TIDMUKW
RNS Number : 6331C
Greencoat UK Wind PLC
24 February 2022
24 February 2022
GREENCOAT UK WIND PLC (the "Company")
Greencoat UK Wind PLC reports results for the year ended 31
December 2021
Greencoat UK Wind PLC today announces the final results for the
year to 31 December 2021 as below. These results were approved by
the Board of Directors on 23 February 2022.
Greencoat UK Wind PLC is the leading listed renewable
infrastructure fund, invested in UK wind farms. The Company's aim
is to provide investors with an annual dividend that increases in
line with RPI inflation while preserving the capital value of its
investment portfolio in the long term on a real basis through
reinvestment of excess cashflow.
The Company provides investors with the opportunity to
participate directly in the ownership of UK wind farms, so
increasing the resources and capital dedicated to the deployment of
renewable energy and the reduction of greenhouse gas emissions.
2021 Highlights
Generation
-- The Group's investments generated 2,933GWh of sustainable electricity.
-- Net cash generation (Group and wind farm SPVs) was GBP256.8 million.
High quality investments and oversubscribed equity raises
-- Acquisition of the remaining 50 per cent interest in Braes of
Doune, investments in Andershaw, Burbo Bank Extension, Windy Rig
and Glen Kyllachy, and the commissioning of Douglas West increased
the portfolio to 43 operating wind farm investments and net
generating capacity to 1,422MW as at 31 December 2021.
-- Issuance of further shares raising GBP648 million through
oversubscribed equity raisings in February 2021 and November
2021.
Dividends and balance sheet
-- The Company has declared total dividends of 7.18 pence per
share with respect to the year and is targeting a dividend of 7.72
pence per share for 2022 (increased in line with December 2021
RPI).
-- GBP950 million outstanding borrowings as at 31 December 2021,
equivalent to 23 per cent of GAV.
Key Metrics
As at As at
31 December 2021 31 December 2020
------------------------------------------------- ------------------- -------------------
Market capitalisation GBP3,257.8 million GBP2,448.0 million
Share price 140.6 pence 134.2 pence
Dividends with respect to the year GBP148.0 million GBP118.7 million
Dividends with respect to the year per share 7.18 pence 7.10 pence
GAV GBP4,043.7 million GBP3,329.9 million
NAV GBP3,093.7 million GBP2,229.9 million
NAV per share 133.5 pence 122.2 pence
NAV movement per share (adjusting for dividends) 11.3 pence 0.7 pence
Total return (NAV) 15.4 per cent 6.5 per cent
TSR 10.7 per cent (6.2) per cent
CO(2) emissions reduced per annum 1.7 million tonnes 1.5 million tonnes
Homes powered per annum 1.5 million homes 1.2 million homes
Funds invested in community projects in the year GBP3.0 million GBP3.8 million
------------------------------------------------- ------------------- -------------------
Commenting on today's results, Shonaid Jemmett-Page, Chairman of
Greencoat UK Wind, said :
"2021 represented another year of robust performance and
sustained strong cash generation, building on our well-established
track record. Our simple, low risk, and proven strategy has enabled
us to increase our dividend in line with RPI once more, and to
target a dividend of 7.72p per share for 2022.
"The year represented another significant period of growth, with
GBP570 million invested in high quality assets and GBP648 million
of new equity raised. In the year we grew our portfolio to surpass
1.4GW of installed capacity, which underlines the size and scale
the Group has attained since listing. We commissioned our first
three subsidy free wind farms, complementing our two CFD
investments, and these sit alongside our 38 ROC investments as part
of a balanced portfolio.
"We continue to see an attractive pipeline of projects, both
onshore and offshore, and remain strongly positioned to deliver
more value-accretive acquisitions to further enhance returns for
our shareholders."
Annual report
A copy of the annual report has been submitted to the National
Storage Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism . The annual
report will also shortly be available on the Company's website at
www.greencoat-ukwind.com where further information on the Company
can also be found.
Details of the conference call for analysts and investors:
There will be a conference call at 9.30am today for analysts and
investors. To register for the event please notify Headland, either
by email to ukwind@headlandconsultancy.com or by telephone on +44
(0)20 3805 4822.
Presentation materials will be posted on the Company's website,
www.greencoat-ukwind.com , from 9.30am.
For further information, please contact:
Greencoat UK Wind PLC 020 7832 9425
Stephen Lilley
Laurence Fumagalli
Tom Rayner
Headland Consultancy 020 3805 4822
Stephen Malthouse
Rob Walker
Defining Characteristics
Greencoat UK Wind PLC was designed for investors from first
principles to be simple, transparent and low risk.
-- The Group is invested solely in UK wind farms.
-- Wind is the most mature and largest scale renewable technology.
-- The UK has a long established regulatory regime, high wind
resource and GBP80 billion worth of wind farms in operation.
-- The Group is wholly independent and thus avoids conflicts of
interests in its investment decisions.
-- The independent Board is actively involved in key investment
decisions and in monitoring the efficient operation of the assets,
and works in conjunction with the most experienced investment
management team in the sector.
-- Low gearing is important to ensure a high level of cash flow
stability and higher tolerance to downside sensitivities.
-- The Group invests in sterling assets and thus does not incur material currency risk.
Chairman's Statement
I am pleased to present the Annual Report of Greencoat UK Wind
PLC for the year ended 31 December 2021.
Performance
2021 was another significant year of growth for the Company with
GBP570 million invested and GBP648 million of new equity
raised.
During the year, portfolio generation was low, 20 per cent below
budget, at 2,933GWh. Power prices were significantly above budget,
primarily reflecting high gas prices in the second half of the
year. Net cash generated by the Group and wind farm SPVs was
GBP256.8 million, providing cover of 1.9x on GBP138.8 million of
dividends paid in the year.
By the end of 2021, the portfolio was generating sufficient
electricity to power 1.5 million homes and avoiding carbon dioxide
emissions of approximately 1.7 million tonnes per annum through the
displacement of thermal generation.
Dividends and Returns
Declared dividends for the year total 7.18 pence per share, with
the fourth and final quarterly dividend of 1.795 pence per share to
be paid on 25 February 2022. With our continuing strong cash flow
and robust dividend cover we can confidently target a dividend of
7.72 pence per share with respect to 2022, increased in line with
December's RPI of 7.5 per cent.
NAV per share increased from 120.4 pence per share (ex dividend)
on 31 December 2020 to 131.7 pence per share (ex dividend) on 31
December 2021, an increase of 11.3 pence (9.4 per cent) during the
year, primarily reflecting high short term power prices. Since
listing, NAV has increased by more than RPI.
The Total Shareholder Return for the year was 10.7 per cent.
Acquisitions
2021 has been an active investment year for us. In February, we
acquired the remaining 50 per cent shareholding in Braes of Doune
wind farm for GBP48 million. In September, we acquired Andershaw
wind farm for GBP121 million and commissioned Douglas West wind
farm (investing a further GBP25 million during the year). In
November, we invested GBP250 million in Burbo Bank Extension wind
farm and in December we acquired Windy Rig and Glen Kyllachy wind
farms once commissioning had been completed for GBP55 million and
GBP59 million respectively. During the year, we have also provided
GBP11 million of construction finance to Kype Muir Extension wind
farm (target commissioning in Q4 2022).
Douglas West, Windy Rig and Glen Kyllachy are the Company's
first 3 subsidy free projects and sit alongside Burbo Bank
Extension and Tom nan Clach, the Company's 2 CFD projects. The
remaining 38 wind farms are all accredited under the ROC regime.
The Group's offshore fleet accounts for 33 per cent of assets by
value.
Equity Issuance
In order to finance our continuing growth and pursue value
creating opportunities, we issued 151 million new shares on 19
February 2021 at a price of 131 pence per share, raising gross
proceeds of GBP198 million. On 29 November 2021 we issued a further
341 million new shares at a price of 132 pence per share, raising
gross proceeds of GBP450 million. Both equity raises were
oversubscribed and priced at a premium to NAV per share.
Gearing
In November, the Company's revolving credit facility was
increased to GBP600 million. GBP150 million term debt maturing in
2022 was also refinanced with longer dated term debt with existing
lenders. In December, we entered into a new GBP200 million term
debt facility with AXA, which was utilised on 31 January 2022 to
reduce borrowings under the revolving credit facility to GBP50
million (GBP250 million as at 31 December 2021). Longer term
borrowing, now totalling GBP900 million, consists of various
maturities to 31 January 2030, thus reducing financing risk. The
Group's gearing of GBP950 million as at 31 December 2021 equates to
23 per cent of GAV and the weighted average cost of borrowing is
2.6 per cent.
The Group will generally avoid using non-recourse debt at wind
farm level and aims to keep overall Group level borrowings at a
prudent level (the maximum is 40 per cent of GAV). Over the medium
term we would expect gearing to be between 20 and 30 per cent of
GAV.
Strategy and Outlook
Wind continues to be the most mature and widely deployed
renewable energy technology in the UK. In November 2021, the UK
hosted the COP26 conference in Glasgow, with the Prime Minister
playing a clear role in encouraging the delivery of 2050 net zero
emissions targets. A key part of that plan for the UK is a 40GW
offshore wind target for 2030.
Our Investment Objective has remained unchanged over the last 9
years since listing: to provide shareholders with an annual
dividend that increases in line with RPI inflation while preserving
the capital value of the investment portfolio in real terms. This
is achieved through a focused strategy of investing only in wind
farms and only in the UK and maintaining a balanced exposure to
power prices. Our intention remains to adhere strictly to this core
strategy.
Growth by acquisition brings benefits to shareholders as:
-- a larger scale brings economies and enables better terms to
be obtained from suppliers;
-- equity raisings following acquisitions provide additional
opportunity for shareholders to increase their investment in the
Company;
-- these equity raisings are priced at a premium to NAV per
share thus enhancing overall NAV per share for existing
shareholders; and
-- equity raisings increase the liquidity of shares in the
market (during 2021 on average 14.1 million of the Company's shares
were traded weekly on the London Stock Exchange).
Significantly, during 2021 we made GBP570 million of
investments, of which 30 per cent were in ROC accredited wind
farms, 44 per cent in CFD projects and 26 per cent in subsidy free
projects. We expect to continue to see attractive CFD and subsidy
free assets within our significant acquisition pipeline alongside
wind farms accredited under the ROC regime.
The executive management continues to maintain a disciplined
acquisition strategy: if a potential investment is not in line with
the Company's investment objectives, or is otherwise not in the
interests of shareholders, then we will not invest.
Through strong cash flow and robust dividend cover, coupled with
our disciplined approach, we are confident in our ability to
continue to meet the objectives of dividend growth in line with RPI
and capital preservation in real terms.
Health, Safety and the Environment
As a responsible investor in operating wind farms, the Company
takes its Health and Safety responsibilities very seriously. We
work with our Investment Manager to promote the highest standard of
health, safety and environmental management practices in managing
our portfolio of investments. Detailed key performance indicators
and the results of audits are regularly reviewed by the Board and
action taken where necessary. We continue to monitor the standards
maintained by the operators of our wind farm investments, to ensure
that these are at least in line with the wider industry, while
seeking continuous improvement.
Climate Change
As a Company investing in wind farms, our strategy and
activities naturally make a positive contribution toward the
worldwide goal of achieving a net zero carbon emissions economy and
limiting global warming to 1.5(o) C. We welcome the opportunity to
make appropriate climate related financial disclosures as
recommended by the Task Force on Climate-Related Financial
Disclosures (TCFD) in this year's Annual Report, which may be
developed further in future reports. Detailed disclosures can be
found in the Strategic Report.
The Board and Governance
At the AGM, Willy Rickett will retire from the Board and I, on
behalf of the whole Board, would like to thank him for the fine job
he has done as the Company's Senior Independent Director since its
listing in 2013. Given his experience, Willy has been a great
source of wisdom and we have valued his contribution enormously. We
were delighted that Nick Winser joined the board on 1 January 2022,
bringing the experience he has in the regulated electricity
sector.
The annual internal evaluation of the Board raised no
significant issues.
The Group's governance is further described in the Corporate
Governance Report.
Annual General Meeting
Our AGM will take place at 2 pm on 28 April 2022 at the office
of the Investment Manager. In 2021, following the advice of the
government on social distancing, travel and measures to prohibit
public gathering in order to minimise the spread of COVID-19, the
Company decided to change the location of its AGM from the offices
of the Investment Manager and hold it with the minimum necessary
quorum of 2 shareholders present. A recording of the AGM was made
and is available for shareholders on the Company's website
(www.greencoat-ukwind.com). It is possible that such an arrangement
might also be either necessary or sensible for the AGM at the end
of April 2022. The Company realises that this is not ideal and will
try to provide the opportunity for investors to meet with the Board
and executive management, if possible, later in the year, if the
AGM has to be carried out in this manner.
Details of the formal business of the meeting are set out in a
separate circular which is sent to shareholders with the Annual
Report.
Shonaid Jemmett-Page
Chairman
23 February 2022
Investment Manager's Report
The Investment Manager
The investment management team's experience covers wind farm
investment, ownership, finance and operation. All the skills and
experience required to manage the Group's investments lie within a
single investment manager. The Investment Manager is authorised and
regulated by the Financial Conduct Authority and is a full scope UK
AIFM.
Since the Company's listing in March 2013, the investment
management team has been led by Stephen Lilley and Laurence
Fumagalli.
Stephen has 25 years of investment management and financing
experience in addition to 6 years in the nuclear industry. Prior to
joining the Investment Manager in March 2012, Stephen led the
renewable energy infrastructure team at Climate Change Capital
(CCC) from May 2010. Prior to CCC, he was a senior director of
Infracapital Partners LP, M&G's European Infrastructure fund.
During this time, Stephen led the acquisitions of stakes in Kelda
Group (Yorkshire Water), Zephyr (wind farms) and Meter Fit
(gas/electricity metering) and also sat on the boards of these
companies after acquisition. Prior to this, he was a director at
Financial Security Assurance, where he led over GBP2 billion of
underwritings in the infrastructure and utility sectors. He also
worked for the investment companies of the Serco and Kvaerner
Groups.
