TIDMTRIG
RNS Number : 7770H
Renewables Infrastructure Grp (The)
06 August 2021
6 August 2021
The Renewables Infrastructure Group Limited
("TRIG" or "the Company", a London-listed investment company
advised by InfraRed Capital Partners ("InfraRed") as Investment
Manager and RES ("Renewable Energy Systems") as Operations
Manager)
Interim Report for the six months ended 30 June 2021
H1 2021 Key Highlights
-- 114.3p NAV per share(1) , decreased by 0.9% since 31 December 2020 (115.3p)
-- GBP2,491m Directors' portfolio valuation(2) , up 12.6% since 31 December 2020 (GBP2,213m)
-- 9.2% total shareholder return since IPO(3) vs. 5.6% for the FTSE 250
-- 6.76p dividend target reaffirmed for the year to December 2021 (2020: 6.76p)
-- 1,941MW portfolio generation capacity(4) (31 December 2020 1,820MW)
-- GBP341m invested in period (H1 2020: GBP281m)
-- GBP240m equity capital raised (H1 2020: GBP120m)
Sustainability Key Highlights
-- 660,000 tonnes of CO(2) avoided(4,5) (H1 2020: 640,000)
-- Portfolio capable of powering 1.4m homes with clean energy(6)
-- Supporting 37 community funds
-- GBP1.1m budgeted for community contributions in 2021
-- 0.27 reportable lost time accidents per 100,000 hours worked
-- InfraRed has achieved an A+ PRI score for the sixth consecutive year(7)
Helen Mahy, CBE, Chairman of the Company, said:
"I am pleased to present a resilient set of results for the
first half of the year and reiterate the Company's dividend
guidance for the full year. As vaccination programmes accelerate in
TRIG's key markets, we have seen further opening of societies and
increase in economic activity, which we hope will be sustained.
Ahead of COP26, we are also witnessing momentum behind the
energy transition continue to build, with renewables to play a
central role in meeting these net-zero ambitions.
The strong participation shown by existing and new investors in
our fundraising in March continues to support the Company's
diversification. TRIG's strategy is wholly aligned with the climate
change agenda and continues to position us well to benefit from
Europe's journey to a net-zero carbon future."
Richard Crawford, Director, Infrastructure, InfraRed Capital
Partners said:
"In the first six months of the year, high power prices and
active portfolio management have helped to reduce the impact of
lower wind levels in the period, and regulatory and taxation
changes.
Renewables remains a highly attractive asset class. Our
disciplined approach to portfolio construction, focus on value
enhancement and responsible investment practises continue to serve
the Company well as we further diversify TRIG's portfolio."
Highlights Footnotes:
1. The Net Asset Value (NAV) per share as at 30 June 2021 is
calculated on the basis of 2,104,289,649 ordinary shares in issue
and to be issued as at 30 June 2021 including issues of ordinary
shares under the scrip dividend scheme and managers' shares (in
part payment of the management fee).
2. On an Expanded basis. Please refer to page 46 for an
explanation of the expanded basis.
3. On a share price plus dividends basis.
4. Based on portfolio performance during H1.
5. The committed portfolio is capable of powering 1.5 million
homes and saving around 1.6m tonnes of CO2 annually based on
average household electricity consumption figures and the IFI
Approach to GHG Accounting for Renewable Energy.
6 Based on the IFI Approach to GHG Accounting. Current
operational portfolio as at 30 June 2021.
7 Principles for Responsible Investment ("PRI") ratings are
based on following a set of Principles, including incorporating ESG
issues into investment analysis, decision-making processes and
ownership policies. More information is available at
https://www.unpri.org/about-the-pri .
Enquiries
InfraRed Capital Partners Limited +44 (0) 20 7484 1800
Richard Crawford
Phil George
Minesh Shah
Mohammed Zaheer
Maitland/AMO +44 (0) 20 7379 5151
Rhys Jones
Neil Bennett
Notes
The Company
The Renewables Infrastructure Group ("TRIG" or the "Company") is
a leading London-listed renewable energy infrastructure investment
company. The Company seeks to provide shareholders with an
attractive long-term, income-based return with a positive
correlation to inflation by focusing on strong cash generation
across a diversified portfolio of predominantly operating
projects.
TRIG is invested in a portfolio of over 75 wind, solar and
battery storage projects with aggregate net generating capacity of
over 1.9GW, enough renewable power for over one million homes and
displacing over 1.3 million tonnes of carbon emissions per annum.
TRIG is seeking further suitable investment opportunities which fit
its stated Investment Policy.
Further details can be found on TRIG's website at
www.trig-ltd.com .
Investment Manager
TRIG's Investment Manager is InfraRed Capital Partners Limited
("InfraRed") which has successfully invested in over 200
infrastructure projects since 1997. InfraRed is a leading
international investment manager focused on infrastructure and real
estate. It operates worldwide from offices in London, Hong Kong,
New York, Seoul, Sydney and Mexico City. With over 190
professionals it manages in excess of USD 12 billion of equity
capital in multiple private and listed funds, primarily for
institutional investors across the globe. InfraRed is authorised
and regulated by the Financial Conduct Authority.
The infrastructure investment team at InfraRed consists of over
85 investment professionals, all with an infrastructure investment
background and a broad range of relevant skills, including private
equity, structured finance, construction, renewable energy and
facilities management.
InfraRed implements best-in-class practices to underpin asset
management and investment decisions, promotes ethical behaviour and
has established community engagement initiatives to support good
causes in the wider community. InfraRed is a signatory of the
Principles of Responsible Investment.
Further details can be found on InfraRed's website at
www.ircp.com .
Operations Manager
TRIG's Operations Manager is RES ("Renewable Energy Systems"),
the world's largest independent renewable energy company.
RES has been at the forefront of wind energy development for
over 38 years, with the expertise to develop, engineer, construct,
finance and operate projects around the globe. RES has developed or
constructed onshore and offshore wind, solar, energy storage and
transmission projects totalling more than 17GW in capacity. RES
supports over 6.3GW of operational assets worldwide for a large
client base. Headquartered in Hertfordshire, UK, RES is active in
10 countries and has over 2,000 employees engaged in renewables
globally.
RES is an expert at optimising energy yields, with a strong
focus on safety and sustainability. Further details can be found on
the website at www.res-group.com.
Webcast details
TRIG will be presenting its results for the first half of 2021
at 09:00 UK time today. The presentation will be broadcast live and
an archive version of the presentation will be made available on
the Group's website. To register to attend please email
Maitland/AMO at trig-maitlandamo@maitland.co.uk
1.2 Chairman's Statement
I am pleased to present the 2021 Interim Report for The
Renewables Infrastructure Group Limited ("TRIG" or "the Company").
The NAV as at 30 June 2021 was 114.3p per share and the NAV total
return for the first half of 2021 was 2.0%.
This performance reflects the Managers' continuing work to
enhance our portfolio, as well as sustained market demand for
renewable energy generating assets, and an increase in near-term
forward power prices. These gains have been partially offset by
reductions in medium- to long-term power price forecasts, below
average weather resource in the period, expectations for wider
reaching cuts to older feed-in tariffs in France and the increase
in future corporation tax rates in the UK.
After a challenging start to the year, economic activity in
TRIG's investment markets has accelerated, thanks in part to the
rollout of Covid-19 vaccination programmes. As ever, the health,
safety and welfare of the workforces of our Managers, on our sites
and in our supply chains remains paramount. We have continued to
operate Covid-aware practices and maintain our focus on the health
and safety of contractors on our sites.
Investment risk mitigation through careful portfolio
construction is a key focus of InfraRed (our Investment Manager).
Acquisitions have further diversified TRIG's portfolio through the
Beatrice offshore wind farm, in the UK, and the Grönhult, Ranasjö
[1] and Salsjö(1) projects, three onshore in-construction wind
farms in Sweden. With these acquisitions and once the projects in
construction become operational, TRIG's generation capacity will
grow to 1.9GW [2] . TRIG's current operational portfolio is capable
of powering 1.4 million homes and avoiding approximately 1.5
million tonnes of carbon emissions per annum [3] .
Supplier working conditions have been brought into focus this
year, particularly in relation to the manufacture of solar PV
panels. Social responsibility considerations are integral to the
Company, including InfraRed's investment process, and our Managers'
risk-based approach to due diligence. Their due diligence process
includes seeking transparency over the supply chain of components
being used in construction projects to ensure that equipment
purchased is responsibly manufactured and sourced. In doing so, we
look to exert what influence we can to improve the supply
chain.
The climate change agenda continues to develop, with numerous
countries increasing their decarbonisation commitments through the
US-led virtual climate summit, coinciding with the 2021 Earth Day,
and further policy developments expected ahead of the UK-hosted
26th United Nations Climate Change conference (COP26) in November
2021. InfraRed and RES (our Operations Manager) continue to
actively engage in the policy debate and we made submissions to the
UK Government's Enabling a High Renewable, Net Zero Electricity
System: Call for Evidence.
Your Board of Directors remains grateful for the support of
TRIG's shareholders, demonstrated through the Company's successful
fundraise of GBP240m in the first quarter of 2021, which was open
to existing and new institutional and retail investors. The
proceeds of this fundraise were invested in the Beatrice offshore
wind farm, which reduced the Company's overall sensitivity to power
price movements and provided further economies of scale. Creating
off-market, bilateral opportunities through well-established
relationships and TRIG's reputation for deliverability, as was the
case for the Beatrice and Twin Peaks investments, is core to the
development of attractive investment opportunities.
Financial Results
The Company's NAV per share was 114.3p at 30 June 2021, a
decrease of 0.9% to the NAV per share at 31 December 2020 of
115.3p. TRIG's NAV total return from IPO to 30 June 2021 was 7.9%,
including dividends paid.
After operating and finance costs, net cash flow covered the
cash dividend 1.28 times [4] , or 2.1 times before the impact of
repaying project-level debt. TRIG has maintained its loan
amortisation profile, continuing to repay project level debt over
the remaining subsidy periods. Interest rates are predominantly
fixed, thereby reducing the risk of rising costs associated with
future interest rate increases.
Investment Activity
Portfolio construction and the generation of attractive
risk-adjusted returns are key to InfraRed's assessment of
opportunities. The offshore wind farms in the portfolio are less
sensitive to changes in power price forecasts than the portfolio
average. They have enabled the Investment Manager to add
unsubsidised higher returning projects into the portfolio, such as
Twin Peaks and Grönhult, whilst maintaining the portfolio's overall
power price sensitivity. Further enhancements we are seeking to
achieve through acquisitions include:
Added geographic diversification to the portfolio, thereby
diversifying the Company's exposure to regulatory regimes, power
price markets and annual weather system variations;
Added technological diversification with other renewables and
related technologies, including in solar and storage, where we can
identify suitable opportunities;
Opportunities to enhance value by de-risking projects through
the construction phase; and
Management of overall leverage levels; for example the Swedish
additions, which are merchant projects, are unlevered.
TRIG's acquisition focus remains unchanged, targeting renewables
and related infrastructure investments (including onshore wind,
offshore wind, solar PV and storage technologies) in the UK and
Europe (including France, Germany, Ireland, and the Iberian and
Nordic regions). In particular, InfraRed is currently in advanced
discussions to acquire a solar PV investment opportunity in Iberia
for the Company, the completion of which remains subject to ongoing
due diligence.
InfraRed continues to monitor technologies whose financial
performance is driven by intermittency of renewables and power
price volatility, thereby having low or negative correlation to
power price forecasts. Investments which fall into this category
are those that provide storage or other generation flexibility -
batteries being one example. In the medium term, green hydrogen
produced using renewable electricity is likely to enable faster
decarbonisation by being capable of longer-term storage of
renewable-generated energy and having a variety of uses in industry
and heavy transportation.
Portfolio Performance
The performance of TRIG's portfolio during the period was
impacted by low weather resource, particularly in Great Britain,
Ireland and Germany. Production was 12% below budget.
Power prices captured in the period, which averaged GBP63.4/MWh
in GB, and near-term power price forwards were sharply higher than
forecast. Meanwhile, medium- to long-term power price forecasts
have reduced somewhat.
The drivers of higher power prices in near-term forecasts
include high global gas pricing following a long, cold winter in
Europe and East Asia and supply constraints from Russia together
with higher carbon pricing in the EU. This is particularly the case
in Germany, which influences power prices across much of Northern
Europe, where the carbon allowance is being cut rapidly, reflecting
the country's increasing resolve to decarbonise. The medium- to
long-term forecasts have continued to edge lower as greater
renewables rollout is incorporated into projection models without
the same level of increase in assumed flexible demand, including
from electric vehicles and domestic heating.
Further UK asset-level power price fixes have been entered into
for 2021 and 2022. Additional fixed prices have also been secured
in Sweden, Ireland and France to capture similar market trends
across their merchant markets. Over the next five years,
approximately 73% of portfolio revenues are subsidised and benefit
from power price fixes.
The proposals for retroactive cuts to historically-set French
feed-in tariffs for solar projects reported in TRIG's 2020 Annual
Report have developed such that a greater number of projects may be
affected than was expected at the 2020 year end. Affected solar
projects are likely to see their feed-in tariffs reduced, adversely
impacting their equity value. As such, we have increased the
provision against these investments by approximately 1.4p/share. We
are taking action to manage the impact on the portfolio, including
working to secure exemptions for some of the affected projects
which, among other things, provide important supply resilience to
French island grids. Legal action may become appropriate. The
market does not expect the action to extend to projects that
secured tariffs through auction processes.
As reported in June 2021, following routine inspections at the
Merkur offshore wind farm, generation was paused as a precautionary
safety measure after stress fatigue in the structure of the
emergency evacuation platform on some turbines was identified. A
solution is being developed that will allow the wind farm to resume
operating safely and effectively for the long term. The cost of
remediation remains with the manufacturer, and we continue to
expect lost revenues to be compensated by the contractual
protection mechanism. No material financial impact is expected on
the Company.
The portfolio's overall asset availability was close to budgeted
levels.
TRIG's construction assets are progressing well. The
construction of Blary Hill, in Scotland, remains on target to
complete in Q1 2022. In Sweden, Grönhult commenced construction on
time in March 2021 and is due to start operations by the end of
2022, while the Twin Peaks projects are scheduled to commence
construction in Q3 2021. Following a pause in the construction of
the Vannier project in France in 2020 due to a challenge against an
environmental permit, a recent court ruling has allowed
construction to restart, with contractual protections compensating
the project for additional costs related to the suspension.
Corporate Governance
Board composition is regularly discussed by the Board's
Nomination Committee to ensure that the Company's non-executive
Directors have a diverse range of relevant expertise and experience
to apply to the oversight of the Company and to engage effectively
with the Managers.
I am pleased to welcome John Whittle to the Board. He was
appointed as a Non-Executive Director in July 2021, and brings
significant infrastructure investment and accounting experience.
John will succeed Jon Bridel as Audit Committee Chairman in due
course upon the retirement of Jon from the TRIG Board in 2022.
John's appointment is the first step in the Nomination
Committee's recruitment and orderly succession plan as the original
Directors approach their ninth anniversaries with TRIG. This plan
incorporates appropriate handover periods, the principles and
provisions of the AIC Code [5] , and the recommendations of the
Hampton-Alexander and the Parker Reviews.
Sustainability
The Board believes investing responsibly and the consideration
of environmental, social and governance ("ESG") factors is
essential to maintain a sustainable business model over the long
term. Our ESG objectives are designed to improve outcomes for
TRIG's shareholders and the portfolio's stakeholders. We report
against these objectives in our recently published 2021
Sustainability Report, available on the Company's website, and
within this 2021 Interim Report.
The GBP500,000 TRIG Covid-19 Community Fund has now supported
over 60 community organisations [6] . These funds are in addition
to the circa GBP1.1m [7] that the portfolio companies contribute to
their local communities each year.
In line with our commitment to the UN Sustainable Development
Goal 13 Climate Action, TRIG's Managers continue to expand their
assessment of the potential impact of climate change and our TCFD
[8] reporting. During the course of this year, RES is screening the
portfolio on an asset-by-asset basis for the potential impact of
the physical risks of adverse climate change over the coming
decades, along with the associated mitigants.
The Board's sustainability ethos is shared by the Managers
within their wider businesses. InfraRed has published its 2021
Sustainability Report, its infrastructure business has maintained
its "A+" rating in its PRI [9] assessment for the sixth consecutive
year and it is a signatory of the Net Zero Asset Managers
Initiative; and RES has produced its third annual Power for Good
report and is a signatory of the Science Based Targets initiative
[10] .
Principal Risks and Uncertainties
The Board and the Managers monitor and, where practicable,
mitigate a range of risks to TRIG's strategy. As set out in the
Company's 2020 Annual Report, the main risks for TRIG continue to
be:
Regulation: government or regulatory support for renewables
changing adversely;
Power prices: electricity prices falling or not increasing as
expected; and
Production performance: portfolio electricity production falling
short of expectations, including as a result of unfavourable
weather and asset unavailability.
Geographical and technological diversification across TRIG's
portfolio, and utilising the specialised expertise of both
Managers, are key to TRIG mitigating these risks.
Medium- to long-term power price forecasts are heavily
influenced by expectations in respect of the route to net zero. We
are seeing two principal philosophies being adopted, which we set
out below.
One route assumes accelerated deployment of renewables such that
the growth in flexible demand does not keep up. As we have seen in
the UK power price forecasts, this has the impact of lowering the
forecast power price curve as renewables become the marginal
producer more often. However, this approach can only take
decarbonisation so far, as the investment case to install new
renewables generation capacity becomes more challenging.
Decarbonisation of heating, industry and transport, which needs to
accelerate, is dependent on their electrification or transition to
zero-carbon fuels such as green hydrogen.
Another path is to reduce the availability of carbon allowances
and expand the sectors of the economy they encompass. This is the
method being adopted in Germany. This will increase the cost of
carbon-emitting generation, which in the medium term will provide
support to power prices and make the deployment of unsubsidised
renewables economically viable. This could provide a bridge to a
future where there are few carbon emitting generators setting the
power price and flexible demand has increased to meet the supply
from renewables.
We believe that a balanced blend of these two approaches,
working dynamically together, will result in the best outcomes.
Outlook
2021 looks to be a pivotal year for the climate change agenda.
The United States has re-joined the Paris climate agreement,
countries around the world have accelerated their decarbonisation
goals and the UK will host COP26 in November. This action is
supplemented with an ever-growing investor focus on sustainability
considerations and companies setting their own net-zero goals.
TRIG's strategy remains wholly aligned with this transition,
having invested over GBP2.5bn into renewable energy projects since
IPO. The revolution in the energy systems across Europe present
significant opportunities for TRIG whilst sustainability
considerations and the attraction of yield are increasing asset
pricing. In that context, portfolio construction and investment
discipline are key. The Board seeks value across the spectrum of
our investment opportunities and value accretion from the active
management of TRIG's portfolio.
We remain confident that TRIG's business model of responsible
investment practices, careful portfolio construction and enhancing
value for stakeholders will continue to generate sustainable
returns for investors whilst contributing towards a net-zero carbon
future.
Helen Mahy CBE
Chairman
5 August 2021
2.1 Summary Information on TRIG
The Renewables Infrastructure Group ("TRIG") was the first
geographically and technologically diversified investment company
investing in renewable energy infrastructure listed on the London
Stock Exchange, completing its IPO in 2013. The Company was the
first of its kind to become a member of the FTSE-250 Index in 2015.
As at 30 June 2021, TRIG has a market capitalisation of
approximately GBP2.7 billion [11] .
With the support of shareholders, TRIG's growth since IPO has
enabled the Investment Manager, InfraRed, to diversify the
portfolio across technologies (onshore wind, offshore wind, solar
PV and battery storage) and geographies (UK, Ireland, France,
Germany and Sweden). We offer investors access to the largest and
most diverse renewables portfolio within the listed investment
company peer group.
Our two experienced managers, InfraRed Capital Partners and
Renewable Energy Systems, work together to provide TRIG's
shareholders with best-in-class investment management and
operational management.
InfraRed Capital Partners Limited ("InfraRed") is TRIG's
Investment Manager. The role of InfraRed is to provide day-to-day
investment management of TRIG. InfraRed undertakes investment
activities, including acquisitions and financial structuring within
parameters set by the Board, as well as financial management and
reporting, including portfolio valuations and investor relations.
InfraRed also advises on strategy, risk management and funding
requirements of the Group.
InfraRed is a leading international investment manager
specialising in infrastructure and real estate. With over 190
employees and offices in London, New York, Seoul and Sydney,
InfraRed has a track record of around 20 years in raising and
managing infrastructure funds, with over US$10m of infrastructure
equity under management. InfraRed is also Investment Manager to
HICL Infrastructure Company Limited, the largest London-listed
infrastructure investment company with a market capitalisation of
GBP3.2bn as at 30 June 2021. Further details can be found on the
website at www.ircp.com .
