues to evolve and
improve its implementation of such recommendations. The Investment
Manager has a dedicated ESG Committee and TCFD working group to
manage the implementation of TCFD disclosures.
The Company remained a partner to the 'Ireland TCFD Supporters
Campaign' in 2022. This initiative was created by Sustainable
Finance Ireland of which the Company is a member. It is also
supported by the Department of Finance, Irish Road to COP26
initiative and the UN Environment Programmer's Finance Initiative.
The programme included corporate events, a TCFD implementation
workshop and formal TCFD training throughout 2021 and 2022. The
learnings from this initiative will be incorporated into the
development of the TCFD strategy for 2023.
The core elements of these disclosures, as recommended by the
TCFD, comprise of 4 thematic areas.
1. Governance
As discussed in the Corporate Governance Report, the Company's
approach to governance is to manage risk through robust processes
and controls and to ensure best practices are in place to support
its growing business. It does this through regular meetings between
the Board and the Investment Manager where risk management of the
Company and its investments are considered and discussed, including
ESG and climate related risks and opportunities. A formal risk
matrix is maintained by the Investment Manager and reviewed and
approved by the Board on an annual basis. The Board and Investment
Manager also regularly discuss developments in European energy
policy, weather patterns and how the Company's strategy can further
support the energy transition.
The Audit Committee also consider the Company's climate related
disclosures in its Annual Report and Financial Statements.
In addition, the Investment Manager has its own ESG committee
that meets regularly to discuss ESG and climate related risks
relating to the Group and other funds it manages. This committee
has implemented an ESG Policy that looks to establish best practice
in climate related risk management, reporting and transparency.
Representatives from the Investment Manager also sit on the Boards
of the SPV companies, which meet on a regular basis to discuss ESG
and climate related risk management.
2. Strategy
As a significant investor in renewables energy infrastructure
with investments in Ireland, France, Finland, Germany, Sweden and
Spain, the Group's growth has been achieved through the acquisition
and operation of renewable energy generation assets with stable
revenues backed predominately by government support mechanisms.
The Company's strategy and Investment Policy of acquiring
operating capacity in the secondary market, enables developers and
utilities to recycle capital, facilitating further renewable
build-out and thus plays a significant role in increasing
generating capacity.
The Company considers that the decarbonisation of the economy
will present significant investment opportunity and the size of the
Company's growth will be related to the success of the sector and
the engagement of its stakeholders.
The Company's strategy is well aligned for the transition to a
low carbon economy. A description of climate related risks and
opportunities is considered below. The material risk of markets
includes scenario modelling and results of the financial impact to
the valuation of the Company.
3. Risk Management
The Board and the Investment Manager monitor climate related
risks and their impact on the Group. This includes both high
transition and high physical risks. The Company's business model is
well positioned to take advantage of the transition to a low carbon
economy. More extreme weather patterns arising from global warming
have the capacity to damage infrastructure in general, including
above ground grid infrastructure. However, it is considered
unlikely that damage will be caused to generating equipment that is
designed to withstand changing weather systems. Appropriate
insurance against property damage and business interruption is held
for any such eventuality.
As a full scope UK AIFM, the Investment Manager has established
a Risk Management Committee that meets on a quarterly basis to
discuss, amongst other matters, the risk framework of the Group and
investee companies including processes for identifying, assessing
and managing climate related risks.
To ensure strong performance, the Group reinforces its specific
oversight on environmental and social issues with a range of
activities, including:
-- appointing at least one director from the Investment Manager
to the boards of SPVs companies, to ensure monitoring and influence
of both financial and ESG performance;
-- carrying out due diligence to ensure that any new outsourced
service providers are reputable and responsible organisations;
-- carrying out due diligence during the acquisition of new
renewable projects in accordance with the Investment Manager's
established procedures and ESG Policy and in compliance with the
AIFMD Due Diligence Policy; and
-- complying with all applicable anti-bribery and
anti-corruption and anti-money laundering laws and regulations and
implementing policies to ensure this performance is in line with
the policies of the Investment Manager.
The Investment Manager's Investment Committee comprises
experienced members of the Investment Manager. Whilst making
investment decisions, due consideration is given to climate related
risks as well as to opportunities identified during due diligence.
A formal ESG checklist is also considered by the Investment
Committee in the approval process of any new investment.
Please see Section 3.1 for Risks and Opportunities relating to
the portfolio.
4. Metrics and Targets
The Company considers its climate related metrics in the wider
context of its sustainability performance in accordance with the
ESG Policy which includes:
-- renewable energy generation;
-- CO(2) savings;
-- equivalent no. of homes powered;
-- number of environmental habitat management plans;
-- number of internal and external health and safety audit
visits;
-- amount invested in community funds or social projects in the
reporting year;
-- appropriate internal controls / audit system/ board level
oversight at Company level;
-- appropriate internal controls / audit system / board level
oversight at SPV level; and
-- policies in place at SPV Level (Health and Safety,
Anti-Bribery and Corruption and Conflicts).
The third party operations managers' report to the Investment
Manager on a monthly basis on a standard set of KPIs and
qualitative factors, such as health and safety compliance of
O&M providers, compliance with relevant laws and regulations,
local community engagement and habitat management, where relevant.
These KPIs are disclosed annually in the Company's ESG report. Any
material ESG incidents are communicated to the Company's Board,
where it is assessed and decided whether to communicate to
investors. KPI data is sourced directly from the SPVs and
supplemented by specialist external advisers such as environmental
consultants, as required.
Renewable generators avoid carbon dioxide emissions on a net
basis at rates of approximately 0.01 - 0.35t CO(2) per MWh. Given
the size of the Group's investment portfolio in various geographies
at 31 December 2022, the portfolio's CO(2) emission avoided will be
in excess of 0.7 million tonnes per annum. The portfolio is also
generating sufficient electricity to power over 0.6 million homes
per annum.
The Company's Scope 1, Scope 2 and Scope 3 greenhouse gas
emissions are disclosed below:
Year ended Year ended
Disclosure 31 December 2022 31 December 2021
------------------------------------------------------------ ----------------- -----------------
Scope 1 - direct emissions (tonnes CO(2) ) 60 19
Scope 2 - indirect emissions (tonnes CO(2) ) 938 383
Scope 3 - indirect emissions (tonnes CO(2) ) 214,261 126,098
----------------- -----------------
Total Scope 1, 2 and 3 emissions (tonnes CO(2) ) 215,259 125,756
------------------------------------------------------------ ----------------- -----------------
Scope 2 - indirect emissions, market based (tonnes CO(2) ) 472 41
------------------------------------------------------------ ----------------- -----------------
These climate related risk and further metric disclosures can be
found in the Company's ESG report available on the Company's
website: www.greencoat-renewables.com .
Targets
The Board and the Investment Manager will continue to develop
the Company's approach to TCFD recommendations in the coming year.
This will include:
-- researching and keeping updated on TCFD developments,
including the TCFD Status Reports;
-- further developing our processes for identifying and
incorporating climate related risks and opportunities into the
Company's risk matrix;
-- alongside leading industry bodies, developing an appropriate
scenario modelling methodology.
Transition Risks
Policy and Legal
-- increased pricing of greenhouse gas emissions;
-- enhanced emissions reporting; and
-- mandates on and regulations on existing products and
services.
Since 2017, the portfolio has saved millions of tonnes of CO(2)
from being released into the atmosphere. An increase of pricing in
greenhouse gas emissions would have a positive impact on the
business model. The Company has voluntarily reported on emissions
through CDP since 2020 (see website and the Appendices of the
Report). It has also made disclosures under TCFD since 2020 and in
accordance with SFDR since 2021. The Company is a member of the UK
AIC and applies its Code of Corporate Governance to ensure best
practice The Company keeps abreast of regulations and industry best
practice with support from expert consultants.
Technology
-- substitution of existing products and services with lower
emissions options;
-- unsuccessful investment in new technologies; and
-- costs to transition to lower emissions technology.
Electrification is a key enabler in the transition to a low
carbon economy. As the Group forecasts increased electricity demand
in the markets that it operates in, the Group is well positioned to
take advantage of the move to lower emission products and services.
The Group has been in operation since 2017 and has a proven track
record across the EU in investment in renewable technologies. The
Investment Manager continues to track the technical maturity and
the associated costs of new renewable technologies.
Market
-- long term power price;
-- uncertainty in market signals; and
-- changing customer behaviour.
The Board and the Investment Manager believe that the key factor
that could impact the Company in the transition to a lower carbon
economy is the variability of long term prices for wholesale
electricity. In a lower carbon economy, where considerable buildout
of renewable generation capacity will be required, there is a risk
that the renewable energy power price could be negatively impacted.
This will depend on the pace of renewable deployment and any future
changes to electricity market design.
In a scenario where global temperature increases are limited to
only 1.5(o) C to 2.0(o) C and we are operating in a net zero carbon
environment, under our scenario analysis, power price forecasts
could be seen to fall below what is currently included in the
Company's NAV, with a potential financial impact of 24 cent per
share reduction.
A large proportion of the Group's revenues are contracted for up
to 15 years in stable economies. As the Company's growth strategy
is implemented, all new jurisdictions are risk assessed during the
acquisition process. This includes government policy, regulatory
and political factors.
Physical risks
In 2022, the Company engaged with a number of consultants who
offer risk modelling services and evaluated two modelling
techniques for the Portfolio. After a successful pilot programme,
the Company then completed a full suite of physical risk modelling
for ten representative assets in the Portfolio. The chosen hazard
modelling reflects the climate related change in the level of
hazard exposure of an asset over time (2030 to 2090) relative to a
historical baseline. Each hazard is associated with a specific
metric, which defines how the hazard is measured and expressed. The
data for all the hazard metrics come from a variety of climate
models and other data sources.
The Risk Hazards are itemised in the table below:
Temperature Extremes Coastal Flooding Fluvial Flooding
Tropical Cyclone Wildfire Water Stress
The modelling incorporates scenarios based on the Representative
Concentration Pathways (RCPs) from the International Panel on
climate change (IPCC). Four RCPs are included in the IPCC AR5:
RCP8.5, RCP6, RCP4.5 and RCP2.6. The RCPs were chosen to represent
a broad range of climate outcomes.
The analysis quantifies the direct financial impacts caused by
climate change in a metric known as Modelled Average Annual Loss
(MAAL); this is the sum of climate related expenses, decreased
revenue and/or business interruption. It is reported annually for
each decadal period. As the name suggests, the output reports
potential financial losses, to provide decision relevant insights
in like terms as other key financial metrics. The output from the
analysis showed that albeit a low risk, the highest physical risks
to the portfolio were due to temperature extremes and fluvial
flooding in the various time horizons.
Physical risks are mitigated as below:
-- The development stage of each project includes a technical
assessment of the key risks including location and site
suitability. The renewables equipment is fully compliant with CE
certification and is chosen based on their suitability for the
location including high winds, temperatures and other climate
related risks. Appropriate insurance against property damage and
business interruption is held for any such eventuality.
-- Renewable energy generation is subject to inter-annual
variations that have a direct impact to annual revenues. Before
investment, the Investment Manager carries out extensive due
diligence using historical resource data that underpins the long
term business case.
-- In addition, the Investment Manager plays an active role in
managing the portfolio to maximise value. This includes operational
energy assessments, six monthly expert analysis, forestry felling
and turbine upgrades.
Opportunities
Energy Source
-- use of lower emission sources of energy;
-- use of supportive policy for incentives;
-- use of new technologies;
-- participation in the carbon market; and
-- shift towards de-centralised energy production.
Across Ireland and its targeted jurisdictions in Continental
Europe, the Company expects over 400GW of renewable capacity to be
in operation by 2030. In 2022, the Company continued to acquire new
sites, including the acquisition of wind farms in Ireland, Germany,
France, Finland and Spain. In addition, the Group entered into
forward sale agreements to acquire Erstrask North, a 134.4MW
onshore wind farm located in Sweden and a 50% stake in South Meath,
an 80.5MW solar farm located in Ireland. The Company continues to
see many value accretive opportunities for growth in the Irish and
Continental European secondary market, benefiting from its
execution track record, relationships with developers and potential
asset vendors and the ability to transact at any scale.
Products and Services
-- development and/or expansion of low emission goods and
services;
-- development of new products or services through R&D and
innovation;
-- ability to diversify business activities; and
-- shift consumer preferences.
The Company considers that the decarbonisation of the EU economy
will present significant investment opportunities and that the
Company's growth will be related to the success of the sector and
the engagement of its stakeholders. The Company anticipates a
growing number of large corporate entities seeking new products and
services including long term PPA arrangements to meet their energy
obligations.
Markets
-- access to new markets, assets and locations; and
-- use of public sector incentives.
In addition to Ireland, the Company can invest in Belgium,
Denmark Finland, France, Germany, the Netherlands, Norway,
Portugal, Sweden and Spain in line with the Company's Investment
policy. Continental Europe provides further diversification of
intra year generation volumes and localised risks. It also gives
the Company access to a considerably larger pool of assets from
which to seek best risk-adjusted returns. Many of the operational
assets across the continent are owned by parties with whom the
Investment Manager has strong existing relationships. The Company's
position is further improved by the absence of currency risk when
acquiring assets in Europe. Over time, the Company aims to achieve
diversification principally through investing in a growing
portfolio of assets across a number of distinct geographies and a
mix of renewable energy technologies
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.
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 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. The risk matrix is also reviewed and
updated to identify emerging risks, such as climate related 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 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, 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 geographical spread of assets across the Portfolio in
Ireland and Continental Europe ensure that there are benefits from
a diversified renewables 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 six 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.
The key risks to the performance of the Group, identified by the
Board, are detailed below.
Investment Manager Risk
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 employees. 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
employees 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 Risk (Marketing)
The Investment Manager is the UK authorised AIFM of the Company,
an Irish unauthorised AIF. As a non EU AIFM, the Investment Manager
manages the AIF, however it can not avail of the marketing passport
under AIFMD and relies on the national private placement
regimes/marketing requirements in place in certain relevant
jurisdictions. On 7 January 2021, the Central Bank of Ireland
confirmed that the Investment Manager can market the Company to
Irish professional investors with effect from 1 January 2021. The
Investment Manager can also market the Company to UK professional
investors under the jurisdiction of the FCA in the UK.
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.
Financing Risk
The Group will finance further investments either by borrowing
or by issuing further shares. The ability of the Group to deliver
its target returns and consequently to realise expected NAV growth
and/or service its dividend as per its dividend policy, 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.
Inflation Risk
As a result of the demand side of the economy recovering post
pandemic and the war in Ukraine, this has led to an increase in
inflation, well above the target range of the European Central
Bank. To mitigate rising prices, central banks have increased
interest rates. This rise in interest rates may make the listed
infrastructure asset class less attractive to investors who are
after a stable yield. As a majority 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.
Electricity Market Regulation Risk
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 energy 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. The exception to this is the recent EU wide cap on
the price received by renewable generators which is further
commented on below.
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.
The EU recently passed Council Regulation 2022/1854 which is
designed to limit or cap market revenues from non gas generation,
introduce a solidarity tax on fossil fuel producers and introduce
electricity demand reduction measures across the EU. Capping market
revenues will have an impact on renewable generators. EU countries
are implementing this in their respective markets. The proposed EU
cap should not exceed EUR180/MWh and is a temporary measure for the
period 1st December 2022 until 30th June 2023. However, it may be
extended if power prices across the EU remain high. Many EU
countries, including Ireland, have implemented a price cap of less
than EUR180/MWh. Ireland, for example, is planning to cap revenues
at EUR120/MWh. Spain has introduced a claw back mechanism which
reduces the price received. Generally, the caps are either allowing
generators with support levels above the cap to retain their level
of support until the end of the relevant subsidy support scheme or
are below the cap. The purpose of the cap is to limit potential
excessive revenues or profits for renewable generation plants when
market prices have increased significantly more than any cost
increase. Prolonged or reduced caps could have a material adverse
effect on the business.
Some markets, such as Finland, are exploring whether to
introduce a tax on renewable generators instead of a price cap.
Depending on the level of tax and how it is implemented, this could
have a material adverse effect on the business.
The Investment Manager is engaging with regulators directly or
through industry bodies and partners to ensure these measures are
implemented in a way that minimises the impact on the business.
The EU is proposing as a longer term measure to review the
electricity market design to address, amongst other matters,
increased renewables penetration and associated market pricing. The
Investment Manager is monitoring the process and engaging with
relevant parties to minimise any impact on the Portfolio. The
electricity market redesign could have a material adverse effect on
the business.
Electricity Price Risk
A number of factors could cause a decline in the market price of
electricity which could adversely affect the investee 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 and
solar.