Laurence also has 25 years of investment management and
financing experience. Prior to joining the Investment Manager in
March 2012, Laurence held a number of senior roles within CCC from
2006 to 2011. Initially he co-headed CCC's advisory team before
transferring in 2007 to the carbon finance team. Laurence joined
Stephen in the renewable energy infrastructure team in early 2011.
From 2003-2006, Laurence headed the Bank of Tokyo-Mitsubishi's
London-based renewables team, where he financed and advised on over
1GW of UK wind. Prior to the Bank of Tokyo-Mitsubishi, Laurence
worked in the power project finance team at NatWest.
In December, Schroders plc announced that it had reached
agreement to acquire a 75% interest in the Investment Manager. The
transaction is expected to complete in H1 2022 subject to
regulatory approval. The Investment Manager will continue to
operate as an independent business and will become part of
Schroders Capital, the private markets division of Schroders plc.
Schroders plc is a global asset manager and wealth manager, which
delivers a broad range of investments for institutions,
intermediaries and high net worth individuals with AUM of GBP700
billion.
Investment Portfolio
Operating portfolio as at 31 December 2021:
Wind Farm Turbines Operator PPA Total Ownership Net MW
MW Stake
---------------------- ---------- ----------- ------------- ------ ---------- --------
Andershaw Vestas Statkraft Statkraft 35.0 100% 35.0
Bicker Fen Senvion EDF EDF 26.7 80% 21.3
Bin Mountain GE SSE SSE 9.0 100% 9.0
Bishopthorpe Senvion BayWa Axpo 16.4 100% 16.4
Braes of Doune Vestas BayWa Centrica 72.0 100% 72.0
Brockaghboy Nordex SSE SSE 47.5 100% 47.5
Burbo Bank Extension Vestas Orsted CFD 258.0 15.7% 40.4
Carcant Siemens BayWa Axpo 6.0 100% 6.0
Church Hill Enercon Energia Energia 18.4 100% 18.4
Clyde Siemens SSE SSE 522.4 28.2% 147.3
Corriegarth Enercon BayWa Centrica 69.5 100% 69.5
Cotton Farm Senvion BayWa Sainsbury's 16.4 100% 16.4
Crighshane Enercon Energia Energia 32.2 100% 32.2
Deeping St. Nicholas Senvion EDF EDF 16.4 80% 13.1
Natural
Douglas West Vestas Power Erova 45.0 100% 45.0
Drone Hill Nordex BayWa Statkraft 28.6 51.6% 14.8
Dunmaglass GE SSE SSE 94.0 35.5% 33.4
Earl's Hall Farm Senvion BayWa Sainsbury's 10.3 100% 10.3
Glass Moor Senvion EDF EDF 16.4 80% 13.1
Natural
Glen Kyllachy Nordex Power Tesco 48.5 100% 48.5
Humber Gateway Vestas RWE RWE 219.0 37.8% 82.8
Kildrummy Enercon BayWa Sainsbury's 18.4 100% 18.4
Natural
Langhope Rig GE Power Centrica 16.0 100% 16.0
Lindhurst Vestas RWE RWE 9.0 49% 4.4
Little Cheyne
Court Nordex RWE RWE 59.8 41% 24.5
Maerdy Siemens BayWa Statkraft 24.0 100% 24.0
Middlemoor Vestas RWE RWE 54.0 49% 26.5
North Hoyle Vestas RWE Erova 60.0 100% 60.0
North Rhins Vestas BayWa E.ON 22.0 51.6% 11.4
Red House Senvion EDF EDF 12.3 80% 9.8
Red Tile Senvion EDF EDF 24.6 80% 19.7
Rhyl Flats Siemens RWE RWE 90.0 24.95% 22.5
Screggagh Nordex SSE Energia 20.0 100% 20.0
Sixpenny Wood Senvion BayWa Statkraft 20.5 51.6% 10.6
Slieve Divena Nordex SSE SSE 30.0 100% 30.0
Slieve Divena
II Enercon SSE SSE 18.8 100% 18.8
Stronelairg Vestas SSE SSE 227.7 35.5% 80.9
Stroupster Enercon BayWa BT 29.9 100% 29.9
Tappaghan GE SSE SSE 28.5 100% 28.5
Natural
Tom nan Clach Vestas Power CFD 40.0 75% 30.0
Walney Siemens Orsted Total 367.2 25.1% 92.2
Windy Rig Vestas Statkraft Statkraft 43.2 100% 43.2
Yelvertoft Senvion BayWa Statkraft 16.4 51.6% 8.5
---------------------- ---------- ----------- ------------- ------ ---------- --------
Total 1,422.0
Portfolio Performance
Portfolio generation for the year was 2,933 GWh, 20 per cent
below budget.
The following table shows wind speed and portfolio generation
relative to budget since listing:
UK weighted average wind speed Generation
(variation to long term mean) (variation to budget)
2013 (adjusted) +3% +8%
------------------------------- -----------------------
2014 -2% -3%
------------------------------- -----------------------
2015 +5% +8%
------------------------------- -----------------------
2016 -6% -6%
------------------------------- -----------------------
2017 -1% 0%
------------------------------- -----------------------
2018 -4% -6%
------------------------------- -----------------------
2019 -8% -11%
------------------------------- -----------------------
2020 +2% -3%
------------------------------- -----------------------
2021 -12% -20%
------------------------------- -----------------------
Variation to budget lies within reasonable statistical
parameters. The annual standard deviation of wind speed is 6 per
cent and the annual standard deviation of generation is 10 per cent
(less than 2 per cent over 30 years).
2021 saw very low wind speeds of 2 standard deviations below the
mean. Similar conditions were last seen in 2010.
The following table provides a breakdown of generation by wind
farm:
Annual 2021
Ownership Ownership Budget 2021 Budget Actual
Wind Farm Stake Period (GWh) (GWh) (GWh) Variance
-------------- ---------- ------ ---------- -------- ------------------- ------ --------------- ------ ---------
Oct -
Andershaw 100% Dec 105.5 31.6 26.3 ([2]) -17%
Jan -
Bicker Fen 80% Dec 44.3 44.3 39.3 -11%
Jan -
Bin Mountain 100% Dec 23.2 23.2 17.8 -23%
Jan -
Bishopthorpe 100% Dec 50.6 50.6 43.1 -15%
Braes of Jan -
Doune 100% ([1]) Dec 167.8 151.0 118.9 ([2]) -21%
Jan -
Brockaghboy 100% Dec 156.0 140.4 ([3]) 109.0 -22%
Burbo Bank
Extension 15.7% Dec 155.0 15.5 14.4 -7%
Jan -
Carcant 100% Dec 17.1 17.1 14.5 -15%
Jan -
Church Hill 100% Dec 37.1 37.1 29.8 -20%
Jan -
Clyde 28.2% Dec 446.9 446.9 342.4 ([2]) -23%
Jan -
Corriegarth 100% Dec 216.2 216.2 150.3 ([2]) -30%
Jan -
Cotton Farm 100% Dec 51.0 51.0 43.1 -16%
Jan -
Crighshane 100% Dec 59.7 59.7 49.2 -18%
Deeping St. Jan -
Nicholas 80% Dec 29.6 29.6 26.6 -10%
Oct -
Douglas West 100% Dec 129.2 38.8 33.9 -12%
Jan -
Drone Hill 51.6% Dec 30.3 30.3 25.4 -16%
Jan -
Dunmaglass 35.5% Dec 129.9 129.9 92.0 ([2]) -29%
Earl's Hall Jan -
Farm 100% Dec 31.9 31.9 27.9 -12%
Jan -
Glass Moor 80% Dec 28.8 28.8 24.1 -16%
Glen Kyllachy 100% n/a 145.7 - - -
Humber Jan -
Gateway 37.8% Dec 320.4 320.4 281.5 -12%
Jan -
Kildrummy 100% Dec 55.6 55.6 40.6 -27%
Langhope Jan -
Rig 100% Dec 46.7 46.7 39.1 -16%
Jan -
Lindhurst 49% Dec 11.5 11.5 9.6 -16%
Little Cheyne Jan -
Court 41% Dec 61.0 61.0 51.1 -16%
Jan -
Maerdy 100% Dec 63.1 63.1 50.1 -21%
Jan -
Middlemoor 49% Dec 68.3 68.3 51.9 -24%
Jan -
North Hoyle 100% Dec 185.8 172.0 ([4]) 135.3 -21%
Jan -
North Rhins 51.6% Dec 37.8 37.8 33.4 ([2]) -12%
Jan -
Red House 80% Dec 21.8 21.8 19.8 -9%
Jan -
Red Tile 80% Dec 42.0 42.0 37.3 -11%
Jan -
Rhyl Flats 24.95% Dec 70.3 70.3 62.8 -11%
Jan -
Screggagh 100% Dec 44.3 44.3 35.6 -20%
Sixpenny Jan -
Wood 51.6% Dec 28.5 28.5 22.3 -22%
Jan -
Slieve Divena 100% Dec 54.9 54.9 42.4 -23%
Slieve Divena Jan -
II 100% Dec 48.7 48.7 41.9 -14%
Jan -
Stronelairg 35.5% Dec 302.6 302.6 226.7 ([2]) -25%
Jan -
Stroupster 100% Dec 94.9 94.9 75.1 -21%
Jan -
Tappaghan 100% Dec 68.0 68.0 53.2 -22%
Jan -
Tom nan Clach 75% Dec 121.8 121.8 103.1 ([2]) -15%
Jan -
Walney 25.1% Dec 355.6 355.6 274.8 -23%
Windy Rig 100% n/a 138.5 - - -
Jan -
Yelvertoft 51.6% Dec 21.7 21.7 17.1 -21%
Total 4,319.3 3,685.2 2,932.6 -20%
-------------- ---------- ------ ---------- -------- ------------------- --------------- ---------
([1]) Ownership in Braes of Doune was 50 per cent until
incremental acquisition of the remaining 50 per cent in February
2021.
([2]) Includes curtailed generation.
([3]) Brockaghboy 2021 budget reduced to reflect a scheduled
grid outage.
([4]) North Hoyle 2021 budget reduced to reflect a scheduled
grid outage and planned downtime for insulator exchanges.
Notable issues affecting portfolio availability were:
-- a scheduled grid outage at Brockaghboy to connect a nearby
substation meaning that the wind farm was offline for the whole of
November;
-- a scheduled grid outage at North Hoyle in April and May,
planned downtime for insulator exchanges in March and an export
cable fault in July;
-- various unplanned outages at Corriegarth and Kildrummy, with
extended periods of downtime due to adverse weather conditions and
a shortage of operation and maintenance personnel;
-- a shortage of operation and maintenance resources at
Dunmaglass, which delayed the resolution of certain turbine faults;
and
-- an inter-turbine array cable fault at Stronelairg in
September and remedial blade works in September and October.
In general, we have reflected an increased allowance for grid
outages when budgeting wind farm availability. Grid outages are
typically uncompensated and result in a whole wind farm being
offline. The increased occurrence in part relates to grid
enhancement works to accommodate the further deployment of wind
generation.
We have also reflected an increased allowance for curtailment in
Northern Ireland. In contrast to curtailment under the Balancing
Mechanism in Great Britain, curtailment in Northern Ireland is
uncompensated. The higher rate of curtailment in part relates to
the greater deployment of wind generation.
During the year, BayWa acquired part of the operational
management business of DNV-GL, which included Operational
Management Agreements at Braes of Doune, Carcant, Maerdy and North
Rhins. BayWa now operates 13 sites in the Group's portfolio.
New PPAs have been entered into with: (i) Erova at Braes of
Doune (from July 2022, power only), Douglas West (power only) and
North Hoyle (power only); (ii) Total at Braes of Doune (from July
2022, ROCs only), Carcant (ROCs only), North Hoyle (ROCs only) and
Walney; and (iii) Tesco at Glen Kyllachy.
Health and Safety
Health and safety is of key importance to both the Company and
the Investment Manager.
The Investment Manager is an active member of SafetyOn, the UK's
leading health and safety focused organisation for the onshore wind
industry. The Investment Manager also has its own health and safety
forum, chaired by Stephen Lilley, where best practice is discussed
and key learnings from incidents from across the industry are
shared.
During the year, routine health and safety audits were conducted
across 11 sites by an independent consultant. In addition, the
Investment Manager undertook 38 safety walks. No material areas of
concern were identified from all audits and safety walks performed
in the year.
Acquisitions
During the year, the Investment Manager priced 20 wind farms
totalling 1,286MW. Of the 20 wind farms priced, 3 investments were
made by the Group (Braes of Doune, Andershaw and Burbo Bank
Extension), 2 were acquired by other buyers, 8 are no longer being
pursued by the Group, and 7 are subject to continuing discussions.
In total, there were 9 relevant secondary market transactions in
the UK wind sector in 2021.
The following table lists investments in the year to 31 December
2021:
GBPm
Douglas West 25.3
------
Kype Muir Extension 10.6
------
Braes of Doune 48.1
------
Andershaw 121.2
------
Burbo Bank Extension 250.0
------
Windy Rig 55.1
------
Glen Kyllachy 59.5
------
Total 569.8
------
During the year, the Group funded incremental investment of
GBP25.3 million in the 45MW Douglas West subsidy free wind farm
project, which entered into full commercial operation in September
2021.
During the year, the Group also provided GBP10.6 million of
construction finance to the Kype Muir Extension subsidy free wind
farm project (target commissioning in Q4 2022).
On 23 February 2021, the Group acquired the remaining 50 per
cent interest in Braes of Doune wind farm from Hermes for GBP48.1
million. The Group has been invested in this wind farm since
listing and the wind farm receives 1 ROC per MWh.
On 27 September 2021, the Group acquired the 35MW Andershaw wind
farm from Statkraft for GBP121.2 million. The wind farm receives
0.9 ROCs per MWh.
On 30 November 2021, the Group acquired a net 15.7 per cent
stake in the 258MW Burbo Bank Extension offshore wind farm from AIP
for GBP250 million. The wind farm benefits from a CFD priced at
GBP176.57/MWh (real 2021).