In July 2020 Sun Life Financial Inc. (together with its
subsidiaries and joint ventures, "Sun Life") purchased a majority
stake in InfraRed. InfraRed now operates as a distinct business
under SLC Management, Sun Life's alternative asset management
business. The Sun Life acquisition will provide further support to
InfraRed in its role as Investment Manager to TRIG over the coming
years and InfraRed's management resources for TRIG will be
unaffected. Sun Life is a leading international financial services
organisation providing insurance, wealth and asset management
solutions to individual and corporate clients. As at 30 September
2020, Sun Life had total assets under management of circa $1,186
billion. For more information please visit www.sunlife.com .
RES ("Renewable Energy Systems Limited") is TRIG's Operations
Manager. RES is the world's largest independent renewable energy
company having developed and/or constructed over 21GW of projects,
with operations in 10 countries and over 3,000 employees globally.
RES is a pure-play renewables company with the expertise to
develop, construct and operate projects around the globe across a
range of technologies including onshore and offshore wind, solar,
energy storage and transmission and distribution.
A large, dedicated team of RES people provide portfolio-level
operations management to the Company and its subsidiaries. RES also
draws on the experience and skills of a much wider pool of
expertise from within the company in order to fulfil its Operations
Manager role, utilising nearly four decades of renewables
experience to provide project-level services to TRIG and support
the evaluation of investment opportunities for the Group.
RES has a strong focus on safety and ESG (Environment, Social,
Governance) and provides a complete range of services for
renewables projects - from development and design, through
construction and engineering, to financial, technical and
commercial asset management services, and operations and
maintenance services. Further details can be found at
www.res-group.com .
RES has joined GWEC's Global Wind Energy Coalition and will be
hosting an Energy Transition Hub with RUK and EUK from its office
in Glasgow overlooking the 2021 United Nations Climate Change
Conference (COP26) venue. COP26 is an opportune moment, important
for the industry to be united with one voice and a strong
intervention about the key role wind and solar can play in the
global energy transition.
2.2 Market Developments & Opportunities
Power demand
As economies across TRIG's key markets begin to emerge from the
pandemic, power demand has increased in light of easing
restrictions on movements and businesses. In the last three months
of the period, compared to pre-pandemic levels, power demand in
Sweden and the UK has fully recovered, with Germany only slightly
below [12] . France and Spain remain further below pre-pandemic
levels, reflecting tighter lockdown restrictions. If vaccination
programmes prove less effective against Covid-19 variants, this
trajectory of demand recovery may change.
In the UK, TRIG's largest investment market, where demand is now
above pre-pandemic expectations, the comparison between 2020 and
2021 demand levels is very significant. Since the partial easing of
restrictions on 12 April, there has been a very clear increase in
electricity demand compared to 2020 in which April saw the lowest
levels of electricity demand as the UK experienced its tightest
lockdown restrictions of the last year.
With increasing demand for electricity now forecast, we do not
foresee a sustained or structural decrease in power demand. As
economies continue to accelerate net-zero ambitions and implement
significant economic stimulus packages, power price forecasters
expect power demand to increase by over 50% by 2050.
Significant economic sectors are dependent on carbon emitting
fuels, such as heavy-duty road transport, home and business
heating, and aviation. Electrification of these sectors, supplied
by renewable energy supply, is critical to achieving net-zero
ambitions. In the UK, we have actively engaged, via the Investment
Manager, InfraRed and Operations Manager RES, with the Call for
Evidence issued in conjunction with the publication of the UK
Government's Energy White Paper. We are pleased to see the UK
Government setting out a direction of travel for energy policy and
look forward to more detail in respect of economy-wide
electrification.
Power prices
Resumption of the production of commodities has lagged economic
activity, resulting in a steep increase in commodity prices over
the first six months of 2021. Oil and gas prices have increased by
over 40% respectively. With gas-fired generation often setting the
prices of electricity in many of TRIG's key markets, this has
resulted in a significant increase in near-term power prices. Low
European gas storage levels and increasing demand in East Asia
prompted by cold weather combined with a reduction in supply and
other factors have led to expectations of elevated power prices for
the next 3 years.
Further support for near-term power prices comes from carbon
pricing. The EU Emissions Trading Scheme ("ETS") carbon prices
doubled to approximately EUR50 per tonne in H1 2021 from an average
of EUR25 per tonne in 2019/20. The expected tightening of the EU
ETS rules, reduction of free allowances, and increased energy
demand due to cold weather were the most significant reasons for
this. Free allowances are set to decrease to 75% of current levels
by 2025 when European Commission revises the EU ETS mechanism in
the summer, though there is potential for the decrease to be higher
with the EU having increased its emission reduction commitments by
2030 to at least 55%, compared with a target of 40% previously. The
UK ETS is currently following a similar path to the EU ETS and
given the shared fundamentals around emissions reductions targets,
power price forecasters expect similar upwards pressure to
materialise on the UK ETS price.
Forecast power price curves published over the first six months
of 2021 have reduced by up to 10% over the longer term. This is as
a result of increases to renewables build-out assumptions,
especially in the UK, offset by stronger near-term power
prices.
Within TRIG's portfolio, 76% of revenues generated in the next
12 months are fixed as a result of a significant portion of
portfolio revenues arising from subsidies and other fixed revenues,
including hedging. Further ahead, 73% of forecast revenues are
forecasted to arise from fixed pricing at Dec '25 and 57% at Dec
'40, giving strong revenue visibility over the coming years.
Portfolio diversification
Portfolio diversification is a strategic pillar of the Company.
We believe that having a broad spread of high-quality assets across
geographies and technologies with a low level of single asset
concentration is essential to building a robust and sustainable
portfolio. During 2021 we have continued to make progress in this
area with the acquisition of three construction-ready onshore wind
farm projects in Sweden (Ranasjö and Salsjö wind farms known as
"Twin Peaks" and the Grönhult wind farm). The construction on all
three projects is being managed by experienced partners who are
experts in the Nordic markets, with Grönhult being developed by
Vattenfall and Ranasjö and Salsjö being developed by Arise. The
projects also have turbine supply and maintenance agreements with
Vestas (Grönhult) and Siemens (Twin Peaks). The Nordic region is
attractive to TRIG for investment given the high level of energy
resource and favourable geographic and planning environments. These
projects will not have subsidised revenues. RES will provide expert
oversight of the Swedish construction projects in the Owner's
Engineer role.
The Company is also evaluating investment opportunities in the
Iberian peninsula, and has one opportunity in the Solar sector in
Iberia at an advanced stage of negotiations. The Iberian economies
have shown strong performance in recent years since the European
Sovereign Debt Crisis and the region's rich energy resource and
favourable planning environment make project economics attractive
without recourse to government subsidies.
Whilst this would represent a first investment in Iberia for
TRIG, InfraRed has been investing in the region and is currently
invested in a 1.5GW development portfolio in Spain through a
private fund. With a strong team of Spanish- and
Portuguese-speaking professionals at InfraRed active in the region,
this project sits well within TRIG's strategy of focusing on
regions where its Managers have expertise.
This investment would be in line with TRIG's strategic pillar of
diversification. A well-diversified portfolio by geography,
technology and revenue type insulates the portfolio from the impact
of localised risks such as regulatory, policy or market changes as
well as single asset failure and reduces year-on-year
volatility.
Solar PV Supply Chain
Renewable energy from solar PV generation is essential to
Europe's decarbonisation plans, especially within the higher
irradiation areas of Southern Europe, including the Iberian
Peninsula, if the EU is to reach net-zero emissions by 2050. Human
rights-related issues in the supply chain of solar panels are a
significant challenge for the solar industry. TRIG has a 'zero
tolerance' stance on modern slavery and believes that robust
engagement provides the best path to addressing the human rights
challenges present in the industry and improving conditions.
Following allegations that certain companies in China's Xinjiang
province are involved in the production of solar panel equipment
with the use of Uyghur forced labour, InfraRed is carrying out
detailed supply chain due diligence ahead of the potential
investment in Iberia. InfraRed's approach is incorporating detailed
and rigorous assessments of the supply chain for the panels and
materials used in the project.
The overriding objective is to achieve improvement in human
rights within the supply chain. As an investor and working with our
local development and construction partners we believe we can
influence what is considered acceptable. With industry alignment,
such engagement can lead to meaningful improvements in the human
rights record of the solar panel supply industry.
French solar tariff change
As reported in the 2020 Annual Report, the French parliament had
been discussing proposals to amend certain pre-existing French
solar tariffs awarded at relatively high levels compared to current
tariffs. The available information suggested that only older
projects that became operational before 2010 would be caught.
Additional information now indicates that the changes will
impact all assets with tariffs awarded under legislation from 2010
or earlier, not only those that became operational before 2010 -
extending the impact. For certain assets, such as those located on
the French islands/in overseas departments and those integrated
into buildings or projects which are agricultural in nature, the
Managers are identifying exemptions and mitigations that may
apply.
Moreover, given the retrospective nature of the tariff changes
we expect there to be significant legal challenges to the
legislation. The market does not expect the action to extend to
projects that secured tariffs through auction processes.
It is likely that this issue will take some time to resolve and
for the final outcome to become clear. Nevertheless, the Company
has made a provision equivalent to 50% of the value of the projects
which may be affected. This reduced the NAV by approximately
GBP28.7m (1.4p/share) during the period. The remaining valuation of
the affected assets is 1.4% of portfolio value, as at 30 June
2021.
Operational update - Merkur
As announced on 21 June 2021, routine inspections late in the
period at Merkur identified signs of stress fatigue on certain
areas of the support structure of the Helihoist on some of the 6MW
wind turbines. Generation at the wind farm was paused as a
precautionary safety measure at the time whilst the root cause of
the issue was being investigated. Since those inspections,
investigations have enabled a number of turbines to be returned to
service with remedial works to follow.
It is anticipated that the remedial works will be undertaken in
two phases. In the first phase, an interim solution is being
finalised in conjunction with the relevant authorities. The second
phase will address the longer-term solution and is expected to be
implemented over the summer of 2022.
The turbines are under warranty and service contract with the
manufacturer. Contractual provisions include a mechanism to protect
lost revenue whilst turbines are not operational, subject to a cap.
It remains our expectation that the cap will not be exceeded and
therefore no material financial impact is expected to the
Company.
2.3 Portfolio
As at 30 June 2021, including investment commitments, the TRIG
portfolio comprised 79 investments in the UK, Republic of Ireland,
France, Sweden and Germany, including 50 wind projects, 28 solar
photovoltaic projects and one battery storage project.
Net Capacity
Project Market (Region)(1) (MW) Year Commissioned3
Onshore wind Farms
Roos GB (England) 100% 17.1 2013
Grange GB (England) 100% 14.0 2013
Tallentire GB (England) 100% 12.0 2013
Garreg Lwyd GB (Wales) 100% 34.0 2017
Crystal Rig 2 GB (Scotland) 49% 67.6 2010
Hill of Towie GB (Scotland) 100% 48.3 2012
Mid Hill GB (Scotland) 49% 37.2 2014
Blary Hill4 GB (Scotland) 100% 35.0 2022
Paul's Hill GB (Scotland) 49% 31.6 2006
Crystal Rig 1 GB (Scotland) 49% 30.6 2003
Solwaybank GB (Scotland) 100% 30.0 2020
Green Hill GB (Scotland) 100% 28.0 2012
Little Raith GB (Scotland) 100% 24.8 2012
Rothes 1 GB (Scotland) 49% 24.8 2005
Freasdail GB (Scotland) 100% 22.6 2017
Rothes 2 GB (Scotland) 49% 20.3 2013
Earlseat GB (Scotland) 100% 16.0 2014
Meikle Carewe GB (Scotland) 100% 10.2 2013
Neilston GB (Scotland) 100% 10.0 2017
Forss GB (Scotland) 100% 7.5 2003
Altahullion SEM (N. Ireland) 100% 37.7 2003
Lendrum's Bridge SEM (N. Ireland) 100% 13.2 2000
Lough Hill SEM (N. Ireland) 100% 7.8 2007
Pallas SEM (Rep. of Ireland) 100% 55.0 2008
Taurbeg SEM (Rep. of Ireland) 100% 25.3 2006
Milane Hill SEM (Rep. of Ireland) 100% 5.9 2000
Beennageeha SEM (Rep. of Ireland) 100% 4.0 2000
Haut Vannier(4) France (North) 100% 43.0 2022
Venelle France (North) 100% 40.0 2020
Epine France (North) 100% 36.0 2019
Rosières France (North) 100% 17.6 2018
Energie du Porcien France (North) 42% 16.3 2012
Montigny France (North) 100% 14.2 2018
Les Vignes France (North) 42% 5.2 2009
Fontaine-Mâcon France (North) 42% 5.1 2011
Haut Languedoc France (South) 100% 29.9 2006
Haut Cabardes France (South) 100% 20.8 2006
Cuxac Cabardes France (South) 100% 12.0 2006
Roussas-Claves France (South) 100% 10.5 2006
Rully France (North) 42% 5.0 2010
Val de Gronde France (North) 37% 4.5 2011
Jädraås Sweden 100% 212.9 2013
Grönhult(4) Sweden 100% 67.0 2022
Twin Peaks - Salsjö4 Sweden 50% 77.5 2024
Twin Peaks - Ranasjö4 Sweden 50% 43.4 2024
Total onshore wind at
30 June 2021 1,331.4
Offshore Wind Farms
East Anglia 1 GB (England) 14.3% 102.1 2020
Sheringham Shoal GB (England) 14.7% 46.6 2012
Beatrice GB (Scotland) 17.5% 102.9 2018
Merkur Germany 25% 99.0 2019
Gode Wind 1 Germany 25% 82.5 2017
Total offshore wind at
30 June 2021 433.1
Solar Photovoltaic Parks
Parley Court GB (England) 100% 24.2 2014
Egmere Airfield GB (England) 100% 21.2 2014
Stour Fields GB (England) 100% 18.7 2014
Tamar Heights GB (England) 100% 11.8 2014
Penare Farm GB (England) 100% 11.1 2014
Four Burrows GB (England) 100% 7.2 2015
Parsonage GB (England) 100% 7.0 2013
Churchtown GB (England) 100% 5.0 2011
East Langford GB (England) 100% 5.0 2011
Manor Farm GB (England) 100% 5.0 2011
Marvel Farms GB (England) 100% 5.0 2011
Midi France (South) 51% 6.1 2012
Plateau France (South) 49% 5.9 2012
Puits Castan France (South) 100% 5.0 2011
Chateau France (South) 49% 1.9 2012
Broussan France (South) 49% 1.0 2012
Pascialone France (Corsica) 49% 2.2 2011
Olmo 2 France (Corsica) 49% 2.1 2011
Santa Lucia France (Corsica) 49% 1.7 2011
Borgo France (Corsica) 49% 0.9 2011
Agrinergie 1 & 3 France (Réunion) 49% 1.4 2011
Chemin Canal France (Réunion) 49% 1.3 2011
Ligne des 400 France (Réunion) 49% 1.3 2011
Agrisol France (Réunion) 49% 0.8 2011
Agrinergie 5 France (Réunion) 49% 0.7 2011
Logistisud France (Réunion) 49% 0.6 2010
Sainte Marguerite France (Guadeloupe) 49% 1.2 2011
Marie Galante France (Guadeloupe) 49% 1.0 2010
Total solar at 30 June
2021 156.3
Battery Storage / Mixed
portfolio
Broxburn GB (Scotland) 100% 20.0 2018
Phoenix SAS5 France 0% - 2015
Total Portfolio at 30
June 2021 (79 assets) 1,940.8
Operating assets 1,674.9
Construction assets4 265.9
Total Portfolio at 30
June 2021 (79 assets) 1,940.8
Table Footnotes
1. SEM refers to the Irish Single Electricity Market.
2. This is TRIG's equity share of the nominal capacity of the
asset.
3. Where a project has been commissioned in stages, this refers
to the earliest commissioning date. For construction assets, this
refers to expected completion date.
4. Blary Hill, Haut Vannier, Grönhult and Twin Peaks (Ranasjö
and Salsjö) are under construction. Twin Peaks were investment
commitments as at 30 June 2021.
5. This investment is in the form of mezzanine level bonds where
the Company does not have an equity stake. The portfolio comprises
five onshore wind farms in Northern France with a combined capacity
of 74MW and four operational solar parks with battery storage
located on the islands of Corsica and La Réunion with a combined
capacity of 29MW ("the Portfolio"). All the Portfolio assets are
backed by the French government's feed-in tariff subsidy and have
an average year of commission of 2015. See section 2.2 for a
regulatory update on the French government's feed-in tariff.
Portfolio Diversification
The TRIG portfolio benefits from being diversified across
multiple jurisdictions, power markets and generating technologies
providing multiple revenue sources, as well as a variety of
geographic areas with differing meteorological conditions affecting
wind speeds and solar irradiation, reducing year-on-year generation
volatility. This is illustrated in the segmentation analysis below,
which is presented by committed project value as at 30 June
2021.
By Country/ Power Market (1,2)
England and Wales (GB) 26%
Scotland (GB) 32%
----
Northern Ireland (SEM) 3%
----
Republic of Ireland
(SEM) 3%
----
France 10%
----
Germany 11%
----
Sweden 15%
----
By Technology (1)
Onshore wind 59%
Offshore wind 32%
----
Solar PV 8%
----
Battery 1%
----
Table footnotes
1 Northern Ireland and the Republic of Ireland form a Single
Electricity Market, distinct from that operating in Great
Britain.
2 Segmentation is based on committed portfolio value, including
Twin Peaks (Ranasjö and Salsjö) and Grönhult.
Revenue Profile
TRIG is invested across several separate power markets: Great
Britain, the Single Electricity Market (of The Republic of Ireland
and Northern Ireland), France and Germany (which sit within the
main continental European power market) and Sweden (which sits in
the Nordic electricity market). This diversification of power
markets reduces portfolio-wide exposure to any single macroeconomic
driver, delivering lower year-on-year price volatility.
The TRIG portfolio has substantial near-term protection in cash
revenues from movements in wholesale power prices, as the portfolio
receives a high proportion of its revenue from selling electricity
generated via Power Purchase Agreements ("PPAs") with fixed prices
and from government subsidies such as Feed-in Tariffs ("FiTs"),
Contract for Differences ("CfDs"), Renewable Obligation
Certificates ("ROCs") or from other hedges.
In the longer term, based on its current portfolio, TRIG is
expected to have greater exposure to future wholesale electricity
prices as subsidies and contracts with pre-determined pricing run
off. As existing fixed-price contracts expire, the replacement
contracts may also have fixed-price elements, and any future
additions to the portfolio may have subsidies, decreasing the
merchant proportion.
2.4 Portfolio Performance
Capital Raising and Acquisitions
During the period, the Company raised gross proceeds of GBP240m
from an Initial Issue under the Company's Share Issuance Programme
announced on 5 March 2021.
In H1 2021, TRIG made investment commitments of GBP509m into new
projects (Beatrice offshore wind farm, Grönhult onshore wind farm
and Twin Peaks onshore wind farms). The Company made actual
investments in H1 2021 of GBP341m relating to Beatrice offshore
wind farm and construction commitments for Venelle, Blary Hill and
Grönhult.
Year Equity Net Capacity Revenue
Date Acquired Project Commissioned Share (MW) 1 Type 2 Location
January Beatrice offshore May 2019 17.5% 103MW Contract UK
2021 wind farm for Difference
February Grönhult onshore Expected 100% 67MW Wholesale Sweden
2021 wind farm Q4 2022 market
May 2021 Ranasjö and Expected 50% 242MW Wholesale Sweden
Salsjö onshore Q2 2024 market
wind farms (Twin
Peaks)
Table footnotes
1 This is TRIG's equity share of the nominal capacity of the
wind farm.
2 The main revenue type during the subsidy period, typically 15
or 20 years from start of operations. Thereafter all revenues are
wholesale power market. FiT refers to Feed-in Tariffs and CfD
refers to Contract for Differences.
Outstanding Commitments and Projects Under Construction
The Company has outstanding commitments of GBP177m relating to
the Ranasjö and Salsjö (Twin Peaks) and Grönhult construction
projects, broken down in the table below, by expected due date. The
Company's acquisition facility was drawn GBP129m as at 30 June
2021.