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 merchant 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.EUR83/MWh whereas the
2022 wholesale electricity price was c.EUR226/MWh.
Under the French subsidy tariff mechanism established in 2000, a
producer can sell its whole production to state companies at a
regulated price under a FIT framework. The FIT offers a fixed price
up to 20 years partially linked to inflation. The level of
inflation linkage, the duration of the FIT contract, as well as the
initial reference price are subject to the vintage of the FIT
contract. The average FIT tariff of the French Group's assets is
c.EUR83/MWh in 2022.
In Sweden and Finland, the market does not typically attract
subsidies. Electricity is typically traded through the Nord Pool,
which is a leading European power market, that offers day ahead and
intra-day markets across 16 European countries. The average market
price for electricity in the Nord Pool SE1 region (location of
Erstrask South) was c.EUR59/MWh in 2022 and in Finland average
market prices have been over EUR150/MWh.
Germany is a mature market for renewable electricity and was one
of the first countries to implement support payments towards
renewables, with the first-generation EEG (Erneubare Energie
Gesetz, Renewable Energy Act) in 2000. Most projects in the market
initially benefit from support under the EEG program with many
older projects now exiting and moving into the merchant market or
other PPA. The average market price in Germany for 2022 was
EUR235/MWh.
Spain is one of the leading countries in Europe in terms of
renewables penetration with over 45% of electricity produced coming
from renewables in 2021. Spain was one of the first markets to
implement measures to limit the impact of high gas prices in 2022.
The average pool price was EUR168/MWh in 2022.
When operating outside of the respective contracted subsidy
periods, the Group may trade in the relevant electricity market on
a merchant basis and its financial performance is therefore subject
to the wholesale power price prevalent at the time. The Group may
also enter into utility, baseload or corporate PPAs. Typically,
these PPAs introduce some deliverability risk where the project
would have to buy power in the market at times when production is
low. This subjects the project to price risk where prices are
higher than the PPA strike price.
The Ukraine war has driven short term prices and forward price
curves for the next two years up significantly in 2022 leading to
the price cap measures outlined above. A difference in the achieved
wholesale price of electricity in the long term 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 and Solar Resource
The investee companies' revenues are dependent upon wind and
solar conditions, which will vary across seasons and years within
statistical parameters. The Group does not have any control over
the wind and solar resource and has designed its dividend policy
such that it can withstand significant short-term variability in
production relating to wind and solar. Before investment, the Group
carries out extensive due diligence using relevant historical wind
and solar data. Typically, the business seeks to acquire assets
with proven operating data to reduce the renewables resource risk
uncertainty.
When acquiring wind or solar farms that have recently become
operational, only limited operational data is available. In these
instances, a comprehensive due diligence exercise will be carried
out on the wind/solar assessment. The acquisition agreements with
the vendors of these projects may include an "energy true-up" which
would apply when at least one year's operational data has become
available, or the acquisition price could be adjusted to reflect
resource uncertainty. Under this energy true-up, the net load
factor may be reforecast based on all available data and the
purchase price may be adjusted, subject to de minimis thresholds
and caps.
Grid Risk
As more renewable energy is added to the grid, there is a risk
of higher levels of dispatch down (constraints and curtailment) and
price cannibalisation during periods of high wind or solar
resource. The grid systems need to be developed to cater for
increased renewable penetration levels and this is a key part of
the EU's plans to support renewables deployment. In certain
jurisdictions including Ireland, Germany and Spain, higher levels
of dispatch down are already becoming more prevalent. Where
dispatch down is not fully compensated, this could have a material
adverse effect on the business.
Asset Life Risk
In the event that the renewable technology does not operate for
its expected life or incurs higher than expected operating costs,
this could have a material adverse effect on the business. Many of
the investee companies have a planning permission shorter than the
assumed life of the asset and while it is expected that an
extension to planning will be available, failure to achieve such
extension could have a material adverse effect on the business.
Some of the initial projects acquired by the Group have leases
shorter than the asset life assumed by the Investment Manager and
while it is expected that lease extensions or renewals will be
obtained, failure to achieve such extension could have a material
adverse effect on the business.
The Investment Manager performs regular reviews and site visits
to ensure that maintenance is performed on all assets across the
Portfolio. Regular maintenance ensures the projects are in good
working order, consistent with their expected lifespans.
Environmental and Social Governance (ESG) and Health and Safety
Risk
The physical location, operation and maintenance of wind and
solar farms may, if inappropriately assessed and managed, pose
health and safety risks to those involved. 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 and solar farms have the potential to cause environmental
hazards or nuisances to their local human populations, flora and
fauna and the surrounding natural environment. Projects 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.
Wind and solar farms have potential to have a negative social
and environmental impact through the manufacturing and supply chain
process or locally through the management of the projects. The
Investment Manager has an ESG plan and policy to mitigate these
risks. The Company produces an annual ESG report to measure and
report on key initiatives and performance indicators to manage this
risk.
Going Concern and Financial Risk
As further detailed in note 1 of the financial statements, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for at least 12 months from the date of approval of this
report.
As at 31 December 2022, the Group had net current liabilities of
EUR81 million (2021: EUR1 million) and had cash balances of EUR27
million (2021: EUR5 million). This excludes cash balances within
investee companies of EUR161 million (2021: EUR68 million), which
are sufficient to meet current obligations as they fall due. The
significant net current liabilities position of the Group at 31
December 2022 is due to the Group's RCF being due for repayment on
3 April 2023 (within 12 months of the year end) and therefore being
classified as a current liability. The Group entered into a new RCF
on 13 February 2023.
The Directors have reviewed Group forecasts and projections
which cover a period of not less than 12 months from the date of
this report, taking into account foreseeable changes in investment
and trading performance, which show that the Group has sufficient
financial resources. On the basis of this review and after making
due enquiries, the Directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the
financial statements.
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 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 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 2022. 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 2022 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 2022:
Directors
-- Rónán Murphy (non-executive Chairman)
-- Emer Gilvarry (non-executive Director)
-- Kevin McNamara (non-executive Director)
-- Marco Graziano (non-executive Director)
-- Eva Lindqvist (non-executive Director); appointed 7 July
2022
Company Secretary
-- Ocorian Administration (UK) Limited
The biographical details of the Directors are set out in the
Board of Directors section.
Directors' Interests in Shares in the Company
Directors' interests in Company shares as at 31 December 2022
are detailed below.
Shareholder Ordinary shares of EUR0.01 each held as at Ordinary shares of EUR0.01 each held as at
------------------------
31 December 2022 31 December 2021
------------------------ ------------------------------------------- -------------------------------------------
Rónán Murphy 235,194 217,694
Emer Gilvarry 100,000 100,000
Kevin McNamara 78,327 78,327
Marco Graziano 90,000 65,000
Eva Lindqvist - -
------------------------ ------------------------------------------- -------------------------------------------
The Company does not have any share option schemes in place.
Dividend
The Board recommended an interim dividend of EUR17.6 million,
equivalent to 1.545 cent per share with respect to the quarter
ended 31 December 2022, bringing total dividends with respect to
the year to EUR70.5 million, equivalent to 6.18 cent per share as
disclosed in note 8 of the financial statements.
Political Donations
No political donations were made during the year ended 31
December 2022.
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 for onshore wind farms and 35 years for offshore wind
farms, 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 focussed infrastructure fund, the Company 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; and
-- Tax law.
Directors' Compliance Statement 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
26 February 2023 26 February 2023
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 in the Board of Directors section,
consists solely of non-executive Directors and is entirely
independent. Annually, the Board considers the level of
remuneration in accordance with the AIC Code. Since the Company's
listing in 2017, the non-executive Directors' remuneration was
first increased on the 1 January 2021 and current Director
remuneration is detailed in the table below.
The Remuneration Committee has committed to conducting a
benchmarking exercise with an independent consultant every 3 years
and will commence this review again in 2023.
Remuneration Policy
As at the date of this report, the Board comprised five
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 met at such times as the Committee Chairman required.
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 were 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.
Annual Report on Remuneration
The Group is now a significant owner of renewable generation
assets in Ireland and Continental Europe, with further investments
planned during 2023, as indicated by the forward sale agreements.
The GAV has grown to EUR2.2 billion through acquisitions and equity
raisings since listing.
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 Paid in year ended
annum 31 December 31 December
2022 2021
-------------------------- --------------------- ------------------------- ------------------- -------------------
Rónán Murphy
(chairman) 16 June 2017 EUR130,000 EUR130,000 EUR130,000
Kevin McNamara 16 June 2017 EUR65,000 EUR65,000 EUR65,000
Emer Gilvarry 16 June 2017 EUR65,000 EUR65,000 EUR65,000
Marco Graziano 30 January 2020 EUR65,000 EUR65,000 EUR65,000
Eva Lindqvist 7 July 2022 EUR65,000 EUR32,500 () -
-------------------------- --------------------- ------------------------- ------------------- -------------------
Total EUR357,500 EUR325,000
------------------------------------------------- ------------------------- ------------------- -------------------
None of the Directors received any other remuneration or
additional discretionary payments during the year from the
Company.
Relative Importance of Spend on Pay
The remuneration of the Directors for the year ended 31 December
2022, totalled EUR357,500 (2021: EUR325,000) in comparison to
dividends paid to shareholders over the same period being EUR66.4
million (2021: EUR47.2 million).
On behalf of the Board,
Emer Gilvarry
Chair of the Remuneration Committee
26 February 2023.
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; and
-- 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
26 February 2023 26 February 2023
Corporate Governance Report
This Corporate Governance Report forms part of the Report of the
Directors as 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 the 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 2022, 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 2022.
Purpose, Culture and Values
The Company's purpose remains clear; to provide investors with
the opportunity to participate directly in the ownership of a
portfolio of renewable energy generating assets, thus promoting the
reduction of greenhouse gas emissions and the global future target
of a net zero economy. The Company also intends to provide
shareholders with an annual dividend that increases between zero
and CPI 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 gearing.
The Company provides investors with the opportunity to
participate directly in the ownership of renewable
energy-generating assets in Ireland and other relevant countries in
the Eurozone thereby increasing the resources and capital dedicated
to the deployment of renewable energy and the reduction of
greenhouse gas emissions.
As an investment trust with no employees, the Board have agreed
that its culture and values 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 importance
being placed on transparency, trustworthiness and
dependability.
-- The trust of stakeholders is very important to maintain the
Company's reputation, particularly for execution certainty for
asset sellers and delivery of investment promises to investors.
-- Respect for differing opinions is to be shown across all
interaction 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 five
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.
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.
Chair Tenure
The Company's policy on Chair tenure is that the Chair should
normally serve no longer than nine years as a Director and Chair.
However, in exceptional circumstances, where it is in the best
interests of the Company, the Chair may serve for a limited time
beyond that. In such circumstances, the independence of the other
directors will ensure that the Board as a whole remains
independent.
Senior Independent Director
The Senior Independent Director works closely with the Chairman
and provides 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. The Senior Independent Director is Emer
Gilvarry.
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 three
men and two women, 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.
The Investment Manager operates an equal opportunities policy
and its partners and employees comprised 73 men and 33 women as at
31 December 2022.
Board Responsibilities
The Board will meet, on average, 5 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 Company Secretary
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 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 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, once every calendar quarter, submits 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,
promptly reports 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 four members. Emer Gilvarry, Marco Graziano and Eva
Lindqvist 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. On the 17 June 2022, the Company
announced the renewal and extension of the Investment Management
Agreement which was extended for a further five -- year term,
commencing on 25 July 2022. The Management Engagement Committee
also performs a review of the performance of other key service
providers to the Group. The Management Engagement Committee meets
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 function is 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 meets at least once a year.
The Nomination Committee comprises all of the Directors and the
Chair is Marco Graziano. 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 meets at least once a year.
The re-appointment of Marco Graziano, Chairman of the
Nominations Committee, as a non-executive director at the 2022 AGM
was opposed by c.21% of shareholders. Following a consultation
process held with shareholders, feedback indicated that opposition
to Marco's reappointment was driven by the lack of gender diversity
of the Board with only a 25% female representation at the time of
the AGM. Since the summer of 2021, the Board was engaged in a
process to appoint an additional Director to the Board and
following the appointment of Eva Lindqvist, the increased female
representation on the Board has addressed the issue raised by
shareholders, aligns with market best-practice and meets the target
for gender diversity set by 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 2022 by each Director is set
out below:
Scheduled Board Meetings (Total of Additional Board Meetings (Total of
2022 7) 9)
-------------------------------------- ------------------------------------- -------------------------------------
Rónán Murphy 7 9
Emer Gilvarry 7 9
Kevin McNamara 7 9
Marco Graziano 7 9
Eva Lindqvist (max. 4 scheduled and 2
additional) 3 2
-------------------------------------- ------------------------------------- -------------------------------------
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.
2022 Audit Committee Management Nomination Committee Remuneration
Meetings (Total of 4) Engagement Committee Meetings (Total of 2) Committee Meetings
Meetings (Total of (Total of 2)
2)
----------------------- ---------------------- --------------------- ---------------------- ----------------------
Rónán Murphy n/a 2 2 2
Emer Gilvarry 4 2 2 2
Kevin McNamara 4 2 2 2
Marco Graziano 4 2 2 2
Eva Lindqvist 2 2 1 1
----------------------- ---------------------- --------------------- ---------------------- ----------------------
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 of the financial statements.
As noted above, the Company announced on 17 June 2022 that the
Board agreed to a new five-year agreement with the Investment
Manager commencing on 25 July 2022. This process was commenced
early in the 2022 year and was supported by the Company's brokers,
RBC and J&E Davy, who provided benchmarking and independent
recommendations that were reviewed and challenged by the Board. The
new contract was agreed on beneficial terms to the Company, with an
additional tier added to the cash fee structure, which will see a
reduction in the fee charged in respect of NAV over EUR1,750
million, reflecting continued economies of scale as the business
grows.
The Investment Management Agreement may be terminated by either
party on conclusion of the second five-year 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.
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.
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 Audit Committee Report, the
risks of the Company are outlined in a risk matrix which was
reviewed and updated during the year. The Board continually reviews
its policy setting and updates the risk matrix 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 Board holds an annual risk and strategy discussion, which
enables the Directors to consider risk outside the scheduled
quarterly Board meetings. This enables emerging risks to be
identified and discussions on horizon scanning to occur, so the
Board can consider how to manage and potentially mitigate any
relevant emerging risks.
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 are focussed around the 3 lines
of defence model and 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% of the persons voting on the relevant
resolution).
General Meetings
The Company holds a general meeting annually and specifies the
meeting as such. All general meetings other than annual general
meetings are called extraordinary general meetings. Extraordinary
general meetings are convened on such requisition, or in default
and may be convened by such requisitions as provided by the
Companies Act 2014.
All business shall be deemed special if it 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 they are a holder. On a poll a member entitled to more than
one vote need not cast all their votes or cast all the votes they
use in the same way.
Engagement with Stakeholders
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.
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 6.18 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 maintain a target dividend of 6.42 cent per share for
2023, which the Board expects to contribute to the Company's target
return to investors of an IRR in excess of 7%, net of fees and
expenses.
A cquisitions
During the year, the Company acquired nine new wind farms, made
up of four in France, two in Ireland and one in Germany, Spain and
Finland. In December 2022, the Company also signed to acquire a
minority interest in a German offshore wind project the acquisition
of which completed on 21 February 2023. To complement this, two
forward sale transactions were also agreed during the year. 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 Issuances
During the year, the Company issued 251,351,351 new shares,
raising a total EUR281.5 million in gross proceeds, through an
oversubscribed share placing. The Investment Manager engaged with
analysts and investors throughout the share issuance process.
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.
The Board receives comprehensive shareholder reports from the
Company's Registrar and regularly monitors the views of
shareholders and the shareholder profile of the Company. The Board
is also kept fully informed of all relevant market commentary on
the Company by the Investment Manager.
Relations with Other Stakeholders
The Company values its relationships with its debt providers.
The Investment Manager ensures the Group continues to meet its debt
covenants and reporting requirements. During the year, the Group
entered into a new five-year non-amortising term debt facility with
CBA, ING, NAB and NatWest as disclosed in note 13 of the financial
statements. During the year, the Group also commenced discussions
on the renewal and increase of its RCF, which post year end has
been increased from EUR300 million to EUR350 million with the
introduction of a new lender, Commerzbank. The new RCF was signed
on 13 February 2023.
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 Listing Sponsor, NOMAD and Joint 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. The Board's
Health and Safety Director also visits sites at regular
intervals.
Similarly, environmental protection issues are reported on every
month by the SPV site managers and annual habitat management plans
are agreed by SPV boards for all relevant 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
Rónán Murphy
Chairman of the Board
26 February 2023.
Audit Committee Report
At the date of this report, the Audit Committee comprised of
Kevin McNamara (Chairman), Emer Gilvarry, Marco Graziano and Eva
Lindqvist. 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 should 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 2022. 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.