On 14 December 2021, the Group acquired the 43.2MW Windy Rig
subsidy free wind farm from Statkraft for GBP55.1 million and on 22
December 2021, the Group acquired the 48.5MW Glen Kyllachy subsidy
free wind farm from RWE for GBP59.5 million.
The acquisition of the 37.8MW Twentyshilling subsidy free wind
farm from Statkraft for GBP51.4 million is expected to complete in
March 2022.
The agreements to acquire Windy Rig, Glen Kyllachy and
Twentyshilling were all entered into in 2019.
Equity Issuance
On 19 February 2021, the Company issued 151 million new shares
at a price of 131 pence per share, raising gross proceeds of GBP198
million. On 29 November, the Company issued a further 341 million
new shares at a price of 132 pence per share, raising gross
proceeds of GBP450 million.
Gearing
In November, the Company's revolving credit facility was
increased to GBP600 million. Term debt maturing in 2022 was also
refinanced with longer dated term debt. In December, the Company
entered into a new GBP200 million term debt facility with AXA,
which was utilised on 31 January 2022 to reduce borrowings under
the revolving credit facility to GBP50 million (GBP250 million as
at 31 December 2021).
The Group's gearing of GBP950 million as at 31 December 2021
equates to 23 per cent of GAV (limit 40 per cent). All borrowing is
at Company level (no debt at wind farm level). More detail in
relation to the Group's debt facilities can be found in note 13 to
the financial statements.
Financial Performance
Power prices during the year were well above budget, primarily
reflecting high gas prices. The average N2EX Day Ahead auction
price was GBP 117.43 /MWh (2020: GBP35.23/MWh).
Net cash generated by the Group and wind farm SPVs was GBP 256.8
million, providing cover of 1.9x dividends paid during the year,
with low generation being more than offset by high power
prices.
Cash balances (Group and wind farm SPVs) increased by GBP 23.3
million to GBP 117.1 million over the year.
For the year ended
Group and wind farm SPV cash flows 31 December 2021
------------------------------------------------- -------------------
GBP'000
Net cash generation (1) 256,764
Dividends paid (138,786)
Acquisitions (2) (569,783)
Acquisition costs (3) (6,263)
Equity issuance 647,618
Equity issuance costs (9,715)
Net repayment under debt facilities (150,000)
Upfront finance costs (6,556)
Movement in cash (Group and wind farm SPVs) 23,279
Opening cash balance (Group and wind farm SPVs) 93,820
------------------------------------------------- -------------------
Closing cash balance (Group and wind farm SPVs) 117,099
Net cash generation 256,764
Dividends 138,786
Dividend cover 1.9 x
------------------------------------------------- -------------------
(1) Alternative Performance Measure as defined below.
(2) Includes GBP2,665k capital expenditure at Windy Rig and
GBP1,160k working capital at Glen Kyllachy.
(3) Includes GBP4,403k in relation to Humber Gateway, acquired
in 2020.
The following 2 tables provide further detail in relation to net
cash generation of GBP 256.8 million:
For the year ended
Net Cash Generation - Breakdown 31 December 2021
--------------------------------- -------------------
GBP'000
Revenue 457,933
Operating expenses (150,892)
Tax (30,445)
Other 23,489
--------------------------------- -------------------
Wind farm cash flow 300,085
Management fee (20,820)
Operating expenses (1,518)
Ongoing finance costs (24,420)
Other (641)
--------------------------------- -------------------
Group cash flow (47,399)
VAT (Group and wind farm SPVs) 4,078
Net cash generation 256,764
--------------------------------- -------------------
For the year ended
Net Cash Generation - Reconciliation to Net Cash Flows from Operating Activities 31 December 2021
---------------------------------------------------------------------------------- -------------------
GBP'000
Net cash flows from operating activities (1) 242,261
Movement in cash balances of wind farm SPVs (2) 26,366
Capital expenditure at Windy Rig and working capital at Glen Kyllachy (2) 3,826
Repayment of shareholder loan investment (1) 8,731
Finance costs (1) (30,976)
Upfront finance costs (3) 6,556
Net cash generation 256,764
---------------------------------------------------------------------------------- -------------------
(1) Consolidated Statement of Cash Flows.
(2) Note 9 to the financial statements.
(3) GBP6,375k facility arrangement fees plus GBP138k
professional fees (note 13 to the financial statements) plus GBP43k
movement in finance costs payable (note 12 to the financial
statements)
Investment Performance
GBP'm
--------------------------------
NAV at 31 December 2020 2,229.9
Investment 569.8
Movement in portfolio valuation 116.6
Movement in cash (Group and wind farm SPVs) 23.3
Movement in other relevant assets / liabilities 4.1
Movement in Aggregate Group Debt 150.0
NAV at 31 December 2021 3,093.7
------------------------------------------------- --------------------------------
The increase in the portfolio valuation of GBP 116.6 million
equates to approximately 5 pence per share, which can be further
broken down as follows: +14 pence from an increase in forecast
power prices, +2 pence from an increase in inflation assumptions,
-5 pence from an increase in the corporation tax rate (25 per cent
modelled from 2023 onwards ), and -6 pence attributable to
depreciation and other assumption changes .
Total dividends of GBP 138.8 million were paid in 2021. Total
dividends of GBP 148.0 million have been paid or declared with
respect to 2021 (7.18 pence per share). The target dividend with
respect to 2022 is 7.72 pence per share (increased in line with
December 2021 RPI).
pence per share per cent
--------------------------------------- ---------------- ---------
NAV at 31 December 2020 122.2
Less February 2021 dividend (1.8)
NAV at 31 December 2020 (ex dividend) 120.4
NAV at 31 December 2021 133.5
Less February 2022 dividend (1.8)
NAV at 31 December 2021 (ex dividend) 131.7
Movement in NAV (ex dividend) 11.3 9.4
Dividends with respect to the year 7.2 6.0
Total return on NAV 18.5 15.4
--------------------------------------- ---------------- ---------
Reconciliation of Statutory Net Assets to Reported NAV
As at As at
31 December 2021 31 December 2020
GBP'000 GBP'000
---------------------------- ------------------ ------------------
Operating portfolio 3,919,545 3,216,563
Construction portfolio 10,702 27,273
Cash (wind farm SPVs) 112,298 85,932
---------------------------- ------------------ ------------------
Fair value of investments 4,042,545 3,329,768
Cash (Group) 4,801 7,888
Other relevant liabilities (3,647) (7,783)
---------------------------- ------------------ ------------------
GAV 4,043,699 3,329,873
Aggregate Group Debt (950,000) (1,100,000)
---------------------------- ------------------ ------------------
NAV 3,093,699 2,229,873
Reconciling items - -
---------------------------- ------------------ ------------------
Statutory net assets 3,093,699 2,229,873
Shares in issue 2,317,097,822 1,824,129,348
NAV per share (pence) 133.5 122.2
---------------------------- ------------------ ------------------
NAV Sensitivities
NAV is equal to GAV less Aggregate Group Debt.
GAV is the sum of:
-- DCF valuations of the Group's investments;
-- cash (at Group and wind farm SPV level); and
-- other relevant assets and liabilities of the Group.
The DCF valuation of the Group's investments represents the
largest component of GAV and the key sensitivities are considered
to be the discount rate used in the DCF valuation and assumptions
in relation to inflation, energy yield, power price and asset
life.
The base case discount rate is a blend of a lower discount rate
for fixed cash flows and a higher discount rate for merchant cash
flows. The blended portfolio discount rate as at 31 December 2021
was 7.2 per cent (31 December 2020: 6.9 per cent), reflecting a
greater proportion of merchant cash flows.
As there is no debt at wind farm level, the DCF valuation is
produced by discounting the individual wind farm cash flows on an
unlevered basis. The equivalent levered discount rate would be
approximately 2 per cent higher than the unlevered discount
rate.
Base case long term inflation assumptions are 3.5 per cent to
2030 and 2.5 per cent thereafter for RPI and 2.5 per cent (all
years) for CPI.
Base case energy yield assumptions are P50 (50 per cent
probability of exceedance) forecasts based on long term wind data
and operational history. The P90 (90 per cent probability of
exceedance over a 10 year period) and P10 (10 per cent probability
of exceedance over a 10 year period) sensitivities reflect the
future variability of wind and the uncertainty associated with the
long term data source being representative of the long term
mean.
Long term power price forecasts are provided by a leading market
consultant, updated quarterly, and may be adjusted by the
Investment Manager where more conservative assumptions are
considered appropriate.
Short term power price assumptions reflect the forward curve as
at 4 January 2022 with an appropriate discount applied reflecting
the higher volatility associated with short term prices.
In 2022, fixed cash flows are forecast to contribute 39 per cent
of total cash flows (61 per cent merchant). Over the life of the
portfolio, fixed cash flows are forecast to contribute 54 per cent
of the total DCF value (46 per cent merchant).
Outlook
There are currently over 25GW of operating UK wind farms (14GW
onshore plus 11GW offshore). In monetary terms, the secondary
market for operating UK wind farms is over GBP80 billion. The Group
currently has a market share of approximately 5 per cent. As at 31
December 2021, the average age of the portfolio was 7 years (versus
5 years at listing in March 2013).
In November 2021, the UK hosted the COP26 conference in Glasgow,
with the Prime Minister playing a clear role in encouraging the
delivery of 2050 net zero emissions targets. A key part of that
plan for the UK is a 40GW offshore wind target for 2030 , supported
by the CFD regime. New build onshore wind and solar are also
expected to contribute, both on a subsidy free basis and supported
by the CFD regime.
It is anticipated that the Group will continue to invest in ROC
wind farms, with CFD wind farms and subsidy free wind farms
continuing to provide further diversified pipeline opportunities.
At all times, the Group will maintain a balanced portfolio, in line
with the Company's Investment Objective.
Power prices during the year were well above budget, primarily
reflecting high gas prices driven by the recovery in global demand
and certain supply chain constraints associated with the recovery
from the COVID-19 pandemic. The average N2EX Day Ahead auction
price was GBP 117.43 /MWh (2020: GBP35.23/MWh). Forward power
prices over the period 2022-2025 remain high. High power prices
drove strong cash generation in 2021 and the Group should continue
to benefit from strong cash generation over the next few years
through its balanced exposure to power prices.
In general, the outlook for the Group is very encouraging, with
proven operational and financial performance from the existing
portfolio, combined with a healthy pipeline of attractive further
investment opportunities.
Strategic Report
Introduction
The Directors present their Strategic Report for the year ended
31 December 2021. Details of the Directors who held office during
the year and as at the date of this report are given below.
Investment Objective
The Company's aim is to provide investors with an annual
dividend that increases in line with RPI inflation while preserving
the capital value of its investment portfolio in the long term on a
real basis through reinvestment of excess cash flow.
The Company provides investors with the opportunity to
participate directly in the ownership of UK wind farms, so
increasing the resources and capital dedicated to the deployment of
renewable energy and the reduction of greenhouse gas emissions.
The target return to investors is an IRR net of fees and
expenses of 8 per cent to 9 per cent. The 2021 dividend of 7.18
pence per annum is targeted to increase in line with December 2021
RPI to 7.72 pence for 2022. Progress on the objectives is measured
by reference to the key metrics above.
Investment Policy
The Group invests in UK wind farms predominantly with a capacity
of over 10MW.
As the Group has no borrowings at wind farm level, and only
limited borrowing at the Group level, the annual dividend is
sufficiently protected against lower power prices. This means that
the Group also has the ability to benefit from higher power prices
as it is not required to enter into long term fixed price
contracts.
The Group has used debt facilities to make additional
investments in the year. This has enhanced the Group's
attractiveness to sellers since execution risk is greatly
diminished, with the Group effectively being a cash buyer. The
Group will continue to use short term debt facilities to make
further investments.
The Group will look to repay its short term debt facilities by
refinancing them with longer term debt facilities or in the equity
markets in order to refresh its debt capacity. While debt
facilities are drawn, the Group benefits from an increase in
investor returns because borrowing costs are below the underlying
return on investments.
The Group invests in both onshore and offshore wind farms with
the amount invested in offshore wind farms being capped at 40 per
cent of GAV at acquisition.
The Board believes that there is a significant market in which
the Group can continue to grow over the next few years.
Structure
The Company is a UK registered investment company with a premium
listing on the London Stock Exchange. The Group comprises the
Company and Holdco. Holdco invests in SPVs which hold the
underlying wind farm assets. The Group employs Greencoat Capital
LLP as its Investment Manager.
Discount Control
The Articles of Association require a continuation vote by
shareholders if the share price were to trade at an average
discount to NAV of 10 per cent or more over a 12 month period.
Notwithstanding this, it is the intention of the Board for the
Company to buy back its own shares in the market if the share price
is trading at a material discount to NAV, providing of course that
it is in the interests of shareholders to do so.
Review of Business and Future Outlook
A detailed discussion of individual asset performance and a
review of the business in the year together with future outlook are
covered in the Investment Manager's Report.
Key Performance Indicators
The Board believes that the key metrics detailed above, which
are typical for investment entities, will provide shareholders with
sufficient information to assess how effectively the Group is
meeting its objectives.
Ongoing Charges
The ongoing charges ratio of the Company is 0.98 per cent of the
weighted average NAV for the year to 31 December 2021. This is made
up as follows and has been calculated using the AIC recommended
methodology.
31 December 2021 31 December 2020
----------------------------
GBP'000 % GBP'000 %
---------------------------- ------------------ ------------ ----------------------- --------
Total management fee 23,406 0.92% 18,400 0.96%
Directors' fees (1) 270 0.01% 258 0.01%
Other ongoing expenses (2) 1,359 0.05% 1,214 0.06%
---------------------------- ------------ --------
Total 25,035 0.98% 19,872 1.03%
---------------------------- ------------------ ------------ ----------------------- --------
Weighted average NAV 2,550,739 1,925,549
(1) Do not include GBP50k of additional discretionary Directors'
fees for work incurred in connection with share placings.