H2 21 2022 2023 2024 Total
Outstanding
Commitments
(GBPm) 21 82 50 24 177
Regarding construction, Blary Hill remains on target to complete
in Q1 2022 with turbines currently being installed. Grönhult
commenced construction on time in March and is due to start
operations by the end of 2022, whilst the Twin Peaks projects are
scheduled to commence construction in Q3 2021 with site-based work
starting in October. A recent court ruling in respect of Vannier
has allowed construction to restart with contractual protections
compensating the project for additional costs related to the
suspension.
By acquiring assets at an earlier stage, TRIG has been able to
access improved returns and a wider range of investment
opportunities. Moreover, TRIG has been able to seek value by
capitalising on its Managers' expertise in the construction
process: InfraRed as greenfield investor across its unlisted
vehicles and RES as a developer and/or constructor of over 21GW of
renewable energy assets globally.
Operations Summary
Portfolio production in the six months to 30 June 2021 was 12%
below budget, with both quarters being below budget and with a
greater budget divergence in Q2. The shortfall in generation was
predominantly due to low wind in the UK, Ireland and Germany. There
was also some impact from grid restrictions in Ireland and Germany
during the period. Asset availability was close to budget.
Each quarter, the veracity of each assets' production budget is
analysed utilising industry best practice, incorporating the latest
satellite wind and irradiation data, providing confidence in the
long-term production budgets, reflected below and within the
portfolio valuation.
Adjustments have been made to the generation values where such
losses are compensated, whether under insurance claims for lost
revenue, compensated grid curtailments from grid companies or
availability warranties from service providers.
Production
Actual Budget Performance
Technology Region MWh MWh vs Budget
Wind onshore GB 575,961 692,298 -17%
France 282,569 295,336 -4%
Scandinavia 277,414 275,250 1%
Ireland 146,414 183,211 -20%
Wind offshore GB 450,442 511,298 -12%
Germany 289,513 358,599 -19%
Solar UK & France 90,399 89,343 1%
Total Portfolio 2,112,712 2,405,335 -12%
GB Onshore Wind
GB Onshore Wind generation was 17% below budget due to poor wind
resource, particularly in Q2. Availability remains largely on
budget with strong operational performance on the majority of
sites.
Solwaybank experienced grid works in February, resulting in
temporary curtailment during high wind periods. These works also
led to a component failure, leaving the site offline for 10 days to
ensure compliance with the MoD curtailment obligations, which will
be compensated through the availability warranty. Aside from this,
Solwaybank performance has been good.
France Onshore Wind
Strong performance of the newer sites in Northern France
continues with good availability enabling them to benefit from the
consistent wind conditions in the period. Despite this, the French
region was 4% below budget overall as the harsher weather
conditions experienced at the older sites in the South during Q1
caused multiple component failures. As a result, Q2 saw increased
maintenance activities at these sites as the necessary corrective
works took place during lower wind periods.
Initial development work on the repowering of the older sites is
progressing, with a tender successfully ran to identify a turbine
provider for one of the sites, with two companies shortlisted.
Scandinavia Onshore Wind
Scandinavian production was 1% above budget in the first half of
the year, driven by strong operational performance with high
availability 2% above budget and despite losses relating to icing
build-up on turbine blades in January.
Ireland (NI & ROI) Onshore Wind
Production in Ireland was 20% below budget in the period,
predominately due to poor wind resource in Q2 across the region.
The impact of the low wind accounts for around 13% of the 20%
shortfall. The remaining variance is due to regional grid
constraint and curtailment in Q1, across both NI and ROI. TRIG
engages with the Irish Wind Energy Association (IWEA), with
representation from RES, to influence changes to infrastructure as
NI and ROI move towards a net-zero future. Despite regional
difficulties, there has been good site-based availability across
all sites, due to the proactive asset management approach on the
older Irish assets.
GB Offshore Wind
Production for the GB Offshore region was 12% below budget;
mostly due to lower-than-average wind speeds. During the period
there were some inter-array cable faults at Beatrice requiring the
wind farm to operate at a reduced capacity until the faults were
corrected. These losses are expected to be recovered under
warranty.
Germany Offshore Wind
Production for the German offshore region was 19% below budget
for the period due to lower than average wind speeds, grid outages
at Gode and the losses arising at Merkur as turbines were paused
due to stress fatigue identified late in the period. A solution is
being developed that will allow the Merkur offshore wind farm to
resume operating safely and effectively for the long term (see
section 2.2 for further details).
There have been some positive Covid-19 tests of operational
personnel but these have been managed to avoid significant impacts
on operations.
Solar
Production across the solar portfolio was 3% above budget in H1,
driven by good operational performance with availability on budget
at most sites, as well as solar energy resource being higher than
expected in the south-west of England. Production was impacted by
lower than expected solar resource in the south and east of England
as well as in France.
There has been significantly improved performance at two of the
Cornwall Solar sites following inverter reconfiguration works, with
production well above budget so far this year. Further analysis is
due later in the year to estimate the expected long-term energy
yield uplift.
Enhancements
Securing additional value for the portfolio is a core part of
RES' role as Operations Manager. RES collaborates with TRIG's asset
managers to identify, assess and implement innovative commercial
and technical enhancements, including the following examples from
the first half of 2021:
Wake steering trial commenced at Altahullion onshore wind farm
in Northern Ireland, seeking to increase the site's overall energy
yield through enhanced turbine control strategies that enable
turbines to operate collaboratively to minimise wakes on
surrounding turbines, thereby maximising production whilst also
minimising turbine loading.
Offshore operations and maintenance strategy enhancements being
investigated, including potential for significant cost savings
through shared access to maintenance vessels with neighbouring
offshore wind farms.
An innovative lifting approach developed through collaboration
with a crane supplier enabled Lendrum's Bridge onshore wind farm to
carry out a yaw ring replacement with a single crane - reducing
costs and avoiding peat disturbance that would otherwise result
from installing additional crane hardstanding capacity.
Optimised curtailment system applied to Garreg Lwyd onshore wind
farm in Wales that uses artificial intelligence to monitor and
interpret site conditions, to ensure turbines are only curtailed
during weather conditions in which shadow flicker can occur.
Vortex upgrades - the installation of turbine blade furniture -
applied at Little Raith onshore wind farm in Scotland to increase
energy yield, following successful pitch upgrades in 2020.
Original equipment manufacturer turbine upgrade offerings
assessed at newer acquisitions, including learnings made from
application to existing projects within the TRIG portfolio and
independent verification of yield uplifts.
Life extensions for TRIG projects continue to progress well,
utilising RES' specialist land, technical and commercial expertise.
Extended project life is considered as part of investment decisions
for upgrades, supported by detailed monitoring of site
performance.
Health and Safety
TRIG continues to actively promote the sharing of best practice
between site managers across the portfolio, with all-party meetings
to prompt discussions and establish collaborative relationships.
Topics include: the latest industry developments; relevant industry
safety alerts; areas of interest within the portfolio; risk
identification, mitigation and best practice.
The recent increased volume of minority interest investments in
larger offshore wind projects brings broader exposure to reportable
incidents involving vessels that occurred during the year.
There has been limited impact on portfolio performance from
Covid-19 to date, with the focus now shifting to manage the return
to 'normal' operations. The Managers have also worked to ensure
that their employees have been well supported during the pandemic -
more information on the wellbeing initiatives implemented can be
found in section 2.5.
2.5 Sustainability
TRIG's purpose is to generate sustainable returns from a
diversified portfolio of renewables infrastructure that contribute
towards a zero-carbon future. Our investments, many of which have
asset lives of 30 years or more, require a long-term view to be
taken and sustainable business practices applied, both in the
initial investment decisions and the subsequent asset
management.
Whilst TRIG's core business of generating renewable electricity
is central to a positive sustainability contribution, the TRIG
Board and its Managers recognise that TRIG's responsibility goes
beyond environmental considerations alone.
TRIG has four ESG goals which we seek to fulfil with every
investment we make and as we conduct ourselves on a day-to-day
basis:
TRIG's core SDG contributions [13]
TRIG's efforts are focused on the goals which align with our
sustainability goals. SDG contributions are made through our
investments and our impact on the local communities around our
assets. Primarily, the Company contributes towards SDG 7 Affordable
and clean energy, and SDG 13 Climate action.
Our ESG commitments have a broader reach, and overall TRIG
actively contributes to 11 out of the 17 SDGs, either at an asset
level or by the Company.
Affordable and Clean Energy
Our business is focused on owning and operating renewable energy
assets. By investing in renewables, TRIG is helping to provide
clean energy for all, as developers recycle capital into the
build-out of more renewables assets. TRIG's current operational
portfolio is capable of powering the equivalent of 1.4 million
homes with clean energy [14] and in the first half of 2021
generated 2,113GWh of renewable electricity.
Climate Action
TRIG's portfolio contributes towards a zero-carbon future and is
currently capable of offsetting more than 1.5 million tonnes of
CO(2) emissions annually [15] . Climate change measures are
integrated into TRIG's policies and planning as the Company seeks
to raise awareness of how to mitigate climate change. We are
assessing and reporting the climate-related risks and opportunities
associated with our assets, as well as taking steps to reduce the
carbon footprint of our portfolio.
Environmental
Mitigating Climate Change
TRIG's primary sustainability goal is to mitigate climate
change, and all investments in the portfolio contribute towards
this. TRIG's Investment Policy only permits investment in
renewables and other forms of infrastructure that is complementary
to, or supports the roll-out of, renewable energy generation.
Reducing carbon emissions is core to TRIG and its Managers.
Emissions are offset for business travel of the TRIG Board.
InfraRed is a certified CarbonNeutral(R) company and is a signatory
of the Net Zero Asset Managers Initiative; and RES, in addition to
being net-zero in their business operations since 2019, are now a
signatory of the Science Based Targets Initiative (SBTi), a leading
framework to drive best practice in emissions reductions. TRIG will
also be committing to the SBTi in 2021. This net-zero strategy
aligns with both the Managers' vision and TRIG's primary
sustainability goal. The targets set by TRIG will be independently
assessed every 5 years, and will cover all GHG emissions over
Scopes 1, 2, and 3.
H1 2021 performance
660,000 tonnes of carbon emissions avoided (H1 2020: 640,000)
[16]
1.2 million homes (equivalent) powered by clean energy (H1 2020:
1.0m)
2,113GWh of renewable electricity generated in the year (H1
2020: 2,141GWh)
72% portfolio sourcing electricity under Renewable Electricity
Supply Contracts (H1 2020: 57%) [17]
Our Managers' further commitments to mitigating climate
change
InfraRed
In July, InfraRed joined the Net Zero Asset Manager initiative -
a group of 128 international asset managers representing $43
trillion in assets committed to supporting the goal of net-zero GHG
emissions by 2050 or sooner.
As a signatory, InfraRed has committed to: Achieve net-zero
emissions for its investment portfolio by 2050 or sooner; and
within the next year, set interim targets for 2030 for a proportion
of its assets under management. A framework for both of these goals
is currently being developed.
Committing to net zero and joining the Net Zero Asset Manager
initiative is the next step in InfraRed's climate journey,
following becoming a carbon neutral firm in 2019 and a TCFD
supporter in 2020.
RES
At the end of 2020, RES committed to the Science Based Targets
initiative. As a renewable energy company, RES has been at the
heart of decarbonising the energy system since 1981. However, as
demonstrated by the increasing impact of extreme weather and over
120 countries committing to achieve net-zero emissions by 2050,
business as usual is no longer an option. Setting and working
towards science-based targets in-line with 1.5degC will be critical
to help protect against future business disruptions. By halving
global emissions in the next decade and reaching net-zero emissions
by 2050, we will be better placed to manage risk and build
resilience.
RES already measures emissions associated with the operational
business. Over the next two years they will capture more emissions
data in upstream and downstream business activities. Once a
baseline is set for full scope emissions, the process of setting
emissions reduction targets can begin.
TCFD Physical Risk Assessment Update
TRIG began voluntarily disclosing under the TCFD framework in
the Annual Report for the year ended 31 December 2019. This
disclosure was substantially qualitative and set the base for
future enhancement. Initial quantitative scenario analysis has been
included in TRIG's 2021 Sustainability Report.
We have since screened TRIG's portfolio for the risk of physical
damage due to climate change on a site-by-site basis, corresponding
to a high physical risk scenario under the Task Force on
Climate-Related Financial Disclosures (TCFD) guidance. In addition
to the mitigations set out, commercial protections are also used to
mitigate such risks, such as insurance, supplier warranties or
operation contractual scopes of work.
Potential physical risk Potential impact of physical Mitigation measures in
risk place
Wind and tropical storms Increased incidence or Solar acquisition due
intensity of wind and diligence of wind loading
tropical storms, due to assessments and embedded
increasing sea temperatures design principles, with
or otherwise. Such storms framework or foundation
may exceed the design reinforcements performed
wind-loading for solar where material risks identified.
sites with the potential Wind turbines' built-in
to uproot foundations, high wind speed protection
damage frameworks and systems protect the turbines
panels or be accompanied from damage, supported
by large hailstorms that by real-time remote monitoring
damage panels. Windspeeds and software updates including
above the design parameters high wind ride through
of the wind turbines and systems in some instances,
their cut-out generating which reduce the loading
wind speeds could cause on the turbine whilst
internal mechanical damage also increasing generation.
or external structural
damage to the wind turbine
blades.
------------------------------------ -------------------------------------
Lightning Increased frequency of Wind turbine exposure
lightning due to a positive to lightning is well understood
correlation with short-term with extensive industry
surface temperatures, experience of lightning
shift of lightning frequency protection systems accompanied
from the tropic region by associated testing
to the middle latitudes, and maintenance regimes.
or due to other reasons. Offshore turbines benefit
Wind turbine blades can from the knowledge gained
be susceptible to lightning onshore, with increasingly
damage through to severe sophisticated protection
structural damage or destruction systems installed.
of a blade. Offshore turbines
may be more susceptible
to damage due to salt
build-up reducing the
efficiency of lightning
protection systems.
------------------------------------ -------------------------------------
Flooding Flash flooding due to Solar acquisition due
increased intensity of diligence of exposure
rainfall caused by higher to flooding and installed
temperatures. Solar sites mitigations including
are generally considered drainage systems.
to be more exposed to
flooding due to their
larger footprint, high
volume of equipment mounted
close or below ground
level, and with local
topography and geology
also a consideration.
------------------------------------ -------------------------------------
Fire Wildfires of ground accumulations Some habitat management
of peat and dead vegetation, plans include maintained
small vegetation on the firebreaks in accordance
surface, or forestry and with the site risk assessments.
shrub crown fires, can Monoculture forestry
result in fire damage is removed from the immediate
to the renewable asset vicinity of each wind
or the associated sub-station turbine to provide sufficient
and any overhead export space during turbine erection
cable. Any woodland in which provides a degree
the vicinity of wind farms of protection from fire.
tend to be commercial Some sites have wider
forestry, which when dry forestry removal to improve
can burn particularly energy yield performance
fast and easily. Dry peat which can be coupled with
can also have a higher broadleaf compensatory
exposure risk to fire. planting elsewhere.
------------------------------------ -------------------------------------
Icing Exposure to icing changing Climatic conditions are
as humidity levels increase considered during the
in those areas previously design phase to determine
less affected by icing. the extent of any icing
Wind turbine blades can impacts on yield as well
be prone to ice build-up, as the ice-throw risk
impacting aerodynamic (and potential throw distance).
performance or causing Turbines are set back
turbines to pause due from dwellings and roads,
to rotor imbalances, thereby minimising risk to people
increasing downtime. Ice from ice throw.
throw from blades can Turbines are available
also pose a safety risk, with anti-icing or de-icing
or cause damage to infrastructure. systems. The reliability
and effectiveness of such
systems is however not
well established at this
stage.
------------------------------------ -------------------------------------
Other physical risks such as of landslide, coastal erosion,
coastal floods, and river floods are considered to be low for the
portfolio, due to the location of the assets which have avoided
mountainous and coastal regions, where the risks above are prone to
occur.
TRIG's diversification strategy also helps to mitigate the
impact and frequency of extreme events across the portfolio as the
physical impact of climate change will vary according to its global
location.
It is important to note that risks are evolving with regards to
climate change, as are standards and expectations with regards to
various mitigants. As per the TCFD recommendations, once climate
risk-related scenarios are developed this can be used to increase
engagement and understanding of physical risks and mitigation
actions across the portfolio with asset managers.
Preserve the natural environment
RES as Operations Manager works with asset managers to preserve
the natural environment by executing environmental management plans
agreed with the authorities during the project consenting process,
undertaking vegetation surveys, preventing biodiversity loss,
recycling where possible and careful usage of materials.
Further opportunities with landowners and other stakeholders are
also sought. These activities are carried out in accordance with
site-specific Construction Method Statements and Habitat Management
plans where applicable.
H1 2021 Performance
14 active environmental management projects (H1 2020: 12)
[18]
Case Study: Environmental monitoring in offshore wind farms
At Beatrice Offshore Wind Farm, TRIG and other partners have
undertaken voluntary studies to research the potential effects of
offshore wind farms on predators (marine mammals and birds) and
their prey (fish species). This study will cover both the
operational and construction phases of the wind farm's life and is
led by Marine Scotland Science, along with other regulators. It is
anticipated that the research will help further understanding of
the cumulative environmental impacts, including potential benefits,
of offshore wind farms on protected marine mammal and seabird
population species.
TRIG welcomes the opportunity to contribute and enhance the
understanding of the interaction between offshore wind farms and
marine wildlife. This increased understanding is beneficial to our
current and future projects and the wider industry, providing
greater marine environment monitoring and collaboration with
regulatory and industry bodies.
Social
Positively impacting the communities in which TRIG works
We are sensitive to the impact that a large renewables asset can
have on its local community. It is important that our assets make a
positive contribution both to the environment and local
communities.
TRIG's assets are often in rural areas where communities may
experience limited employment options or unemployment and limited
social and health facilities. Tangible local benefits can be
generated through initiatives such as:
Using local employment and sourcing materials locally where
possible.
The Local Electricity Discount Scheme (LEDS), whereby properties
closest to certain wind farms are eligible for a discount on their
electricity bills.
Educating the next generation about sustainability and renewable
energy through school education days on TRIG sites.
Supporting local good causes, often via community funds, such as
donating to help fund social hubs, local healthcare, schools and
entertainment.
TRIG's Operations Manager RES and its asset managers proactively
engage with communities local to TRIG's assets, meeting with the
public on a regular basis and has protocols in place to govern
community benefit arrangements which are administered by local
organisations who are best placed to understand local
priorities.
TRIG has no direct employees, but actively engages with its
Managers in respect of their employee engagement programmes.
Alongside this, both InfraRed and RES look to give back to wider
society through various social initiatives.
H1 2021 Performance
37 community funds (H1 2020: 33)
GBP1.1m budgeted for Community Fund contributions in 2021
Case Study: High Mead Farm CIC, supported by Parley Court Solar Farm
High Mead Farm CIC provide therapy day sessions to people whose
lives are limited through physical and/or mental disability. They
offer a large range of activities including education on
sustainable food systems, horticulture, mechanics, animal care and
husbandry, wood recycling, painting and decorating, and various
arts and crafts. Service users come to the farm as part of their
care package, either through referral from their GP or social
services, or through direct arrangement. These activities within
the farm environment provide an environment of well-being and
responsibility, which is immensely valuable for those who
attend.
The site comprises four acres and over 200 animals. Prior to the
pandemic, eight staff were employed in addition to a large bank of
volunteers. Despite the facility being closed during the pandemic,
there were significant costs to meet each month for overheads, as
well as animal feed and veterinary bills. Demand from people
seeking such day therapy as part of their care package was even
higher due to the impact on mental health posed by the
pandemic.
Funding of GBP3,000 was provided by TRIG to support preparation
works for re-opening and animal care. This funding has helped CIC
continue these important therapy sessions for those in need as soon
as restrictions allow.
Case Study: The well-being initiatives of TRIG's Managers during
Covid
RES
Keeping employees connected
Throughout the pandemic RES has encouraged all staff to take
time out to catch up with colleagues. RES has actively sought
opportunities and activities to keep its employees, who have been
working remotely, connected. Every other month staff can sign up to
"Coffee Roulette" where they are randomly matched with two other
colleagues from around the globe for a 15-minute coffee break
discussion.
Well-being and Mental Health Awareness Weeks
In 2020 RES ran a dedicated wellbeing week - focused around the
four pillars of social, physical, mental and financial wellbeing.
During the week RES virtually hosted four guest speakers, a high
energy fitness session, desk-based yoga and other activities. The
programme was designed to offer something for all employees across
the UK and Ireland. For Mental Health Awareness, the week revolved
around connecting with nature, and experiencing the mental and
physical benefits of being outdoors. The week also provided further
support activities such as access to private financial coaching and
a cook-along virtual lunch.