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 focussed on, but were
not limited to:
-- detailed analysis of the Company's quarterly NAVs;
-- reviewing the updated risk matrix of the Company including
climate related reporting disclosures under the TCFD framework;
-- 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 Audit 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 rates, 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. The Audit Committee also has a process in place to identify
emerging risks, such as climate related 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 January 2022 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 2021, to determine that these were
unchanged from those disclosed in the Company's 2020 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 focussed 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 a 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 is available on request to 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 of 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 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 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
2023 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
26 February 2023.
Independent Auditor's Report
To the members of Greencoat Renewables PLC
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Greencoat Renewables
PLC ("Company") and its subsidiaries ("Group") for the financial
year ended 31 December 2022, 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 2022 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 2022;
-- 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.
Key Audit Matter
The entire investment portfolio is represented by unquoted equity
and loan investments and all investments are individually material
to the financial statements.
The valuation of investments is calculated using discounted cash
flow models. This is a highly subjective accounting estimate where
there is an inherent risk of bias arising from the investment
valuations being prepared by the Investment Manager, who is remunerated
based on the Net Asset Value ("NAV") of the Company.
These estimates include judgements including future power prices,
wind generation, discount rates, asset lives and inflation.
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 and inflation rate
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;
* Reviewed the valuation model to track changes to
inputs or structure from the valuation model used in
the prior year and applied spreadsheet analysis tools
to assess the integrity of the valuation model;
* Agreed cash and other net assets to bank statements
and investee company management accounts, including
interrogating the valuation of the interest rate
swaps to a 3rd party pricing source;
* Considered the accuracy of forecasting by comparing
previous forecasts to actual results;
* We vouched to loan agreements and verified the terms
of the loan; and
* We evaluated and challenged management's assessment
as to the recoverability of the loan investments.
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
EUR25.6m, 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
return. Specific materiality of EUR13.6m 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 EUR1.3m, as well
as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors' assessment of the Group and
Company's ability to continue to adopt the going concern basis of
accounting including agreeing the inputs and assumptions within the
directors' assessment to supporting documentation and our own
understanding of the Group and Company. We stress tested their
assessment as well as conducting a robust review of the liquidity
position of the Group and Company. We have also reviewed the
adherence to bank covenants in place based on the stress tested
forecasts and considered the likelihood of these being breached in
the future.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group or Company's ability to continue as a going concern for a
period of at least twelve months from the date when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
We have nothing to report in respect of the following
information in the annual report, in relation to which the ISAs
(Ireland) require us to report to you whether we have anything
material to add or draw attention to:
-- the disclosures in the annual report that describe the
principal risks and explain how they are being managed or
mitigated;
-- the directors' confirmation in the annual report that they
have carried out a robust assessment of the principal risks facing
the Group and the Company, including those that would threaten its
business model, future performance, solvency or liquidity;
-- the directors' statement in the financial statements about
whether the directors considered it appropriate to adopt the going
concern basis of accounting in preparing the financial statements
and the directors' identification of any material uncertainties to
the Group's and the Company's ability to continue to do so over a
period of at least twelve months from the date of approval of the
financial statements;
-- the directors' explanation in the annual report as to how
they have assessed the prospects of the Group and the Company, over
what period they have done so and why they consider that period to
be appropriate, and their statement as to whether they have a
reasonable expectation that the Group and the Company will be able
to continue in operation and meet its liabilities as they fall due
over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or
assumptions.
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 Corporate Governance Code and AIC Code
specified for our review; and
-- certain elements of disclosures in the report to shareholders
by the Board of Directors' remuneration committee.
Also, 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.
Stewart Dunne
For and on behalf of BDO
Dublin
Statutory Audit Firm
AI223876
Date
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
For the year For the year
ended ended
31 December 31 December
2022 2021
Note EUR'000 EUR'000
------------------------------------ ----- ------------- -------------
Return on investments 4 172,415 93,023
Other income 13 67
------------------------------------ ----- ------------- -------------
Total income and gains 172,428 93,090
Operating expenses 5 (15,228) (10,283)
Investment acquisition costs (5,349) (3,166)
------------------------------------ ----- ------------- -------------
Operating profit 151,851 79,641
Finance expense 13 (15,279) (8,498)
------------------------------------ ----- ------------- -------------
Profit for the year before tax 136,572 71,143
Taxation 6 - -
------------------------------------ ----- ------------- -------------
Profit for the year after tax 136,572 71,143
Profit and total comprehensive
income attributable to:
Equity holders of the Company 136,572 71,143
Earnings per share
------------------------------------ ----- ------------- -------------
Basic and diluted earnings from
continuing operations in the year
(cent) 7 12.7 9.3
------------------------------------ ----- ------------- -------------
The accompanying notes form an integral part of the consolidated
financial statements.
Consolidated Statement of Financial Position
As at 31 December 2022
31 December 31 December
2022 2021
Note EUR'000 EUR'000
----------------------------------- ----- ------------ ------------
Non current assets
Investments at fair value through
profit or loss 9 2,109,570 1,408,802
----------------------------------- ----- ------------ ------------
2,109,570 1,408,802
Current assets
Receivables 11 290 359
Cash and cash equivalents 26,841 5,045
----------------------------------- ----- ------------ ------------
27,131 5,404
Current liabilities
Loans and borrowings 13 (100,000) -
Payables 12 (8,164) (6,297)
----------------------------------- ----- ------------ ------------
Net current (liabilities) (81,033) (893)
Non current liabilities
Loans and borrowings 13 (746,080) (472,709)
----------------------------------- ----- ------------ ------------
Net assets 1,282,457 935,200
----------------------------------- ----- ------------ ------------
Capital and reserves
Called up share capital 15 11,412 8,898
Share premium account 15 942,954 668,405
Other distributable reserves 48,219 114,597
Retained earnings 279,872 143,300
----------------------------------- ----- ------------ ------------
Total shareholders' funds 1,282,457 935,200
----------------------------------- ----- ------------ ------------
Net assets per share (cent) 16 112.4 105.1
----------------------------------- ----- ------------ ------------
Authorised for issue by the Board on 26 February 2023 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 2022
31 December 31 December
2022 2021
Note EUR'000 EUR'000
----------------------------------- ----- ------------ ------------
Non current assets
Investments at fair value through
profit or loss 9 1,278,474 935,069
----------------------------------- ----- ------------ ------------
1,278,474 935,069
Current assets
Receivables 11 324 227
Cash and cash equivalents 7,283 2,480
----------------------------------- ----- ------------ ------------
7,607 2,707
Current liabilities
Payables 12 (3,624) (2,576)
----------------------------------- ----- ------------ ------------
Net current assets 3,983 131
Net assets 1,282,457 935,200
----------------------------------- ----- ------------ ------------
Capital and reserves
Called up share capital 15 11,412 8,898
Share premium account 15 942,954 668,405
Other distributable reserves 48,219 114,597
Retained earnings 279,872 143,300
----------------------------------- ----- ------------ ------------
Total shareholders' funds 1,282,457 935,200
----------------------------------- ----- ------------ ------------
Net assets per share (cent) 16 112.4 105.1
----------------------------------- ----- ------------ ------------
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 EUR136,572,238 (2021:
EUR71,143,477).
Authorised for issue by the Board on 26 February 2023 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 2022
Share Share Other distributable Retained
capital premium reserves earnings Total
------------------------
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------------ ----- --------- --------- -------------------- ---------- ----------
Opening net assets
attributable to
shareholders (1
January 2022) 8,898 668,405 114,597 143,300 935,200
Issue of share capital 15 2,514 279,000 - - 281,514
Share issue costs 15 - (4,451) - - (4,451)
Dividends 8 - - (66,378) - (66,378)
Profit and total
comprehensive income
for the year - - - 136,572 136,572
------------------------ ----- --------- --------- -------------------- ---------- ----------
Closing net assets
attributable to
shareholders 11,412 942,954 48,219 279,872 1,282,457
------------------------ ----- --------- --------- -------------------- ---------- ----------
After taking account of cumulative unrealised gains of
EUR188,043,313, the total reserves distributable by way of a
dividend as at 31 December 2022 were EUR140,048,064.
For the year ended 31 December 2021
Share Share Other distributable Retained
capital premium reserves earnings Total
------------------------
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------------ ----- --------- --------- -------------------- ---------- ---------
Opening net assets
attributable to
shareholders (1
January 2021) 7,412 507,476 161,768 72,157 748,813
Issue of share capital 15 1,486 163,514 - - 165,000
Share issue costs 15 - (2,585) - - (2,585)
Dividends 8 - - (47,171) - (47,171)
Profit and total
comprehensive income
for the year - - - 71,143 71,143
------------------------ ----- --------- --------- -------------------- ---------- ---------
Closing net assets
attributable to
shareholders 8,898 668,405 114,597 143,300 935,200
------------------------ ----- --------- --------- -------------------- ---------- ---------
The accompanying notes form an integral part of the consolidated
financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
For the year For the year
ended ended
31 December 2022 31 December
2021
Note EUR'000 EUR'000
--------------------------------------- ----- ----------------- -------------
Net cash flows from operating
activities 17 101,841 16,067
Cash flows from investing activities
Acquisition of investments (762,732) (449,647)
Investment acquisition costs (4,895) (3,603)
Repayment of shareholder loan
investments 9 118,306 56,810
--------------------------------------- ----- ----------------- -------------
Net cash flows from investing
activities (649,321) (396,440)
Cash flows from financing activities
Issue of share capital 15 281,514 165,000
Payment of issue costs (4,451) (2,585)
Dividends paid 8 (66,378) (47,171)
Amounts drawn down on loan facilities 13 470,660 654,780
Amounts repaid on loan facilities 13 (95,660) (394,780)
Finance costs 13 (16,409) (6,343)
--------------------------------------- ----- ----------------- -------------
Net cash flows from financing
activities 569,276 368,901
Net increase/(decrease) in cash
and cash equivalents during the
year 21,796 (11,472)
Cash and cash equivalents at the beginning
of the year 5,045 16,517
Cash and cash equivalents at the end
of the year 26,841 5,045
---------------------------------------------- ----------------- -------------
The accompanying notes form an integral part of the consolidated
financial statements.
Company Statement of Cash Flows
For the year ended 31 December 2022
For the year For the year
ended ended
31 December 31 December
2022 2021
Note EUR'000 EUR'000
--------------------------------------- ----- ------------- -------------
Net cash flows from operating
activities 17 (9,672) (5,663)
Cash flows from investing activities
Equity investments to Group companies (205,200) -
Loans advanced to Group companies 9 (35,651) (162,000)
Repayment of loans advanced to
Group companies 9 30,289 34,400
Repayment of shareholder loan
investments 9 14,352 18,954
--------------------------------------- ----- ------------- -------------
Net cash flows from investing
activities (196,210) (108,646)
Cash flows from financing activities
Issue of share capital 15 281,514 165,000
Payment of issue costs (4,451) (2,585)
Dividends paid 8 (66,378) (47,171)
--------------------------------------- ----- ------------- -------------
Net cash flows from financing
activities 210,685 115,244
Net increase in cash and cash
equivalents during the year 4,803 935
Cash and cash equivalents at the beginning
of the year 2,480 1,545
Cash and cash equivalents at the end
of the year 7,283 2,480
---------------------------------------------- ------------- -------------
The accompanying notes form an integral part of the consolidated
financial statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
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 annual 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 2022 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.
New and amended standards and interpretations not applied
Updated accounting standards and interpretations have been
published and will be mandatory for the Company's accounting
periods beginning on or after 1 January 2023 or later periods. The
impact of these standards is not expected to be material to the
reported results and financial position of the Group.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Investment Manager's Report. The Group faces a
number of risks and uncertainties, as set out in the Directors'
Report. The financial risk management objectives and policies of
the Group, including exposure to price risk, interest rate risk,
credit risk and liquidity risk are discussed in note 18 to the
financial statements.
The Group continues to meet day-to-day liquidity needs through
its cash resources.
As at 31 December 2022, the Group had net current liabilities of
EUR81 million (2021: net liabilities of EUR0.9 million) and had
cash balances of EUR26.8 million (2021: EUR5.0 million). This
excludes cash balances within investee companies of EUR161.3
million (2021: EUR68.4 million), which are sufficient to meet
current obligations as they fall due. The significant net current
liabilities position of the Group at 31 December 2022 is due to the
Group's RCF being due for repayment on 3 April 2023 (within 12
months of the year end) and therefore being classified as a current
liability. The Group entered into a new RCF on 13 February 2023 and
on signing, repaid the old RCF, with additional information
contacted in Note 21.
The major cash outflows of the Group are the payment of
dividends and costs relating to the acquisition of new assets, both
of which are discretionary. The Directors are confident that the
Group has sufficient access to both debt and equity markets in
order to fund commitments to acquisitions and meet the contingent
liabilities detailed in note 14 of the financial statements, when
they become payable.
The Group had EUR846 million (2021: EUR472.7 million) of
outstanding debt as at 31 December 2022. The covenants on the
Company's banking facilities are limited to gearing and interest
cover and the Company is expected to continue to comply with these
covenants going forward.
SPV revenues are derived from the sale of electricity and
although approximately 10% of the portfolio's revenue in 2022 is
exposed to the floating power price, revenue is received through
power purchase agreements in place with large and reputable
providers of electricity to the market and also through government
subsidies.
The Directors have reviewed Group forecasts and projections
which cover a period of at least 12 months from the date of
approval of this report, taking into account foreseeable changes in
investment and trading performance, which show that the Group has
sufficient financial resources to continue in operation for at
least the next 12 months from the date of approval of this
report.
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 at least 12 months from the date of approval of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
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 for onshore wind farms and 35 years for offshore
wind farms. 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 expected 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 Holdcos.
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
----------- ---------------- ------------------- ------------- --------------- ------------------
Holdco 9 March 2017 Riverside One, Sir 100% Ireland Ireland
John Rogerson's
Quay, Dublin 2
Holdco 1 2 March 2020 Riverside One, Sir 100% Ireland Ireland
John Rogerson's
Quay, Dublin 2
Holdco 2 2 March 2020 Riverside One, Sir 100% Ireland Ireland
John Rogerson's
Quay, Dublin 2
Based on control, the results of Holdco, Holdco 1 and Holdco 2
are 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; and
-- 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 2022 and 2021, 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 Holdcos 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.
Financial assets are recognised/derecognised at the date of the
purchase/disposal. Investments are initially recognised at cost,
being the fair value of consideration given. Transaction costs are
recognised in the Consolidated Statement of Comprehensive Income as
incurred.
Fair value is 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 renewable generation and
storage assets.
The Group is engaged in a single segment of business, being
investment in renewable infrastructure to generate investment
returns while preserving capital. The Group presents the business
as a single segment comprising a homogeneous portfolio.
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. This
conclusion involved a degree of judgement and assessment as to
whether the Company met the criteria outlined in the accounting
standards. 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 estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying value of assets and
liabilities are those used to determine the fair value of the
investments as disclosed in note 9 to the financial statements.
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 rates, 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 an onshore wind farm is 30
years and 35 years for an offshore wind farm, 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 30 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 rates are subjective and therefore it is feasible
that a reasonable alternative assumption may be used resulting in a
different value. The discount rates applied to the cash ows are
reviewed quarterly 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 rates 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 under various government support regimes. Future
power prices are estimated using external third-party forecasts
which take the form of specialist consultancy reports, which
reflect various factors including gas prices, carbon prices and
renewables deployment, each of which reflect the global response to
climate change. 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.
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 is 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% of such part of the NAV;
-- 0.2% of NAV per quarter on that part of NAV from EUR1 billion
to EUR1.75 billion; and
-- 0.1875% of NAV per quarter on that part of NAV over EUR1.75
billion.
Investment management fees paid or accrued in the years ended 31
December 2022 and 31 December 2021 were as follows:
For the year For the year
ended ended
31 December 31 December 2021
2022
EUR'000 EUR'000
---------------------------- ------------- -----------------
Investment management fees 11,913 7,944
----------------------------- ------------- -----------------
11,913 7,944
---------------------------- ------------- -----------------
As at 31 December 2022, EUR3,140,251 was payable in relation to
investment management fees (2021: EUR2,155,526).