(2) Other ongoing expenses do not include GBP1,115k of
management and administration fees relating to the wind farm SPVs
that is recharged to them and GBP 58 k of broken deal costs.
Assuming no further changes in NAV, the 2022 ongoing charges
ratio is expected to be 0.96 per cent.
The Investment Manager is not paid any performance or
acquisition fees.
Employees and Officers of the Company
The Company does not have any employees and therefore employee
policies are not required. The Directors of the Company are listed
below.
Principal Risks and Uncertainties
In the normal course of business, each investee company has a
rigorous risk management framework with a comprehensive risk
register that is reviewed and updated regularly and approved by its
board. The principal risks identified by the Board to the
performance of the Group are detailed below. The Board do not
consider the likelihood or impact of these risks to have changed in
the year.
The Board maintains a risk matrix setting out the risks
affecting both the Group and the investee companies. This risk
matrix is reviewed and updated at least annually to ensure that
procedures are in place to identify principal risks and to mitigate
and minimise the impact of those risks should they crystallise.
This risk matrix is also reviewed and updated to identify emerging
risks, such as climate related risks, and to determine whether any
actions are required. This enables the Board to carry out a robust
assessment of the risks facing the Group, including those risks
that would threaten its business model, future performance,
solvency or liquidity.
The risk appetite of the Group is considered in light of the
principal risks and their alignment with the Company's Investment
Objective. The Board considers the risk appetite of the Group and
the Company's adherence to the Investment Policy in the context of
the regulatory environment taking into account, inter alia, gearing
and financing risk, wind resource risk, the level of exposure to
power prices and environmental and health and safety risks.
As it is not possible to eliminate risks completely, the purpose
of the Group's risk management policies and procedures is not to
eliminate risks, but to reduce them and to ensure that the Group is
adequately prepared to respond to such risks and to minimise any
impact if the risk materialises.
The spread of assets within the portfolio ensures that the
portfolio benefits from a diversified wind resource and spreads the
exposure to a number of potential technical risks associated with
grid connections and with local distribution and national
transmission networks. In addition, the portfolio includes 6
different turbine manufacturers, which diversifies technology and
maintenance risks. Finally, each site contains a number of
individual turbines, the performance of which is largely
independent of other turbines.
Risks Affecting the Group
Investment Manager
The ability of the Group to achieve the Company's Investment
Objective depends heavily on the experience of the management team
within the Investment Manager and more generally on the Investment
Manager's ability to attract and retain suitable staff. The
sustained growth of the Group depends upon the ability of the
Investment Manager to identify, select and execute further
investments which offer the potential for satisfactory returns.
Financing Risk
The Investment Management Agreement includes key man provisions
which would require the Investment Manager to employ alternative
staff with similar experience relating to investment, ownership,
financing and management of wind farms should for any reason any
key man cease to be employed by the Investment Manager. The
Investment Management Agreement ensures that no investments are
made following the loss of key men until suitable replacements are
found and there are provisions for a reduction in the investment
management fee during the loss period. It also outlines the process
for their replacement with the Board's approval. In addition, the
key men are shareholders in the Company.
The Group will finance further investments either by borrowing
or by issuing further shares. The ability of the Group to deliver
expected real NAV growth is dependent on access to debt facilities
and equity capital markets. There can be no assurance that the
Group will be able to borrow additional amounts or refinance on
reasonable terms or that there will be a market for further raising
of equity.
Investment Returns Become Unattractive
A significantly strengthening economy may lead to higher future
interest rates which could make the listed infrastructure asset
class relatively less attractive to investors. In such
circumstances, it is likely that there will be an increase in
inflation (to which the revenues and costs of the investee
companies are either indexed or significantly correlated) or an
increase in power prices (due to greater consumption of power) or
both. Both would increase the investment return and thus would
provide a degree of mitigation against higher future interest
rates.
Risks Affecting Investee Companies
Regulation
If a change in Government renewable energy policy were applied
retrospectively to current operating projects including those in
the Group's portfolio, this could adversely impact the market price
for renewable energy or the value of the green benefits earned from
generating renewable energy. The Government has evolved the
regulatory framework for new projects being developed but has
consistently stood behind the framework that supports operating
projects as it understands the need to ensure investors can trust
regulation.
Electricity Prices
Other things being equal, a decline in the market price of
electricity would reduce the investee companies' revenues.
The Group's dividend policy has been designed to withstand
significant short term variability in power prices. A longer period
of power price decline would materially affect the revenues of
investee companies.
Wind Resource
The investee companies' revenues are dependent upon wind
conditions, which will vary across seasons and years within
statistical parameters. The standard deviation of energy production
is 10 per cent over a 12 month period (less than 2 per cent over 30
years). Since long term variability is low, there is no significant
diversification benefit to be gained from geographical
diversification across weather systems.
The Group does not have any control over the wind resource but
has no debt at wind farm level and has designed its dividend policy
such that it can withstand significant short term variability in
production relating to wind. Before investment, the Group carries
out extensive due diligence and relevant historical wind data is
available over a substantial period of time. The other component of
wind energy generation, a wind farm's ability to turn wind into
electricity, is mitigated by purchasing wind farms, where possible,
with a proven operating track record.
When acquiring wind farms that have only recently entered into
operation, only limited operational data is available. In these
instances, the acquisition agreements with the vendors of these
wind farms will include a "wind energy true-up" or an appropriate
discount to the purchase price.
Asset Life
In the event that the wind turbines do not operate for the
period of time assumed by the Group or require higher than expected
maintenance expenditure to do so, it could have a material adverse
effect on investment returns.
The Group performs regular reviews and ensures that maintenance
is performed on all wind turbines across the wind farm portfolio.
Regular maintenance ensures the wind turbines are in good working
order, consistent with their expected life-spans.
Health and Safety and the Environment
The physical location, operation and maintenance of wind farms
may, if inadequately assessed and managed, pose health and safety
risks to those involved. Inappropriate wind farm operation and
maintenance may result in bodily injury, particularly if an
individual were to fall from height, fall or be crushed in transit
from a vessel to an offshore installation or be electrocuted. If an
accident were to occur in relation to one or more of the Group's
investments and if the Group were deemed to be at fault, the Group
could be liable for damages or compensation to the extent such loss
is not covered by insurance policies. In addition, adverse
publicity or reputational damage could follow.
The Board reviews health and safety at each of its scheduled
Board meetings and Martin McAdam serves as the appointed Health and
Safety Director. The Group also engages an independent health and
safety consultant to ensure the ongoing appropriateness of its
health and safety policies.
The investee companies comply with all regulatory and planning
conditions relating to the environment, including in relation to
noise emissions, habitat management and waste disposal.
Going Concern
As further detailed in note 1 to the financial statements, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
to at least February 2023 from the date of approval of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
Longer Term Viability
As further disclosed below, the Company is a member of the AIC
and complies with the AIC Code. In accordance with the AIC Code,
the Directors are required to assess the prospects of the Group
over a period longer than the 12 months associated with going
concern. The Directors conducted this review for a period of 10
years, which is deemed appropriate, given the long term nature of
the Group's investments which are modelled over 30 years, coupled
with its long term strategic planning horizon.
In considering the prospects of the Group, the Directors looked
at the key risks facing both the Group and the investee companies,
focusing on the likelihood and impact of each risk as well as any
key contracts, future events or timescales that may be assigned to
each key risk. The Directors also tested and are comfortable that
the Company would continue to remain viable under several robust
downside scenarios, including loss of government subsidies and a
significant decline in long term power price forecasts, both
considered principal risks and uncertainties affecting investee
companies.
As a sector-focused infrastructure fund, the Group aims to
produce stable and inflating dividends while preserving the capital
value of its investment portfolio on a real basis. The Directors
believe that the Group is well placed to manage its business risks
successfully over both the short and long term and accordingly, the
Board has a reasonable expectation that the Group will be able to
continue in operation and to meet its liabilities as they fall due
for a period of at least 10 years.
The Board does not believe that the lower power prices projected
in the high transition risk scenario, will diminish the longer term
viability of the Company.
While the Directors have no reason to believe that the Group
will not be viable over a longer period, they are of the opinion
that it would be difficult to foresee the economic viability of any
company with any degree of certainty for a period of time greater
than 10 years.
Directors' Responsibilities Pursuant to Section 172 of the
Companies Act 2006
The Directors are responsible for acting in a way that they
consider, in good faith, is the most likely to promote the success
of the Company for the benefit of its members. In doing so, they
should have regard for the needs of stakeholders and the wider
society. The Company's objective is to provide investors with an
annual dividend that increases in line with RPI inflation while
preserving the capital value of its investment portfolio in the
long term on a real basis through reinvestment of excess cash flow
and the prudent use of gearing.
The Company provides investors with the opportunity to
participate directly in the ownership of UK wind farms, so
increasing the resources and capital dedicated to the deployment of
renewable energy and the reduction of greenhouse gas emissions. The
Board is also aware of its responsibility for the risk management
of the Group's climate related risks and for transparent disclosure
of these risks, appreciating how this is integral to the success of
the Company.
Key decisions are those that are either material to the Company
or are significant to any of the Company's key stakeholders, as
defined in the Corporate Governance Report. The Company's
engagement with its key stakeholders, including the Investment
Manager, is discussed further in the Corporate Governance Report.
The key decisions detailed below were made or approved by the
Directors during the year, with the overall aim of promoting the
success of the Company while considering the impact on its members
and wider stakeholders.
Dividends
The Board has approved total dividends of 7.18 pence per share
with respect to the year and shareholders voted 99.97 per cent in
favour to approve the Company's dividend policy at the AGM on 28
April 2021. The Board are confident that with the Group's
continuing strong cash flow and robust dividend cover, the Company
can target a dividend of 7.72 pence per share for 2022, which the
Board expect to contribute to the Company's target return to
investors of an IRR of 8 per cent to 9 per cent, net of fees and
expenses.
Acquisitions
Following recommendation from the Investment Manager, the
Directors considered each of the Company's investments in the
context of the Company's Investment Policy, availability of
financing and the potential returns to investors. They also
considered each investment in the context of sustainability and its
impact on the surrounding community.
Share Issues
During the year, the Company issued 492 million further shares,
raising a total of GBP648 million through oversubscribed equity
raisings in February and November. The Investment Manager engaged
with analysts and investors throughout the equity raising
process.
Board Composition
Nick Winser was appointed as a non-executive Director of the
Company with effect from 1 January 2022. Nick is also a member of
the Company's Audit, Management Engagement and Nominations
Committees.
The Board undertakes a formal and rigorous internal evaluation
of its performance each financial year to determine effectiveness
and performance in various areas, as well as the Directors'
continued independence and tenure. The reviews concluded that the
overall performance of the Board and Audit Committee was
satisfactory and the Board was confident in its ability to continue
to govern the Company well.
Environmental, Social and Governance
The Group's approach
The Group invests in wind farms and the environmental benefits
of renewable energy are proven and key to delivering the
Government's and society's climate change objectives. As the
largest renewable infrastructure fund and one of the largest owners
of wind farms in the UK, the Company continues to prove the
viability of clean energy as a robust sector for investment.
The Group now owns over 1.4GW of installed capacity across 43
onshore and offshore operating wind farms. By dedicating resources
to the deployment of renewable energy, the Group is playing an
active role in reducing the UK's greenhouse gas emissions and
accelerating a move towards net zero for the whole economy. Since
listing, the Group's operating wind farms have produced 14.4TWh of
clean energy, saving 5.7 million tonnes of CO(2) .
During the year, the Group's wind farms generated 2,933GWh of
renewable electricity. By the end of 2021, the portfolio was
generating sufficient electricity to power over 1.5 million homes
and avoiding CO(2) emissions of approximately 1.7 million tonnes
per annum through the displacement of thermal generation.
To sustain the long term success of the business, the Company
acknowledges and understands the importance of effective management
of ESG matters for all stakeholders.
The Company continues to have an important role to play in
championing both responsible investment and the development of the
renewable energy sector. This is achieved through continuous
engagement with all industry stakeholders and transparently sharing
its ESG approach and results with investors.
Responsible investing principles have been applied to each of
the investments made, which require the Group to make reasonable
endeavours to procure the ongoing compliance of its investee
companies with its policies on responsible investment.
Although the non-executive Board has overall responsibility for
the activities of the Company and its investments, the day-to-day
management of the business is delegated to the Investment Manager.
This includes responsibility for ESG matters before investments are
made and then continuously during the life of each wind farm. The
Investment Manager assesses how ESG should be managed and the
Company has developed its ESG policy in accordance with the
Investment Manager's ESG Framework Policy. The ESG Policy of the
Company is approved and overseen by the Company's Board.
The Group will continue to lead the way in encouraging
responsible investment to accelerate the development of the UK's
wind energy sector further and will do this in a way that maximises
returns for our shareholders and creates benefits for the
communities and the natural environment in which its wind farms
operate.
The Investment Manager has representation on the boards of the
operating wind farm companies which oversee performance, including
on ESG matters, and meet quarterly. From these ongoing reviews, the
Investment Manager reports quarterly to the Company's Board, with
data on production, wind farm availability, key events and health
and safety performance.
This robust management structure enables the Investment Manager
to oversee ESG issues effectively throughout the lifecycle of the
Group's wind farms:
Screening
-- screen against investment mandate and restrictions; and
-- assess the ability of the investment to comply with ESG standards.
Due Diligence
-- rigorously assess ESG risks based on commitment, capacity,
track record and features of the wind farm; and
-- identify mitigation plans.
Investment decision
-- identify and address ESG issues in extracts of the Investment
Manager's Investment Committee papers that inform investment
decisions; and
-- determine and cost plans to address ESG issues, and price
into the investment decision process.