Online classes and collective activities
As well as offering weekly virtual exercise classes and cookery
sessions, in 2020 RES started a global challenge to help employees
collectively improve their health and wellbeing. RES set off with
the goal of reaching the moon - by running, cycling, swimming,
walking, rowing, skiing, and canoeing the equivalent distance to
reach it. RES employees and their families from around the world
have been taking part and clocking up the kms every week.
Providing a safe space to talk about well-being
RES wants to breakdown the stigma around mental health to make
sure it creates a safe space where staff feel able to talk about
wellbeing. RES has several qualified mental health first aiders,
who provide a point of contact if staff, or someone they are
concerned about, are experiencing a mental health issue or
emotional distress. Their presence visibly promotes openness about
mental health matters, and they are able to give confidential and
friendly initial support and signpost to appropriate help if
required. Additionally, through RES' Employee Assistance Programme,
there is the ability for staff to access extensive services
covering health and lifestyle, legal information, work life and
home life - and counsellors who are there to support RES' people
and their families. The programme also has a confidential helpline
available 24 hours a day.
Taking regular breaks and managing time
RES actively encourages its employees to take time away from the
desk at regular periods during the day. Staff are asked to avoid
booking meetings over the lunchtime hours to allow for colleagues
to get outside and have a full lunch break.
Supporting our communities
In 2020, RES supported over 40 charities and community groups,
with grants made to organisations nominated by RES employees across
the globe. Focused on supporting key workers and disadvantaged,
vulnerable and hard to reach members of the community - more than
half of grants awarded were to support wellbeing initiatives. RES
provides staff with the opportunity to take four days volunteering
leave each year - despite the pandemic, in 2020 RES staff recorded
435 hours of volunteering.
InfraRed
Engagement
Frequent and clear communication to staff, feedback sought using
regular surveys, encouragement of annual holiday use.
Office working arrangements
InfraRed has been following government guidance and implemented
a working from home policy, where applicable. If individuals decide
they would benefit from coming to the office, for example because
of unsuitable home arrangements, for collaboration reasons or tasks
that are not conducive to working from home, then this has been
permitted. Working from InfraRed's office has been subject to
strict limits on numbers in the office at any one time, enhanced
hygiene arrangements and complying with other guidance to make it a
safe environment.
Working from home and "working from anywhere"
Courses on home working set-up and expense allowance for
investment in home set-up. Staff have also been given a 30-day
Working from Anywhere 'WFA' allowance, enabling individuals to
spend time elsewhere in recognition of the fact that many people
have been unable to see families and loved ones for an extended
period of time.
Wellbeing activities
InfraRed established a 'Go-To Team' for staff to contact if they
need additional support, as well as wellbeing webinars on topics
such as resilience, healthy habits and improving sleep. Wellbeing
initiatives motivating people to incorporate wellbeing activities
into their daily lives through company-wide 'Wellbeing Challenges'
have been run and support has also been provided to staff balancing
homeschooling their children with work commitments through reduced
working hours.
Charitable endeavours
InfraRed established a GBP1m charitable foundation to promote
SDGs 3 (Good Health and Well-being), 4 (Quality Education) and 13
(Climate Action), in addition to other charitable activities such
as the donation of surplus corporate laptops to schools within the
InfraRed manager portfolio to support students with their studies
and the LifeCycle Project, which up-cycles unwanted bicycles for
key workers and others in need, in collaboration with InfraRed's
business partners, Vercity, Bouygues Energies and Service as well
as the Department of Work & Pensions and HM Prison Service.
Governance
Maintaining ethics and integrity in governance
To be successful over the longer term, it is essential that TRIG
is run responsibly and that the highest standards of ethics and
integrity in governance are maintained across all areas, including
health and safety, managing conflicts of interest, and maintaining
policies.
The Board has overall responsibility for TRIG's Sustainability
Policy [19] and its application, whilst the day-to-day management
of the portfolio is delegated to both Managers.
Sustainability is integrated into each stage of the Investment
Manager's investment process, from negative screening against the
firm and fund exclusion lists to deal screening, due diligence and
investment approval. InfraRed publishes its own sustainability
report and sustainability policy, including its approach to the
integration of sustainability considerations into the investment
cycle, on its website. [20]
The Operations Manager leads management of project level ESG
policies and activities, whilst keeping active sight of ESG KPIs,
community outreach activities, and health and safety standards. RES
works together with InfraRed to ensure that sustainability
considerations are also prioritised in the ongoing management and
reporting of the assets throughout the ownership period. The
Project Company Boards maintain a responsibility to review and
update SPV policies on an annual basis. This includes HSQE, tax,
ESG, and cybersecurity.
Both Managers stress ethics and integrity in their own
governance and believe it is vital to consider the needs of all
stakeholders. They maintain policies on Sustainability, Modern
Slavery, Diversity & Inclusion, Procurement, and Whistleblowing
and publish their own Sustainability Reports available on both the
InfraRed and RES websites. Please refer to page 44 of TRIG's 2021
Sustainability Report for more information on the policies held by
TRIG and its Managers.
TRIG has published its full ESG disclosures with the Association
of Investment Companies (AIC); these can be found under the
Company's page on the AIC website.
H1 2021 performance
0.27 reportable lost time accidents per 100,000 hours (H1 2020:
0.81) [21]
50% female board
33% of the directors that the Managers provide to the 87 [22]
project companies are female
A+ PRI score achieved by InfraRed's Infrastructure division for
six consecutive years
How do we calculate our performance indicators?
Renewable electricity generated
The most important metric of sustainability for the portfolio.
Generation is measured continuously throughout the year. The
electricity generated through the means of wind and solar power
indicates TRIG's capability in mitigating climate change and
providing affordable and clean energy (SDGs 7 and 13).
Lost Time Accident Frequency Rate (LTAFR)
For every 100,000 hours worked, calculated as the number of
accidents which occurred in the given period divided by number of
hours worked times 100,000. Whilst all accidents are recorded, only
accidents that have resulted in the worker being unable to perform
their normal duties for more than seven days are included in this
calculation, in line with reportable accidents as defined by UK HSE
RIDDOR regulation. As previously reported, the HSE considers the
central estimate for the 'All Industries' injury frequency rate to
be 1.24 per 100,000 hours (2014 value). The LTAFR is also
considered in the context of the latest onshore and offshore
industry benchmarks noting there can be differences between
incident classification types.
This metric is used as a key performance metric in TRIG's
ESG-Linked Revolving Credit Facility (RCF), where performance is
measured annually from 2021 with the cost of the RCF amended in the
following year.
Carbon emissions avoided
This represents the fossil fuel-powered electricity displaced by
TRIG's portfolio of renewable electricity. TRIG uses the
International Financial Institutions (IFI) approach to GHG
Accounting for Renewable Energy. This harmonised approach for
assessing the mitigation benefits of GHG or renewable energy plants
means that TRIG can report consistent and comparable values for
this metric. This approach was developed by a technical working
group of IFIs, and with support from the UNFCC. The metrics are
reviewed and updated periodically to reflect electricity generation
within a given country/region.
Each country has a different mix of electricity generating power
plants. Some countries have a much higher carbon content than
others. For example, Germany has a significant number of coal power
stations, whilst France has a lot of nuclear and Sweden has a great
deal of hydro power. As such, depending on their location,
renewables displace different amounts of fossil fuel-powered
electricity.
UK portfolio sourcing electricity under renewable electricity
supply contracts
This measures the percentage of assets which source electricity
used on site from renewable energy sources. Although the assets
themselves generate renewable energy, they also need to consume a
small percentage of energy from the grid (circa 1% compared to
electricity generated) to support ancillary services such as
transformers, substation, and electric heaters for on-site welfare
facilities.
Where possible, TRIG has encouraged purchase of green
electricity contracts and green energy tariffs, leading to an
increase in this metric. Some regions do not have the ability to
choose a preferred utility due to government regulations.
The impact of sourcing electricity under renewable electricity
supply contracts is also reflected in TRIG's Scope 2 emissions
where the indirect market-based emissions are circa 50% lower than
the location-based metrics. More information can be found on page
36 of the 2021 Sustainability Report.
Homes powered by clean energy
measures TRIG's energy generation equivalent to the number of
homes powered specific to current electricity household consumption
within each of TRIG's regions for a given year; TRIG uses the
latest available statistics from regional governments on household
energy use.
Factors which affect the Typical Domestic Consumption value
include the size of a typical home within a given region and the
typical number of electrical appliances within the household. For
example, the value is much higher in Sweden compared to the UK due
to a higher application of electric heating systems over
traditional gas boilers. As the UK phases out gas boilers, we can
expect these values to change over time.
Example calculation below:
Renewable Electricity Generated in region / Regional Household
Typical Domestic Consumption Value = Regional Homes Powered
Using GB as an example region, and assumed generation of
2,000,000MWh, the following values can be produced:
2,000,000MWh / 2.9MWh per annum = 0.7 million homes powered in
GB through wind and solar power
This metric is used as a key performance metric in TRIG's
ESG-Linked Revolving Credit Facility (RCF), where performance is
measured annually from 2021 with the cost of the RCF amended in the
following year.
Number of community funds tracks active funds across operational
TRIG sites. All TRIG community funds have a defined use of
proceeds, geographical target area, value and recipients.
This metric is used as a key performance metric in TRIG's
ESG-Linked Revolving Credit Facility (RCF), where performance is
measured annually from 2021 with the cost of the RCF amended in the
following year.
Community investment (annual basis) tracks the actual investment
provided by the established community funds within a given
year.
Properties supported by Local Electricity Discount Schemes
(Annual Basis), also known as LEDS, is a community benefit which
takes the form of an annual discount on the electricity bills of
properties closest to a participating and operational wind farm.
Eligible properties include private residences, local business, and
public buildings such as schools, libraries, and hospitals.
Participation in the scheme is voluntary.
Active environmental management projects tracks the number of
operational TRIG sites engaged in pro-active habitat management
plans that exceed standard environmental maintenance. For example,
initiatives such as island production of cut flowers at La Reunion,
and hen harrier protection works at Taurbeg.
Board diversity tracks the gender diversity of the TRIG board
members within a given period.
Project company board diversity tracks the gender diversity of
the TRIG Project Company board members for TRIG projects within a
given period.
2.6 Valuation of the Portfolio
The Investment Manager is responsible for carrying out a fair
market valuation of the Group's investment portfolio, which is
presented to the Directors for their approval and adoption.
Valuations are carried out on a six-monthly basis as at 31 December
and 30 June each year.
For non-market traded investments (being all the investments in
the current portfolio), the valuation principles used are based on
a discounted cash flow methodology and adjusted in accordance with
the European Venture Capital Association's valuation guidelines
where appropriate to comply with IFRS 13 and IFRS 9, given the
special nature of infrastructure investments. Where an investment
is traded, a market quote is used.
The valuation for each investment in the portfolio is derived
from the application of an appropriate discount rate to reflect the
perceived risk to the investment's future cash flows to give the
present value of those cash flows. The Investment Manager exercises
its judgement in assessing the expected future cash flows from each
investment based on the project's expected life and the financial
model produced by each project entity. In determining the
appropriate discount rate to apply to a given investment, the
Investment Manager takes into account the relative risks associated
with the revenues, which include fixed price per MWh income (lower
risk) or merchant power sales income (higher risk).
The Directors' valuation of the portfolio of 77 [23] project
investments as at 30 June 2021 was GBP2,491.0m (31 December 2020:
GBP2,213.0m). From time to time the Board engages an independent
third-party expert to review the Manager's valuation, and
accordingly the Board commissioned an independent valuation from
the Accountants BDO as at 30 June 2021. BDO's work included a
review of the key valuation assumptions including discount rates,
power price and cannibalisation, inflation and other macroeconomic
assumptions, operating costs and asset lives. BDO's work
corroborated the TRIG June 2021 valuation and the key underlying
assumptions.
Valuation Movement
Valuation movement during the period to 30 June
2021 GBPm GBPm
Valuation of portfolio at 31 December 2020 2,213.0
Cash investments 341.4
Cash distributions from portfolio (88.0)
------------------------------------------------- ------ -------
Rebased valuation of portfolio 2,466.5
------------------------------------------------- ------ -------
Change in power price forecast 43.7
Movement in discount rate 33.5
Foreign exchange movement (39.4)
Change in macroeconomic assumptions (67.6)
French solar provision (28.7)
Balance of portfolio return 83.0
------------------------------------------------- ------ -------
Valuation of portfolio at 30 June 2021 2,491.0
------------------------------------------------- ------ -------
* A net loss of GBP11.8m after the impact of foreign exchange
hedges held at Company level.
** Table does not cast due to rounding.
The opening valuation at 31 December 2020 was GBP2,213.0m.
Allowing for cash investments of GBP341.4m into Beatrice, Blary
Hill and Grönhult, and cash receipts from investments of GBP88.0m,
the rebased valuation as at 30 June 2021 was GBP2,466.5m.
Each movement between the rebased valuation of GBP2,466.5m and
the 30 June 2021 valuation of GBP2,491.0m is considered in turn
below:
(i) Change in power price forecast:
Movements in power price forecasts during the six-month period
had the impact of increasing the valuation of the portfolio by a
net GBP43.7m. The valuation uses updated power price forecasts for
each of the markets in which TRIG invests.
Power price forecasts have increased markedly in the near term,
principally driven by a combination of higher gas and carbon
prices, as economies recover from the recent Covid-19 impacts and
the global supply chain for gas attempts to catch up with this
increase in demand, further exacerbated by a cold and extended
winter across Europe and East Asia coupled with supply constraints
from Russia. Individual markets have also seen other factors
impacting forecast power prices, notably:
relatively low level of rainfall in the Nordics region resulting
in stored hydroelectric reservoirs reducing from their previous
high levels, increasing short-term prices
increased assumptions for offshore renewable deployment, notably
in the UK, pushing longer term pricing down.
Across the markets TRIG invests in, the electrification of other
economic sectors including transport and heating coupled with the
use of renewable electricity to produce hydrogen have provided an
upward pressure on forecast electricity demand, counterbalanced by
increasing forecast renewable generation, with each region seeing
variation in the resulting movement from the aforementioned
factors.
The significant increase in near-term forecast wholesale power
prices results in a higher gradient of the forecast power price
curve, but after the shorter-term constraint in energy supply,
forecast power prices are slightly below previous December
forecasts. The table below separates average real forecast power
prices in Great Britain and the average across the other four Euro
denominated markets (SEM, France, Germany and Sweden, weighted by
value) for the period 2021-2025 and beyond.
Prices by Region (real) Average 2021-2025 Average 2026-2050 Average 2021-2050
Great Britain (GBP per MWh) 58 38 41
Average of 4 Euro denominated markets
(EUR per MWh) 53 46 47
(ii) Movement in valuation discount rates:
The weighted average portfolio valuation discount rate as at 30
June 2021 was 6.5% (31 December 2020: 6.7%). The discount rates
used for valuing each investment represent an assessment of the
rate of return at which infrastructure investments with similar
risk profiles would trade on the open market. Acquisitions during
the period had a broadly neutral impact on the weighted average
discount rate.
During the half year we have observed continuing strong
competition for renewables infrastructure, which remains a very
sought-after asset class, and we continue to see new entrants to
the market seeking to buy assets. This has resulted in a continued
reduction in the prevailing discount rates applied to renewables
investments. Other factors include the continued abundance of
low-cost debt, and low risk-free returns. Overall, the Investment
Manager, based on its experience of bidding and transacting in the
secondary market for renewable infrastructure assets, has applied
an average reduction of 0.2% to discount rates across the portfolio
compared to 31 December 2020.
The Company engaged an independent valuation of the portfolio
and a further review of the discount rates adopted for the June
2021 valuation, which confirmed that the rates used were
appropriate. This change in assumption has led to an increase in
the valuation of the investments of GBP33.5m.
(iiii) Foreign exchange:
Over the half year the Sterling has appreciated 4% against the
Euro compared to the rate at December 2020 (31 December 2020: EUR
1.119; 30 June 2021: EUR 1.166). In aggregate this has led to a
loss in the period of GBP39.4m in the valuation of the
Euro-denominated investments located in France, the Republic of
Ireland, Sweden and Germany ([24]) . After the impact of forward
currency hedges held at Company level are taken into account, the
foreign exchange loss reduces to GBP11.8m.
Euro-denominated investments comprised 35% of the portfolio at
the period end (31 December 2020: 40%).
Once the committed investments are fully subscribed the
proportion of Euro denominated investments based on the current
portfolio and valuation increases to 39%.
The Group enters into forward hedging contracts (selling Euros,
buying sterling) for an amount equivalent to its expected income
from Euro-denominated investments over the short term, currently
approximately the next 48 months. In addition, the Group enters
into further forward hedging contracts such that, when combined
with the "income hedges", the overall level of hedge achieved in
relation to the Euro-denominated assets value is currently
approximately 80%. Hedging has also been effected when making
investments using the revolving credit facility by drawing in euros
for euro acquisitions.
The Investment Manager keeps under review the level of Euro
exposure and utilises hedges, with the objective of minimising
variability in shorter term cash flows with a balance between
managing the sterling value of cash flow receipts and potential
mark-to-market cash outflows.
(iv) Change in corporation tax rate
As enacted in the Finance Act 2021 the forecast UK corporation
tax rate has been increased to 25% (from 19%) commencing April
2023. This change is assumed from this date throughout the lives of
all UK companies (i.e. for the full duration of the projects
economic lives). This has resulted in a negative valuation impact
of GBP67.6m.
(v) French solar provision
As noted in the Section 2.2 - Market Developments and
Opportunities, further detail has been received in the period in
respect of retrospective changes to feed-in tariffs in France. This
indicates that the cuts to historical tariffs will be wider than
first expected. An additional provision of approximately GBP28.7m
(1.4p/share) has been made at 30 June 2021, and the remaining
valuation of the affected assets is 1.4% of Portfolio Value, at 30
June 2021. The provision made is equivalent to 50% of value of the
projects affected. The final outcome still remains unclear and,
taking into account the possibility of appeals, may take some time
to resolve.
(vi) Balance of portfolio returns:
This refers to the balance of valuation movements in the period
(excluding (i) to (vi) above) and represents an uplift of GBP83.0m
and a 3.4% increase over the half year in the rebased value of the
portfolio. The balance of portfolio return mostly reflects the net
present value of the cash flows brought forward by six months at
the prevailing portfolio discount rate (6.7% per annum before
acquisitions and the period end reduction in the discount rate).
The significant acquisitions during the period occurred part way
through the period and consequently these cash flows were brought
forward by less than six months - accounting for this in the
calculation of rebased valuation would move the increase over the
half year to 3.6%.
In addition to the unwinding of the discount rate, the portfolio
has experienced positive and negative movements including:
Active portfolio management activities including the placing of
inflation swaps, improved power purchase agreement terms and active
power price management, generating approximately 1p per share:
- ESG-linked inflation swaps for both RPI and CPI have been
placed, hedging circa 30% of RPI exposure and circa 45% of CPI
exposure at circa 2.9% and circa 3.5% respectively, generating
approximately 0.7p per share
- During the period new power purchase agreements have been
placed across multiple assets with lower costs to sell electricity
than previously forecast
- Several of the power purchase agreements across the portfolio
include optionality to fix prices for a given period (typically
three or six months, up to twelve months in advance) - these
options can be used to secure prices when the markets are
relatively high and reduce the risks to short-term cash flows,
actively managing the short term power price risk
Statutory changes to several local taxes levied in France,
reducing the levels of local taxes faced by the French assets in
the portfolio.
Lower actuals with overall generation for the period below
budget with lower wind speed principally in GB being partially
offset by higher actual power prices in the period, resulting in a
net downside of circa 0.6 pence per share. Actual inflation has had
a positive impact over the period, however from 2030 forecast RPI
inflation has been reduced to 2% as a result of the changes in
calculation methodology to align with the CPIH inflation measure.
In aggregate both changes above result in a positive impact, the
revision to RPI inflation from 2030 is having a relatively limited
impact as ROC revenues (the most significant source of RPI
exposure) are generally coming to an end in the early 2030s.
Various changes have also been made to deposit rate assumptions,
principally to delay the assumed step up in interest rates. The
portfolio remains relatively insensitive to the changes in interest
rates, which is an advantage to TRIG's approach of favouring
long-term structured project financing, rather than short-term
corporate debt. Structured project financing is secured against the
underlying assets, with the substantial majority benefitting from
long-term interest rate swaps which fix the interest costs to the
projects. As such, the overall impact of interest rate changes is
not material. Please see further detail on page 41.