4. Return on investments
For the year For the year
ended ended
31 December 31 December
2022 2021
EUR'000 EUR'000
----------------------------------------- ------------- -------------
Interest on shareholder loan investment
(note 19) 32,757 16,741
Dividends received (note 19) 83,587 11,350
Unrealised movement in fair value
of investments (note 9) 56,071 64,932
------------------------------------------ ------------- -------------
172,415 93,023
----------------------------------------- ------------- -------------
5. Operating expenses
For the year For the year
ended ended
31 December 31 December
2022 2021
EUR'000 EUR'000
-------------------------------------------- ------------- -------------
Investment management fees (note
3) 11,913 7,944
Other expenses 2,593 1,684
Non-executive Directors' remuneration 358 325
Group and SPV administration fees 246 251
Fees to the Company's Auditor:
for audit of the statutory financial
statements 115 76
for other services 3 3
--------------------------------------------- -------------
15,228 10,283
-------------------------------------------- ------------- -------------
The fees to the Company's Auditor include EUR3,150 (2021:
EUR3,000) paid 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 2022 31 December 2021
EUR'000 EUR'000
---------- ------------------- -------------------
Taxation - -
---------- ------------------- -------------------
The tax reconciliation is explained below.
For the year ended For the year ended
31 December 2022 31 December 2021
EUR'000 EUR'000
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year before taxation 136,572 71,143
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year multiplied by the standard rate of corporation tax of
12.5% 17,072 8,893
Tax on income at a higher rate 1,565 997
Fair value movements (not subject to taxation) (7,201) (8,117)
Dividends received (not subject to taxation) (10,859) (1,419)
Losses available for surrender 138 129
Group relief at higher rate of tax (1,565) (997)
Expenditure not deductible for tax purposes 850 514
---------------------------------------------------------------------------- ------------------- -------------------
- -
---------------------------------------------------------------------------- ------------------- -------------------
7. Earnings per share
For the For the
year ended year ended
31 December 31 December
2022 2021
------------------------------------- -------------- ------------
Profit attributable to equity
holders of the Company - EUR'000 136,572 71,143
Weighted average number of ordinary
shares in issue 1,076,507,357 767,303,359
------------------------------------- -------------- ------------
Basic and diluted earnings from
continuing operations in the year
(cent) 12.7 9.3
------------------------------------- -------------- ------------
8. Dividends declared with respect to the year
Interim dividends paid during the year ended 31 December 2022 Dividend per Total
Share Dividend
cent EUR'000
--------------------------------------------------------------- ------------- ----------
With respect to the quarter ended 31 December 2021 1.515 13,482
With respect to the quarter ended 31 March 2022 1.545 17,632
With respect to the quarter ended 30 June 2022 1.545 17,632
With respect to the quarter ended 30 September 2022 1.545 17,632
6.150 66,378
--------------------------------------------------------------- ------------- ----------
Interim dividends declared after 31 December 2022 and not accrued in the year Dividend per Total
Share Dividend
cent EUR'000
------------------------------------------------------------------------------- ------------- ----------
With respect to the quarter ended 31 December 2022 1.545 17,632
------------------------------------------------------------------------------- ------------- ----------
1.545 17,632
------------------------------------------------------------------------------- ------------- ----------
On 26 January 2023, the Company announced a dividend of 1.5450
cent per share with respect to the quarter ended 31 December 2022,
bringing the total dividend declared with respect to the year to 31
December 2022 to 6.18 cent per share. The record date for the
dividend was 3 February 2023 and the payment date was 24 February
2023.
The following table shows dividends paid in the prior year.
Interim dividends paid during the year ended 31 December 2021 Dividend per Total
Share Dividend
cent EUR'000
--------------------------------------------------------------- ------------- ----------
With respect to the quarter ended 31 December 2020 1.515 11,230
With respect to the quarter ended 31 March 2021 1.515 11,230
With respect to the quarter ended 30 June 2021 1.515 11,230
With respect to the quarter ended 30 September 2021 1.515 13,481
--------------------------------------------------------------- ------------- ----------
6.060 47,171
--------------------------------------------------------------- ------------- ----------
9. Investments at fair value through profit or loss
Loans Equity interest Total
Group as at 31 December
2022 EUR'000 EUR'000 EUR'000
----------------------------- ----------- ---------------- -------------
Opening balance 779,865 628,937 1,408,802
Additions 601,648 161,084 762,732
Repayment of shareholder
loan investments (note 19) (118,306) - (118,306)
Restructure of shareholder
loan investments / Equity
Investments (note 19) 2,708 (2,939) (231)
Unrealised movement in fair
value of investments (note
4) 502 56,071 56,573
----------------------------- ----------- ---------------- -------------
1,266,417 843,153 2,109,570
----------------------------- ----------- ---------------- -------------
Loans Equity interest Total
Group as at 31 December
2021 EUR'000 EUR'000 EUR'000
----------------------------- ----------- ---------------- -------------
Opening balance 505,552 438,800 944,352
Additions 378,342 74,205 452,547
Repayment of shareholder
loan investments (note 19) (56,810) - (56,810)
Restructure of shareholder
loan investment (note 19) (51,000) 51,000 -
Shareholder loan adjustment (657) - (657)
Unrealised movement in fair
value of investments (note
4) 4,438 64,932 69,370
-----------------------------
779,865 628,937 1,408,802
----------------------------- ----------- ---------------- -------------
The unrealised movement in fair value of investments of the
Group during the year were made up as follows:
For the year For the year
ended ended
31 December 31 December
2022 2021
EUR'000 EUR'000
------------------------------------------- ------------- -------------
Decrease in valuation of investments (93,685) (24,792)
Movement in swap fair values within
SPVs 36 4,166
Repayment of debt at SPV level 13,481 14,527
Repayment of shareholder loan investments 118,306 56,810
Shareholder loan balance adjustment (2,708) 657
Movement in cash balances of SPVs 21,143 18,002
-------------------------------------------- ------------- -------------
56,573 69,370
------------------------------------------- ------------- -------------
Loans Equity interest Total
Company as at 31 December
2022 EUR'000 EUR'000 EUR'000
------------------------------- ----------- ---------------- -------------
Opening balance 575,336 359,733 935,069
Equity investments (note 19) - 205,200 205,200
Loans repaid by Holdcos (note
19) (30,289) - (30,289)
Loans advanced to SPVs (note
19) 35,651 - 35,651
Loans repaid by wind farm
SPVs (note 19) (14,352) - (14,352)
Unrealised movement in fair
value of investments - 147,195 147,195
------------------------------- ----------- ---------------- -------------
566,346 712,128 1,278,474
------------------------------- ----------- ---------------- -------------
Loans Equity interest Total
Company as at 31 December
2021 EUR'000 EUR'000 EUR'000
------------------------------- ----------- ---------------- -----------
Opening balance 517,690 228,217 745,907
Loans advanced to Holdcos
(note 19) 162,000 - 162,000
Loans repaid by Holdcos (note
19) (34,400) - (34,400)
Loans repaid by wind farm
SPVs (note 19) (69,954) - (69,954)
Restructure of shareholder
loan (note 19) - 51,000 51,000
Unrealised movement in fair
value of investments - 80,516 80,516
-------------------------------
575,336 359,733 935,069
------------------------------- ----------- ---------------- -----------
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 Holdcos 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 2022.
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 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 Portfolio's blended unlevered discount rate as at 31
December 2022 was 6.9%, which includes a 0.5% increase in the
underlying discount rates during the year reflecting higher
discount rate.
The DCF valuation is produced by discounting the individual wind
farm cash flows on an unlevered basis. The equivalent levered
discount rate (assuming 40% gearing) is approximately 9%.
Base case long term CPI assumption is 2.0% for all countries
based on long term target of the ECB and European central banks.
Higher inflation assumptions are used for 2023 and 2024.
A variance of +/- 0.5% is considered to be a reasonable range of
alternative assumptions for both discount and inflation rate.
Base case energy yield assumptions are P50 (50% probability of
exceedance) forecasts based on long term wind data and operational
history. The P90 (90% probability of exceedance over a 10 year
period) and P10 (10% 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.
Long term power price forecasts are provided by leading market
consultants, updated quarterly and may be adjusted by the
Investment Manager where more conservative assumptions are
considered appropriate.
The base case asset life depends on the technology as those are
underpinned by different design life. As a result, the Portfolio's
wind onshore assets' lifetime is typically 30 years whilst the
Portfolio's wind offshore assets' lifetime is based on 35 years.
There is no terminal value assumed at the end of operating
life.
The sensitivity below assumes that asset life may be 5 years
shorter or longer than the base case, which is impacted by
technical durability of the wind farm components and commercial
aspects of each investment, including the renewals of site leases,
planning permission and grid connection agreements.
Sensitivity analysis
The fair value of the Group's investments is EUR2,109,569,844
(2021: EUR1,408,802,257). 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 of
Input Base case Change in input investments Change in NAV per share
---------------- ------------------------- --------------------- ------------------------ ------------------------
EUR'000 cent
Discount rate 6-7 % +0.5 % (69,667) (6.1)
-0.5 % 74,206 6.5
Energy yield P50 10-year P90 (128,748) (11.3)
10-year P10 127,684 11.2
Forecast by leading
Power price consultant -10 % (135,947) (11.9)
10 % 130,850 11.5
Inflation rate 2.0 % - 0.5 % (60,757) (5.3)
Long term +0.5 % 64,581 5.7
Asset Life 30 years (onshore)/ - 5 years (148,179) (13.0)
35 years (offshore) + 5 years 102,394 9.0
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:
Ownership Interest as
at
Investment Place of Business Registered Office 31 December 2022
------------------------------------- ------------------- ------------------------- ------------------------
Riverside One, Sir John
Rogerson's Quay, Dublin
Ballybane Windfarms Limited Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Beam Wind Limited Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Carrickallen Wind Limited Ireland 2 50%
6(th) Floor, South Bank
Cloosh Valley Wind Farm Holdings DAC House, Barrow Street,
(1) Ireland Dublin 4 75%
Riverside One, Sir John
Rogerson's Quay, Dublin
Cnoc Windfarms Limited (2) Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Cordal Windfarm Holdings Limited(3) Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Cregg Wind Farm Limited(4) Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Glencarbry Windfarm Limited Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Gortahile Windfarm Limited Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
GRW1 AH Limited(5) Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Killala Community Wind Farm DAC Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Killhills Windfarm Limited Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Knockacummer Wind Farm Limited Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Knocknalour Wind Farm Limited Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Kostroma Holdings Limited (6) Ireland 2 100%
Riverside One, Sir
John Rogerson's Quay,
Lisdowney Wind Farms Limited Ireland Dublin 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Meenaward Wind Farm Limited (7) Ireland 2 100%
Riverside One, Sir John
Monaincha Sigatoka Wind Holdings DAC Rogerson's Quay, Dublin
(8) Ireland 2 100%
20, Avenue de la Paix,
Parc Eolien Des Tournevents du Cos 67000 Strasbourg,
SAS (9) France France 100%
20, Avenue de la Paix,
67000 Strasbourg,
Parc Eolien Des Courtibeaux SAS (10) France France 100%
Two Gateway, East Wall
Raheenleagh Power DAC Ireland Road, Dublin 3 50%
Riverside One, Sir John
Rogerson's Quay, Dublin
Ronaver Energy Limited (11) Ireland 2 100%
Riverside One, Sir John
Seahound Wind Developments Limited Rogerson's Quay, Dublin
(12) Ireland 2 100%
Dublin Road,
Newtownmountkennedy,
Sliabh Bawn Wind Holdings DAC(13) Ireland Co. Wicklow 25%
Riverside One, Sir John
Rogerson's Quay, Dublin
SMSF Holdings Limited Ireland 2 100%
20, Avenue de la Paix,
Société d'Exploitation du 67000 Strasbourg,
Parc Eolien du Tonnerois (14) France France 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Tra Investments Limited(15) Ireland 2 100%
Riverside One, Sir John
Rogerson's Quay, Dublin
Tullynamoyle Wind Farm II Limited Ireland 2 100%
(1) The Group's investment in Cloosh Valley is held through
Cloosh Valley Wind Farm Holdings DAC
(2) The Group's investment in Cnoc Energy Supply is held through
Cnoc Windfarm Holdings Limited
(3) The Group's investment in Cordal Windfarms and Oak Energy
Supply Limited is held through Cordal Windfarm Holdings Limited
(4) The Group's investment in Taghart is held through Cregg Wind
Farm Limited
(5) The Group's investment in GRP Sweden Holdings AB(16) ,
Boston Holding A/S (Danish HoldCo)(17) , GRP Finland Holdings
Oy(18) , GRP Germany Holdings GmbH(19) and Soliedra is held through
GRW1 AH Limited
(6) The Group's investment in Glanaruddery is held through
Kostroma Holdings Limited
(7) The Group's investment in Beam Hill Extension is held
through Meenaward Wind Farm Limited
(8) The Group's investments in Monaincha and Garranereagh are
held through Monaincha Sigatoka Wind Holdings DAC
(9) The Group's investment in Pasilly is held through Parc
Eolien Des Tournevents du Cos SAS
(9) The Group's investment in Saint Martin is held through Parc
Eolien Des Courtibeaux SAS
(11) The Group's investment in Tullahennel is held through
Ronaver Energy Limited
(12) The Group's investment in Letteragh is held through
Seahound Wind Developments Limited
(13) The Group's investment in Sliabh Bawn Power and Sliabh Bawn
Supply is held through Sliabh Bawn Wind Holdings DAC
(14) The Group's investment in Sommette is held through Société
d'Exploitation du Parc Eolien du Tonnerois
(15) The Group's investment in Ballincollig Hill is held through
Tra Investments Limited
(16) The Group's investment in Erstrask South is held through
GRP Sweden Holdings AB Limited
(17) The Group's investment in Borkum is held through Boston
Holding A/S (Danish HoldCo)
(18) The Group's investment in Kokkaneva is held through GRP
Finland Holdings Oy
(19) The Group's investment in Genonville, Grande Piece,
Menonville and Arcy Precy is held through GRP Germany Holdings
GmbH
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 2022 31 December
2021
Group EUR'000 EUR'000
----------------------------- ----------------- ------------
Sundry receivables 25 157
VAT receivable 48 118
Prepayments 50 46
Accrued income 167 20
Withholding tax receivable - 18
----------------------------- ----------------- ------------
290 359
---------------------------- ----------------- ------------
31 December 31 December
2022 2021
Company EUR'000 EUR'000
-------------------------- ------------ ------------
Due from wind farm SPVs 219 108
VAT receivable 65 83
Prepayments 40 36
324 227
------------------------- ------------ ------------
The Company has reviewed the receivable from wind farm SPVs in
accordance with IFRS 9 "Financial Instruments" and has not
accounted for any expected credit losses. At 26 February 2023, the
current balance outstanding is EUR219,000.
12. Payables
31 December 2022 31 December
2021
Group EUR'000 EUR'000
------------------------------------ ----------------- ------------
Investment management fee payable 3,140 2,156
Other payables 1,706 1,739
Acquisition costs payable 1,787 1,327
Loan interest payable 1,210 781
Commitment fee payable 321 257
Share issue costs payable - 37
8,164 6,297
----------------------------------- ----------------- ------------
31 December 2022 31 December
2021
Company EUR'000 EUR'000
------------------------------------ ----------------- ------------
Investment management fee payable 3,140 2,156
Other payables 484 383
Share issue costs payable - 37
3,624 2,576
----------------------------------- ----------------- ------------
13. Loans and borrowings
The Company did not hold any loans or borrowings at 31 December
2022 (2021: EURnil).
31 December 2022 31 December
2021
Group at 31 December 2022 EUR'000 EUR'000
-------------------------------------- ----------------- ------------
Opening balance 472,709 210,808
Revolving Credit Facility
Drawdowns 195,660 379,780
Repayments (95,660) (394,780)
Amortisation - 2,173
Term debt facilities
Drawdowns 275,000 275,000
Finance costs capitalised during
the year (2,829) (816)
Amortisation 1,200 544
Closing balance 846,080 472,709
-------------------------------------- ----------------- ------------
Reconciled as
Current liabilities 100,000 -
Non-current liabilities 746,080 472,709
Closing balance 846,080 472,709
----------------------------- -------- --------
The finance costs associated with the RCF and term debt
facilities that were capitalised and amortised during the year
ended 31 December 2022 was EUR1.6 million (2021: EURnil).
In the prior period finance costs associated with the RCF were
fully amortised, as the balance owing was Nil.
For the year For the year
ended 31 December ended 31 December
2022 2021
EUR'000 EUR'000
-------------------------------- ------------------- -------------------
Loan interest 12,407 4,550
Professional fees 46 490
Amortised facility arrangement
fees 1,200 2,717
Commitment fees 1,626 741
15,279 8,498
-------------------------------- ------------------- -------------------
In relation to non-current loans and borrowings, the Directors
are of the view that the current market interest rate is not
significantly different to the respective instruments' contractual
interest rates, therefore the fair value of the non-current loans
and borrowings at the end of the reporting period is not
significantly different from their carrying amounts.