Asset Management
-- establish appropriate governance structures;
-- comply with all relevant laws and regulations;
-- ensure ongoing monitoring and management of ESG issues;
-- manage impacts on the natural habitat surrounding the wind farms we manage;
-- engage with and support the local community;
-- perform due diligence on third parties; and
-- ensure business integrity with a focus on avoiding money
laundering, negligent or corrupt practices.
Environment
As one of the largest owners of wind farms in the UK, the Group
is focused on taking actions to support climate change mitigation
through the generation of renewable energy, while minimising the
potential impacts that the operation of wind farms may have on
local habitats and the environment.
The world faces a serious climate challenge, and the UK is
taking an active role as a global leader in greenhouse gas
emissions reduction. The Company supports the UK Government's Ten
Point Plan to be net zero by 2050 by allowing developers and
utilities to recycle their capital, and by demonstrating the
attractive long term returns in the industry through our prudent
management of wind farms, thereby reducing the cost of capital.
The Group is committed to protecting the local environment
around its wind farms, recognising the potential impact that wind
farms can have on local terrestrial and aquatic wildlife and
landscape.
As such, the Group seeks to protect the local environment around
its wind farms by using robust environmental management systems.
These include policies, periodic risk assessments, monitoring and
regular reporting to the Board and the boards of each of the wind
farm companies. Through these measures, the Group also ensures
compliance with all applicable laws, regulations and planning
permissions as administered by the Environment Agency, Health
Protection Agency, local authorities, Ofgem, UREGNI or any other
relevant regulatory body, including the data reporting obligations
under Renewable Obligation Order 2009.
The Group's core activities include:
-- maintaining management systems to evaluate the potential
risks and impacts of its activities and avoiding or mitigating
environmental impacts on biodiversity, air quality, noise, and
waste management where relevant;
-- running habitat management plans at its wind farms;
-- undertaking additional environmental impact assessments or
undergoing regular monitoring, as required;
-- seeking to work with partners who uphold good industry
standards - from operational managers whose management systems
comply with the requirements of ISO 14001:2015 (environmental
management systems) to the material contractors used; and
-- regular reporting to the Board and the boards of each of the wind farm companies.
CASE STUDY
Peatland protection
Peatland protection plays a vital role in the transition to net
zero. Peatlands are important areas for biodiversity and are the
largest natural terrestrial carbon sinks, storing twice as much
carbon as all of the world's forests . As a result, their
protection is crucial to reducing emissions and conserving
biodiversity. Many of the wind farms in our portfolio have
protection initiatives and planning obligations in place designed
to manage and restore peatland and blanket bog environments
better.
In Dunmaglass, we restored blanket bog after our wind farm was
constructed and monitored the recovery of the peatland, while
preventing its erosion. Here, further peatland restoration works
commenced in the Q3 2021 to treat more than 20 hectares of eroding
peatland around the site. Ditch blockings will prevent further
breakdown of plant material, and carbon release, by restoring the
natural flow of water and soil saturation.
In Tappaghan, some of the peat, cut to accommodate new
infrastructure, had failed to revegetate. We trialled a method
using transplants to revegetate bare peat by translocating small
peat plugs from nearby vegetated surfaces. Tall heather was pruned
back and other species were transplanted in the same condition that
they were growing in.
In Corriegarth, blanket bog restoration was carried out in 2016,
once on- site groundworks were completed. The target was to restore
areas of degrading blanket bog to aid the long term conservation of
the priority habitat while promoting the restoration of peat bog.
Measures were put in place to prevent further erosion by means of
gully blocking and stabilising bare peat faces by constructing
dams. In largely vegetated areas, peaty soils were drying out as a
result of artificial drainage channels. So, drains deeper than a
metre were blocked to allow rewetting of the bog.
In Screggagh, the area around the wind farm is primarily blanket
bog, with a peat depth varying from 0.5 to 5 metres. The HMP we
have in place is designed to maintain and enhance the blanket bog
and grassland habitats. We have focused on restoring areas of
cut-over blanket bog and ensuring that drainage structures do not
adversely affect blanket bog habitats. With a lack of standing
water anywhere on site, a system of pools and dams was put in place
to provide an array of permanent and ephemeral water bodies
throughout the site. Trackside vegetation is now largely well
established and is in generally good condition where the tracks cut
through peatland habitats.
Social
It is important that the wind farms are truly part of the
community. The Group's approach aids long term support for wind
farms in the UK, which helps the industry to continue its build
out.
Supporting worker safety and fair employment on our sites
The Group cares that the workers on its sites are safe. The
arrival of COVID-19 in 2020 only reinforced the importance of
employee health and wellbeing.
The Group also recognises the need for people to be paid fairly
for the work they do and to have appropriate working conditions. By
doing this, it helps to sustain and grow the local communities in
which its wind farms operate.
The Group achieves this through a range of activities,
including:
-- seeking to comply with all applicable laws relating to
employment, occupational health and safety, human rights,
prevention of human trafficking and modern slavery, public safety
and security and community matters, including the Wind Turbine
Safety Rules;
-- implementing health and safety best practices through wind
farm specific health and safety policies, project management,
contractual arrangements, staff training and stakeholder
education;
-- assessing and monitoring health and safety practices through
wind farm specific risk identification and prevention activities.
During the year, these activities included: regular safety checks
carried out by the operations and maintenance service providers at
all wind farms; safety walks by the Investment Manager's team at 38
wind farms; independent health and safety audits by an accredited
professional at 11 wind farms, and electrical safety inspections at
18 sites; and
-- reporting on key health and safety data regularly, with
escalation and rapid response procedures in place in case of
emergency.
As a member of Renewable UK, the UK's leading wind energy trade
association, the Company is keen to work with other stakeholders to
develop the industry further. In addition, t he Investment Manager
is an active member of SafetyOn, the UK's leading health and safety
focused organisation for the onshore wind industry.
Supporting the communities around our wind farms
The Group cares about the communities around its wind farms and
engages with local communities to ensure respect for land and
access rights and that its wind farms are managed in accordance
with planning permissions.
The Group holds regular dialogue with community funds and
provide financial support to local groups through community benefit
schemes that fund local projects.
These funds help deliver a range of services, from improving
local amenities and infrastructure and aiding educational projects
for local schools to providing COVID-19 emergency and response.
Supporting the communities during the pandemic
As the COVID-19 virus spread in early 2020, and local and
national lockdowns came into force, the Group quickly implemented
actions to support communities in dealing with emergencies.
Actions taken included:
-- Offering 10 per cent of the annual community benefit funds
for certain wind farms to help with community COVID-19 response
activity;
-- Early release of funding to safeguard key community projects; and
-- Extension of funding to key social projects to ensure support for the most vulnerable.
Diversity
The Board has a policy to base appointments on merit and against
objective criteria, with due regard for the benefits of diversity,
including gender diversity. Its objective is to attract and
maintain a Board that, as a whole, comprises an appropriate balance
of skills and experience.
The Board consists of individuals from relevant and
complementary backgrounds offering experience in the investment
management of listed funds, as well as in the energy sector from
both a public policy and a commercial perspective. As at the date
of this report, the Board comprised 3 men and 3 women, all
non-executive Directors who are considered to be independent of the
Investment Manager and free from any business or other relationship
that could materially interfere with the exercise of their
independent judgement.
The Investment Manager operates an equal opportunities policy
and its partners and employees comprise 57 men and 23 women.
Governance
Detailed disclosure on the Company's governance structure and
activities can be found in the Corporate Governance Report.
CASE STUDY
Clyde Wind Farm & Wiston Lodge
Clyde wind farm is a 522MW wind farm near Abington in South
Lanarkshire. It makes GBP625,000 available for community and
charitable projects within the Clyde wind farm area every year.
This year, two grants totalling GBP62,190 were made to Wiston
Lodge, a charity and social enterprise with a focus in delivering
nature-based tailored learning programmes to children and young
people, vulnerable adults and to the staff of the organisations
that support them. The Lodge is committed to welcoming a wide
diversity of groups from all backgrounds into their community and
to conserving and sustaining the environment in all of their
activities. A series of core programmes are run to support the
achievement of their mission, including:
-- Adventure Activities
-- Nature Connections (bushcraft, conservation, gardening)
-- Music and Art
-- Renewable Energy Education
Wiston works with their surrounding community to build a
brighter future for their local area. Programmes are designed to
demonstrate that working outdoors has the power to transform
people's lives and foster an appreciation of the great outdoors and
a recognition of our effect on the natural world.
Through the community fund managed by the South Lanarkshire
Council, GBP9,961 was provided to support service delivery during
the pandemic. Under the SSE-managed Sustainable Development Fund, a
separate grant of GBP52,229 was provided to develop a visitor
changing and washroom facility. These funds helped to continue the
valuable work of the Wiston Lodge.
Task Force on Climate Related Financial Disclosures (TCFD)
The Company strives to maintain the highest standards of
corporate governance and effective risk identification and
management at both Group and wind farm level. The Company supports
the recommendations of the TCFD and refers to them for guidance on
addressing climate related risks and opportunities across the Group
and enhancing our disclosure.
These disclosures are categorised between the 4 thematic areas
as recommended by the TCFD.
Governance
The Board is responsible for the determination of the Company's
Investment Objective and Investment Policy. It also oversees the
management of the Company and its investments, including ESG and
climate related risks and opportunities. The Board delegates the
day-to-day management of the business, including management of ESG
matters, to the Investment Manager.
The Audit Committee also considers the Company's climate related
disclosures in its Annual Report and Financial Statements.
As discussed in the Corporate Governance Report, the Board and
the Investment Manager meet regularly and discuss risk management.
Climate related risks are covered during these discussions, as they
naturally arise from the Group's underlying investments and the
Company's significant role in the decarbonisation of the UK
economy. A formal risk matrix is maintained by the Investment
Manager and reviewed and approved by the Board on an annual
basis.
In addition, the Investment Manager has its own ESG committee
that meets regularly to discuss ESG and climate related risks
relating to the Group and other funds it manages. This committee
has implemented an ESG Framework Policy that looks to establish
best practice in climate related risk management, reporting and
transparency. Representatives from the Investment Manager also sit
on all of the boards of the wind farm companies, which meet
quarterly and discuss ESG and climate related risk management.
Strategy
As the leading renewable infrastructure fund, invested in UK
wind farms, the Company plays a significant role in the UK
renewables industry. The Company's strategy and Investment Policy
of acquiring operating wind capacity in the secondary market,
enables developers and utilities to recycle capital, facilitating
further renewable build-out and thus plays a significant role in
increasing operating wind generating capacity.
The Company considers that the decarbonisation of the UK economy
will continue to present a significant investment opportunity and
the size of the Company's growth will be related to the success of
the sector and the engagement of its stakeholders.
The Board and the Investment Manager monitor climate related
risks and appreciate their impact on the Group. In the medium and
long term, more extreme weather patterns arising from global
warming have the capacity to damage infrastructure in general,
including above ground grid infrastructure. It is considered
unlikely, however, that significant damage will be caused to
generating equipment that is designed to take advantage of weather
systems. Nonetheless, appropriate insurance against property damage
and business interruption is held for any such eventuality.
It is possible that the deployment of new renewable generating
capacity, required to meet future UK and global emission reduction
targets, could reduce the power price captured by the Group's
portfolio investments. The Group's dividend policy, however, has
been designed to withstand significant short term variability in
generation or power price capture.
High Transition Risk Scenario
The Board and the Investment Manager believe that the key factor
that could impact the Company in the transition to a lower carbon
economy is the variability of long term prices for wholesale
electricity. In a lower carbon economy, where considerable
build-out of renewable generation capacity will be required, there
is a risk that the power price received by the Group's portfolio
could be negatively impacted, depending on how successful the
Government is in implementing its plan and depending on future
electricity market design.
In a scenario in which global temperature increases are limited
to only 1.5 (o) C to 2 (o) C (most typically associated with net
zero), it is assumed that the Government is successful in
implementing its plan in its entirety. In this scenario, the long
term power price is lower than the base case used to calculate the
Company's NAV. The lower long term power price reflects the wider
deployment of low marginal cost renewable generation capacity,
partially offset by the expected deployment of electrolysers as
part of a growing hydrogen economy, increased electrification of
transport and heat and the build-out of data centres. Modelling the
lower long term power price would equate to approximately an 8
pence reduction in NAV per share.
The base case long term power price assumes significant
renewable generation and other measures to reduce carbon emissions
and represents the independent consultant's best estimate of likely
outturn. The High Transition Risk Scenario assumes further
measures. The precise effect on power price of any measures (in the
base case and in the High Transition Risk Scenario) is highly
uncertain and is highly dependent on future electricity market
design. The High Transition Risk Scenario also assumes no other
offsetting factors.
High Physical Risk Scenario
The Board and the Investment Manager believe that a scenario
where global temperature increases are significantly higher than
2(o) C would not lead to any significant physical risk to the
Group's wind farms, which are designed to operate in extreme
weather conditions and are typically not located in areas prone to
flooding.
Alongside all scenarios, there is a risk that weather systems
change as a result of higher temperature change scenarios but it is
not possible, at this time, to determine whether this would impact
the Group positively or negatively.
Risk Management
As a full scope UK AIFM, the Investment Manager has established
a Risk Management Committee that meets on a quarterly basis to
discuss, amongst other matters, the risk framework of the Group and
investee companies including processes for identifying, assessing
and managing climate related risks.
To ensure strong performance, the Group reinforces its specific
oversight on environmental and social issues with a range of
activities, including:
-- appointing at least one director from the Investment Manager
to the boards of the wind farm companies, to ensure monitoring and
influence of both financial and ESG performance;
-- carrying out due diligence to ensure that any new outsourced
service providers are reputable and responsible organisations;
-- carrying out due diligence during the acquisition of new wind
farms in accordance with the Investment Manager's established
procedures and ESG Framework Policy, and in compliance with the
AIFMD Due Diligence Policy; and
-- complying with all applicable anti-bribery and corruption,
and anti-money laundering laws and regulations and implementing
policies to ensure this performance is in line with the policies of
the Investment Manager.
The Investment Manager's Investment Committee comprises
experienced senior managers. Whilst making investment decisions,
due consideration is given to climate related risks as well as to
opportunities identified during due diligence.