Investment Obligations
Completion Outstanding Value (fully
Name Acquired Net MW Status Date Commitment* committed)*
Grönhult Feb-21 67.0 Construction Q4 2022 2% 3%
----------------- --------- ------ ------------ ---------- ------------ ------------
Twin Peaks
- Ranasjö Jul-21 43.4 Construction Q2 2024 3% 3%
----------------- --------- ------ ------------ ---------- ------------ ------------
Twin Peaks
- Salsjö Jul-21 77.5 Construction Q2 2024 1% 1%
*Expressed as a percentage of portfolio valuation once fully
invested, which takes into account expenditure on construction
projects.
At 30 June 2021, the Company had outstanding investment
commitments on three projects (Grönhult and Twin Peaks Ranasjö and
Salsjö) with all projects in construction. The outstanding
commitments are expected to be invested between 2021 and 2024.
Outstanding commitments in relation to Grönhult and Twin
Peaks
H2 2021 2022 2023 2024 Total
Outstanding Commitments
(GBPm) 24 82 50 24 177*
*Table does not cast due to rounding.
TRIG's Construction Assets/Wind farms
At the period end TRIG had five projects in construction as
follows, representing 11% of the portfolio valuation once fully
invested.
Expected
Capacity Completion
Name of Asset Location (MW) Date
Blary Hill* GB (Scotland) 35 Q1 2022
-------------------------- -------------- -------- -----------
Vannier** France (North) 40 Q3 2022
-------------------------- -------------- -------- -----------
Gr ö nhult Sweden (SE3) 67 Q4 2022
-------------------------- -------------- -------- -----------
Twin Peaks - Ranasjö Sweden (SE2) 43 Q2 2024
-------------------------- -------------- -------- -----------
Twin Peaks - Salsjö Sweden (SE2) 78 Q2 2024
-------------------------- -------------- -------- -----------
* Blary Hill is now close to completion with all funds having
been injected.
** Vannier is mid-construction with the remaining construction
spend being funded by project finance-specific senior debt, as the
project has subsidy income, with the initial construction spend
having been funded by equity.
The valuation of the portfolio on a fully invested basis can be
derived by adding the valuation at 30 June 2021 and the expected
outstanding commitments as follows:
Portfolio valuation at 30 June 2021 GBP2,491.0m
Future investment commitments GBP177.3m
Portfolio valuation once fully invested GBP2,668.3m
2.7 Valuation Sensitivities
The following table illustrates the sensitivity of TRIG's NAV
per share to changes in key input assumptions (with the labels
indicating the impact on the NAV in pence per share of the
sensitivities):
% Change in Portfolio Value due to impact of sensitivity
Discount rate +/- 0.5% -3.6% 3.9%
------
Output P90 / P10 (10
year) -12.2% 13.2%
------ -----
Power price -/+ 10% -6.9% 6.9%
------ -----
Inflation -/+ 0.5% -3.9% 4.3%
------ -----
Operating costs +/-
10% -4.8% 4.8%
------ -----
Exchange rate -/+ 10% -1.4% 1.4%
------ -----
Interest rate + 2%
/ - 1% 0.0% 0.0%
------ -----
Tax +/- 2% -1.5% 1.5%
------ -----
Asset Life -/+ 1yrs -0.9% 0.8%
------ -----
For each of the sensitivities, it is assumed that potential
changes occur independently of each other with no effect on any
other base case assumption, and that the number of investments in
the portfolio remains static throughout the modelled life.
The sensitivities assume the portfolio is fully invested. As
such the Portfolio Value for the sensitivity analysis is the sum of
the Portfolio Valuation at 30 June 2021 (GBP2,491.0m) and the
outstanding investment commitments as set out above, i.e.
GBP2,668.3m.
2.8 Financing
The Group has a GBP500m ESG-linked revolving credit facility
(which includes a GBP30m working capital element) with the Royal
Bank of Scotland International, National Australia Bank, ING Bank
NV, Sumitomo Mitsui Banking Corporation, Santander and Barclays to
fund new acquisitions. The facility expires on 31 December 2023
with the option to extend for up to an additional 24 months. This
type of short-term financing is limited to 30% of the Portfolio
Value. It is intended that any facility used to finance
acquisitions is likely to be repaid, in normal market conditions,
within a year through equity fundraisings.
The acquisition facility was drawn GBP129m as at 30 June 2021
and was used to fund investments made in the period, including
Beatrice and Grönhult, before being partially repaid following the
equity fund raise in March and the reinvestment of surplus cash
flows.
The majority of the projects within the Company's investment
portfolio have underlying long term debt (by value 67% of the
Group's investments have project finance raised against them and
33% are ungeared).
The project-level gearing across the portfolio was 43% as at 30
June 2021 on an invested basis (and 41% on a committed investment
basis as the outstanding commitments relate to ungeared projects)
which is the same level as at 31 December 2020. This reflects the
impact of acquisitions in the period offsetting the impact of
repayments of project level debt in the period. The main addition
is Beatrice wind farm which has project financing in place, to be
fully repaid within the subsidy period.
There is a gearing limit in respect of such project finance
debt, which is non-recourse to TRIG, of 50% of the Gross Portfolio
Value (being the total enterprise value of the Group's portfolio
companies), measured at the time the debt is drawn down or acquired
as part of an investment. The Company may, in order to secure
advantageous borrowing terms, secure a project finance facility
over a group of portfolio companies.
The vast majority of the debt is fixed and has an average cost
of 3.4% (including margin) reflecting the terms available on
interest rate swaps when the project debt was initially put in
place.
As at 30 June 2021, the Group had cash balances of GBP26m,
excluding cash held in investment project companies as working
capital or otherwise.
3.0 Analysis of Financial Results
At 30 June 2021 the Group had investments in 77 ([25]) projects.
As an investment entity for IFRS reporting purposes, the Company
carries these 77 investments at fair value. The results below are
shown on a statutory and on an "expanded" basis as we have done in
previous years. See the box below for further explanation.
Basis of preparation
In accordance with IFRS 10 the Group carries investments at fair value
as the Company meets the conditions of being an Investment Entity.
In addition, IFRS 10 states that investment entities should measure
their subsidiaries that are themselves investment entities at fair
value. Being investment entities, The Renewables Infrastructure Group
(UK) Limited ("TRIG UK") and The Renewables Infrastructure Group (UK)
Investments Limited ("TRIG UK I"), the Company's subsidiaries, through
which investments are purchased, are measured at fair value as opposed
to being consolidated on a line-by-line basis, meaning their cash,
debt and working capital balances are included as an aggregate number
in the fair value of investments rather than the Group's current assets.
In order to provide shareholders with more transparency into the Group's
capacity for investment, ability to make distributions, operating
costs and gearing levels, adjusted results have been reported in the
pro forma tables below.
The pro forma tables that follow show the Group's results for the
six months ended 30 June 2021 and the comparative period on a non-statutory
"Expanded basis", where TRIG UK and TRIG UK I are consolidated on
a line-by-line basis, compared to the Statutory IFRS financial statements
(the "Statutory IFRS basis").
The Directors consider the non-statutory Expanded basis to be a more
helpful basis for users of the accounts to understand the performance
and position of the Company because key balances of the Group including
cash and debt balances carried in TRIG UK and TRIG UK I and expenses
incurred in TRIG UK and TRIG UK I are shown in full rather than being
netted off.
The necessary adjustments to get from the Statutory IFRS basis to
the non-statutory Expanded basis are shown for the primary financial
statements. The commentary provided on the primary statements of TRIG
is on the Expanded Basis.
Income Statement Balance Sheet Cash Flow Statement
The Statutory IFRS basis The Statutory IFRS basis The Statutory basis shows
nets off TRIG UK and TRIG includes TRIG UK and TRIG cash movements for the
UK I's costs, including UK I's cash, debt and top company only (TRIG
overheads, management working capital balances Limited). The Expanded
fees and acquisition costs as part of portfolio value. basis shows the consolidated
against income. The Expanded The Expanded basis shows cash movements above the
basis includes the expenses these balances gross. investment portfolio which
incurred within TRIG UK There is no difference are relevant to users
and TRIG UK I to enable in net assets between of the accounts. Differences
users of the accounts the Statutory IFRS basis include income received
to fully understand the and the Expanded basis. by TRIG UK and TRIG UK
Group's costs. There is The majority of cash generated I applied to reinvestment
no difference in profit from investments had been and expenses incurred
before tax or earnings passed up from TRIG UK by TRIG UK and TRIG UK
per share between the and TRIG UK I to the Company I that are excluded under
two bases. at both 30 June 2021 and the Statutory IFRS basis.
31 December 2020.
At 30 June 2021, TRIG
UK I was GBP129.4m drawn
on its revolving credit
facility
(Dec 2020: GBP40m drawn).
================================ ==============================
Income statement
Six months to 30 June 2021 Six months to 30 June 2020
Summary income statement GBP'million GBP'million
Statutory Expanded Statutory Expanded
IFRS Basis Adjustments(1) Basis IFRS Basis Adjustments(1) Basis
Operating income 10.5 14.7 25.2 46.8 14.3 61.1
Acquisition costs - (1.1) (1.1) - (0.2) (0.2)
----------- -------------- -------- ----------- -------------- --------
Net operating income 10.5 13.6 24.1 46.8 14.1 60.9
Fund expenses (0.9) (10.9) (11.8) (0.9) (8.5) (9.4)
Foreign exchange
losses 27.2 0.4 27.6 (29.6) (4.0) (33.6)
Finance costs - (3.1) (3.1) - (1.6) (1.6)
----------- -------------- -------- ----------- -------------- --------
Profit before tax 36.8 - 36.8 16.3 - 16.3
----------- -------------- -------- ----------- -------------- --------
EPS(2) 1.8p 1.8p 1.0p 1.0p
1. The following were incurred within TRIG UK and TRIG UK I;
acquisition costs, the majority of expenses and acquisition
facility fees and interest. The income adjustment offsets these
cost adjustments.
2. Calculated based on the weighted average number of shares
during the period being approximately 2,009.3 million shares.
Analysis of Expanded Basis financial results
Profit before tax for the six months to 30 June 2021 was GBP36.8
million, generating earnings per share of 1.8p, which compares to
GBP16.3 million and earnings per share of 1.0p for the six months
to 30 June 2020.
The EPS of 1.8p reflects a small level of valuation growth in
the period.
Positive valuation drivers in the period to 30 June 2021
include: a net increase in power price forecasts - as power prices
in the near term have increased, driven by increasing gas and
carbon prices as economies recover from the recession caused by the
pandemic - reductions in forecast power prices over the longer term
are linked to an increased assumption of roll out of renewables,
particularly in the UK; a small reduction in valuation discount
rates, reflecting continued strong competition for the asset class;
and efficient portfolio management alongside other valuation
enhancements.
These increases are partially offset by foreign exchange
movements as Sterling appreciated, the impact of an increase in
future UK corporation tax rates and provisions made for expected
reductions to French feed-in Tariffs being proposed by the French
Government to apply to certain older solar projects with
historically high feed-in Tariff levels.
Operating Income reflects the portfolio value movement in the
six months and is fully described in Section 2.6.
Acquisition costs relate to the investments in the period, being
Beatrice, Grönhult and the agreement to invest in the Twin Peaks
project.
Increase in fund expenses as compared to H1 2020 reflects the
increase in the size of the portfolio.
Fund expenses of GBP11.8 million (H1 2020: GBP9.4 million)
includes all operating expenses and GBP10.4 million (H1 2020:
GBP8.2 million) of fees paid to the Investment and Operations
Managers. Management fees are charged at 1% of Adjusted Portfolio
Value up to GBP1 billion, 0.8% of Adjusted Portfolio Value in
excess of GBP1 billion, 0.75% of Adjusted Portfolio Value in excess
of GBP2 billion and 0.7% of Adjusted Portfolio Value in excess of
GBP3 billion as set out in more detail in the Related Party and Key
Advisor Transactions note, Note 14 to the financial statements.
During the period sterling strengthened against the euro
resulting in a foreign exchange valuation loss for the euro
denominated assets of GBP39.4 million (2020: GBP58.8 million gain),
partially offset by gains on foreign exchange hedges and cash and
debt balances held at Company level of GBP27.6 million (2020:
GBP33.6 million loss). The net foreign exchange loss in the period
is hence GBP11.8 million (2020: GBP25.2 million gain).
Finance costs relate to the interest and fees incurred relating
to the Group's revolving credit facility. The finance costs in the
period reflect the increased size of the facility and increased
drawings versus the comparative period.
Ongoing charges
Six months Six months
to to
30 June 30 June
2021 2020
Ongoing Charges (Expanded Basis) GBP'000s GBP'000s
Investment and Operations Management fees 10,419 8,236
Audit and non-audit fees 129 100
Directors' fees and expenses 156 140
Other ongoing expenses 829 715
---------- ----------
Total expenses(1) 11,535 9,192
---------- ----------
Annualised equivalent 23,261 18,485
Average net asset value 2,300,487 1,924,571
Ongoing Charges Percentage (OCP) 1.01% 0.96%
------------------------------------------- ---------- ----------
1. Total expenses exclude GBP0.3 million (2020: GBP0.2 million)
of lost bid costs incurred during the period.
The Ongoing Charges Percentage for the period is 1.01% (H1 2020:
0.96%). The ongoing charges have been calculated in accordance with
AIC guidance and are defined as annualised ongoing charges (i.e.
excluding acquisition costs and other non-recurring items) divided
by the average published undiluted net asset value in the period.
The Ongoing Charges Percentage has been calculated on the Expanded
Basis and therefore takes into consideration the expenses of TRIG
UK and TRIG UK I as well as the Company's.
The increase in OCP level reflects higher amounts being drawn on
the Revolving Credit Facility (RCF) in the period which has
resulted in a lower NAV compared to Portfolio Value. There is no
performance fee paid to any service provider.
Balance sheet
Summary balance As at 30 June 2021 As at 31 December 2020
sheet GBP'million GBP'million
Statutory Expanded Statutory Expanded
IFRS Basis Adjustments Basis IFRS Basis Adjustments Basis
Portfolio value 2,334.4 156.6 2,491.0 2,160.9 52.1 2,213.0
Working capital 29.2 (30.7) (1.5) 12.3 (12.9) (0.6)
Hedging Asset/(Liability) 20.1 (0.2) 19.9 (1.4) - (1.4)
Debt - (129.4) (129.4) - (40.0) (40.0)
Cash 22.4 3.7 26.1 23.1 0.8 23.9
--------------------------- ----------- ----------- -------- ----------- ----------- --------
Net assets 2,406.1 - 2,406.1 2,194.9 - 2,194.9
--------------------------- ----------- ----------- -------- ----------- ----------- --------
Net asset value
per share 114.3p 114.3p 115.3p - 115.3p
--------------------------- ----------- ----------- -------- ----------- ----------- --------
Analysis of Expanded Basis financial results
Portfolio value grew by GBP278.0 million in the six months to
GBP2,491.0 million, primarily as a result of the investments made
in the six months to 30 June 2021 as described more fully in the
"Valuation Movements" section of this Strategic Report.
Cash at 30 June 2021 was GBP26.1 million (Dec 2020: GBP23.9
million) and acquisition facility debt drawings were GBP129.4m (Dec
2020: GBP40m).
Net assets grew by GBP211.2 million in the period to GBP2,406.1
million. The Company raised GBP235.8 million (after issue expenses)
of new equity during the period and produced a GBP36.8 million
profit in the period, with net assets being stated after accounting
for dividends paid in the period (net of scrip take up) of GBP62.4
million. Other movements in net assets totalled GBP1.0 million,
being Managers' shares accruing in H1 2021 and to be issued on or
around 30 September 2021.
Net asset value ("NAV") per share as at 30 June 2021 was 114.3p
compared to 115.3p at 31 December 2020.
Net asset value ("NAV") and Earnings per share ("EPS")
reconciliation
Shares in Net assets
NAV per share issue (million) (GBP'million)
Net assets at 31 December 2020 115.3p 1,904.3 2,194.9
Dividends paid in H1 2021(2) (3.4)p (67.7)
Profit/EPS to 30 June 2021(1) 1.8p 36.8
Scrip dividend take-up(3) - 4.1 5.3
Shares issued (net of costs) 0.6p 195.0 235.9
H1 2021 Managers' shares to
be issued - 0.9 1.0
-------------------------------- ------------- ---------------- --------------
Net assets at 30 June 2021(4) 114.3p 2,104.3 2,406.1
-------------------------------- ------------- ---------------- --------------
Table footnotes
1. Calculated based on the weighted average number of shares
during the period being 2,009.3 million shares
2. 1.69p dividend paid 31 March 2021 related to Q4 2020 (GBP32.2
million) and 1.69p dividend paid 30 June 2021 related to Q1 2021
(GBP35.5 million).
3. Scrip dividend take-up comprises 1.8 million shares, equating
to GBP2.3 million issued in lieu of dividends paid in March 2021
and 2.4 million shares, equating to GBP3.0 million issued in lieu
of dividends paid in June 2021.
4. Balance may not sum as a result of rounding differences.
Cash flow statement
Summary cash Six months to 30 June 2021 Six months to 30 June 2020
flow statement GBP'million GBP'million
Statutory Expanded Statutory Expanded
IFRS Basis Adjustments Basis IFRS Basis Adjustments Basis
Cash received
from investments 64.9 27.7 92.6 54.3 23.8 78.1
Operating and
finance costs (0.8) (11.9) (12.7) (0.9) (8.6) (9.5)
------------------------- ----------- ----------- -------- ----------- ----------- --------
Cash flow from
operations 64.1 15.8 79.9 53.4 15.2 68.6
Debt arrangement
costs - (0.1) (0.1) - - -
Foreign exchange
gains/ (losses) 5.7 (3.9) 1.8 (1.3) (3.8) (5.1)
Issue of share
capital (net
of costs) 236.9 (1.0) 235.9 119.6 (0.9) 118.7
Acquisition facility
drawn - 90.0 90.0 - 49.8 49.8
Purchase of new
investments (including
acquisition costs) (245.0) (97.9) (342.9) (221.6) (60.2) (281.8)
Distributions
paid (62.4) - (62.4) (53.6) - (53.6)
------------------------- ----------- ----------- -------- ----------- ----------- --------
Cash movement
in period (0.7) 2.9 2.2 (103.5) 0.1 (103.4)
Opening cash
balance 23.1 0.8 23.9 127.6 0.2 127.8
------------------------- ----------- ----------- -------- ----------- ----------- --------
Net cash at
end of period 22.4 3.7 26.1 24.1 0.3 24.4
------------------------- ----------- ----------- -------- ----------- ----------- --------
Analysis of Expanded Basis financial results
Cash received from investments in the period was GBP92.6 million
(H1 2020: GBP78.1 million). The increase in cash received compared
with the previous period reflects the increase in the size of the
portfolio.
Dividends paid in the period totalled GBP62.4 million (net of
GBP5.3m scrip dividends) and reflect dividends paid in the quarter
ended 31 March 2021 (GBP29.9 million, net of GBP2.3 million scrip
dividends) and the quarter ended 30 June 2021 (GBP32.5 million, net
of GBP3.0 million scrip dividends). Dividends paid in the
comparative period totalled GBP53.6 million (net of GBP1.2 million
scrip dividends).
Cash flow from operations in the period was GBP79.9 million (H1
2020: GBP68.6 million) and covers dividends paid of GBP62.4 million
in the period by 1.28 times (or 1.18 times without the benefit of
scrip take up), or 2.1 times before factoring in amounts invested
in the repayment in project-level debt. The Group repaid GBP64.0
million of project-level debt (pro-rata to the Company's equity
interest) in the period.
Share issue proceeds (net of costs) totalling GBP235.9 million
(H1 2020: GBP118.7 million) resulting from the issue of 195.0
million shares issued at 123p in March 2021 under the
Prospectus.
The Company's acquisition facility was drawn in the period to
fund the investment in Grönhult, Beatrice and Blary Hill. The
facility was partially repaid in March following fund raising and
June following distributions received from underlying projects.
In the period, GBP342.9 million was invested in acquisitions.
These were funded through the March share raise, reinvestment and
drawings from the Company's acquisition facility.
Cash balances increased in the period by GBP2.2 million
reflecting cash flows generated exceeding distributions paid.
Going Concern
The Group has the necessary financial resources to meet its
obligations. The Group benefits from a range of long-term contracts
with various major UK and European utilities and well-established
suppliers across a range of infrastructure projects. In addition,
it maintains a working capital component of GBP30m as part of its
revolving credit facility (recently increased to GBP500m and
limited to 30% of Portfolio Value). The Group's project-level
external debt is non-recourse to the Company and is limited to 50%
of Gross Portfolio Value.