The Group maintained a EUR300 million RCF with CIBC, RBC and
Santander with a margin of 1.3% per annum plus EURIBOR. On 13
February, 2023, the Group entered into a new RCF as detailed in
note 21.
The Group is obliged to pay a quarterly commitment fee of 0.46%
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 2022, the principal balance of the RCF
outstanding was EUR100 million (2021: EURnil), which is recorded as
a current liability.
Term debt facilities of the Group are detailed below:
Facility A
In April 2021, the Group increased the aggregate 5-year term
debt arrangements adding ING into the banking syndicate. Details of
the Group's term debt facilities and associated interest rate swaps
are set out in the tables below:
Loan Swap fixed Loan
Provider Maturity date margin rate principal
% % EUR'000
---------------------- ---------- ----------------- -----------
CBA 7 October 2025 1.55 (0.399) 75,000
NAB 7 October 2025 1.55 (0.399) 75,000
ING 7 October 2025 1.55 (0.300) 75,000
Natwest 7 October 2025 1.55 (0.396) 50,000
275,000
---------------------- ---------- ----------------- -----------
Facility B
In July 2021, the Group entered into a 7-year term debt
arrangement with AXA. This fixed rate non-amortising term debt of
EUR200 million was utilised in three tranches on 30 September 2021
(EUR100 million), 10 December 2021 (EUR50 million) and 17 December
2021 (EUR50 million).
Loan Mid swap Loan
Provider Maturity date margin rate principal
% % EUR'000
------------------------------ -------- --------- -----------
AXA 30 September 2028 1.85 (0.141) 150,000
AXA 30 September 2028 1.85 (0.045) 50,000
200,000
------------------------------ -------- --------- -----------
Facility C
In April 2022, the Group entered into a new 5-year term debt
arrangements with the existing term debt lenders, being, CBA, ING,
NAB and NatWest. Details of the Group's term debt facilities under
Facility C and associated interest rate swaps are set out in the
below table:
Loan Swap fixed Loan
Provider Maturity date margin rate principal
% % EUR'000
-------------------------- -------- ----------- -----------
CBA 01 April 2027 1.45 2.062 75,000
NAB 01 April 2027 1.45 2.057 75,000
ING 01 April 2027 1.45 2.059 75,000
Natwest 01 April 2027 1.45 2.077 50,000
275,000
-------------------------- -------- ----------- -----------
All borrowing ranks pari passu with a debenture over the assets
of, Holdco 1 and Holdco 2 and a floating charge over Holdco 1 and
Holdco 2's bank accounts.
These loans contain swaps that are contractually linked.
Accordingly, they have been treated as single fixed rate loan
agreements, which effectively set interest payable at fixed
rates.
14. Contingencies and Commitments
In December 2020, the Group entered into an agreement to acquire
the Cloghan and Taghart wind farms for a headline consideration of
EUR123 million. Taghart was acquired in December 2022, with Cloghan
expected to be completed in March 2023, once the wind farm is fully
operational.
In December 2021, the Group entered into an agreement to acquire
Torrubia, a 50MW solar farm currently under construction in La
Muela, Spain. The investment is scheduled to complete in March 2023
once the solar farm is fully operational.
In June 2022, the Group entered into an agreement to acquire the
Estrack North wind farm a 134.4MW onshore wind farm in Norrbotten
County, Sweden from Enercon on a forward sale basis. The investment
is scheduled to complete in Q4, 2023, once the wind farm is fully
operational.
In July 2022, the Group entered into an acquisition agreement to
acquire the 80.5MW South Meath Solar Farm from Statkraft. The Group
will acquire a 50% stake in the asset with the remaining 50% being
acquired in partnership with a pension fund, investing through a
fund also managed by Schroders Greencoat Capital LLP, the Group's
Investment Manager. The asset is currently under construction in
County Meath, Ireland, with commencement of commercial operations
expected in Q4 2023. The transaction is structured under a forward
sale model and will only complete once the solar farm is fully
operational.
In December 2022, the Group signed an agreement to acquire 22.5%
of the Butendiek offshore wind farm, located in Germany's exclusive
economic zone in the North Sea, from Marguerite Pantheon. Developed
by wpd AG, the Butendiek offshore wind farm has a total capacity of
288MW and has been operational since 2015. This transaction
completed on 21 February 2023, following regulatory approval and
was funded in part by a drawdown on the Group's RCF of EUR150
million.
15. Share capital - ordinary shares
At 31 December 2022, the Company had authorised share capital of
2,000,000,000 ordinary shares of EUR0.01 each.
Number
Issued and of shares Share Share
Date fully paid issued capital premium Total
EUR'000 EUR'000 EUR'000
----------------------------------- -------------- --------- --------- --------
1 January 2022 Opening balance 889,887,587 8,898 668,405 677,303
5 April 2022 Issued and paid 251,351,351 2,514 279,000 281,514
Less share issue
5 April 2022 costs - - (4,451) (4,451)
31 December 2022 1,141,238,938 11,412 942,954 954,366
------------------------------------ -------------- --------- --------- --------
Number
Issued and fully of shares Share Share
Date paid issued capital premium Total
EUR'000 EUR'000 EUR'000
----------------------------------- ------------ --------- --------- --------
1 January 2021 Opening balance 741,238,938 7,412 507,476 514,888
29 October
2021 Issued and paid 148,648,649 1,486 163,514 165,000
29 October Less share issue
2021 costs - - (2,585) (2,585)
31 December
2021 889,887,587 8,898 668,405 677,303
------------------------------------ ------------ --------- --------- --------
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 31 December
2022 2021
---------------------------------- -------------- ------------
Net assets - EUR'000 1,282,457 935,200
Number of ordinary shares issued 1,141,238,938 889,887,587
----------------------------------- -------------- ------------
Total net assets - cent 112.4 105.1
----------------------------------- -------------- ------------
17. Reconciliation of operating profit for the year to net cash
from operating activities
Group For the year For the year
ended 31 December ended 31 December
2022 2021
EUR'000 EUR'000
--------------------------------------- ------------------- -------------------
Operating profit for the year 151,851 79,641
Adjustments for:
Movement in fair value of investments
(note 4) (56,071) (64,932)
Investment acquisition costs 5,349 3,166
Finance costs capitalised during
the period (2,829) (816)
Amortisation of finance costs
(note 13) 1,200 2,717
Decrease in receivables (note
11) 69 3,736
Increase/(decrease) in payables 2,272 (7,445)
---------------------------------------- ------------------- -------------------
Net cash flows from operating
activities 101,841 16,067
---------------------------------------- -------------------
Company For the year For the year
ended 31 December ended 31 December
2022 2021
EUR'000 EUR'000
Operating profit for the year 136,572 71,143
Adjustments for:
Movement in fair value of investments
(note 9) (147,195) (80,516)
(Increase)/decrease in receivables
(note 11) (97) 3,545
Increase in payables 1,048 165
Net cash flows from operating
activities (9,672) (5,663)
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 RCF. An increase of 0.5% represents the
Investment Manager's assessment of a reasonably possible change in
interest rates. Should the EURIBOR rate increase by 0.5%, the
annual interest due on the facility would increase by EUR500,000
based on the amount drawn of EUR100,000,000.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 2022 are summarised below:
Interest bearing
Group Floating Non-interest
Fixed rate rate bearing Total
EUR'000 EUR'000 EUR'000 EUR'000
---------
Assets
Cash at bank - 26,841 - 26,841
Other receivables (note
11) - - 290 290
Investments (note 9) 541,812 683,164 884,594 2,109,570
541,812 710,005 884,884 2,136,701
Liabilities
Other payables (note
12) - - (8,164) (8,164)
Loans and borrowings
(note 13) (750,000) (100,000) - (850,000)
(750,000) (100,000) (8,164) (858,164)
The Group's interest and non-interest-bearing assets and
liabilities as at 31 December 2021 are summarised below:
Interest bearing
Group Fixed Floating Non-interest
rate rate bearing Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Cash at bank - 5,045 - 5,045
Other receivables (note
11) - - 359 359
Investments (note 9) 757,937 - 650,865 1,408,802
757,937 5,045 651,224 1,414,206
Liabilities
Other payables (note
12) - - (6,297) (6,297)
Loans and borrowings
(note 13) (472,709) - - (472,709)
(472,709) - (6,297) (479,006)
The Company's interest and non-interest-bearing assets and
liabilities as at 31 December 2022 are summarised below:
Interest bearing
Company Fixed Floating Non-interest
rate rate bearing Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Cash at bank - 7,283 - 7,283
Other receivables (note
11) - - 324 324
Investments (note 9) - 162,000 1,116,474 1,278,474
- 169,283 1,116,798 1,286,081
Liabilities
Other payables (note
12) - - (3,624) (3,624)
- - (3,624) (3,624)
The Company's interest and non-interest-bearing assets and
liabilities as at 31 December 2021 are summarised below:
Interest bearing
Company Fixed Floating Non-interest
rate rate bearing Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Cash at bank - 2,480 - 2,480
Other receivables (note
11) - - 227 227
Investments (note 9) - 162,000 773,069 935,069
- 164,480 773,296 937,776
Liabilities
Other payables (note
12) - - (2,576) (2,576)
- - (2,576) (2,576)
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 31 December
2022 2021
Group EUR'000 EUR'000
------------
Other receivables (note 11) 290 359
Cash at bank 26,841 5,045
Loan investments (note 9) 1,266,417 779,865
1,293,548 785,269
The table below details the Company's maximum exposure to credit
risk:
31 December 31 December 2021
2022
Company EUR'000 EUR'000
Other receivables (note 11) 324 227
Cash at bank 7,283 2,480
Loan investments (note 9) 566,346 575,336
573,953 578,043
The tables below shows the cash balances of the Group and credit
rating for each counterparty:
Rating 31 December 2022
Group EUR'000
AIB BBB+ 26,841
26,841
Rating 31 December 2021
Group EUR'000
AIB BBB+ 5,045
5,045
The table below shows the cash balances of the Company and the
credit rating for each counterparty:
Rating 31 December 2022
Company EUR'000
AIB BBB+ 7,283
7,283
Rating 31 December 2021
Company EUR'000
AIB BBB+ 2,480
2,480
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. The
Group intends to manage liquidity risk through a number of sources,
including:
-- Existing cash reserves contained in the investee
Companies;
-- Surplus cash generated by the underlying investments;
-- The undrawn portion of the RCF;
-- Additional use of additional long term debt; and
-- Expected future equity raises.
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 2022 and 31 December 2021:
Group - 31 December Less than
2022 1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables (note
11) 290 - - 290
Cash at bank 26,841 - - 26,841
Loan investments 1,266,417 - - 1,266,417
Liabilities
Other payables (note
12) (8,164) - - (8,164)
Loan and borrowings (116,366) (601,669) (202,349) (920,384)
1,169,018 (601,669) (202,349) 365,000
Group - 31 December Less than
2021 1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables (note
11) 359 - - 359
Cash at bank 5,045 - - 5,045
Loan investments 779,865 - - 779,865
Liabilities
Other payables (note
12) (6,297) - - (6,297)
Loan and borrowings (6,341) (300,364) (206,200) (512,905)
772,631 (300,364) (206,200) 266,067
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 2022 and 31 December 2021:
Company - 31 December Less than
2022 1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables 324 - - 324
Cash at bank 7,283 - - 7,283
Loan investments 411,038 168,694 - 579,732
Liabilities
Other payables (3,624) - - (3,624)
415,021 168,694 - 583,715
Company - 31 December Less than
2021 1 year 1 - 5 years 5+ years Total
EUR'000 EUR'000 EUR'000 EUR'000
Assets
Other receivables 227 - - 227
Cash at bank 2,480 - - 2,480
Loan investments 416,618 165,285 573,284 589,484
Liabilities
Other payables (2,576) - - (2,576)
416,749 165,285 573,284 582,034
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-bearing loans to Holdco of EURnil (2021:
EUR162,000,000) and Holdco made principle repayments of
EUR30,289,305 to the Company (2021: EUR34,400,000).
-- Advanced non interest bearing loans to Tullahennel of
EUR3,480,153 (2021: EURnil), to Boston Holdings A/S of
EUR31,889,547 (2021: EURnil) and to Soliedra of EUR281,564 (2021:
EURnil).
-- Provided capital to Holdco 2 of EUR205,200,000 (2021:
EUR51,000,000).
-- Received shareholder loan repayments from Knockacummer of
EUR6,850,400 (2021: EUR67,353,852) and Killhills of EUR7,501,217
(2021: EUR2,600,428).
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 2022 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 2022 For the year ending 31 December 2021
Rónán Murphy 17,500 25,000
Emer Gilvarry - 32,168
Kevin McNamara - 10,000
Marco Graziano 25,000 -
42,500 67,168
The below tables shows the Group's dividend income from wind
farm SPVs:
For the year For the year
ended ended
31 December 31 December
2022 EUR'000 2021 EUR'000
Cordal 10,762 5,500
Cloosh Valley 1,426 -
Ballybane 3,539 1,700
Gortahile 2,050 1,450
Beam 2,150 700
Knocknalour 1,000 600
Raheenleagh 1,000 500
Knockacummer 38,336 -
Kilhills 5,277 -
Glanaruddery 10,647 -
Carrickallen 3,300 350
Letteragh 600 -
An Cnoc 1,700 -
Garranereagh 850 350
Lisdowney 950 200
83,587 11,350
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 26 January 2023, the Board approved a dividend of EUR17.6
million, equivalent to 1.545 cent per share in relation to the
quarter ended 31 December 2022. The record date for the dividend
was 3 February 2023 and the payment date was 24 February 2023.
On 13 February 2023, the Group entered into a new RCF and on
signing, repaid the old RCF, via a EUR100 million utilisation. The
terms of the new RCF include the following (previous RCF terms in
brackets):
-- Margin: 1.4% (1.3%)
-- Size: EUR350 million (EUR300 million)
-- Repayment date 13 February 2026.
On 21 February 2023, the Group acquired 22.5% in Butendiek
(German offshore wind), which required a further RCF utilisation of
EUR150 million, leaving EUR100 million available under the RCF to
fund future commitments.
Company Information
Directors (all non-executive) Registered Company Number
Rónán Murphy (Chairman) 598470
Emer Gilvarry
Kevin McNamara
Marco Graziano
Eva Lindqvist (appointed 7 July 2022)
Investment Manager
Registered Office
Riverside One
Schroders Greencoat LLP Sir John Rogerson's Quay
(formally Greencoat Capital LLP) Dublin 2
4(th) Floor The Peak
5 Wilton Road
London SW1V 1AN Registered Auditor
BDO
Block 3, Miesian Plaza
Company Secretary 50-58 Baggot Street Lower
Ocorian Administration (UK) Limited Dublin 2
Unit 18 Innovation Centre
Northern Ireland Science Park Legal Advisers
Queens Road McCann FitzGerald LLP
Belfast BT3 9DT Riverside One
Sir John Rogerson's Quay
Dublin 2
Administrator
Northern Trust International Fund
Administration Services (Ireland) Limited
Georges Court
54-62 Townsend Street
Euronext Growth Listing Sponsor, 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 St reet
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 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 104 staff for the financial year ending 31 December
2022 was GBP31.5 million, consisting of GBP16.0 million fixed and
GBP15.5 million variable remuneration. The aggregate amount of
remuneration for the 5 staff members of the Investment Manager
constituting senior management and those staff whose actions have a
material impact on the risk profile of the Company was GBP2.1
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.
Annex V Disclosure
ANNEX V
Template periodic disclosure for the financial products referred
to in Article 9 , paragraphs 1 to 4a, of Regulation (EU) 2019/2088
and Article 5, first paragraph, of Regulation (EU) 2020/852
Product name: Greencoat Renewables PLC (the "Company")
Legal entity identifier: 635400TVSIFFQOB8RB67
Sustainable investment objective
Did this financial product have a sustainable investment
objective?
Yes - It made sustainable investments with an environmental
objective: 100% -
in economic activities that qulaify as environmentally
sustainable under the EU Taxonomy
To what extent was the sustainable investment objective of this
financial product met?
The Company invests in euro denominated operational renewable
electricity generation assets in Relevant Countries within the
Eurozone. The Company's aim is to provide investors with an annual
dividend per Ordinary Share that increases progressively while
growing the capital value of its investment portfolio over the long
term, through re-investment of excess cash flows and the prudent
use of leverage.
The Company has sustainable investment as its objective within
the meaning of Article 9 SFDR. More specifically, the Company is
intended to contribute to the environmental objective of climate
change mitigation on the basis of the activities of the assets
targeted by the Company, which are renewable power generation
assets that help to facilitate the transition to a low-carbon
economy.