Metrics and Targets
The world faces a serious climate challenge, and the UK is
taking an active role as a global leader in greenhouse gas
emissions reduction.
The Government published its net zero strategy in October 2021,
just before the UK hosted the COP26 conference in Glasgow. That
strategy sets out a high level plan to reach net zero carbon
emissions by 2050, which will require significant investment. The
plan includes targets for:
-- 40GW of offshore wind capacity by 2030;
-- 5GW of hydrogen production capacity by 2030;
-- Additional nuclear capacity;
-- 4 carbon capture and storage clusters; and
-- Electrification of transportation (thus increasing demand for
electricity).
The Group supports this investment by allowing developers and
utilities to recycle their capital, and by demonstrating the
attractive long term returns in the industry through its prudent
management of wind farms, thereby reducing the cost of capital.
Renewable energy generators avoid carbon dioxide emissions on a
net basis at a rate of approximately 0.4t CO(2) per MWh. Given the
size of the Group's investment portfolio on 31 December 2021, the
portfolio's contribution to CO(2) emissions is reductions is
approximately 1.7 million tonnes per annum. The portfolio is also
generating sufficient electricity to power 1.5 million homes per
annum, at 2.9MWh per home.
The portfolio's Scope 1, Scope 2 and Scope 3 greenhouse gas
emissions are disclosed below.
Year ended
Disclosure 31 December 2021
-------------------------------------------------- -----------------
Scope 1 - direct emissions (tonnes CO(2) ) 35
Scope 2 - indirect emissions (tonnes CO(2) ) 74
Scope 3 - indirect emissions (tonnes CO(2) ) (1) 87,908
-----------------
Total Scope 1, 2 and 3 emissions (tonnes CO(2) ) 88,017
-------------------------------------------------- -----------------
(1) Scope 3 emissions are the result of activities from assets
not owned or controlled by the Group, but that the Group indirectly
impacts in its value chain. Scope 3 emissions include all sources
not within the Group's scope 1 and 2 boundary and include, inter
alia, emissions arising from the construction of each wind farm
acquired in 2021, including those emissions associated with the
manufacturing and transport of all equipment and material, before
the wind farm was commissioned, as well as the expected spare part
provision throughout its lifetime.
On behalf of the Board
Shonaid Jemmett-Page
Chairman
23 February 2022
Board of Directors
As at the date of this report, the Board comprises 6 individuals
from relevant and complementary backgrounds, including Nick Winser
who the Board appointed as a non-executive Director of the Company
with effect from 1 January 2022. Nick has also been appointed as a
member of the Company's Audit, Management Engagement and
Nominations Committees.
The Directors are of the opinion that the Board as a whole
comprises an appropriate balance of skills, experience and
diversity.
Shonaid Jemmett-Page, Chairman (appointed 5 December 2012)
Shonaid Jemmett-Page, (Chairman) FCA (Director), aged 61, is an
experienced non-executive director in the energy and financial
sectors. Shonaid spent the first 20 years of her career at KPMG in
London and Tokyo, rising to the position of Partner, Financial
Services. In 2001, she moved to Unilever, where she was Senior Vice
President, Finance and Information for Asia, based in Singapore,
before returning to the UK as Finance Director for Unilever's
global non-food business. In 2009, Shonaid joined CDC Group as
Chief Operating Officer, a position she held until 2012.
Since then, Shonaid has focused on non-executive appointments
and is currently Chairman of Cordiant Digital Infrastructure
Limited as well as Chairman of its nominations and management
engagement committees, a non-executive Director of Caledonia
Investments plc and Chairman of its remuneration committee and a
member of its governance, nomination and audit committees, Senior
Independent Director and Chairman of its audit and remuneration
committees and a member of its nomination and risk committees at
ClearBank Ltd, and non-executive Director of QinetiQ Group plc and
Chairman of its audit committee and a member of its risk and
security, remuneration and nomination committees. On 20 December
2021 she was appointed as a non-executive Director of Aviva plc.
Until January 2016 she was a non-executive Director of APR Energy
Limited where she served as Chairman of its audit committee and a
member of its remuneration committee. Until October 2017 she was
non-executive Chairman of Origo Partners plc. Until April 2018 she
was non-executive Director of GKN plc where she served as Chairman
of its audit committee and was a member of its remuneration and
nominations committees. Until November 2019 she was non-executive
Director of MS Amlin plc where she served as Chairman and was also
the Chairman of its remuneration and nominations committees and a
member of its risk and solvency committee, and until March 2020 she
served as non-executive Chairman and then non-executive Director of
MS Amlin Insurance SE (a Belgian subsidiary of MS Amlin plc). She
is also the examiner of the UK branch of an Indian children's
cancer charity.
Caoimhe Giblin, Chairman of the Audit Committee (appointed 1
September 2019)
Caoimhe Giblin (Director and Audit Committee Chairman), aged 45,
has extensive experience in the electricity industry sector and is
currently Commercial Director at ElectroRoute, an energy trading
company which is part of the Mitsubishi Corporation group of
companies.
Prior to that, Caoimhe was Director of Finance for SSE
Renewables where she had responsibility for the financial
activities of SSE's significant on and offshore wind development
and construction portfolio. Prior to this, Caoimhe held various
roles in the Corporate Finance department at Airtricity where she
gained significant experience of corporate acquisitions and
disposals, equity fundraising, project finance, debt financing and
managed the company's corporate valuation process. Caoimhe was
appointed Head of Corporate Finance of SSE Renewables in 2008
following the acquisition of Airtricity by SSE plc.
Caoimhe qualified as a Chartered Accountant with KPMG and spent
the early part of her career focusing on providing corporate
finance due diligence, internal audit and risk management services
in both Dublin and New Zealand. Caoimhe is a Fellow of Chartered
Accountants of Ireland and has a BA in Accounting & Finance and
an MBS in Accounting from Dublin City University. Caoimhe also
holds a Diploma in Company Direction from the Institute of
Directors, of which she is a member. In 2018, Caoimhe was elected
to sit on the Wind Energy Ireland Council.
William Rickett C.B., Senior Independent Director (appointed 4
December 2012)
William Rickett C.B. (Senior Independent Director), William
Rickett C.B., aged 69, is a former Director General of the
Department of Energy & Climate Change within the UK Government
(2006-2009) with considerable experience as non-executive director
of private sector companies. William is Chairman of Cambridge
Economic Policy Associates Ltd, an economic, financial and public
policy consultancy with a strong energy practice and was Chairman
of the governing board of the International Energy Agency from 2007
to 2009. William was previously a non-executive Director of
Eggborough Power Ltd, an electricity generating company, Helius
Energy plc, an AIM listed developer of new dedicated biomass power
stations, the National Renewable Energy Centre Limited, which helps
to develop renewable energy technology, Smart DCC Ltd, the company
procuring the shared infrastructure needed for the roll out of
smart gas and electricity meters across the country, and Impax
Environmental Markets plc, a listed investment trust specialising
in the alternative energy, waste and water sectors. William is also
a non-executive Director of Harmony Energy Income Trust PLC, a
company that invests in commercial scale energy storage and
renewable energy generation projects.
William's Whitehall career included 15 years of board-level
experience in five government departments focusing on energy and
transport. In the late 1980s he led the privatisation of the
electricity industry creating the first competitive electricity
market in the world. Later as Director General of Energy he drove
the transformation of the UK energy policy to re-establish a
nuclear power programme as well as developing strategies for the
deployment of renewable energy. He was made a Companion of the
Order of the Bath in the New Year Honours in 2010.
Martin McAdam (appointed 1 March 2015)
Martin McAdam, aged 60, is an accomplished executive with
significant experience in the energy and renewables sector. He was
formerly Chief Executive Officer of Aquamarine Power. Prior to
that, Martin was President and Chief Executive Officer of the US
subsidiary of Airtricity, a role in which he constructed over 400MW
of wind farm capacity.
Martin spent his early career at ESB, the Irish utility,
involved in a number of activities including power station
construction and generation planning. After a number of years in
information services, he returned to the power industry and joined
Airtricity, a significant developer and constructor of wind farms
throughout the UK and Ireland, managing construction of new wind
farms. Martin's role expanded into operations and ultimately to
take responsibility for the growing US business. He led the
integration of the Airtricity generation business unit into the SSE
Renewables Division after its sale.
Martin is a Chartered Engineer and a Fellow of Engineers Ireland
and a Fellow of the Royal Society for the Encouragement of Arts,
Manufactures and Commerce.
Lucinda Riches C.B.E., (appointed 1 May 2019)
Lucinda Riches C.B.E. (Director), aged 60, brings significant
capital markets experience, having advised public companies on
strategy, fundraising and investor relations for many years. She
also brings extensive experience as a public company non-executive
director across a variety of businesses, including two FTSE 100
companies.
Lucinda worked at UBS and its predecessor firms for 21 years
until 2007 where she was a managing director, global head of Equity
Capital Markets and a member of the board of the investment bank.
She is Senior Independent Director and Deputy Chair of Peel Hunt
Limited and a non-executive Director of Ashtead Group plc.
Previously she was a non-executive Director of UK Financial
Investments, a non-executive director of The Diverse Income Trust
plc, Senior Independent Director of The British Standards
Institution and until 2021 she was a non-executive Director of CRH
plc and Senior Independent Director of ICG Enterprise Trust plc.
She was awarded a C.B.E. in 2017 for her services to financial
services, British industry and to charity.
Nick Winser (appointed 1 January 2022)
Nick Winser C.B.E, aged 61, has a 30 year career in the energy
sector which included CEO of National Grid across UK and Europe,
President of the European Network of Transmission System Operators
for Electricity and CIGRE UK Chair. Nick has been the Chairman of
Energy Systems Catapult since 2015 and was appointed Chairman of
the Advisory Board for the Energy Revolution ISCF programme in 2018
and served on the Advisory Panel for the Cost of Energy Review in
2017. He is also a member of a COP26 Advisory Group and the Net
Zero Expert Group which advises the Secretary of State.
Nick is a member of the IET, serving as its President in 2017/18
Nick maintains a keen interest in the organisation's work and sits
on the Nominations & Succession Committee. Nick is also Chair
of the MS Society and a former member of the Board of the Kier
Group.
Other UK Listed Public Company Directorships
In addition to their directorships of the Company, the below
Directors currently hold the following UK listed public company
directorships:
Shonaid Jemmett-Page
Caledonia Investments plc
QinetiQ Group plc
Cordiant Digital Infrastructure Limited
Aviva plc
William Rickett C.B.
Harmony Energy Income Trust plc
Lucinda Riches C.B.E.
Ashtead Group plc
Peel Hunt Limited
With the exception of William Rickett, the Directors have all
offered themselves for re-election and resolutions concerning this
will be proposed at the 2022 AGM.
Conflicts of Interest
The Directors have declared any conflicts or potential conflicts
of interest to the Board which has the authority to approve such
situations. The Company Secretary maintains the Register of
Directors' Conflicts of Interests which is reviewed quarterly by
the Board and when changes are notified. The Directors advise the
Company Secretary and the Board as soon as they become aware of any
conflicts of interest. Directors who have conflicts of interest do
not take part in discussions which relate to any of their
conflicts.
In accordance with Provision 9 of the AIC Code, the appointment
of any Director has included consideration of the time they have
available to the role. Any additional external appointments will be
submitted by Directors to the Board for approval before the
appointment is accepted.
Report of the Directors
The Directors present their Annual Report, together with the
consolidated financial statements of Greencoat UK Wind PLC for the
year to 31 December 2021. The Corporate Governance Report forms
part of this report.
Details of the Directors who held office during the year and as
at the date of this report are given above.
Capital Structure
The Company has one class of ordinary shares which carry no
rights to fixed income. Shareholders are entitled to all dividends
paid by the Company and, on a winding up, provided the Company has
satisfied all of its liabilities, the shareholders are entitled to
all of the surplus assets of the Company.
Shareholders will be entitled to attend and vote at all general
meetings of the Company and, on a poll, to one vote for each
ordinary share held.
Authority to Purchase Own Shares
The current authority of the Company to make market purchases of
up to 14.99 per cent of its issued share capital expires at the
conclusion of the 2022 AGM. Special resolution 13 will be proposed
at the forthcoming AGM seeking renewal of such authority until the
next AGM (or 30 June 2023, whichever is earlier). The price paid
for the shares will not be less than the nominal value or more than
the maximum amount permitted to be paid in accordance with the
rules of the UK Listing Authority in force at the date of purchase.
This power will be exercised only if, in the opinion of the
Directors, a repurchase would be in the best interests of
shareholders as a whole. Any shares repurchased under this
authority will either be cancelled or held in treasury at the
discretion of the Board for future resale in appropriate market
conditions.
The Directors believe that the renewal of the Company's
authority to purchase shares, as detailed above, is in the best
interests of shareholders as a whole and therefore recommend
shareholders to vote in favour of special resolution 13.
The Directors also recommend shareholders to vote in favour of
resolutions 11 and 12, which renew their authority to allot equity
securities for the purpose of satisfying the Company's obligations
to pay the equity element of the Investment Manager's fee, and also
their authority to allot equity securities for cash either pursuant
to the authority conferred by resolution 11 or by way of a sale of
treasury shares.
Major Interests in Shares
Significant shareholdings as at 11 February 2022 are detailed
below.
Shareholder Ordinary shares held %
---------------------------------------
11 February 2022
--------------------------------------- -----------------------
Newton Investment Management 7.46
BlackRock Investment Management 5.98
Rathbone Investment Management 5.62
Investec Wealth & Investment 5.09
Baillie Gifford 4.77
FIL Investment International 4.75
M&G Investments 3.14
Legal & General Investment Management 3.09
--------------------------------------- -----------------------
Significant shareholdings as at 31 December 2021 are detailed
below.