As a consequence, the Directors believe that the Group is well
placed to manage its business risks successfully. The directors do
not believe that there is a significant risk to the business as a
result of the Covid-19 pandemic but will continue to monitor any
future developments. Thus they continue to adopt the going concern
basis of accounting in preparing the interim financial
statements.
Related Parties
Related party transactions are disclosed in note 14 to the
condensed set of financial statements.
There have been no material changes in related party
transactions described in the last annual report
4.0 Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
1. The condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting; and
2. The Chairman's Statement and the Managers' Report meet the
requirements of an Interim Managers' Report, and include a fair
review of the information required by
a. DTR 4.2.7R, being an indication of important events during
the first six months and description of principal risks and
uncertainties for the remaining six months of the year; and
b. DTR 4.2.8R, being the disclosure of related parties' transactions and changes therein.
By order of the Board
Helen Mahy
Chairman
5 August 2021
5.0 Financial Statements
Condensed Income Statement
For the six-month period 1 January 2021 to 30 June 2021
Six months Six months
ended ended
30 June 30 June
2021 2020
(unaudited) (unaudited)
Note GBP'000s GBP'000s
Net (losses)/gains on investments 4 (39,862) 9,743
Dividend income 4 3,200 -
Investment income from investments 4 47,202 37,091
-------------------------------------------- ---- ------------ ------------
Total operating income 10,540 46,834
Fund expenses 5 (906) (924)
-------------------------------------------- ---- ------------ ------------
Operating profit for the period 9,634 45,910
Finance and other income/(expense) 6 27,176 (29,647)
-------------------------------------------- ---- ------------ ------------
Profit before tax 36,810 16,263
Income tax 7 - -
-------------------------------------------- ---- ------------ ------------
Profit for the period 8 36,810 16,263
-------------------------------------------- ---- ------------ ------------
Attributable to:
Equity holders of the parent 8 36,810 16,263
-------------------------------------------- ---- ------------ ------------
Total equity 8 36,810 16,263
-------------------------------------------- ---- ------------ ------------
Ordinary shares earnings per share (pence) 8 1.8p 1.0p
-------------------------------------------- ---- ------------ ------------
All results are derived from continuing operations.
There is no other comprehensive income or expense apart from
those disclosed above and consequently a statement of comprehensive
income has not been prepared.
Condensed Balance Sheet
For the six-month period 1 January 2021 to 30 June 2021
As at
30 June As at
31 December
2021 2020
(unaudited) (audited)
Note GBP'000s GBP'000s
Non-current assets
Investments at fair value through profit or
loss 12 2,334,401 2,160,946
--------------------------------------------- ---- ------------- --------------
Total non-current assets 12 2,334,401 2,160,946
--------------------------------------------- ---- ------------- --------------
Current assets
Other receivables 9 49,748 12,501
Cash and cash equivalents 22,424 23,116
--------------------------------------------- ---- ------------- --------------
Total current assets 72,172 35,617
--------------------------------------------- ---- ------------- --------------
Total assets 2,406,573 2,196,563
--------------------------------------------- ---- ------------- --------------
Current liabilities
Other payables (469) (1,692)
--------------------------------------------- ---- ------------- --------------
Total current liabilities (469) (1,692)
--------------------------------------------- ---- ------------- --------------
Total liabilities (469) (1,692)
--------------------------------------------- ---- ------------- --------------
Net assets 11 2,406,104 2,194,871
--------------------------------------------- ---- ------------- --------------
Equity
Share capital and premium 13 2,288,348 2,046,237
Other reserves 13 992 1,005
Retained reserves 116,764 147,629
--------------------------------------------- ---- ------------- --------------
Total equity attributable to owners of the
parent 11 2,406,104 2,194,871
--------------------------------------------- ---- ------------- --------------
Net assets per Ordinary Share (pence) 11 114.3p 115.3p
--------------------------------------------- ---- ------------- --------------
The accompanying Notes are an integral part of these interim
financial statements.
The interim financial statements were approved and authorised
for issue by the Board of Directors on 5 August 2021, and signed on
its behalf by:
Jon Bridel Helen Mahy
Director Director
Condensed Statement of Changes in Equity
For the six-month period 1 January 2021 to 30 June 2021
For the period ended 30 June 2021
Share
capital
and share Other Retained Total
premium reserves reserves equity
(unaudited) (unaudited) (unaudited) (unaudited)
GBP'000s GBP'000s GBP'000s GBP'000s
Shareholders' equity at beginning of
period 2,046,237 1,005 147,629 2,194,871
------------------------------------------- ------------- ------------- ------------- -------------
Profit for the period - - 36,810 36,810
Dividends paid - - (62,423) (62,423)
Scrip shares issued in lieu of dividend 5,252 - (5,252) -
Ordinary Shares issued 239,850 - - 239,850
Costs of Ordinary Shares issued (3,996) - - (3,996)
Ordinary Shares issued in period in
lieu of Management Fees, earned in
H2 2020(1) 1,005 (1,005) - -
Ordinary Shares to be issued in lieu
of Management Fees, earned in H1 2021(2) - 992 - 992
------------------------------------------- ------------- ------------- ------------- -------------
Shareholders' equity at end of period 2,288,348 992 116,764 2,406,104
------------------------------------------- ------------- ------------- ------------- -------------
For the year ended 31 December 2020
Share Other Retained Total
premium reserves reserves equity
(audited) (audited) (audited) (audited)
GBP'000s GBP'000s GBP'000s GBP'000s
Shareholders' equity at beginning of
year 1,721,309 1,008 161,120 1,883,437
------------------------------------------- ----------- ----------- ----------- -----------
Profit for the year - - 100,166 100,166
Dividends paid - - (107,028) (107,028)
Scrip shares issued in lieu of dividend 6,629 - (6,629) -
Ordinary Shares issued 320,000 - - 320,000
Costs of Ordinary Shares issued (3,704) - - (3,704)
Ordinary Shares issued in period in
lieu of Management Fees, earned in
H2 2019(3) 1,008 (1,008) - -
Ordinary Shares to be issued in lieu
of Management Fees, earned in H1 2020(4) 995 - - 995
Ordinary Shares to be issued in lieu
of Management Fees, earned in H2 2020(1) - 1,005 - 1,005
------------------------------------------- ----------- ----------- ----------- -----------
Shareholders' equity at end of year 2,046,237 1,005 147,629 2,194,871
------------------------------------------- ----------- ----------- ----------- -----------
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent. of the management
fees (up to an Adjusted Portfolio Value of GBP1 billion) are
settled in Ordinary Shares.
Table footnotes
1 The GBP1,005,462 transfer between reserves represents the
885,012 shares that relate to management fees earned in the six
months to 31 December 2020 and were recognised in other reserves at
31 December 2020, and were issued to the Managers during the
period, with the balance being transferred to share premium
reserves, on 31 March 2021.
2 As at 30 June 2021, 880,719 shares equating to GBP991,781,
based on a Net Asset Value ex dividend of 112.61 pence per share
(the Net Asset Value at 30 June 2021 of 114.3 pence per share less
the interim dividend of 1.69 pence per share) were due but had not
been issued. The Company intends to issue these shares to the
Managers on or around 30 September 2021.
3 The GBP1,008,216 transfer between reserves represents the
889,550 shares that relate to management fees earned in the six
months to 31 December 2019 and were recognised in other reserves at
31 December 2019, and were issued to the Managers during the
period, with the balance being transferred to share premium
reserves, on 31 March 2020.
4 The GBP994,533 addition to the share premium reserve
represents the 893,480 shares that relate to management fees earned
in the six months to 30 June 2020 and were issued to the Managers
on 30 September 2020.
Condensed Cash Flow Statement
For the six-month period 1 January 2021 to 30 June 2021
Six months Six months
ended ended
30 June 30 June
2021 2020
(unaudited) (unaudited)
Note GBP'000s GBP'000s
Cash flows from operating activities
Profit before tax 8 36,810 16,263
Adjustments for:
Loss/(gain) on investments 4 39,862 (9,743)
Dividend income from investments 4 (3,200) -
Interest income from investments 4 (47,202) (37,091)
Movement in Other reserves relating to Managers
shares (13) (13)
Movement in accrued share issue costs 15 -
Finance and other income/(expense) 6 (27,176) 29,647
-------------------------------------------------- ---- ------------ ------------
Operating cash flow before changes in working
capital (904) (937)
Changes in working capital:
(Increase)/decrease in receivables (14) 2
Increase/(decrease) in payables 176 (104)
-------------------------------------------------- ---- ------------ ------------
Cash flow from operations (742) (1,039)
Interest received from investments 29,808 35,547
Loan stock and equity repayments received 31,897 18,779
Dividends received from investments 3,200 -
Interest income from cash on deposit 1 151
-------------------------------------------------- ---- ------------ ------------
Net cash from operating activities 64,164 53,438
-------------------------------------------------- ---- ------------ ------------
Cash flows from investing activities
Purchases of investments 12 (245,000) (221,616)
-------------------------------------------------- ---- ------------ ------------
Net cash used in investing activities (245,000) (221,616)
-------------------------------------------------- ---- ------------ ------------
Cash flows from financing activities
Proceeds from issue of share capital during
period 240,855 121,008
Costs in relation to issue of shares (3,996) (1,375)
Dividends paid to shareholders 10 (62,423) (53,614)
-------------------------------------------------- ---- ------------ ------------
Net cash from financing activities 174,436 66,019
-------------------------------------------------- ---- ------------ ------------
Net decrease in cash and cash equivalents (6,400) (102,159)
-------------------------------------------------- ---- ------------ ------------
Cash and cash equivalents at beginning of period 23,116 127,589
Exchange gains/(losses) on cash 5,708 (1,325)
-------------------------------------------------- ---- ------------ ------------
Cash and cash equivalents at end of period 22,424 24,105
-------------------------------------------------- ---- ------------ ------------
The accompanying Notes are an integral part of these interim
financial statements.
Notes to the Unaudited Financial Statements
For the six-month period 1 January 2021 to 30 June 2021
1. General information
The Renewables Infrastructure Group Limited ("TRIG" or the
"Company") is a closed ended investment company incorporated in
Guernsey under Section 20 of the Companies (Guernsey) Law, 2008.
The shares are publicly traded on the London Stock Exchange under a
premium listing. Through its subsidiaries, The Renewables
Infrastructure Group (UK) Limited ("TRIG UK") and The Renewables
Infrastructure Group (UK) Investments Limited ("TRIG UK I"), TRIG
invests in operational renewable energy generation projects,
predominantly in onshore and offshore wind and solar PV segments,
across the United Kingdom and Europe. The Company, TRIG UK, TRIG UK
I and its portfolio of investments are known as the "Group".
The interim condensed unaudited financial statements of the
Company (the "interim financial statements") as at and for the six
months ended 30 June 2021 comprise only the results of the Company,
as all of its subsidiaries are measured at fair value following the
amendment to IFRS 10 as explained below in Note 2.
The condensed interim financial information has been prepared on
the basis of the accounting policies, significant judgements, key
assumptions and estimates as set out in the notes to the Group's
annual financial statements for the year ended 31 December
2020.
The annual financial statements of the Company for the year
ended 31 December 2020 were approved by the Directors on 16
February 2021 and are available from the Company's Administrator
and on the Company's website http://trig-ltd.com/.
2. Key accounting policies
Basis of preparation
The interim financial statements were approved and authorised
for issue by the Board of Directors on 5 August 2021.
The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
International Accounting Standard 34 Interim Financial Reporting
("IAS 34"), as adopted by the European Union ("EU") and in
compliance with the Companies (Guernsey) Law, 2008. They should be
read in conjunction with the annual financial statements of the
Company for the year ended 31 December 2020, which are prepared in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the EU and using the historical cost basis,
except that the financial instruments classified at fair value
through profit or loss are stated at their fair values and that the
Company has applied the amendment to IFRS 10, as adopted by the EU
and as described below.
The interim financial statements are presented in sterling,
which is the Company's functional currency.
IFRS 10 states that investment entities should measure all of
their subsidiaries that are themselves investment entities at fair
value. Being investment entities, TRIG UK and TRIG UK I are
measured at fair value as opposed to being consolidated on a
line-by-line basis, meaning their cash, debt and working capital
balances are included in the fair value of investments rather than
the Group's current assets.
The Chief Operating Decision Maker (the "CODM") is of the
opinion that the Group is engaged in a single segment of business,
being investment in renewable energy assets to generate investment
returns while preserving capital. The financial information used by
the CODM to allocate resources and manage the Group presents the
business as a single segment comprising a homogeneous portfolio.
The CODM has been identified as the Board of Directors of the
Company acting collectively.
Going Concern
The Group has the necessary financial resources to meet its
obligations. The Group benefits from a range of long-term contracts
with various major UK and European utilities and well-established
suppliers across a range of infrastructure projects. In addition,
it maintains a working capital component of GBP30m as part of its
revolving credit facility (currently sized at GBP500m and limited
to 30% of Portfolio Value). The facility is available for a 3-year
term and it was GBP129m drawn at 30 June 2021.
The Company has sufficient headroom on its revolving credit
facility covenants. These covenants have been tested and relate to
interest cover ratios and group gearing limits and the Company does
not expect these covenants to be breached. The Company and its
direct subsidiaries have a number of Guarantees, detailed in Note
15. These guarantees relate to certain obligations that may become
due by the underlying investments over their useful economic lives.
We do not anticipate these guarantees to be called in the next 12
months and in many cases the potential obligations are insured by
the underlying investments.
The Group's project-level financing is non-recourse to the
Company and is limited to 50% of Gross Portfolio Value. At 30 June
2021, the Company had project-level financing of 43%.
A cash balance of GBP22.4m at 30 June 2021 is held by the
Company, with further amounts held in the Company's direct and
indirect subsidiaries. In addition, the Company has a working
capital facility on its revolving credit facility of GBP30m.
Further to the above, the Company has a number of outstanding
commitments which are detailed in section 2.6 of the Interim
Statements. These commitments include assets exchanged after the
balance sheet date and can be fully covered by the Company's
revolving credit facility.
Since the start of 2020, an outbreak of coronavirus (which
causes Covid-19) caused a global pandemic, which in conjunction
with the public health responses of various governments, led to
uncertainty in the market. The directors of the Company continue to
follow advice given by the national and international agencies
(including the World Health Organization and Public Health England)
to ensure best practices are followed.
To date there has not been a material impact on the ability of
the Company to carry out its operations. Restrictions imposed by
governments on public health grounds have impacted the consumption
of electricity, and consequently electricity prices, however these
measures are currently expected to be transitory and in place for
the shortest period practicable, ultimately with a recovery to
previous levels expected at this time. Consequently, the Directors
do not believe that there is a significant risk to the value of the
Company's investments, operations or its overall business as a
result of the Covid-19 pandemic but will continue to monitor any
future developments.
Consequently, the Directors believe that the Group is well
placed to manage its business risks successfully. To date there has
not been a significant risk to the business as a result of the
Covid-19 pandemic, but the Directors will continue to monitor any
future developments. The Directors have considered the impact of
Covid-19 in making their assessment for at least 12 months and thus
continue to adopt the going concern basis of accounting in
preparing the interim financial statements.
The Company's financial performance does not suffer materially
from seasonal fluctuations.
The initial difference between the transaction price and the
fair value, derived from using the discounted cash flows
methodology at the date of acquisition, is recognised only when
observable market data indicates there is a change in a factor that
market participants would consider in setting the price of that
investment. For the period ended 30 June 2021 and the year ended 31
December 2020, there were no such differences. In addition, there
was no material change on applying fair values between the date of
acquisition and the reporting date for acquisitions in the period
ended 30 June 2021 and 31 December 2020.
3. Financial instruments
30 June 31 December
2021 2020
GBP'000s GBP'000s
Financial assets
Designated at fair value through profit or loss:
Investments 2,334,401 2,160,946
Other financial assets 20,067 -
Financial assets at fair value 2,354,468 2,160,946
-------------------------------------------------- --------- -----------
At amortised cost:
Other receivables 29,681 12,501
Cash and cash equivalents 22,424 23,116
-------------------------------------------------- --------- -----------
Financial assets at amortised cost 52,105 35,617
-------------------------------------------------- --------- -----------
Financial liabilities
Designated at fair value through profit or loss:
Other financial liabilities - 1,399
-------------------------------------------------- --------- -----------
Financial liabilities at fair value - 1,399
-------------------------------------------------- --------- -----------
At amortised cost:
Other payables 469 293
-------------------------------------------------- --------- -----------
Financial liabilities at amortised cost 469 293
-------------------------------------------------- --------- -----------
The Directors believe that the carrying values of all financial
instruments are not materially different to their fair values.
Other financial assets/liabilities represent the fair value of
foreign exchange forward agreements in place at the period end. In
the period, the net fair value of foreign exchange forward
agreements changed from being held as a liability to that of an
asset.
Fair value hierarchy
The fair value hierarchy is defined as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
As at 30 June 2021
Level 1 Level 2 Level 3 Total
GBP'000s GBP'000s GBP'000s GBP'000s
Investments at fair value through profit
or loss - - 2,334,401 2,334,401
------------------------------------------ --------- --------- --------- ---------
- - 2,334,401 2,334,401
------------------------------------------ --------- --------- --------- ---------
Other financial assets - 20,067 - 20,067
------------------------------------------ --------- --------- --------- ---------
- 20,067 - 20,067
------------------------------------------ --------- --------- --------- ---------
As at 31 December 2020
Level 1 Level 2 Level 3 Total
GBP'000s GBP'000s GBP'000s GBP'000s
Investments at fair value through profit
or loss - - 2,160,946 2,160,946
------------------------------------------ --------- --------- --------- ---------
- - 2,160,946 2,160,946
------------------------------------------ --------- --------- --------- ---------
Other financial liabilities - (1,399) - (1,399)
------------------------------------------ --------- --------- --------- ---------
- (1,399) - (1,399)
------------------------------------------ --------- --------- --------- ---------
Investments at fair value through profit or loss comprise the
fair value of the investment portfolio, on which the sensitivity
analysis is calculated, and the fair values of TRIG UK and TRIG UK
I, the Company's subsidiaries, being its cash, working capital and
debt balances.
30 June 31 December
2021 2020
GBP'000s GBP'000s
Portfolio value 2,490,997 2,213,030
TRIG UK and TRIG UK I
Cash 3,669 737
Working capital (34,493) (17,211)
Debt(1) (125,772) (35,610)
--------------------------------------------------- --------- -----------
(156,596) (52,084)
Investments at fair value through profit or loss 2,334,401 2,160,946
--------------------------------------------------- --------- -----------
1 Debt arrangement costs of GBP3,664k (Dec 2020: GBP4,390k) have
been netted off the GBP129,436k (Dec 2020: GBP40,000k) debt drawn
by TRIG UK and TRIG UK I.
Level 2
Valuation methodology
Fair value is based on price quotations from financial
institutions active in the relevant market. The key inputs to the
discounted cash flow methodology used to derive fair value include
foreign currency exchange rates and foreign currency forward
curves. Valuations are performed on at least a six-monthly basis
every June and December for all financial assets and all financial
liabilities.
Level 3
Valuation methodology
The Investment Manager has carried out fair valuations of the
investments as at 30 June 2021 and the Directors have satisfied
themselves as to the methodology used, the discount rates and key
assumptions applied, and the valuation. All investments are at fair
value through profit or loss and are valued using a discounted cash
flow methodology using a bifurcated approach.
The following economic assumptions were used in the discounted
cash flow valuations at:
30 June 2021 31 December 2020
UK inflation rates (other
than ROC's) 2.75% 2.75%
------------------------------- ------------------------- ------------------------
Inflation applied to UK Actual then 2.75% to
ROC Income 2030, 2.00% thereafter 2.75%
------------------------------- ------------------------- ------------------------
Ireland, France, Sweden
and Germany
inflation rates 2.00% thereafter 2.00% thereafter
------------------------------- ------------------------- ------------------------
0.25% to March 2025, 0.25% to March 2023,
UK deposit interest rates 1.25% thereafter 1.0% thereafter
------------------------------- ------------------------- ------------------------
Ireland, France, Sweden
and Germany deposit interest 0.0% to March 2025, 0.25% 0.0% to March 2023, 0.5%
rates thereafter thereafter
------------------------------- ------------------------- ------------------------
19.00% to March 2023,
UK corporation tax rate 25% thereafter 19.00%
------------------------------- ------------------------- ------------------------
France corporation tax 28%; reducing to 25% 28%; reducing to 25%
rate by 2022 by 2022
------------------------------- ------------------------- ------------------------
Ireland corporation tax 12.5% active rate, 25% 12.5% active rate, 25%
rate passive rate passive rate
------------------------------- ------------------------- ------------------------
Sweden corporation tax 21.4% for 2020, 20.6%
rate 20.6% thereafter
------------------------------- ------------------------- ------------------------
Germany corporation tax
rate 15.8% 15.8%
------------------------------- ------------------------- ------------------------
Euro/sterling exchange
rate 1.1663 1.1191
------------------------------- ------------------------- ------------------------
Energy yield assumptions P50 case P50 case
------------------------------- ------------------------- ------------------------
Valuation Sensitivities
Sensitivity analysis is produced to show the impact of changes
in key assumptions adopted to arrive at the valuation. For each of
the sensitivities, it is assumed that potential changes occur
independently of each other with no effect on any other base case
assumption, and that the number of investments in the portfolio
remains static throughout the modelled life.