The Company does not have a carbon reduction objective and has
not designated a reference benchmark for the purpose of attaining
the sustainable investment objective.
As of the 31st December 2022, the Company's portfolio consists
of interests in 34 operating wind farms located in Ireland, France,
Germany, Spain, Sweden & Finland, along with a 11MW co-located
battery storage project, with an aggregate net installed capacity
of 1,164MW. The Company has also committed in 2022 to purchase a
further wind farm under construction in Sweden, and a solar farm
under construction in Ireland, totalling 175MW capacity.
These sustainable investments contribute to the Company's
sustainable investment objective as the electricity generated from
wind and solar farms can be used in place of non-renewable energy
sources, thereby helping to stabilise greenhouse gas concentrations
in the atmosphere and contributing to climate change mitigation.
These investments are considered environmentally sustainable in
accordance with the Technical Screening Criteria of the EU Taxonomy
relating to the environmental objective of climate change
mitigation (activities 4.1 and 4.3).
How did the sustainability indicators perform?
The sustainability indicators used to measure attainment of the
sustainable investment objective of the Company performed as
follows in the reporting period:
- Renewable energy generated: 2,487 GWh
- GHG emissions avoided:
o Scope 1: 0.06 ktes CO2e
o Scope 2: 0.5 ktes CO2e (Market),
0.9 ktes CO2e (Location)
o Scope 3: 214.3 ktes CO2e
- Equivalent number of homes powered: 538,958 homes
Notes:
(1) Carbon footprint indicators are measured in line with the
industry standard GHG Protocol based on an equity control approach,
meaning emissions from the Company's operations are weighted
according to the Company or its Special Purpose Vehicle's (SPV's)
ownership interest.
(2) Scope emissions calculations are verified by third party consultants.
(3) Scope 3 emissions are the result of activities from assets
not owned or controlled by the Group, but that the Company
indirectly impacts in its value chain. Scope 3 emissions include
all sources not within the Company's Scope 1 and 2 boundary and
include, inter alia, emissions arising from the construction of
each wind farm acquired in 2022, including those emissions
associated with the manufacturing and transport of all equipment
and material, before the wind farm was commissioned as well as the
expected spare part provision throughout its lifetime.
...and compared to previous periods?
Not applicable as this is the Company's first reporting
period.
How did the sustainable investments not cause significant harm
to any sustainable investment objective?
The Investment Manager has sought to ensure that the Company's
sustainable investments cause no significant harm to any
sustainable investment objective by only investing in renewable
energy infrastructure assets and by actively engaging and managing
sustainability risks and opportunities for the Company and its
investments prior to investment and on an ongoing basis once an
investment has been made.
Prior to each investment, the Investment Manager's Investment
Committee responsible for the Company considered the Company's
investment policy, investment restrictions and the Company's ESG
Policy (a copy of which can be found here ) (the "GRP ESG Policy")
, as well as the sustainability risks and opportunities identified
during due diligence (including by means of an ESG checklist).
Each investment made is held through special purpose vehicles
("SPVs") and the Investment Manager has appointed directors to each
of the boards of those SPVs to oversee all major strategic and
operational decisions.
Sustainability risks and opportunities have been fully embedded
into the risk management framework at both a Company and asset SPV
level. A risk register has been set up for each new SPV which
includes sustainability risks and assesses risks (in respect of the
likelihood of its occurrence and the impact of its occurrence) on a
numerical scale.
Ongoing sustainability risks for the portfolio were monitored,
managed and reported on by the Investment Manager to the Company's
board of directors which has overall responsibility for the
activities of the Company and its investments. Material risks
relating to sustainability were escalated on a quarterly basis to
the Investment Manager's Risk Management Committee. Across the
portfolio, there were no material sustainability-related incidents
during 2022. Specifically with regards to health and safety, there
were no reportable incidents.
In addition, the Company complied with the principles of good
governance contained in the AIC Code, which ensures the Company is
in accordance with the requirements of the UK Corporate Governance
Code and provides a framework of best practice for listed
investment companies.
How were the indicators for adverse impacts on sustainability
factors taken into account?
The Investment Manager considers the principal adverse impacts
("PAIs") of its investment decisions relating to the Company on
sustainability factors and this informs its approach to long-term
investment stewardship and stakeholder engagement.
As the Company predominantly targets investments in operating
European wind farms, the PAIs that are most relevant to the Company
include (but are not limited to):
-- Greenhouse gas emissions (Table 1 RTS: PAIs 1-6); and
-- Number of days lost to injuries, accidents, fatalities or illness (Table 3 RTS: PAI 3)
The Investment Manager sought to mitigate the impact of the PAIs
and other indicators considered in relation to the Company firstly
by implementing the GRP ESG Policy, which has been developed in
line with the Investment Manager's ESG Policy (a copy of which can
be found on the Investment Manager's website). This sets guidance
and principles for integrating sustainability across the Company's
business and looks to establish best practice in climate related
risk management, reporting and transparency. It outlines areas of
focus for wind power generation assets including environment,
workplace standards, health and safety practices, governance
(including compliance with applicable laws and regulations) and
local community engagements. It also includes a list of key
performance indicators that are monitored and reported on (as
appropriate). Sustainability factors were considered prior to
investment as part of early-stage screening, detailed due diligence
and the Investment Committee's decision-making, and are managed
post-acquisition in accordance with the Investment Manager's wider
asset management practices.
A statement on principal adverse impacts on sustainability
factors (the "PAI Statement"), including the list of PAI indicators
and associated metrics considered in relation to the Company, can
be found in Company's Annual Report.
The Investment Manager considers the impacts reported within the
PAI Statement do not constitute significant harm to any sustainable
investment objective, as further described in the PAI
Statement.
Were sustainable investments aligned with the OECD Guidelines
for Multinational Enterprises and the UN Guiding Principles on
Business and Human Rights? Details :
Yes - the Investment Manager considers that the Company's
sustainable investments were aligned with the OECD Guidelines for
Multinational Enterprises and the UN Guiding Principles on Business
and Human Rights (the "Minimum Safeguards").
During 2022, the Investment Manager conducted initial due
diligence (for new investments) and ongoing monitoring (for
existing investments) of the SPVs in which the underlying renewable
energy assets are held to ensure their alignment with the Minimum
Safeguards. For the existing investments this included the
completion of Modern Slavery audits by an external competent
consultant for a number of key service providers.
Further, the Investment Manager ensured that the new key service
providers involved in the operations and management of the SPVs
acquired in 2022 comply with all applicable laws, rules,
regulations and overarching principles in the countries where they
operate. This covers anti-bribery and corruption, financial crime,
data protection and employment and health and safety laws
(including those relating to human rights, human trafficking,
modern slavery, and public safety). This was achieved where
possible through the application of the Investment Manager's 'Code
of Conduct' Side Letter or otherwise provided for in the key
service provider contracts, and monitoring by the Investment
Manager's risk function.
There has been no material change to any existing service
providers, or any reports by the SPVs of any misalignment to the
Minimum Safeguards.
For more information on how the sustainable investment objective
of this financial product was met, please refer to the Company's
ESG Report which can be found at the following link: Report and
Publications - Greencoat Renewables (greencoat-renewables.com)
How did this financial product consider principal adverse
impacts on sustainability factors?
See the response to the question above "How were the indicators
for adverse impacts on sustainability factors taken into
account."
What were the top investments of this financial product?
Largest investments Sector % Assets (NAV) Country
Borkum Wind 16.6% Germany
Cloosh Valley Wind 9.8% Ireland
Knockacummer Wind 8.5% Ireland
Cordal Wind 8.3% Ireland
Erstrask South Wind 4.2% Sweden
Tullahennel Wind 3.8% Ireland
What was the proportion of sustainability-related
investments?
What was the asset allocation?
Investments
-- #1 Sustainable 100% > Environmental 100% > Taxonomy-aligned (100%)
-- #2 Not sustainable 0%
#1 Sustainable covers sustainable investments with environmental
or social objectives.
#2 Not sustainable includes investments which do not qualify as
sustainable
In which economic sectors were the investments made?
All investments of the Company are in the economic sector
"electricity generation from wind power" (activity 4.3 of the
Climate Change Mitigation Technical Screening Criteria). There are
also two forward purchases of solar farms which falls under
"electricity generation using solar photovoltaic technology"
(activity 4.1 of the Climate Change Mitigation Technical Screening
Criteria).
To what extent were sustainable investments with an
environmental objective aligned with the EU Taxonomy?
Did the financial product invest in fossil gas and/or nuclear
energy related activities complying with the EU Taxonomy ?
[ ] Yes
[ ] In fossil gas [ ] In nuclear energy
[ x ] No
What was the share of investments made in transitional and
enabling activities?
All activities of the Company are low-carbon activities so the
share of investments in transitional and enabling activities is
zero.
How did the percentage of investments aligned with the EU
Taxonomy compare with previous reference periods?
Not applicable as this is the Company's first report produced in
respect of the EU Taxonomy-alignment of the Company's
investments.
What was the share of sustainable investments with an
environmental objective that were not aligned with the EU
Taxonomy?
There was no share of sustainable investments with an
environmental objective that were not aligned with the EU Taxonomy.
100% of the Company sustainable investments are in wind generation
assets which are considered aligned with the EU Taxonomy in
accordance with the relevant Technical Screening Criteria for
climate change mitigation (activity 4.3). There are also two
forward purchase's of solar farm's which fall under "electricity
generation using solar photovoltaic technology" (activity 4.1 of
the Climate Change Mitigation Technical Screening Criteria).
As at 31 December 2022, 100% of the Company's sustainable
investments (expressed as a % of the Net Asset Value) were in
sustainable investments with an environmental objective that were
aligned with the EU Taxonomy, in accordance with the relevant
Technical Screening Criteria for climate change mitigation.
What was the share of socially sustainable investments?
0% of the Company's investments are socially sustainable
investments. The Company does not target sustainable investments
with a social objective.
What investments were included under "not sustainable", what was
their purpose and were there any minimum environmental or social
safeguards?
The investments included under "#2 Not sustainable" comprise a
cash reserve (to the extent not generated from sustainable
investments) and hedging arrangements for the purposes of efficient
portfolio management.
Given the purpose of these investments, there were no minimum
environmental and social safeguards applied to such investments
What actions have been taken to attain the sustainable
investment objective during the reference period?
The Investment Manager sought to attain the Company's
sustainable investment objective by implementing the binding
elements described in the Company's pre-contractual disclosures
(Annex 3 RTS) on a continuous basis, and by integrating
sustainability risks in its investment decision-making as described
above: "How did the sustainable investments not cause significant
harm to any sustainable investment objective?".
As the binding elements of the Company's investment strategy
were formalised in late 2022, work is underway to enhance the
Investment Manager's processes to measure and monitor the
application of the binding elements. For example, the Schroders
Greencoat ESG Policy, based upon which the Company's ESG Policy has
been developed was updated in Q4 2022 to incorporate a list of
investment exclusions with the effect of avoiding investment in
activities which the Investment Manager believes to be incompatible
with a sustainable investment objective. Similarly, new investments
are being assessed against the Technical Screening Criteria as part
of normal course pre-investment screening and recorded as having
been assessed in the Investment Committee papers, to determine the
extent of EU Taxonomy-alignment of the Company's sustainable
investments.
Further, the Investment Manager continued to engage with
stakeholders relevant to the Company's portfolio to ensure its
renewable investments positively impact the communities in which
they operate. Sustainability-related risks and challenges were
regularly discussed within the Investment Manager's asset
management teams which were also reported to and discussed with the
Board through regular meetings and specific risk register review
discussions. Key sustainability factors such as those relating to
health and safety, compliance with environmental standards and
stakeholder relations were regularly discussed and documented.
For more information on the application of good governance and
active ownership of the investments, please refer to the Company's
ESG Report's which can be found at the following link: Report and
Publications - Greencoat Renewables (greencoat-renewables.com)
How did this financial product perform compared to the reference
sustainable benchmark?
Not applicable (N/a) as the Company does not have a carbon
reduction objective and is not managed against a reference
benchmark.
How did the reference benchmark differ from a broad market
index?
N/a
How did this financial product perform with regard to the
sustainability indicators to determine the alignment of the
reference benchmark with the sustainable investment objective?
N/a
How did this financial product perform compared with the
reference benchmark?
N/a
How did this financial product perform compared with the broad
market index?
N/a
Principal Adverse Impact Statement
Statement on principal adverse impacts of investment decisions
on sustainability factors
Financial Product : Greencoat Renewables PLC (LEI:
635400TVSIFFQOB8RB67) (the "Company"), managed by Schroders
Greencoat LLP (the "Investment Manager")
1. Summary
The Investment Manager considers principal adverse impacts of
its investment decisions on sustainability factors in relation to
the Company. The present statement is the consolidated statement on
principal adverse impacts on sustainability factors of the Company.
This statement on principal adverse impacts on sustainability
factors of the Company covers the reference period from 1(st)
January to 31(st) December 2022.
The adverse sustainability indicators applicable to investee
companies considered by the Investment Manager are summarised in
the table below (including the relevant table and number associated
with the adverse sustainability indicators listed in Annex I of the
RTS [3] ).
Adverse Sustainability Indicator RTS
Theme Annex RTS
I Table Annex
I
Number
Climate
and
other
environment-related
indicators GHG emissions 1 1
Carbon footprint 1 2
GHG intensity of investee companies 1 3
Exposure to companies active in the
fossil fuel sector 1 4
Share of non-renewable energy consumption
and production 1 5
Energy consumption intensity per high
impact climate sector 1 6
Emissions to water 1 8
Hazardous waste and radioactive waste
ratio 1 9
Natural species and protected areas 2 14
Social
and
employee,
respect
for
human
rights,
anti-corruption Violations of UN Global Compact principles
and and Organisation for Economic Cooperation
anti-bribery and Development (OECD) Guidelines for
matters Multinational Enterprises 1 10
Lack of processes and compliance mechanisms
to monitor compliance with UN Global
Compact principles and OECD Guidelines
for Multinational Enterprises 1 11
Exposure to controversial weapons (anti-personnel
mines, cluster munitions, chemical weapons
and biological weapons) 1 14
Number of days lost to injuries, accidents,
fatalities or illness 3 3
Lack of a supplier code of conduct 3 4
Lack of anti-corruption and anti-bribery
policies 3 15
Description of the principal adverse impacts on sustainability
factors
CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS
Adverse sustainability Metric Impact Impact Explanation Actions taken,
indicator 2022 2021 and actions
planned and
targets set
for the next
reference period
Greenhouse 1. GHG emissions Scope 1 GHG 60 tonnes 19 tonnes The increase The Board and
gas emissions emissions of CO2e of CO2e in scope the Investment
emissions Manager expect
is due to to take steps
the acquisition to reduce the
of 9 wind Company's future
farms in 2022 Scope 1 and
increasing 2 GHG emissions
net generation in 2023.
capacity to
1,164MW (from
800MW in 2021).
Carbon footprint
indicators
are measured
in line with
the industry
standard GHG
Protocol based
on an equity
control approach,
meaning emissions
from the
Company's
operations
are weighted
according
to the Company
or its SPVs'
ownership
interest.
Scope emissions
calculations
are verified
by third party
consultants.
Scope 3 emissions
are the result
of activities
from assets
not owned
or controlled
by the Group,
but that the
Group indirectly
impacts in
its value
chain. Scope
3 emissions
include all
sources not
within the
Company's
Scope 1 and
2 boundary
and include,
inter alia,
emissions
arising from
the construction
of each wind
farm acquired
in 2022,
including
those emissions
associated
with the
manufacturing
and transport
of all equipment
and material,
before the
wind farm
was commissioned
as well as
the expected
spare part
provision
throughout
its lifetime.
Scope 2 GHG 472 tonnes 41 tonnes
emissions of CO2e of CO2e
(market
based),
938 tonnes
of CO2e
(location
based)
Scope 3 GHG 214,261 125,697
emissions tonnes of tonnes
CO2e of CO2e
Total GHG 214,793 125,757
emissions tonnes of tonnes
CO2e (market of CO2e
based)
215,259
tonnes of
CO2e (location
based)
2. Carbon Carbon footprint 214,793 N/a
footprint tonnes of
CO2e (market
based)
215,259
tonnes of
CO2e (location
based)
3. GHG intensity GHG intensity 649 tonnes N/a
of investee of investee of CO2e/
companies companies EURm net
revenue
At the end of
2022, the Investment
Manager formalised
its investment
exclusion criteria
with the effect
of avoiding
investment in
activities that
it believes
to be incompatible
with a sustainable
investment objective.
The Company's
ESG Policy is
due for revision
in September
2023, however,
the Company
will update
the policy in
2023 to incorporate
the latest obligations
under SFDR.