Shareholder Ordinary shares held %
---------------------------------------
31 December 2021
--------------------------------------- -----------------------
Newton Investment Management 7.54
Rathbone Investment Management 5.63
Investec Wealth & Investment 5.20
Baillie Gifford 5.17
FIL Investment International 4.79
BlackRock Investment Management 4.75
Legal & General Investment Management 3.20
M&G Investments 3.11
--------------------------------------- -----------------------
Companies Act 2006 Disclosures
In accordance with Schedule 7 of the Large and Medium Sized
Companies and Groups (Accounts and Reports) Regulations 2008 the
Directors disclose the following information:
-- the Company's capital structure is detailed in note 15 to the
financial statements and all shareholders have the same voting
rights in respect of the share capital of the Company. There are no
restrictions on voting rights that the Company is aware of, nor any
agreement between holders of securities that result in restrictions
on the transfer of securities or on voting rights;
-- there exist no securities carrying special rights with regard to the control of the Company;
-- the Company does not have an employees' share scheme;
-- the rules concerning the appointment and replacement of
Directors are contained in the Company's Articles of Association
and the Companies Act 2006;
-- there exist no agreements to which the Company is party that
may affect its control following a takeover bid;
-- there exist no agreements between the Company and its
Directors providing for compensation for loss of office that may
occur because of a takeover bid; and
-- the Directors' responsibilities pursuant to Section 172 of
the Companies Act 2006, as detailed in the Strategic Report.
I nvestment Trust Status
The Company has been approved as an investment trust under
sections 1158 and 1159 of the Corporation Taxes Act 2010. As an
investment trust, the Company is required to meet relevant
eligibility conditions and ongoing requirements. In particular, the
Company must not retain more than 15 per cent of its eligible
investment income. The Company has conducted and monitored its
affairs so as to enable it to comply with these requirements.
Diversity and Business Review
A business review is detailed in the Investment Manager's Report
and the Group's policy on diversity is detailed in the Strategic
Report .
Directors' Indemnity
Directors' and Officers' liability insurance cover is in place
in respect of the Directors. The Company's Articles of Association
provide, subject to the provisions of UK legislation, an indemnity
for Directors in respect of costs which they may incur relating to
the defence of any proceedings brought against them arising out of
their positions as Directors, in which they are acquitted or
judgement is given in their favour by the Court.
Except for such indemnity provisions in the Company's Articles
of Association and in the Directors' letters of appointment, there
are no qualifying third party indemnity provisions in force.
Streamlined Energy Carbon Reporting
As the Group has outsourced operations to third parties, there
are no significant greenhouse gas emissions to report from the
operations of the Group. The Group qualifies as a low energy user
and is therefore exempt from disclosures on greenhouse gas
emissions and energy consumption.
The underlying assets of the Group's investee companies are
renewable energy generators which avoid carbon dioxide emissions on
a net basis (at a rate of approximately 0.4t CO(2) per MWh and
approximately 1.7 million tonnes per annum based given the size of
the Group's investment portfolio on 31 December 2021).
Further details of the portfolio's Scope 1, Scope 2 and Scope 3
greenhouse gas emissions can be found in the Strategic Report.
Risks and Risk Management
The Group is exposed to financial risks such as price risk,
interest rate risk, credit risk and liquidity risk and the
management and monitoring of these risks are detailed in note 18 to
the financial statements.
Independent Auditor
The Directors will propose the reappointment of BDO LLP as the
Company's Auditor and resolutions concerning this and the
remuneration of the Company's Auditor will be proposed at the 2022
AGM.
So far as each of the Directors at the time that this report was
approved are aware:
-- there is no relevant audit information of which the Auditor is unaware; and
-- they have taken all the steps they ought to have taken to
make themselves aware of any audit information and to establish
that the Auditor is aware of that information.
Annual Accounts
The Board is of the opinion that the Annual Report, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the position,
performance, strategy and business model of the Company.
The Board recommends that the Annual Report, the Report of the
Directors and the Independent Auditor's Report for the year ended
31 December 2021 are received and adopted by the shareholders and a
resolution concerning this will be proposed at the 2022 AGM.
Dividend
The Board recommended an interim dividend of GBP41.6 million ,
equivalent to 1.795 pence per share with respect to the 3 month
period ended 31 December 2021, bringing total dividends with
respect to the year to GBP148.0 million , equivalent to 7.18 pence
per share as disclosed in note 8 to the financial statements.
Subsequent Events
Significant subsequent events have been disclosed in note 21 to
the financial statements.
Strategic Report
A review of the business and future outlook, going concern
statement and the principal risks and uncertainties of the Group
have not been included in this report as they are disclosed in the
Strategic Report.
On behalf of the Board
Shonaid Jemmett-Page
Chairman
23 February 2022
Directors' Remuneration Report
This report has been prepared by the Directors in accordance
with the requirements of the Companies Act 2006 and the Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008. A resolution to approve the Directors'
Remuneration Report will be proposed at the 2022 AGM. At the AGM on
28 April 2021, shareholders voted 99.54 per cent in favour to
approve the Directors' Remuneration Report for the year ended 31
December 2020.
The Company's Auditor is required to give their opinion on the
information provided on Directors' remuneration in this report and
this is explained further in its report to shareholders. The
remainder of this report is outside the scope of the external
audit.
Annual Statement from the Chairman of the Board
The Board, which is profiled above, consists solely of
non-executive Directors and is considered to be entirely
independent. The Board considers at least annually the level of the
Board's fees, in accordance with the AIC Code. During the year, the
basic fee for non-executive Directors increased by GBP5,000 per
annum to GBP45,000 following an internal evaluation. The Board
confirmed that this increase was appropriate through discussions
with an external consultant and it was agreed the Directors would
remain eligible for a discretionary payment of up to GBP10,000,
where significant additional work is incurred by Directors in the
raising of further equity, as disclosed in the Annual Report on
Remuneration below.
Remuneration Policy
As at the date of this report, the Board comprised 6 Directors,
all of whom are non-executive. The Board does not have a separate
Remuneration Committee as, being wholly comprised of non-executive
Directors, the whole Board considers these matters.
At the AGM on 30 April 2020, shareholders voted 98.25 per cent
in favour to approve the Company's Remuneration Policy, which is
put to a vote by Shareholders every 3 years. The details of the
Company's Remuneration Policy are set out in full below and no
changes are expected for 2022.
Each Director receives a fixed fee per annum based on their
roles and responsibility within the Company and the time commitment
required. It is not considered appropriate that Directors'
remuneration should be performance related and none of the
Directors are eligible for pension benefits, share options, long
term incentive schemes or other benefits in respect of their
services as non-executive Directors of the Company.
The Company's Articles of Association empower the Board to award
a discretionary bonus where any Director has been engaged in
exceptional work on a time spent basis to compensate for the
additional time spent over their expected time commitment.
The Articles of Association provide that Directors retire and
offer themselves for re-election at the first AGM after their
appointment and at least every 3 years thereafter. However, in
accordance with AIC Code, the Directors are required to be
re-elected annually. All of the Directors have been provided with
letters of appointment for an initial term of 3 years and for each
3 year term thereafter, which are subject to annual re-election in
accordance with the AIC Code. The following table outlines the date
and expiry of each of the Directors' current letters of
appointment:
Date of expiry
Date of current appointment letter of current appointment letter
---------------------- ----------------------------------- -------------------------------
Shonaid Jemmett-Page May 2020 May 2023
William Rickett C.B. February 2019 February 2022
Martin McAdam February 2021 February 2024
Lucinda Riches C.B.E. March 2019 March 2022
Caoimhe Giblin August 2019 August 2022
Nick Winser January 2022 January 2025
---------------------- ----------------------------------- -------------------------------
A Director's appointment may at any time be terminated by and at
the discretion of either party upon 6 months' written notice. A
Director's appointment will automatically end without any right to
compensation whatsoever if they are not re-elected by the
shareholders. A Director's appointment may also be terminated with
immediate effect and without compensation in certain other
circumstances. Being non-executive Directors, none of the Directors
have a service contract with the Company.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company's
registered office.
Annual Report on Remuneration
During the year, the basic fee for non-executive Directors
increased by GBP5,000 per annum to GBP45,000, with effect from 1
January 2021, with the Senior Independent Director and the Audit
Committee Chair receiving an additional GBP5,000 and GBP10,000 per
annum respectively. The Chairman's basic fee was also increased by
GBP5,000 to GBP75,000 per annum.
In addition, and in line with the practice of some other
companies in the sector, where significant additional work and
responsibility is incurred by Directors in the raising of further
equity, appropriate additional fees of no more than GBP10,000 per
annum per Director will be paid.
The level of fees for Directors were benchmarked in 2019 by
independent consultants, Heidrick & Struggles, as in line with
the market. The Company is now the largest independent generator of
renewable electricity in the UK. Its GAV has grown to GBP4.0
billion through acquisitions and equity raisings and, in the last 3
years, the Board and its committees have held 80 meetings.
The Board takes the view that making discretionary payments to
Directors for the extra work involved when equity raisings are
required is better for shareholders than a permanent increase in
the level of Directors' base fees.
The table below (audited information) shows the total
remuneration earned by each individual Director during the current
year:
Paid in the year to 31 December 2021 Fixed remuneration Discretionary remuneration (1) Total remuneration
------------------------------------------- ------------------- ------------------------------- -------------------
Shonaid Jemmett-Page (Chairman) GBP75,000 GBP10,000 GBP85,000
Caoimhe Giblin GBP55,000 GBP10,000 GBP65,000
(Audit Committee Chairman)
William Rickett C.B. (Senior Independent GBP50,000 GBP10,000 GBP60,000
Director)
Martin McAdam GBP45,000 GBP10,000 GBP55,000
Lucinda Riches C.B.E. GBP45,000 GBP10,000 GBP55,000
Total GBP270,000 GBP50,000 GBP320,000
------------------------------------------- ------------------- ------------------------------- -------------------
(1) The Directors received an additional discretionary payment
from the Company in relation to work incurred in connection with
the share placings in February and November 2021.
The table below (audited information) shows the total
remuneration earned by each individual Director during the prior
year:
Paid in the year to 31 December 2020 Fixed remuneration Discretionary remuneration (4) Total remuneration
------------------------------------------- ------------------- ------------------------------- -------------------
Shonaid Jemmett-Page (Chairman) (1) GBP63,333 GBP10,000 GBP73,333
Caoimhe Giblin (Audit Committee Chairman) GBP46,667 GBP10,000 GBP56,667
(2)
William Rickett C.B. (Senior Independent GBP45,000 GBP10,000 GBP55,000
Director)
Martin McAdam GBP40,000 GBP10,000 GBP50,000
Lucinda Riches C.B.E. GBP40,000 GBP10,000 GBP50,000
Tim Ingram (3) GBP23,333 - GBP23,333
Total GBP258,333 GBP50,000 GBP308,333
------------------------------------------- ------------------- ------------------------------- -------------------
(1) Appointed as Chairman of the Board with effect from 30 April
2020. The basic remuneration for the role of Chairman remained
unchanged at GBP70,000 per annum.
(2) Appointed as Audit Committee Chairman with effect from 30
April 2020.
(3) Retired with effect from 30 April 2020.
(4) The Directors received an additional discretionary payment
from the Company in relation to work incurred in connection with
the October 2020 share placing.
2021 2020
Paid in the year to 31 December 2021 % change from prior year(1) % change from prior year(1)
---------------------------------------------------- ---------------------------- ----------------------------
Shonaid Jemmett-Page (Chairman) 16% 22%
Caoimhe Giblin
(Audit Committee Chairman) (2) 15% 325%
William Rickett C.B. (Senior Independent Director) 9% 0%
Martin McAdam 10% 0%
Lucinda Riches C.B.E.(3) 10% 58%
Tim Ingram(4) n/a -71%
Dan Badger (5) n/a -100%
(1) Movement in Individual Director's salary based on annualised
total figures.
(2) Appointed with effect from 1September 2019
(3) Appointed with effect from 1 May 2019
(4) Retired with effect from 30 April 2020.
(5) Resigned with effect from 31 July 2019.
Directors' Interests (audited information)
Directors who held office and had interests in the shares of the
Company as at 31 December 2021 are given in the table below. There
were no changes to the interests of each Director as at the date of
this report.
Ordinary shares of 1p each held at 31 Ordinary shares of 1p each held at 31
December 2021 December 2020
-------------------------- ------------------------------------------- -------------------------------------------
Shonaid Jemmett-Page (1) 131,602 116,450
William Rickett C.B. (2) 37,500 37,500
Martin McAdam 103,689 98,689
Lucinda Riches C.B.E. 120,000 70,000
Caoimhe Giblin 40,000 20,000
-------------------------- ------------------------------------------- -------------------------------------------
(1) includes 59,570 ordinary shares legally and beneficially
owned by her spouse.
(2) includes 30,000 ordinary shares legally and beneficially
owned by members of his family.
Relative Importance of Spend on Pay
The remuneration of the Directors with respect to the year
totalled GBP320,000 (2020: GBP 308,333 ) in comparison to dividends
paid or declared to shareholders with respect to the year of
GBP147,998,434 (2020: GBP 118,662,399 ).
Company Performance
Due to the positioning of the Company in the market as a
sector-focused infrastructure fund investing in UK wind farms to
produce stable and inflating dividends for investors while aiming
to preserve capital value, the Directors consider that a listed
infrastructure fund has characteristics of both an equity index and
a bond index. As the Company listed on 27 March 2013, historical
data for the past 10 years is not yet available. The graph below
shows the TSR of the Company compared to the FTSE 250 index and the
Bloomberg Barclays Sterling Corporate Bond Index:
On behalf of the Board
Shonaid Jemmett-Page
Chairman
23 February 2022
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group's financial statements, and have
elected to prepare the Company's financial statements, in
accordance with UK adopted international accounting standards and
with the requirements of the Companies Act 2006 as applicable to
companies reporting under those standards. Under company law the
Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss for the
Group for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with UK
adopted international accounting standards, subject to any material
departures disclosed and explained in the financial statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business; and
-- prepare a Report of the Directors, a Strategic Report and
Directors' Remuneration Report which comply with the requirements
of the Companies Act 2006.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities. The Directors are responsible
for ensuring that the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Group's performance, business model
and strategy.