The sensitivities assume the portfolio is fully invested and
hence the Portfolio Value for the sensitivity analysis is the sum
of the Portfolio Valuation as at 30 June 2021 (GBP2,491.0m) and the
outstanding investment commitments (GBP177.3m) being
GBP2,668.3m.
Accordingly, the NAV per share impacts shown below assume the
issue of further shares to fund these commitments.
The analysis below shows the sensitivity of the portfolio value
(and its impact on NAV) to changes in key assumptions as
follows:
Discount rates
The discount rates used for valuing each investment are based on
market information and the current bidding experience of the Group
and its Managers.
The weighted average valuation discount rate applied to
calculate the portfolio valuation is 6.5% at 30 June 2021 (December
2020: 6.7%). An increase or decrease in this rate by 0.5% has the
following effect on valuation.
Total
NAV/share -0.5% Portfolio +0.5% NAV/ share
Discount rate impact change Value change impact
Directors' valuation - June
2021 4.4p +GBP104.1m GBP2,668.3m (GBP97.0m) (4.1p)
--------------------------------- --------- ---------- ----------- ----------- ----------
Directors' valuation - December
2020 4.7p +GBP107.3m GBP2,629.8m (GBP100.5m) (4.4p)
--------------------------------- --------- ---------- ----------- ----------- ----------
Power Price
The sensitivity considers a flat 10% movement in power prices
for all years, i.e. the effect of adjusting the forecast
electricity price assumptions in each of the jurisdictions
applicable to the portfolio down by 10% and up by 10% from the base
case assumptions for each year throughout the operating life of the
portfolio.
A change in the forecast electricity price assumptions by plus
or minus 10% has the following effect.
Total
NAV/share -10% Portfolio +10% NAV/ share
Power Price impact change Value change impact
Directors' valuation - June
2021 (7.8p) (GBP182.9m) GBP2,668.3m +GBP182.8m 7.8p
--------------------------------- --------- ----------- ----------- ---------- ----------
Directors' valuation - December
2020 (7.6p) (GBP173.6m) GBP2,629.8m +GBP172.7m 7.6p
--------------------------------- --------- ----------- ----------- ---------- ----------
Energy Yield
The base case assumes a "P50" level of output. The P50 output is
the estimated annual amount of electricity generation (in MWh) that
has a 50% probability of being exceeded - both in any single year
and over the long term - and a 50% probability of being
underachieved. Hence the P50 is the expected level of generation
over the long term.
The sensitivity illustrates the effect of assuming "P90 10-year"
(a downside case) and "P10 10-year" (an upside case) energy
production scenarios. A P90 10-year downside case assumes the
average annual level of electricity generation that has a 90%
probability of being exceeded over a 10-year period. A P10 10-year
upside case assumes the average annual level of electricity
generation that has a 10% probability of being exceeded over a
10-year period. This means that the portfolio aggregate production
outcome for any given 10-year period would be expected to fall
somewhere between these P90 and P10 levels with an 80% confidence
level, with a 10% probability of it falling below that range of
outcomes and a 10% probability of it exceeding that range. The
sensitivity includes the portfolio effect which reduces the
variability because of the diversification of the portfolio. The
sensitivity is applied throughout the life of each asset in the
portfolio (even where this exceeds 10 years).
The table below shows the sensitivity of the portfolio value to
changes in the energy yield applied to cash flows from project
companies in the portfolio as per the terms P90, P50 and P10
explained above.
Total
NAV/share P90 10 Portfolio P10 10 NAV/ share
Energy Yield impact year exceedance Value year exceedance impact
Directors' valuation - June
2021 (13.8p) (GBP325.9m) GBP2,668.3m +GBP351.7m 14.9p
--------------------------------- --------- ---------------- ----------- ---------------- ----------
Directors' valuation - December
2020 (14.3p) (GBP324.4m) GBP2,629.8m +GBP349.3m 15.3p
--------------------------------- --------- ---------------- ----------- ---------------- ----------
Inflation rates
The projects' income streams are principally a mix of subsidies,
which are typically amended each year with inflation, and power
prices, which the sensitivity assumes will move with inflation. The
projects' management, maintenance and tax expenses typically move
with inflation, but debt payments are fixed. This results in the
portfolio returns and valuation being positively correlated to
inflation.
The portfolio valuation assumes 2.75% p.a. inflation for the UK
and 2.75% to 2030 for UK ROC Income (2.0% thereafter) and 2.0% p.a.
for each of Germany, Sweden, France and Ireland over the long
term.
The sensitivity illustrates the effect of a 0.5% decrease and a
0.5% increase from the assumed annual inflation rates in the
financial model for each year throughout the operating life of the
portfolio.
Total
NAV/share -0.5% Portfolio +0.5% NAV/ share
Inflation assumption impact change Value change impact
Directors' valuation - June
2021 (4.4p) (GBP104.3m) GBP2,668.3m +GBP114.2m 4.8p
--------------------------------- --------- ----------- ----------- ---------- ----------
Directors' valuation - December
2020 (4.8p) (GBP110.1m) GBP2,629.8m +GBP120.0m 5.3p
--------------------------------- --------- ----------- ----------- ---------- ----------
Operating costs
The sensitivity shows the effect of a 10% decrease and a 10%
increase to the base case for annual operating costs for the
portfolio, in each case assuming that the change to the base case
for operating costs occurs with effect from 1 July 2021 and that
change to the base case remains reflected consistently thereafter
during the life of the projects.
Total
NAV/share -10% Portfolio +10% NAV/ share
Operating costs impact change Value change impact
Directors' valuation - June
2021 5.4p +GBP127.3m GBP2,668.3m (GBP127.0m) (5.4p)
--------------------------------- --------- ---------- ----------- ----------- ----------
Directors' valuation - December
2020 +5.8p +GBP131.5m GBP2,629.8m (GBP132.6m) (5.8p)
--------------------------------- --------- ---------- ----------- ----------- ----------
Taxation rates
The profits of each project company are subject to corporation
tax in their home jurisdictions at the applicable rates (the tax
rates adopted in the valuation are set out in Note 3 to the
financial statements). The tax sensitivity looks at the effect on
the Directors' valuation of changing the tax rates by +/- 2% each
year in each jurisdiction and is provided to show that tax can be a
material variable in the valuation of investments.
Total
NAV/ share -2% Portfolio +2% NAV/ share
Taxation rates impact change Value change impact
Directors' valuation - June
2021 1.7p +GBP39.1m GBP2,668.3m (GBP39.0m) (1.7p)
--------------------------------- ---------- --------- ----------- ---------- ----------
Directors' valuation - December
2020 1.6p +GBP37.2m GBP2,629.8m (GBP37.4m) (1.6p)
--------------------------------- ---------- --------- ----------- ---------- ----------
Interest rates
This shows the sensitivity of the portfolio valuation to the
effects of a reduction of 1% and an increase of 2% in interest
rates. The change is assumed with effect from 1 July 2021 and
continues unchanged throughout the life of the assets.
The portfolio is relatively insensitive to changes in interest
rates. This is an advantage of TRIG's approach of favouring
long-term structured project financing (over shorter term corporate
debt) which is secured with the substantial majority of this debt
having the benefit of long-term interest rate swaps which fix the
interest cost to the projects.
The portfolio sensitivity to interest rates is assessed
asymmetrically, noting that there is limited capacity for further
interest rate reductions.
Total
NAV/share -1% Portfolio +2% NAV/ share
Interest rates impact change Value change impact
Directors' valuation - June
2021 (0.0p) (GBP0.6m) GBP2,668.3m +GBP0.4m 0.0p
--------------------------------- --------- --------- ----------- -------- ----------
Directors' valuation - December
2020 (0.0p) (GBP0.9m) GBP2,629.8m +GBP0.2m 0.0p
--------------------------------- --------- --------- ----------- -------- ----------
Currency rates
The sensitivity shows the effect of a 10% decrease and a 10%
increase in the value of the euro relative to sterling used for the
30 June 2021 valuation (based on a 30 June 2021 exchange rate of
EUR1.1663 to GBP1). In each case it is assumed that the change in
exchange rate occurs from 1 July 2021 and thereafter remains
constant at the new level throughout the life of the projects.
At the period-end, 39% of the committed portfolio was located in
Sweden, France, Germany and Ireland comprising euro-denominated
assets. The Group has entered into forward hedging of the expected
euro distributions for the next 36-48 months and in addition placed
further hedges to reach a position where approximately 60-80% of
the valuation of euro-denominated assets is hedged. The hedge
reduces the sensitivity of the portfolio value to foreign exchange
movements and accordingly the impact is shown net of the benefit of
the foreign exchange hedges in place. All committed investments are
included in this sensitivity.
Total
NAV/ share -10% Portfolio +10% NAV/ share
Currency rates impact change Value change impact
Directors' valuation - June
2021 (1.6p) (GBP38.0m) GBP2,668.3m +GBP38.0m 1.6p
--------------------------------- ---------- ---------- ----------- --------- ----------
Directors' valuation - December
2020 (1.4p) (GBP31.9m) GBP2,629.8m +GBP31.9m 1.4p
--------------------------------- ---------- ---------- ----------- --------- ----------
The euro/sterling exchange rate sensitivity does not attempt to
illustrate the indirect influences of currencies on UK power prices
which are interrelated with other influences on power prices.
Asset Lives
Assumptions adopted in the valuation typically range from 25 to
40 years with the type and age of the technology being key factors
in determining the appropriate assumption (i.e. solar lives
typically greater than for wind, and newer technology typically
possessing longer assumed lives than older technology); with an
average of 30 years for the wind portfolio and 37 years for the
solar portfolio.
The overall average across the portfolio at 30 June 2021 is 30
years.
The sensitivity below shows the impact on the valuation of
assuming all assets within the portfolio have a year longer and a
year shorter asset life assumed.
Total
NAV/ share -1 year Portfolio +1 year NAV/ share
Asset Lives impact change Value change impact
Directors' valuation - June
2021 (1.0p) (GBP23.6m) GBP2,668.3m +GBP22.3m 0.9p
--------------------------------- ---------- ---------- ----------- --------- ----------
Directors' valuation - December
2020 (1.2p) (GBP27.0m) GBP2,629.8m +GBP23.4m 1.0p
--------------------------------- ---------- ---------- ----------- --------- ----------
4. Total operating income
For six For six
months months
ended ended
30 June 30 June
2021 2020
Total Total
GBP'000s GBP'000s
Net (losses)/gains on investments (39,862) 9,743
Dividend income 3,200 -
Interest income from investments 47,202 37,091
----------------------------------- ---------- ----------
Total operating income 10,540 46,834
----------------------------------- ---------- ----------
On the Expanded basis, which includes TRIG UK and TRIG UK I, the
Company's subsidiaries the Directors consider to be an extension of
the Company's investment activity, the total operating income is
GBP25,227k (Jun 2020: GBP61,145k). The reconciliation from the
Statutory IFRS basis to the Expanded basis is shown in Analysis of
Financial Results section on page 49.
5. Fund expenses
For six For six
months months
ended ended
30 June 30 June
2021 2020
Total Total
GBP'000s GBP'000s
Fees payable to the Company's auditor:
For the audit of the Company's accounts 70 62
For audit-related assurance services 41 39
Investment and management fees (Note 14) 99 99
Directors' fees (Note 14) 156 137
Other costs 540 587
------------------------------------------ ---------- ----------
Total fund expenses 906 924
------------------------------------------ ---------- ----------
On the Expanded basis, fund expenses are GBP11,784k (Jun 2020:
GBP9,446k); the difference being the costs incurred within TRIG UK
and TRIG UK I, the Company's subsidiaries. The reconciliation from
the Statutory IFRS basis to the Expanded basis is shown in the
Analysis of Financial Results section on page 49.
Audit-related services are solely in relation to the interim
review of the half-yearly financial statements.
The Company had no employees during the current or prior period.
The Company has appointed the Investment Manager and the Operations
Manager to advise on the management of the portfolio, the Company
and its subsidiaries, on its behalf.
6. Finance and other income/(expense)
For six For six
months months
ended ended
30 June 30 June
2021 2020
Total Total
GBP'000s GBP'000s
Interest income:
Interest on bank deposits 1 151
--------------------------------------------------- ---------- ----------
Total finance income 1 151
--------------------------------------------------- ---------- ----------
Gain/(loss) on foreign exchange:
Realised gain/(loss) on settlement of FX forwards 5,709 (1,155)
Fair value gain/(loss) of FX forward contracts 21,468 (28,419)
Other foreign exchange loss (2) (224)
--------------------------------------------------- ---------- ----------
Total gain/(loss) on foreign exchange 27,175 (29,404)
--------------------------------------------------- ---------- ----------
Finance and other income/(expenses) 27,176 (29,647)
--------------------------------------------------- ---------- ----------
On the Expanded basis, excluding foreign exchange movements,
finance income is GBP1k (Jun 2020: GBP131k) and finance costs are
GBP3,131k (Jun 2020: GBP1,794k); the difference being the Group's
acquisition facility costs which are incurred within TRIG UK and
TRIG UK I, the Company's subsidiaries. These costs are detailed in
the Analysis of Financial Results section on page 49.
The gain on foreign exchange on the Expanded basis is GBP27,569k
(Jun 2020: loss of GBP33,586k). The reconciliation from the
Statutory IFRS basis to the Expanded basis, which includes a large
FX movement within TRIG UK and TRIG UK I, the Company's
subsidiaries, is shown in the Analysis of Financial Results section
on page 49.
7. Income tax
Under the current system of taxation in Guernsey, the Company is
exempt from tax in Guernsey other than on Guernsey source income
(excluding Guernsey bank interest). Therefore, income from
investments is not subject to any tax in Guernsey, although these
investments will bear tax in the individual jurisdictions in which
they operate.
8. Earnings per share
Earnings per share ("EPS") is calculated by dividing the profit
attributable to equity shareholders of the Company by the weighted
average number of Ordinary Shares in issue during the period.
30 June 30 June
2021 2020
Profit attributable to equity holders of the Company
(GBP'000s) 36,810 16,263
Weighted average number of Ordinary Shares in issue
('000s) 2,009,262 1,658,987
Basic and diluted EPS 1.8p 1.0p
------------------------------------------------------ --------- ---------
9. Other receivables
30 June 31 December
2021 2020
Total Total
GBP'000s GBP'000s
Other receivables 87 73
Manager fees 992 1,005
Long-term loan interest accrued 28,602 11,423
Fair value of forward FX contracts 20,067 -
------------------------------------ --------- -----------
Total receivables 49,748 12,501
------------------------------------ --------- -----------
10. Dividends
30 June 31 December
2021 2020
GBP'000s GBP'000s
Amounts recognised as distributions to equity holders
during the period:
Interim dividend for the three months ended 31 December
2019 of 1.66p per share - 27,167
Interim dividend for the three months ended 31 March
2020 of 1.69p per share - 27,673
Interim dividend for the three months ended 30 June
2020 of 1.69p per share - 29,379
Interim dividend for the three months ended 30 September
2020 of 1.69p per share - 29,439
Interim dividend for the three months ended 31 December
2020 of 1.69p per share 32,167 -
Interim dividend for the three months ended 31 March
2021 of 1.69p per share 35,508 -
---------------------------------------------------------- --------- ------------
67,675 113,658
---------------------------------------------------------- --------- ------------
Dividends settled as a scrip dividend alternative 5,252 6,629
Dividends settled in cash 62,423 107,029
---------------------------------------------------------- --------- ------------
67,675 113,658
---------------------------------------------------------- --------- ------------
On 3 August 2021 (see Note 17), the Company declared an interim
dividend of 1.69 pence per share for the three-month period ended
30 June 2021. The dividend, which is payable on 30 September 2021,
is expected to total GBP35,547,610.92, based on a record date of 13
August 2021 and the number of shares in issue being
2,103,408,930.
11. Net assets per Ordinary Share
30 June 31 December
2021 2020
GBP'000s GBP'000s
Shareholders' equity at balance sheet date (GBP'000s) 2,406,104 2,194,871
------------------------------------------------------- --------- -----------
Number of shares at balance sheet date, including
management shares accrued but not yet issued ('000s) 2,104,290 1,904,282
------------------------------------------------------- --------- -----------
Net Assets per Ordinary Share at balance sheet date 114.3p 115.3p
------------------------------------------------------- --------- -----------
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent of the Group's
management fees (up to an Adjusted Portfolio Value of GBP1 billion)
are to be settled in Ordinary Shares. Shares are issued to the
Investment Manager and the Operations Manager twice a year in
arrears, usually in March and September for the half year ending
December and June, respectively.
As at 30 June 2021, 880,719 shares equating to GBP991,781, based
on a Net Asset Value ex dividend of 112.61 pence per share (the Net
Asset Value at 30 June 2021 of 114.3 pence per share less the
interim dividend of 1.69 pence per share) were due but had not been
issued. The Company intends to issue these shares on or around 30
September 2021.
As at 31 December 2020, 885,012 shares equating to GBP1,005,462,
based on a Net Asset Value ex dividend of 113.61 pence per share
(the Net Asset Value at 31 December 2020 of 115.0 pence per share
less the interim dividend of 1.69 pence per share) were due but had
not been issued. The Company issued these shares on 31 March
2021.
In view of this, the denominator in the above Net assets per
Ordinary Share calculation is as follows:
30 June 31 December
2021 2020
GBP'000s GBP'000s
Ordinary Shares in issue at balance sheet date 2,103,409 1,903,402
Number of shares to be issued in lieu of Management
fees 881 885
-------------------------------------------------------- --------- -----------
Total number of shares used in Net Assets per Ordinary
Share calculation 2,104,290 1,904,287
-------------------------------------------------------- --------- -----------
12. Investments at fair value through profit or loss
Investments at fair value through profit or loss is the sum of
the Portfolio Valuation and the carrying amount of TRIG UK and TRIG
UK I, the Company's subsidiaries.
30 June 31 December
2021 2020
GBP'000s GBP'000s
Brought forward 2,160,946 1,741,457
Investments purchased 245,000 499,466
Distributions received from investments (64,906) (188,779)
Dividend income 3,200 -
Interest income from investments 30,023 67,792
(Loss)/gain on valuation (39,862) 41,010
----------------------------------------- --------- ------------
Carried forward 2,334,401 2,160,946
----------------------------------------- --------- ------------
The following information is non-statutory. It provides
additional information to users of the interim financial
statements, splitting the fair value movements between the
investment portfolio and TRIG UK and TRIG UK I, the Company's
subsidiaries.
30 June 31 December
2021 2020
GBP'000s GBP'000s
Fair value of investment portfolio
Brought forward value of investment portfolio 2,213,030 1,745,185
Investments in the period 341,438 588,249
Exit proceeds in the period(2) - (117,950)
Distributions received from investments (87,979) (147,958)
Interest income 36,000 69,869
Dividend income 19,028 23,506
(Loss)/gain on valuation(3) (30,520) 52,130
--------------------------------------------------- --------- ------------
Carried forward value of investment portfolio 2,490,997 2,213,030
--------------------------------------------------- --------- ------------
Fair value of TRIG UK and TRIG UK I
Brought forward value of TRIG UK and TRIG UK I (52,084) (3,728)
Cash movement 2,933 521
Working capital movement (17,284) (11,661)
Debt movement(1) (90,161) (37,215)
--------------------------------------------------- --------- ------------
Carried forward value of TRIG UK and TRIG UK I (156,596) (52,083)
--------------------------------------------------- --------- ------------
Total investments at fair value through profit or
loss 2,334,401 2,160,946
--------------------------------------------------- --------- ------------
Table footnotes
1 Debt arrangement costs of GBP3,664k (Dec 2020: GBP4,390k) have
been netted off the GBP129,436k (Dec 2020: GBP40,000k) debt drawn
by TRIG UK and TRIG UK I.
2 In the prior year, this related to the exit of Ersträsk and
sell down of Merkur.
3 The loss on valuation includes an additional provision for
French Solar Feed-in Tariff "FiT" (GBP28.7m) which represents 1.4%
of the portfolio.
The gains on investment are unrealised.