A copy of the
policy can be
found below:
ESG - Greencoat
The Company Renewables (greencoat-renewables.com)
does not have The Investment
any exposure Manager monitor
to the fossil a set of KPI's
fuel sector to improve environmental
and will only management and
invest in to continuously
renewable improve performance.
energy generation They are reported
assets, also monthly, at
in accordance a minimum, directly
Share of with the to the asset
4. Exposure investments Investment management team,
to companies in companies Manager's the Directors
active in active in investment of the wind
the fossil the fossil exclusions farm companies,
fuel sector fuel sector 0% 0% list. and the Board.
5. Share Share of Production N/A The Company's
of non-renewable non-renewable share: renewable
energy energy 0% non-renewable. energy generation
consumption consumption Consumption assets generate
and production and non-renewable share: green electricity
energy production 19% that saves
of investee non-renewable. the carbon
companies emissions
from and air pollution
non-renewable that would
energy sources have otherwise
compared to been generated
renewable using fossil
energy sources, fuels. These
expressed assets consume
as a percentage electricity
of total energy in the generation
sources of green
electricity,
the majority
of which is
provided from
renewable
sources.
6. Energy Energy N/A N/A N/A Will develop
consumption consumption appropriate
intensity in GWh per methodology
per high million EUR and will report
impact climate of revenue on relevent
sector of investee PAI's for the
companies, reporting year
per high impact of 2023.
climate sector
Water 8. Emissions Tonnes of N/A N/A
to water emissions
to water
generated
by investee
companies
per million
EUR invested,
expressed
as a weighted
average
Waste 9. Hazardous Tonnes of N/A N/A
waste and hazardous
radioactive waste and
waste ratio radioactive
waste generated
by investee
companies
per million
EUR invested,
expressed
as a weighted
average
INDICATORS FOR SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION
AND ANTI-BRIBERY MATTERS
Adverse sustainability Metric Impact Impact Explanation Actions taken,
indicator 2022 2021 and actions
planned and
targets set
for the next
reference period
Social 10. Violations Share of N/A N/A The Company The Investment
and employee of UN Global investments predominantly Manager will
matters Compact in investee targets develop a standard
principles companies investments methodology
and Organisation that have in operating to assess the
for Economic been involved renewable alignment of
Cooperation in violations energy generation the key service
and Development of the UNGC assets which providers with
(OECD) principles will be held the OECD Guidelines
Guidelines or OECD through special for Multinational
for Guidelines purpose vehicles Enterprises
Multinational for Multinational ("SPVs"): and the UN Guiding
Enterprises Enterprises standalone Principles on
legal entities Business and
which typically Human Rights
do not have (the "Minimum
any employees Safeguards").
or management
teams. The
SPVs will
typically
outsource
all operations
and management
requirements
to third parties,
through long-term
contracts.
The Investment
Manager conducts
initial due
diligence
and provides
ongoing
monitoring
of SPVs to
ensure their
alignment
with the Minimum
Safeguards.
Where possible,
the Investment
Manager imposed
obligations
on the key
service providers
involved in
the operations
and management
of the SPVs
to ensure
their ongoing
compliance.
In most
instances,
this was achieved
by the Investment
Manager's
'Code of Conduct
Side Letter'
(or an equivalent
standard)
which requires
key service
providers
to comply
with all
applicable
laws, rules,
regulations
and overarching
principles
in the countries
where they
operate (which
includes the
Minimum
Safeguards).
This covers
anti-bribery
and corruption,
financial
crime, data
protection
and employment
and health
and safety
laws (including
those relating
to human rights,
human
trafficking,
modern slavery,
and public
safety).
11. Lack Share of N/A N/A In 2022, to
of processes investments deepen our understanding
and compliance in investee of modern slavery
mechanisms companies risks in our
to monitor without policies supply chain,
compliance to monitor the Investment
with UN compliance Manager commissioned
Global Compact with the UNGC a number of
principles principles ethical audits
and OECD or OECD on our key service
Guidelines Guidelines providers. The
for for Multinational audit covered
Multinational Enterprises for direct and
Enterprises or grievance indirect workers:
/complaints legislation,
handling best practice,
mechanisms policies, recruitment
to address processes, right
violations to work, disciplinary
of the UNGC processes, equal
principles opportunities,
or OECD welfare provision,
Guidelines working hours,
for Multinational rates of pay,
Enterprises bullying and
harassment,
modern slavery,
occupational
& mental health
and freedom
of association.
Overall the
auditor found
that the key
services providers
were substantially
in compliance
with legislation
and best practice.
The Investment
Manager is currently
enchancing its
processes to
monitor the
percentage of
O&Ms with policies
addressing the
following issues:
* Bribery and corruption
* Data protection and privacy (including cyber
security)
* Governance, business ethics and integrity
* Modern slavery
* Environmental management
* Workers' health & safety
* Community engagement
* Gender diversity across firm / senior positions
We will develop
appropriate
methodology
and will report
on for the reporting
year of 2023.
At the end of
2022, the Investment
Manager formalised
its investment
exclusion criteria
with the effect
of avoiding
Exposure to investment in
controversial activities that
weapons is it believes
14. Exposure not permissible to be incompatible
to within the with a sustainable
controversial Share of investment investment objective.
weapons investments strategy of The Company's
(anti-personnel in investee the Company ESG Policy,
mines, cluster companies and is captured available below,
munitions, involved in in the Investment is due for revision
chemical the manufacture Managers' on in September
weapons or selling investment 2023.
and biological of controversial exclusions ESG - Greencoat
weapons) weapons 0% 0% list. Renewables (greencoat-renewables.com)
OTHER INDICATORS FOR PRINCIPAL ADVERSE IMPACTS ON SUSTAINABILITY FACTORS
Table 2 ADDITIONAL CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS
Adverse sustainability Metric Impact Impact Explanation Actions taken,
indicator 2022 2021 and actions
planned and
targets set
for the next
reference period
Water, 14. Natural Share of N/A N/A All habitat Renewable energy
waste species and investments management assets have
and material protected in investee plans are the potential
emissions areas companies agreed for to have a negative
whose operations relevant sites environmental
affect to ensure impact through
threatened that the the manufacturing
species environment and supply chain
in and process or locally
surrounding through the
each wind ongoing management
farm is carefully of the projects.
protected. The Company
We monitor has an ESG policy
a set of KPIs to help mitigate
to improve these risks.
our health The policies
and safety in place outline
management the environmental
and to standards which
continuously it aims to meet.
improve There is a strong
performance. commitment to
They are reported continuous improvement
monthly, at of environmental
a minimum, management which
directly to in 2022 included
the asset external audits
management by a competent
team, the consultant on
Directors management systems
of the wind and compliance.
farm companies,
and the Board.
We are pleased
that in 2021
& 2022 there
were no lost
time incidents
at our wind
farms.
Share of No. of Habitat No. of
investments Management Habitat
in investee plans not Management
companies in place: plans not
without a 0% in place:
biodiversity 0%
protection
policy covering
operational
sites owned,
leased, managed
in a protected
area or an
area of high
biodiversity
value outside
protected
areas
Adverse sustainability indicator
Adverse sustainability Metric Impact Impact Explanation Actions taken,
indicator 2022 2021 and actions
planned and
targets set
for the next
reference period
Social 3. Number Number of Reportable Reportable We monitor The Investment
and employee of days lost workdays lost Injuries: Injuries: a set of KPIs Manager has
matters to injuries, to injuries, 0 0 to improve a specific Health,
accidents, accidents, our health Safety and Environmental
fatalities fatalities and safety Plan in place,
or illness or illness management which is reviewed
of investee and performance monthly by the
companies continuously. asset management
expressed They are reported team. It allows
as a weighted monthly, at for efficient
average a minimum, planning, monitoring
directly to and tracking
the asset of key management
management pillars. The
team, the plan includes
Directors policies, safety
of the wind statements,
farm companies, audits, monthly
and the Board. meetings, a
Greencoat Capital
Health and Safety
Forum, incidents/developing
trends reports,
site visits,
onboarding and
training.
There is a nominated
Health and Safety
Director for
each fully owned
wind farm company.
Our Board also
reviews health
and safety matters
at each of its
scheduled meetings.
We have strong
health and safety
policies/safety
statements in
place at each
wind farm company.
These are reviewed
annually, and
their implementation
is audited externally
by a specialist
health and safety
consultant.
Our operating
managers conduct
health and safety
audits on oru
renewbales energy
assets. Also,
independent
accredited professionals
audit of our
wind farms on
various risk
assessed topics.
These audits
are used to
support continuous
improvement
in health and
safety outcomes
on our renewable
energy projects.
4. Lack of Share of N/A N/A Where possible, See ' Social
a supplier investments the Investment and employee
code of conduct in investee Manager impose matters 10 -
companies obligations 14' above.
without any on the key Will develop
supplier code service providers appropriate
of conduct involved in methodology
(against unsafe the operations and will report
working and management on for the reporting
conditions, of the SPVs year of 2023.
precarious to ensure
work, child their ongoing
labour and compliance.
forced labour) In most
instances,
this was achieved
by the Investment
Manager's
'Code of Conduct
Side Letter'
(or an equivalent
standard)
which requires
key service
providers
to comply
with all
applicable
laws, rules,
regulations
and overarching
principles
in the countries
where they
operate (which
includes the
Minimum
Safeguards).
This covers
anti-bribery
and corruption,
financial
crime, data
protection
and employment
and health
and safety
laws (including
those relating
to human rights,
human
trafficking,
modern slavery,
and public
safety).
See ' Social
and employee
matters 10
- 14' above.
Upon acquisition,
all wholly
owned SPV's
Share of adopt the
investments policies of
in entities the Company
without including
policies anti-corruption
on and anti-bribery. See ' Social
anti-corruption These policies and employee
and are regulalry matters 10 -
anti-bribery reviewed by 14' above.
consistent legal experts, Will develop
15. Lack with the United and are updated appropriate
of Nations for new methodology
Anti-corruption anti-corruption Convention legislation and will report
and and anti-bribery against and new on for the reporting
anti-bribery policies Corruption 0% 0% geographies. year of 2023.
Description of policies to identify and prioritise principal
adverse impacts on sustainability factors
The Investment Manager seeks to mitigate the impact of principal
adverse impacts ("PAIs") and other indicators considered in
relation to the Company firstly by implementing the Company's ESG
Policy (a copy of which can be found here: ESG - Greencoat
Renewables (greencoat-renewables.com) (the "GRP ESG Policy"). The
GRP ESG Policy, which has been developed in line with the
Investment Manager's ESG Policy (a copy of which can be found on
the Investment Manager's website), sets guidance and principles for
integrating sustainability across the Company's business and looks
to establish best practice in climate related risk management,
reporting and transparency. It outlines areas of focus for wind
power generation assets including environment, workplace standards,
health and safety practices, governance (including compliance with
applicable laws and regulations) and local community engagements.
It also includes a list of key performance indicators that are
monitored and reported on (as appropriate). Sustainability factors
are considered prior to investment as part of early-stage
screening, detailed due diligence and the Investment Committee's
decision-making, and managed post-acquisition in accordance with
the Investment Manager's wider asset management practices.
The GRP ESG Policy is reviewed at least annually by the
Investment Manager's ESG Committee and approved by the Board. It
was last updated on 8th September 2022, it will be updated in 2023
to incorporate the latest obligations under SFDR.
In implementing its approach to integrating sustainability and
the consideration of PAIs on sustainability factors, the Investment
Manager does not rely on a dedicated team, but rather
responsibilities are shared on a holistic basis:
-- the investment and asset management team (as the first line
of defence) who embed sustainability practices (including the
consideration of PAIs on sustainability factors) into their
investment decision making and ongoing management of the
assets;
-- a dedicated ESG Committee focussed on developing the ESG Policy;
-- the Investment Committees; and
-- valuation independent of portfolio management and the
Investment Manager Risk Management Committee (as overseen by the
AIFM).
Sustainability related risks and challenges are regularly
discussed within the Investment Manager's asset management team,
which are also reported to and discussed with the Board through
regular meetings and specific risk register review discussions. Key
sustainability factors such as those relating to health and safety,
compliance with environmental standards and stakeholder relations
are regularly discussed and documented.
The boards of each SPV are responsible for ensuring
sustainability factors are considered in the context of the
operational performance, business objectives and broader
stakeholder relationships. During the holding period,
representatives of the Investment Manager will take one or more
seats on the board of each SPV and will oversee all major strategic
and operational decisions. Given this structure, outside health and
safety risks, the organizational (including governance) risks of
the SPVs are limited. None of the SPVs have employees or management
teams and therefore any employee related social factors are
focussed on the third-party service providers.
The Investment Manager's ESG Committee is responsible for (i)
determining the ESG Policy and reviewing it regularly to ensure it
remains relevant to evolving conditions, (ii) developing and
evolving sustainability integration practices for material
sustainability factors within the different businesses and assets,
(iii) leveraging existing resources and research capabilities on
sustainability related topics for the benefit of the investment
management team, and (iv) promoting education and awareness of
sustainability trends and developments and sharing best practice.
The ESG Committee meets at least quarterly and is comprised of
representatives of each investment strategy.
The Investment Manager uses information provided directly from
investee companies in relation to the PAIs. In order to ensure data
quality, the Investment Manager works with specialist external
advisers, such as environmental consultants. These advisors review
the Investment Manager's methodologies for identifying and
prioritising PAIs and advise on industry best practices.
The data collected as described above is processed as
follows:
-- KPI data is sourced directly from SPVs and supplemented by
specialist external advisers such as environmental consultants, as
required.
-- O&M service providers used by the Company or its SPVs
report to the Investment Manager, on a monthly basis, on a standard
set of KPIs and qualitative factors, such as health and safety,
compliance with relevant laws and regulations, local community
engagement and habitat management, where relevant.
-- Carbon footprint indicators are measured in line with the
industry standard GHG Protocol based on an equity control approach,
meaning emissions from the Company's operations are weighted
according to the Company or its SPV's ownership interest. Scope
emissions calculations will be verified by third party
consultants.
In some instances, the Company may need to use estimates or
proxy data. Where estimated data is used it will typically
represent the minority of data used and will be based upon
reasonable assumptions and appropriate comparators. The Investment
Manager will act reasonably in using estimated or proxy data. As
the use of such data will vary on a case-by case basis, it is not
possible to provide a proportion of estimated data.
Engagement policies
The Company is committed to engaging with all stakeholders
relevant to its portfolio to ensure its renewable investments
positively impact the communities in which they operate. The Board
recognises that engagement is critical to long term sustainable
investment. It seeks to build strong, long-term relationships with
high-quality, experienced counterparties to give consistency of
service and standards, allow for learnings across the varies
businesses it manages and drive efficiency.
References to international standards
The Investment Manager holds memberships and/or proactively
engages with the following responsible business codes and/or
internationally recognised standards to promote sustainable
investment practices.
1. Task Force on Climate-Related Financial Disclosures ("TCFD")
Relevant for Table 1, PAI 1-5 (Greenhouse gas emissions)
The Company and the Investment Manager supports and aligns with
the TCFD recommendations and reports the disclosures in the annual
reports of the funds it manages. These disclosures report on
climate change related impacts, opportunities and risks to the
funds, as well as fund level carbon emissions. Given its long-term
investment perspective, the Investment Manager constantly assesses
the risks its assets might be exposed to and factors them into
decision making and risk monitoring.
2. UN Principles of Responsible Investment
The Investment Manager has been a signatory to the PRI since
2016, committed to adopting the PRI's six principles of responsible
investment.
Principle 1: We will We have embedded practices that consider
incorporate ESG issues ESG risks and opportunities across all
into investment analysis of our investment teams, each applying
and decision-making them as applicable, across investment
processes identification (screening), due diligence
and ongoing management of the assets
Principle 2: We will Where applicable, ESG considerations
be active owners and are embedded within our policies and
incorporate ESG issues approach to good governance and oversight.
into our ownership policies For example, SPVs may have specific ESG
and practices considerations to address based on the
nature of the assets they own, the maturity
of the project or asset and the third-party
service providers engaged to manage the
assets. The SPV Boards will develop their
policies and practices accordingly
Principle 3: We will We undertake a robust investment due
seek appropriate disclosure diligence process, which includes ESG
on ESG issues by the factors, when making an investment and
entities in which we will reject any that have unacceptable
invest ESG related risks which cannot be mitigated
Principle 4: We will We support the PRI through attendance
promote acceptance and at its conferences and forums
implementation of PRI
within the investment
industry
Principle 5: We will We proactively share our learnings and
work together to enhance approaches to ESG across our teams and
our effectiveness in we engage with investors on our PRI reporting
implementing PRI as and when requested. Our PRI reporting
forms the foundation for relevant elements
of our investor Due Diligence Questionnaires
and Requests for Proposal
Principle 6: We will We have since becoming a PRI signatory,
each report on our activities continued to report each year as required
and progress towards and make these reports available to investors
implementing PRI who request them
Historical comparison
None available. The earliest historical comparison will be
provided in periodic reporting in respect of financial year ending
December 2023.