Investments are generally restricted on their ability to
transfer funds to the Company under the terms of their senior
funding arrangements for that investment. Significant restrictions
include:
Historic and projected debt service and loan life cover ratios
exceed a given threshold;
Required cash reserve account levels are met;
Senior lenders have agreed the current financial model that
forecasts the economic performance of the project company;
Project company is in compliance with the terms of its senior
funding arrangements; and
Senior lenders have approved the annual budget for the
Company.
Details of investments recognised at fair value through profit
or loss were as follows:
30 June 2021 31 December 2020
Subordinated Subordinated
Investments (project name) Country Equity loan stock Equity loan stock
TRIG UK UK 100% 100% 100% 100%
TRIG UK I UK 100% 100% 100% 100%
Roos UK 100% 100% 100% 100%
The Grange UK 100% 100% 100% 100%
Hill of Towie UK 100% 100% 100% 100%
Green Hill UK 100% 100% 100% 100%
Forss UK 100% 100% 100% 100%
Altahullion UK 100% 100% 100% 100%
Lendrums Bridge UK 100% 100% 100% 100%
Lough Hill UK 100% 100% 100% 100%
Republic
Milane Hill of Ireland 100% 100% 100% 100%
Republic
Beennageeha of Ireland 100% 100% 100% 100%
Haut Languedoc France 100% 100% 100% 100%
Haut Cabardes France 100% 100% 100% 100%
Cuxac Cabardes France 100% 100% 100% 100%
Roussas-Claves France 100% 100% 100% 100%
Puits Castan France 100% 100% 100% 100%
Churchtown UK 100% 100% 100% 100%
East Langford UK 100% 100% 100% 100%
Manor Farm UK 100% 100% 100% 100%
Parsonage UK 100% 100% 100% 100%
Marvel Farms UK 100% 100% 100% 100%
Tamar Heights UK 100% 100% 100% 100%
Stour Fields UK 100% 100% 100% 100%
Meikle Carewe UK 100% 100% 100% 100%
Tallentire UK 100% 100% 100% 100%
Parley UK 100% 100% 100% 100%
Egmere UK 100% 100% 100% 100%
Penare UK 100% 100% 100% 100%
Earlseat UK 100% 100% 100% 100%
Republic
Taurbeg of Ireland 100% 100% 100% 100%
Four Burrows UK 100% 100% 100% 100%
Rothes 2 UK 49% 49% 49% 49%
Mid Hill UK 49% 49% 49% 49%
Paul's Hill UK 49% 49% 49% 49%
Rothes 1 UK 49% 49% 49% 49%
Crystal Rig 1 UK 49% 49% 49% 49%
Crystal Rig 2 UK 49% 49% 49% 49%
Broussan France 48.9% 100% 48.9% 100%
Plateau France 48.9% 100% 48.9% 100%
Borgo France 48.9% 100% 48.9% 100%
Olmo 2 France 48.9% 100% 48.9% 100%
Chateau France 48.9% 100% 48.9% 100%
Pascialone France 48.9% 100% 48.9% 100%
Santa Lucia France 48.9% 100% 48.9% 100%
Agrinergie 1&3 France 48.9% 100% 48.9% 100%
Agrinergie 5 France 48.9% 100% 48.9% 100%
Agrisol France 48.9% 100% 48.9% 100%
Chemin Canal France 48.9% 100% 48.9% 100%
Ligne des 400 France 48.9% 100% 48.9% 100%
Logistisud France 48.9% 100% 48.9% 100%
Marie Galante France 48.9% 100% 48.9% 100%
Sainte Marguerite France 48.9% 100% 48.9% 100%
Freasdail UK 100% 100% 100% 100%
FVP du Midi France 51.0% 100% 51.0% 100%
Neilston UK 100% 100% 100% 100%
Garreg Lwyd UK 100% 100% 100% 100%
Broxburn UK 100% 100% 100% 100%
Sheringham Shoal UK 14.7% 14.7% 14.7% 14.7%
Republic
Pallas of Ireland 100% 100% 100% 100%
Solwaybank UK 100% 100% 100% 100%
Montigny France 100% 100% 100% 100%
Rosieres France 100% 100% 100% 100%
Jadraas Sweden 100% 100% 100% 100%
Venelle France 100% 100% 100% 100%
Fujin France 41.9% 100% 41.9% 100%
Epine France 100% 100% 100% 100%
Little Raith UK 100% 100% 100% 100%
Gode Wind 1 Germany 25% 25% 25% 25%
Blary Hill UK 100% 100% 100% 100%
Merkur Germany 24.6% 24.6% 24.6% 24.6%
Haut Vannier France 100% 100% 100% 100%
East Anglia 1 UK 14.3% 14.3% 14.3% 14.3%
Beatrice UK 17.5% - - -
Grönhult Sweden 100% 100% - -
Phoenix France - 77% - 100%
On 15 January 2021, TRIG exchanged contracts to acquire 17.5% of
equity interest in Beatrice offshore wind farm located off the
north east coast of Scotland and completed in March 2021 following
regulatory and lending consent.
On 12 February 2021, TRIG acquired 100% interest in Grönhult, a
67.2 MW ready-to-build onshore wind farm located in the southwest
of Sweden. The Project was purchased from Vattenfall, the leading
Swedish utility supplier and major developer of renewables, who
will also manage the construction process. The Project is expected
to become operational at the end of Q4 2022 and will be funded
through equity investment rather than project debt.
On 27 May 2021, TRIG exchanged contracts to acquire a 50%
interest in two onshore pre-construction wind farms, Ranasjö and
Salsjö, also known as Twin Peaks, located in central Sweden. TRIG
has partnered with InfraRed European Infrastructure Income Fund 4
who acquired a 50% interest in the project alongside TRIG. This is
consistent with TRIG's strategy of partnering with aligned
co-investors on larger transactions whilst maintaining a
diversified portfolio. The transaction subsequently completed in
July 2021.
In the period TRIG made an additional investment in Blary Hill
to fund its construction programme, in line with outstanding
commitments.
Further detail of acquisitions made in the period can be found
in the Interim Management Report.
13. Share capital, share premium and reserves
Ordinary Ordinary
GBP1 Shares GBP1 Shares
30 June 31 December
2021 2020
000s 000s
Opening balance 1,903,403 1,636,564
Issued for cash 195,000 260,000
Issued as a scrip dividend alternative 4,121 5,056
Issued in lieu of management fees 885 1,783
---------------------------------------- ------------- --------------
Issued at end of period - fully paid 2,103,409 1,903,403
---------------------------------------- ------------- --------------
On 23 May 2021, the Company issued 195,000,000 shares at 123p
per share, raising GBP239.85m before costs. The company used the
funds to partially repay the revolving credit facility.
The Company issued 4,121,580 shares in relation to scrip take-up
as an alternative to dividend payments in relation to the dividends
paid in the period.
The 885,012 shares issued on 31 March 2021 relate to
GBP1,005,462 of manager fees earned in the six months to 31
December 2020.
The holders of the 2,103,408,930 (Dec 2020: 1,903,402,338)
Ordinary Shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of
the Company. The Company shares are issued at nil par value.
Share capital and share premium
30 June 31 December
2021 2020
GBP'000s GBP'000s
Opening balance 2,046,237 1,721,309
Ordinary Shares issued 246,107 328,632
Cost of Ordinary Shares issued (3,996) (3,704)
-------------------------------- --------- ------------
Closing balance 2,288,348 2,046,237
-------------------------------- --------- ------------
Other reserves
30 June 31 December
2021 2020
GBP'000s GBP'000s
Opening balance 1,005 1,008
Shares to be issued in lieu of management fees incurred
in H1 2020(1) - 995
Shares to be issued in lieu of management fees incurred
in H2 2020 (Note 13) - 1,005
Shares to be issued in lieu of management fees incurred
in H1 2021 (Note 13) 992 -
Shares issued in the period, transferred to share
premium (1,005) (2,003)
--------------------------------------------------------- --------- ------------
Closing balance 992 1,005
--------------------------------------------------------- --------- ------------
Table footnotes
1 GBP994,533 represents the 893,480 shares that relate to
management fees earned in the six months to 30 June 2020, this was
issued to the Managers in September 2020 and transferred to share
premium. Thus, this figure cannot be seen under Other Reserves on
the Statement of Changes in Equity.
Retained reserves
Retained reserves comprise retained earnings, as detailed in the
statement of changes in shareholders' equity.
14. Related party and key advisor transactions
Loans to related parties:
30 June 31 December
2021 2020
GBP'000s GBP'000s
Short-term balance outstanding on accrued interest
receivable 28,602 11,423
Short-term balance outstanding from TRIG UK, in relation
to Management fees to be settled in shares 992 1,005
Long-term loan to TRIG UK I 1,499,047 1,312,037
---------------------------------------------------------- --------- ------------
1,528,641 1,324,465
---------------------------------------------------------- --------- ------------
During the period, interest totalling GBP47,202k (Jun 2020:
GBP37,091k) was earned, in respect of the long-term
interest-bearing loan between the Company and its subsidiaries,
TRIG UK and TRIG UK I. At the period end GBP28,602k of accrued
interest was receivable (Dec 2020: GBP11,423k).
Key advisor transactions
The Investment Manager to the Group (InfraRed Capital Partners
Limited) is entitled to 65 per cent of the aggregate management fee
(see below), payable quarterly in arrears. The Operations Manager
to the Group (Renewable Energy Systems Limited) is entitled to 35
per cent of the aggregate management fee (see below), payable
quarterly in arrears.
The aggregate management fee payable to the Investment Manager
and the Operations Manager is 1 per cent of the Adjusted Portfolio
Value in respect of the first GBP1 billion of the Adjusted
Portfolio Value, 0.8 per cent in respect of the Adjusted Portfolio
Value in excess of GBP1 billion, 0.75 per cent in respected of the
Adjusted Portfolio Value in excess of GBP2 billion and 0.7 per cent
in respected of the Adjusted Portfolio Value in excess of GBP3
billion. These fees are payable by TRIG UK, the Company's direct
subsidiary, less the proportion that relates solely to the Company,
the advisory fees, which are payable by the Company.
The advisory fees payable to the Investment Manager and the
Operations Manager in respect of the advisory services they provide
to the Company are GBP130k per annum and GBP70k per annum,
respectively. The advisory fees charged to the Company are included
within the total fee amount charged to the Company and its
subsidiary, TRIG UK. The Investment Manager advisory fee charged to
the income statement for the period was GBP64k (Jun 2020: GBP64k),
of which GBP32k (Jun 2020: GBP32k) remained payable in cash at the
balance sheet date. The Operations Manager advisory fee charged to
the income statement for the period was GBP35k (Jun 2020: GBP35k),
of which GBP17k (Jun 2020: GBP35k) remained payable in cash at the
balance sheet date.
The Investment Manager management fee charged to TRIG UK for the
period was GBP6,708k (Jun 2020: GBP5,289k), of which GBP3,843k (Jun
2020: GBP3,065k) remained payable in cash at the balance sheet
date. The Operations Manager management fee charged to TRIG UK for
the period was GBP3,612k (Jun 2020: GBP2,847k), of which GBP2,069k
(Jun 2020: GBP1,650k) remained payable in cash at the balance sheet
date.
In addition, the Operations Manager received GBP6,303k (Jun
2020: GBP4,664k) for services in relation to Asset Management.
These expenses are incurred in the project companies and are not
included in these interim financial statements.
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent of the Group's
aggregate management fees (up to an Adjusted Portfolio Value of
GBP1 billion) are to be settled in Ordinary Shares. The shares
issued to the Managers by the Company relate to amounts due to the
Managers by TRIG UK. Accordingly, TRIG UK reimburses the Company
for the shares issued.
On 31 March 2021, the Company issued 885,012 shares equating to
GBP1,005,462, based on a Net Asset Value ex dividend of 113.61
pence per share (the Net Asset Value at 31 December 2020 of 115.0
pence per share less the interim dividend of 1.69 pence per share)
in respect of management fees earned in H2 2020.
As at 30 June 2021, 880,719 shares equating to GBP991,781, based
on a Net Asset Value ex dividend of 112.61 pence per share (the Net
Asset Value at 30 June 2021 of 114.3 pence per share less the
interim dividend of 1.69 pence per share) were due, in respect of
management fees earned in H1 2021, but had not been issued. The
Company intends to issue these shares on or around 30 September
2021.
The Directors of the Company received fees for their services.
Total fees for the Directors for the period were GBP156,000 (Jun
2020: GBP137,167). Directors' expenses of GBP0 (Jun 2020: GBP2,906)
were also paid in the period.
All of the above transactions were undertaken on an arm's length
basis.
15. Guarantees and other commitments
As at 30 June 2021, the Company and or TRIG UK and or TRIG UK I
and its subsidiaries, had provided GBP60.3m (Dec 2020: GBP58.9m) in
guarantees to the projects in the TRIG portfolio.
The Company and its subsidiaries have issued decommissioning and
other similar guarantee bonds with a total value of GBP19.0m (Dec
2020: GBP22.9m).
As at 30 June 2021, the Company, through its subsidiaries, had
net commitments of GBP177.3m (Jun 2020: GBP40.6m) in relation to
future investments. These commitments, in the form of deferred
consideration, are due as investment completion obligations are met
and when construction milestones are achieved.
The Company also guarantees the revolving credit facility,
entered into by TRIG UK and TRIG UK I, to enable it to acquire
further investments.
16. Contingent consideration
The Group has performance-related contingent consideration
obligations of up to GBP1.8m (Dec 2020: GBP0.4m) relating to
acquisitions completed prior to 30 June 2021. These payments depend
on the performance of certain wind farms and other contracted
enhancements. The payments, if triggered, would be due up to 2026.
The valuation of the investments in the portfolio does not assume
that these enhancements are achieved. If further payments do become
due, they would be expected to be offset by an increase in fair
value of the investment due to increased assumed revenues. The
arrangements are generally two-way in that if performance is below
base case levels some refund of consideration may become due.
17. Events after the balance sheet date
On 3 August 2021, the Company declared an interim dividend of
1.69 pence per share for the three-month period ended 30 June 2021.
The dividend, which is payable on 30 September 2021, is expected to
total GBP35,547,611, based on a record date of 13 August 2021 and
the number of shares in issue being 2,103,408,930.
There are no other events after the balance sheet date, which
are required to be disclosed.
Directors and Advisers
DIRECTORS
Helen Mahy (Chairman)
Jonathan (Jon) Bridel
Shelagh Mason
Klaus Hammer
Tove Feld
John Whittle (appointed 1 July 2021)
REGISTRAR
Link Market Services (Guernsey) Limited
PO Box 627
St Peter Port
Guernsey GY1 4PP
ADMINISTRATOR TO COMPANY, DESIGNATED MANAGER, COMPANY SECRETARY
AND REGISTERED OFFICE
Aztec Financial Services (Guernsey) Limited
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3PP
+44 1481 748 831
INVESTMENT MANAGER
InfraRed Capital Partners Limited
Level 7, One Bartholomew Close
Barts Square
London EC1A 7BL
OPERATIONS MANAGER
Renewable Energy Systems Limited
Beaufort Court
Egg Farm Lane
Kings Langley
Hertfordshire WD4 8LR
FINANCIAL PR
Maitland/AMO
3 Pancras Square
London N1C 4AG
UK TRANSFER AGENT
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Helpline: 0871 664 0300
AUDITOR
Deloitte LLP
Regency Court
Esplanade
St Peter Port
Guernsey GY1 3HW
BROKERS
Investec Bank Plc
30 Gresham Street
London EC2V 7QP
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Key Company Data
Company name The Renewables Infrastructure Group Limited
Registered address East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey
Listing London Stock Exchange - Premium Listing
Ticker symbol TRIG
SEDOL BBHX2H9
Index inclusion FTSE All-Share, FTSE 250, FTSE 350 and FTSE 350
High Yield indices
Company year end 31 December
Dividend payments Quarterly (March, June, September, December)
Investment Manager InfraRed Capital Partners Limited
("IM")
Operations Manager Renewable Energy Systems Limited
("OM")
Company Secretary Aztec Financial Services (Guernsey) Limited
and
Administrator
Net assets GBP2,406m as at 30 June 2021
Market capitalisation GBP2,692m as at 30 June 2021
Management Fees 1.0% per annum of the Adjusted Portfolio Value1
of the investments up to GBP1.0bn (with 0.2%
of this paid in shares), falling to (with no
further elements paid in shares) 0.8% per annum
for the Adjusted Portfolio Value above GBP1.0bn,
0.75% per annum for the Adjusted Portfolio Value
above GBP2.0bn and 0.7% per annum for the Adjusted
Portfolio Value above GBP3.0bn. Fees are split
between the Investment Manager (65%) and the
Operations Manager (35%).
No performance or acquisition fees.
ISA, PEP and SIPP The ordinary shares are eligible for inclusion
status in PEPs and ISAs (subject to applicable subscription
limits) provided that they have been purchased
in the market. The shares are permissible assets
for SIPPs.
FATCA The Company has registered for FATCA and has
a GIIN number J0L1NL.99999.SL.831
KID The Company issues a KID in line with EU PRIIPs
regulation and this can be found on the Company's
website
Investment policy The Company's investment policy can be found
on the Company's website
Website www.TRIG-Ltd.com
Table footnotes
1 Adjusted Portfolio Value means fair market value, without
deductions for borrowed money or other liabilities or accruals, and
including outstanding subscription obligations.
[1] Ranasjö and Salsjö are collectively known as Twin Peaks -
this transaction was completed subsequent to valuation on 30 June
2021
[2] Calculated based on each project's generation capacity
pro-rated for TRIG's share of subordinated debt and equity capital.
Capacity is from both generation and battery output and includes
expected capacity arising from investment commitments as at 30 June
2021.
[3] On a committed basis at the date of this report, and based
on average regional household electricity consumption figures and
the IFI Approach to GHG Accounting for Renewable Energy.
[4] Dividend cover was 1.18 times after scrip take-up
[5] The AIC Code has been endorsed by the Financial Reporting
Council (FRC) and the Guernsey Financial Services Commission
(GFSC).
[6] Details of recent recipients of grants from the TRIG
Covid-19 Community Fund can be found in the Company's latest
Sustainability Report.
[7] Pro-rated based on TRIG's % ownership of portfolio companies.
[8] Taskforce on Climate-related Financial Disclosures
[9] Principles for Responsible Investment, a United
Nations-supported international network of investors.
[10] Science Based Targets initiative ("SBTi") defines and
promotes best practice for company emission reduction targets.
[11] Based on a closing share price on 30 June 2021 of 128p.
[12] According to Bloomberg New Energy Finance
[13] https://www.un.org/sustainabledevelopment
[14] Once the projects in construction are operational the
portfolio will be capable of powering the equivalent of 1.5 million
homes with clean energy
[15] Once the projects in construction are operational the
portfolio will be capable of offsetting 1.6 million tonnes of CO(2)
emissions annually. Calculated in accordance with the IFI Approach
to GHG Accounting for Renewable Energy.
[16] Actual values calculated in accordance with the IFI
Approach to GHG Accounting for Renewable Energy.
[17] This relates to electricity used on site
[18] Number of operational TRIG sites engaged in pro-active
habitat management plans that exceed standard environmental
maintenance.
[19] Found on the reports and publications section of TRIG's
website:
https://www.trig-ltd.com/investors/reports-and-publications/
[20] https://www.ircp.com/sustainability
[21] The LTAFR is calculated on the basis of the number of
accidents which have occurred in the period divided by the number
of hours worked multiplied by 100,000 to give a rate for every
100,000 hour worked. Whilst all accidents are recorded by RES, only
accidents that have resulted in the incapacitation of a worker for
more than seven days are included in this calculation in line with
reportable accidents as defined UK HSE RIDDOR regulation.
[22] TRIG project companies are the number of project level
companies registered within a given region. There may be some
assets, which have multiple company registrations, due to the size
and locations of the individual sites (such as smaller solar and
wind farms).
[23] Ranasjö and Salsjö (Twin Peaks) are not included as no
investment had been made at the valuation date.
[24] The majority of the Swedish wind farm income is from
wholesale power sales which in the Nord Pool are denominated in
Euros, accordingly the investment is treated as Euro
denominated.
[25] Ranasjö and Salsjö (Twin Peaks) are not included as no
investment had been made at the valuation date.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR EAXPSESKFEFA
(END) Dow Jones Newswires
August 06, 2021 02:00 ET (06:00 GMT)
The Renewables Infrastru... (LSE:TRIG)
Historical Stock Chart
From Jun 2024 to Jul 2024
The Renewables Infrastru... (LSE:TRIG)
Historical Stock Chart
From Jul 2023 to Jul 2024