ANNEX
Defined terms used in this statement
For the purposes of this statement, the following definitions
shall apply:
(1) 'scope 1, 2 and 3 GHG emissions' means the scope of
greenhouse gas emissions referred to in points (1)(e)(i) to (iii)
of Annex III to Regulation (EU) 2016/1011 of the European
Parliament and of the Council [4] ;
(2) 'greenhouse gas (GHG) emissions' means greenhouse gas
emissions as defined in Article 3, point (1), of Regulation (EU)
2018/842 of the European Parliament and of the Council [5] ;
(3) 'weighted average' means a ratio of the weight of the
investment by the financial market participant in an investee
company in relation to the enterprise value of the investee
company;
(5) 'companies active in the fossil fuel sector' means companies
that derive any revenues from exploration, mining, extraction,
production, processing, storage, refining or distribution,
including transportation, storage and trade, of fossil fuels as
defined in Article 2, point (62), of Regulation (EU) 2018/1999 of
the European Parliament and of the Council [6] ;
(6) 'renewable energy sources' means renewable non-fossil
sources, namely wind, solar (solar thermal and solar photovoltaic)
and geothermal energy, ambient energy, tide, wave and other ocean
energy, hydropower, biomass, landfill gas, sewage treatment plant
gas, and biogas;
(7) 'non-renewable energy sources' means energy sources other
than those referred to in point (6);
(8) 'energy consumption intensity' means the ratio of energy
consumption per unit of activity, output or any other metric of the
investee company to the total energy consumption of that investee
company;
(9) 'high impact climate sectors' means the sectors listed in
Sections A to H and Section L of Annex I to Regulation (EC) No
1893/2006 of the European Parliament and of the Council [7] ;
(10) 'protected area' means designated areas in the European
Environment Agency's Common Database on Designated Areas
(CDDA);
(11) 'area of high biodiversity value outside protected areas'
means land with high biodiversity value as referred to in Article
7b(3) of Directive 98/70/EC of the European Parliament and of the
Council [8] ;
(12) 'emissions to water' means direct emissions of priority
substances as defined in Article 2(30) of Directive 2000/60/EC of
the European Parliament and of the Council [9] and direct emissions
of nitrates, phosphates and pesticides ;
(13) 'areas of high water stress' means regions where the
percentage of total water withdrawn is high (40-80%) or extremely
high (greater than 80%) in the World Resources Institute's (WRI)
Water Risk Atlas tool "Aqueduct";
(14) 'hazardous waste and radioactive waste' means hazardous
waste and radioactive waste;
(15) 'hazardous waste' means hazardous waste as defined in
Article 3(2) of Directive 2008/98/EC of the European Parliament and
of the Council [10] ;
(16) 'radioactive waste' means radioactive waste as defined in
Article 3(7) of Council Directive 2011/70/Euratom [11] ;
(17) 'non-recycled waste' means any waste not recycled within
the meaning of 'recycling' in Article 3(17) of Directive
2008/98/EC;
(18) 'activities negatively affecting biodiversity-sensitive
areas' means activities that are characterised by all of the
following:
(a) those activities lead to the deterioration of natural
habitats and the habitats of species and disturb the species for
which a protected area has been designated;
(b) for those activities, none of the conclusions, mitigation
measures or impact assessments adopted pursuant to any of the
following Directives or national provisions or international
standards that are equivalent to those Directives have been
implemented:
(i) Directive 2009/147/EC of the European Parliament and of the Council [12] ;
(ii) Council Directive 92/43/EEC [13] ;
(iii) an Environmental Impact Assessment (EIA) as defined in
Article 1(2), point (g), of Directive 2011/92/EU of the European
Parliament and of the Council [14] ;
(iv) for activities located in third countries, conclusions,
mitigation measures or impact assessments adopted in accordance
with national provisions or international standards that are
equivalent to the Directives and impact assessments listed in
points (i), (ii) and (iii);
(19) 'biodiversity-sensitive areas' means Natura 2000 network of
protected areas, UNESCO World Heritage sites and Key Biodiversity
Areas ('KBAs'), as well as other protected areas, as referred to in
Appendix D of Annex II to Commission Delegated Regulation (EU)
2021/2139 [15] ;
(20) 'threatened species' means endangered species, including
flora and fauna, listed in the European Red List or the IUCN Red
List, as referred to in Section 7 of Annex II to Delegated
Regulation (EU) 2021/2139;
(22) 'UN Global Compact principles' means the ten Principles of
the United Nations Global Compact;
(24) 'board' means the administrative, management or supervisory body of a company;
(25) 'human rights policy' means a policy commitment approved at
board level on human rights that the economic activities of the
investee company shall be in line with the UN Guiding Principles on
Business and Human Rights;
For the purposes of this Annex, the following formulas shall
apply:
(1) 'GHG emissions' shall be calculated in accordance with the following formula:
(2) 'carbon footprint' shall be calculated in accordance with the following formula:
(3) 'GHG intensity of investee companies' shall be calculated in
accordance with the following formula:
(4) 'GHG intensity of sovereigns' shall be calculated in
accordance with the following formula:
(5) 'inefficient real estate assets' shall be calculated in
accordance with the following formula:
For the purposes of the formulas, the following definitions
shall apply:
(1) 'current value of investment' means the value in EUR of the
investment by the financial market participant in the investee
company;
(2) 'enterprise value' means the sum, at fiscal year-end, of the
market capitalisation of ordinary shares, the market capitalisation
of preferred shares, and the book value of total debt and
non-controlling interests, without the deduction of cash or cash
equivalents;
(3) 'current value of all investments' means the value in EUR of
all investments by the financial market participant;
(4) 'nearly zero-energy building (NZEB)', 'primary energy demand
(PED)' and 'energy performance certificate (EPC)' shall have the
meanings given to them in paragraphs 2, 5 and 12 of Article 2 of
Directive 2010/31/EU of the European Parliament and of the Council
[16] .
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
AIM means Alternative Investment Market
AGM means Annual General Meeting of the Company
Arcy-Precy means Ferme Eolenne D'Arcy-Precy
AUM means Assets Under Management
AXA means funds managed by AXA Investment Managers UK
Limited
Ballincollig Hill means Tra Investments Limited
Ballybane means Ballybane Windfarms Limited
BDO means the Company's Auditor as at the reporting date
Beam means Beam Hill and Beam Hill Extension
Beam Hill means Beam Wind Limited
Beam Hill Extension means Meenaward Wind Farm Limited
Brexit mean the withdrawal of the United Kingdom from the
European Union
Board means the Directors of the Company
Borkum Riffgrund 1 means Borkum Riffgrund oHG
Boston Holding means Boston Holding A/S
Carrickallen means Carrickallen Wind Limited
CBA means Commonwealth Bank of Australia
CBI means the Central Bank of Ireland
CDP means Carbon Disclosure Project
CE means Conformité Européene (CE) Mark
CFD means Contract for Difference
CIBC means Canadian Imperial Bank of Commerce
Cloosh Valley means Cloosh Valley Wind Farm Holdings DAC and
Cloosh Valley Wind Farm DAC
Cnoc means Cnoc Windfarms Limited
Company means Greencoat Renewables PLC
Cordal means Cordal Windfarm Holdings Limited, Oak Energy Supply
Limited and Cordal Windfarms Limited
CPI means Consumer Price Index
DCF means Discounted Cash Flow
DS3 means Delivering a Secure, Sustainable Electricity
System
ECB means European Central Bank
EGM means Extraordinary General Meeting of the Company
Erstrask South means Erstrask Vind South AB
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 20 of the 27 Member States
which have adopted the euro as their common currency and sole legal
tender
EU SFDR means the European Union Sustainable Finance Disclosure
Regulation
FCA means Financial Conduct Authority
FIT means Feed-In Tariff
FRC means Financial Reporting Council
GAV means Gross Asset Value as defined in the Admission
Document
Garranereagh means Sigatoka Limited
Genonville means Ferme Eolienne de Genonville
GHG Protocol means Greenhouse Gas Protocol
Glanaruddery means Glanaruddery Windfarms Limited and
Glanaruddery Energy Supply Limited
Glencarbry means Glencarbry Windfarm Limited
Gortahile means Gortahile Windfarm Limited
Grande Piece means Ferme Eolienne de la Grande Piece
Group means the Company, Holdco, Holdco 1 and Holdco 2
Group Statutory Auditors means BDO
GRP Sweden means GRP Sweden Holding AB
Holdco means GR Wind Farms 1 Limited
Holdco 1 means Greencoat Renewables 1 Holdings Limited
Holdco 2 means Greencoat Renewables 2 Holdings Limited
Holdcos mean GR Wind Farms 1 Limited, Greencoat Renewables 1
Holdings Limited and Greencoat Renewables 2 Holdings Limited
H&S means Health and Safety
IAS means International Accounting Standards
IFRS means International Financial Reporting Standards
ING means ING Bank N.V.
Investment Management Agreement means the agreement between the
Company and the Investment Manager
Investment Manager means Schroders Greencoat LLP (formally
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
Joint Broker means RBC and J&E Davy
Killala means Killala Community Wind Farm DAC
Killala Battery means Bat project at Killala Community Wind Farm
DAC
Killhills means Killhills Windfarm Limited
Kokkoneva means Kestilan Kokkaneva Tuulivoima Oy
Knockacummer means Knockacummer Wind Farm Limited
Knocknalour means Knocknalour Wind Farm Limited
Kostroma Holdings means Kostroma Holdings Limited
KPI means Key Performance Indicator
Letteragh means Seahound Wind Developments Limited
Levelized Cost of Energy (LCOE) means a measure of the lifetime
costs divided by energy production
Lisdowney means Lisdowney Wind Farm Limited
Lost Time Incidents means an accident that results in time off
work or loss of productive work
Menonville means Ferme Eolienne de la Butte de Menonville
Monaincha means Monaincha Wind Farm Limited
NAB means National Australia Bank
Natwest means National Westminster Bank
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
O&M means operations and maintenance
Pasilly means Société d'Exploitation du Parc Eolien du
Tonnerois
PPA means Power Purchase Agreement entered into by the Group's
wind farms
PRI means the world's leading proponent of responsible
investment
PSO means Public Support Obligation
Raheenleagh means Raheenleagh Power DAC
RBC means Royal Bank of Canada
RCF means the Group's Revolving Credit Facility
REFIT means Renewable Energy Feed-In Tariff
RESS means Renewable Energy Support Scheme
R&D means Research and Development
Saint Martin means Parc Eolien Des Courtibeaux SAS
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
SFDR means Sustainable Finance Disclosure Regulation
Sliabh Bawn means Sliabh Bawn Holding DAC, Sliabh Bawn Supply
DAC and Sliabh Bawn Power DAC
SMSF means SMSF Holdings Limited
Solar PV means a solar photovoltaic system, which is a power
system designed to supply usable solar power by means of
photovoltaics
Soliedra means Parque Eolico Soliedra
Sommette means Parc Eolien Des Tournevents SAS
South Meath means SMSF Holdings Limited
SPVs means the Special Purpose Vehicles, which hold the Group's
investment portfolio of underlying operating wind farms
Taghart means Cregg Wind Farm Limited
TCFD means Task Force on Climate Related Financial
Disclosures
TSR means Total Shareholder Return
Tullahennel means Ronaver Energy Limited
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
Alternative Performance Measures
Performance Measure Definition
CO(2) emissions avoided The estimate of the portfolio's annual
per annum CO(2) emissions avoided through the displacement
of alternative generation, based on the
portfolio's estimated generation as at
the relevant reporting date.
Homes powered per annum The estimate of the number of homes powered
by electricity generated by the portfolio,
based on the portfolio's estimated generation
as at the relevant reporting date.
Generation The amount of energy generated by the
underlying SPVs (investments) in the
portfolio over the period.
NAV movement per share Movement in the ex-dividend Net Asset
(adjusting for dividends) Value per ordinary share during the year.
NAV per share The Net Asset Value per ordinary share.
Net cash generation The operating cash flow of the Group
and wind farm SPVs.
Premium to NAV The percentage difference between the
published NAV per ordinary share and
the quoted price of each ordinary share
as at the relevant reporting date.
Total return (NAV) The movement in the ex-dividend NAV per
ordinary share, plus dividend per ordinary
share declared or paid to shareholders
with respect to the year.
Total Shareholder Return The movement in share price, combined
with dividends paid during the year,
on the assumption that these dividends
have been reinvested.
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 Annual Report has been prepared for the Company as a whole
and therefore gives greater emphasis to those matters which are
significant in respect of Greencoat Renewables PLC and its
subsidiary undertakings when viewed as a whole.
[1] Gross cash generation before the repayment of project level
debt of EUR13.5 million.
[2] Post-acquisition of a 22.5% stake in the German Butendiek
offshore wind farm on 21 February 2023, Group Debt increased to 46%
of GAV.
[3] The Regulatory Technical Standards accompanying the EU
Sustainable Finance Disclosure Regulation.
[4] Regulation (EU) 2016/1011 of the European Parliament and of
the Council of 8 June 2016 on indices used as benchmarks in
financial instruments and financial contracts or to measure the
performance of investment funds and amending Directives 2008/48/EC
and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171,
29.6.2016, p. 1).
[5] Regulation (EU) 2018/842 of the European Parliament and of
the Council of 30 May 2018 on binding annual greenhouse gas
emission reductions by Member States from 2021 to 2030 contributing
to climate action to meet commitments under the Paris Agreement and
amending Regulation (EU) No 525/2013 (OJ L 156, 19.6.2018, p.
26).
[6] Regulation (EU) 2018/1999 of the European Parliament and of
the Council of 11 December 2018 on the Governance of the Energy
Union and Climate Action, amending Regulations (EC) No 663/2009 and
(EC) No 715/2009 of the European Parliament and of the Council,
Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU,
2012/27/EU and 2013/30/EU of the European Parliament and of the
Council, Council Directives 2009/119/EC and (EU) 2015/652 and
repealing Regulation (EU) No 525/2013 of the European Parliament
and of the Council (OJ L 328, 21.12.2018, p. 1).
[7] Regulation (EC) No 1893/2006 of the European Parliament and
of the Council of 20 December 2006 establishing the statistical
classification of economic activities NACE Revision 2 and amending
Council Regulation (EEC) No 3037/90 as well as certain EC
Regulations on specific statistical domains Text with EEA relevance
(OJ L 393, 30.12.2006, p. 1-39).
[8] Directive 98/70/EC of the European Parliament and of the
Council of 13 October 1998 relating to the quality of petrol and
diesel fuels and amending Council Directive 93/12/EEC (OJ L 350,
28.12.1998, p. 58).
[9] Directive 2000/60/EC of the European Parliament and of the
Council of 23 October 2000 establishing a framework for Community
action in the field of water policy (OJ L 327, 22.12.2000, p.
1).
[10] Directive 2008/98/EC of the European Parliament and of the
Council of 19 November 2008 on waste and repealing certain
Directives (OJ L 312, 22.11.2008, p. 3).
[11] Council Directive 2011/70/Euratom of 19 July 2011
establishing a Community framework for the responsible and safe
management of spent fuel and radioactive waste (OJ L 199, 2.8.2011,
p. 48).
[12] Directive 2009/147/EC of the European Parliament and of the
Council of 30 November 2009 on the conservation of wild birds (OJ L
20, 26.1.2010, p. 7).
[13] Council Directive 92/43/EEC of 21 May 1992 on the
conservation of natural habitats and of wild fauna and flora (OJ L
206, 22.7.1992, p. 7).
[14] Directive 2011/92/EU of the European Parliament and of the
Council of 13 December 2011 on the assessment of the effects of
certain public and private projects on the environment (OJ L 026,
28.1.2012, p. 1).
[15] Commission Delegated Regulation (EU) 2021/2139 of 4 June
2021 supplementing Regulation (EU) 2020/852 of the European
Parliament and of the Council by establishing the technical
screening criteria for determining the conditions under which an
economic activity qualifies as contributing substantially to
climate change mitigation or climate change adaptation and for
determining whether that economic activity causes no significant
harm to any of the other environmental objectives (OJ L 442,
9.12.2021, p. 1).
[16] Directive 2010/31/EU of the European Parliament and of the
Council of 19 May 2010 on the energy performance of buildings
(recast) (OJ L 153, 18.6.2010, p. 13).
This information is provided by RNS, the news service of the
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