The Directors are also responsible under section 172 of the
Companies Act 2006 to promote the success of the Company for the
benefit of its members as a whole and in doing so have regard for
the needs of wider society and other stakeholders.
Website Publication
The Directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the UK governing the preparation and
dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibilities also extend to the ongoing
integrity of the financial statements contained therein.
Directors' Responsibilities Pursuant to DTR4
The Directors confirm to the best of their knowledge that:
-- the Group's financial have been prepared in accordance with
UK adopted international accounting standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards, and give a true and fair view of
the assets, liabilities, financial position and profit and loss of
the Group; and
-- the Annual Report includes a fair review of the development
and performance of the business and the financial position of the
Group and the Parent Company, together with a description of the
principal risks and uncertainties that they face.
On behalf of the Board
Shonaid Jemmett-Page
Chairman
23 February 2022
Corporate Governance Report
This Corporate Governance Report forms part of the Report of the
Directors. The Board operates under a framework for corporate
governance which is appropriate for an investment company. All
companies with a premium listing of equity shares in the UK are
required under the UK Listing Rules to report on how they have
applied the UK Code in their Annual Report and financial
statements.
The Company became a member of the AIC with effect from 27 March
2013 and has therefore put in place arrangements to comply with the
AIC Code and, in accordance with the AIC Code, complies with the UK
Code.
The AIC Code, as explained by the AIC Guide, addresses all the
principles set out in the UK Code, as well as setting out
additional principles and recommendations on issues that are of
specific relevance to investment companies such as the Company.
The AIC Code and the AIC Guide are available on the AIC's
website, www.theaic.co.uk . The UK Code is available on the FRC's
website, www.frc.org.uk .
The Company has complied with the recommendations of the AIC
Code throughout the year.
Purpose, Culture and Values
The Company's purpose remains clear; to provide shareholders
with an annual dividend that increases in line with RPI inflation
while preserving the capital value of its investment portfolio in
the long term on a real basis through reinvestment of excess cash
flow and the prudent use of gearing.
The Company provides investors with the opportunity to
participate directly in the ownership of UK wind farms, so
increasing the resources and capital dedicated to the deployment of
renewable energy and the reduction of greenhouse gas emissions.
As an investment trust with no employees, the Board have agreed
that its culture and values should be aligned with those of the
Investment Manager and centred on long term relationships with the
Company's key stakeholders and sustainable investment as
follows:
-- Integrity is at the heart of every activity, with importance
being placed on transparency, trustworthiness and
dependability.
-- The trust of stakeholders is very important to maintain the
Company's reputation, particularly for execution certainty for
asset sellers and delivery of investment promises to investors.
-- Respect for differing opinions is to be shown across all interaction and communication.
-- Individual empowerment is sought with growth in
responsibility and autonomy being actively encouraged.
-- Collaboration and effectively utilising the collective skills
of all participants is important to ensure ideas and information
are best shared.
The Board
As at the date of this report, the Board consists of 6
non-executive Directors and represents a range of investment,
financial and business skills and experience.
The Chairman of the Board is Shonaid Jemmett-Page. In
considering the independence of the Chairman, the Board took note
of the provisions of the AIC Code relating to independence, and has
determined that Ms Jemmett-Page is an independent director. The
Senior Independent Director is William Rickett C.B.. It is expected
that Lucinda Riches will be appointed as Senior Independent
Director following William's retirement at the forthcoming AGM. The
Company has no employees and therefore there is no requirement for
a chief executive.
The Articles of Association provide that Directors shall retire
and offer themselves for re-election at the first AGM after their
appointment and at least every 3 years thereafter. However, the AIC
Code requires that Directors be subject to an annual election by
shareholders, and the Directors comply with this requirement. All
of the Directors, other than William Rickett C.B., shall offer
themselves for re-election at the forthcoming AGM. Having
considered their effectiveness, demonstration of commitment to the
role, length of service, attendance at meetings and contribution to
the Board's deliberations, the Board approves the nomination for
re-election of the Directors.
The Company's view is that the continuity and experience of its
Directors are important and that a suitable balance needs to be
struck with the need for independence and the refreshing of the
skills and expertise of the Board. The Company believes that some
limited flexibility in its approach to Director rotation and Chair
tenure will enable it to manage succession planning more
effectively. In such circumstances, the independence of the other
directors will ensure that the Board as a whole remains
independent.
Mr Rickett joined the Company in December 2012, bringing him
beyond the nine year director tenure limit, and as such will not
seek re-election at the 2022 Annual General Meeting.
The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company's
registered office.
Chair Tenure Policy
The Company's policy on Chair tenure is available on the Company
website. Ms Jemmett-Page joined the Company in December 2012,
bringing her beyond the nine year director tenure limit, but was
appointed as Chairman of the Board in April 2020. The Company's
policy on Chair tenure is that the Chair should normally serve no
longer than nine years as a Director and Chair but, where it is in
the best interests of the Company, its shareholders and
stakeholders, the Chair may serve for a limited time beyond that to
help the Company manage succession planning whilst at the same time
still address the need for regular refreshment and diversity. In
such circumstances the independence of the other Directors will
ensure that the Board as a whole remains independent. The Company
believes that this limited flexibility regarding Chair tenure will
enable it to manage succession planning more effectively.
Performance and Evaluation
Pursuant to Provision 26 of the AIC Code, the Board undertakes a
formal and rigorous evaluation of its performance each financial
year. As a FTSE 250 company, in keeping with the provisions of the
AIC Code, it is the Company's policy that every 3 years an external
consultant, who has no connection with the Company, carries out a
formal review of the Board's performance. This was last conducted
in 2019.
An internal evaluation of the Board, the Audit Committee and
individual Directors was conducted during 2021 in the form of
annual performance appraisals, questionnaires and discussions to
determine effectiveness and performance in various areas, as well
as the Directors' continued independence and tenure. This process
was facilitated by the Company Secretary. The reviews concluded
that the overall performance of the Board and Audit Committee was
satisfactory and the Board was confident in its ability to continue
to govern the Company well.
Each individual Director's training and development needs are
reviewed annually. All new Directors receive an induction from the
Investment Manager, which includes the provision of information
about the Company and their responsibilities. In addition, site
visits and specific Board training sessions are arranged involving
presentations on relevant topics.
Board Responsibilities
The Board will meet, on average, 5 times in each calendar year
for scheduled Board meetings and on an ad hoc basis as and when
necessary. At each meeting the Board follows a formal agenda that
will cover the business to be discussed. Between meetings there is
regular contact with the Investment Manager and the Administrator.
The Board requires to be supplied with information by the
Investment Manager, the Administrator and other advisers in a form
appropriate to enable it to discharge its duties.
The Board has responsibility for ensuring that the Company keeps
proper accounting records which disclose with reasonable accuracy
at any time the financial position of the Company and which enable
it to ensure that the financial statements comply with applicable
regulation. It is the Board's responsibility to present a fair,
balanced and understandable Annual Report, which provides the
information necessary for shareholders to assess the performance,
strategy and business model of the Company. This responsibility
extends to the half year and other price-sensitive public
reports.
Committees of the Board
The Company's Audit Committee is chaired by Caoimhe Giblin and
consists of a minimum of 3 members. In accordance with best
practice, the Company's Chairman is not a member of the Audit
Committee however she does attend Audit Committee meetings as and
when deemed appropriate. The Audit Committee Report below describes
the work of the Audit Committee.
The Company's Management Engagement Committee comprises all of
the Directors and is required to meet at least once per year. The
Chairman of the Management Engagement Committee is Shonaid
Jemmett-Page. The Management Engagement Committee's main function
is to keep under review the performance of the Investment Manager
and make recommendations on any proposed amendment to the
Investment Management Agreement.
Terms of reference for the Management Engagement Committee have
been approved by the Board and are available on the Company's
website.
The Management Engagement Committee met once during the year to
review the performance of the Investment Manager and to consider
the structure of the Investment Manager's fee.
The Company's Nominations Committee comprises all of the
Directors and is required to meet at least once per year. The
Chairman of the Nominations Committee is Shonaid Jemmett-Page. The
Nominations Committee's main function is to plan for Board
succession and to review annually the structure, size and
composition of the Board and make recommendation to the Board with
regard to any changes that are deemed necessary. Terms of reference
for the Nominations Committee have been approved by the Board and
are available on the Company's website.
The Nominations Committee met twice during the year to consider
Board succession planning, as well as the Director recruitment
process in which a shortlist of candidates had been identified for
consideration by the recruitment consultant, Nurole Limited.
Following a discussion with Nurole Limited and the Investment
Manager, the Nominations Committee recommended the appointment of
Mr Nick Winser as a non-executive Director of the Company.
The Company has established a Communications and Disclosure
Committee which is required to meet at least once a year. The
committee has responsibility for, amongst other things, determining
on a timely basis the disclosure treatment of material information,
and assisting in the design, implementation and periodic evaluation
of disclosure controls and procedures. The committee also has
responsibility for the identification of inside information for the
purpose of maintaining the Company's insider list.
Terms of reference for the Communications and Disclosure
Committee have been approved by the Board and are available on the
Company's website. Membership consists of the Chairman (or one
other Director) and one of Stephen Lilley and Laurence Fumagalli.
Additional members of the committee may be appointed and existing
members removed by the committee. The membership of the committee
is reviewed by the Board on a periodic basis and at least once a
year.
The AIC Code recommends that companies appoint a Remuneration
Committee, however the Board has not deemed this necessary, as
being wholly comprised of non-executive Directors, the whole Board
considers these matters.
The Investment Manager
The Board has entered into the Investment Management Agreement
with the Investment Manager under which the Investment Manager is
responsible for developing strategy and the day-to-day management
of the Group's investment portfolio, in accordance with the Group's
Investment Objective and Investment Policy, subject to the overall
supervision of the Board. A summary of the fees paid to the
Investment Manager are given in note 3 to the financial
statements.
The Investment Manager's appointment is terminable by the
Investment Manager or the Company on not less than 12 months'
notice. The Investment Management Agreement may be terminated with
immediate effect and without compensation, by either the Investment
Manager or the Company if the other party has gone into
liquidation, administration or receivership or has committed a
material breach of the Investment Management Agreement.
The Board as a whole reviewed the Company's compliance with the
UK Corporate Governance Code, the Listing Rules, the Disclosure
Guidance and Transparency Rules and the AIC Code. In accordance
with the Listing Rules, the Directors confirm that the continued
appointment of the Investment Manager under the current terms of
the Investment Management Agreement is in the interests of
shareholders. The Board also reviewed the performance of other
service providers and examined the effectiveness of the Company's
internal control systems during the year.
Board Meetings, Committee Meetings and Directors' Attendance
The number of meetings of the full Board attended in the year to
31 December 2021 by each Director is set out below:
Scheduled Board Meetings Additional Board Meetings
(Total of 5) (Total of 13)
----------------------- ------------------------------ ---------------------------
Shonaid Jemmett-Page 5 13
William Rickett C.B. 5 13
Martin McAdam 5 13
Lucinda Riches C.B.E. 5 13
Caoimhe Giblin 5 13
----------------------- ------------------------------ ---------------------------
The number of meetings of the committees of the Board attended
in the year to 31 December 2021 by each committee member is set out
below:
Management Engagement
Audit Committee Meetings Committee Meetings Nominations Committee Meetings
(Total of 4) (Total of 1) (Total of 2)
------------------- -------------------------------- ---------------------------- -------------------------------
Shonaid
Jemmett-Page n/a 1 2
William Rickett
C.B. 4 1 2
Martin McAdam 4 1 2
Lucinda Riches
C.B.E. 4 1 2
Caoimhe Giblin 4 1 2
------------------- -------------------------------- ---------------------------- -------------------------------
Internal Control
The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness. The Board confirms
that it has an ongoing process for identifying, evaluating and
managing the significant risks faced by the Company. This process
has been in place throughout the year and has continued since the
year end.
The Company's principal risks and uncertainties are detailed in
the Strategic Report. As further explained in the Audit Committee
Report, the risks of the Company are outlined in a risk matrix
which was reviewed and updated during the year. The Board
continually reviews its policy setting and updates the risk matrix
at least annually to ensure that procedures are in place with the
intention of identifying, mitigating and minimising the impact of
risks should they crystallise. The Board has a process in place to
identify emerging risks, such as climate related risks, and to
determine whether any actions are required. The Board relies on
reports periodically provided by the Investment Manager and the
Administrator regarding risks that the Company faces. When
required, experts are employed to gather information, including tax
and legal advisers. The Board also regularly monitors the
investment environment and the management of the Company's
portfolio, and applies the principles detailed in the internal
control guidance issued by the FRC.
The Board holds an annual risk and strategy discussion, which
enables the Directors to consider risk outside the scheduled
quarterly Board meetings. This enables emerging risks to be
identified and discussions on horizon scanning to occur, so the
Board can consider how to manage and potentially mitigate any
relevant emerging risks.
The principal features of the internal controls systems which
the Investment Manager and Administrator have in place in respect
of the Group's financial reporting are focussed around the 3 lines
of defence model and include:
-- internal reviews of all financial reports;
-- review by the Board of financial information prior to its publication;
-- authorisation limits over expenditure incurred by the Group;
-- review of valuations; and
-- authorisation of investments.
Whistleblowing
The Board has considered the AIC Code recommendations in respect
of arrangements by which staff of the Investment Manager or
Administrator may, in confidence, raise concerns within their
respective organisations about possible improprieties in matters of
financial reporting or other matters. It has concluded that
adequate arrangements are in place for the proportionate and
independent investigation of such matters and, where necessary, for
appropriate follow-up action to be taken within their
organisation.
Amendment of Articles of Association
The Company's Articles of Association may be amended by the
members of the Company by special resolution (requiring a majority
of at least 75 per cent of the persons voting on the relevant
resolution).
Engagement with Stakeholders
The Company is committed to maintaining good communications and
building positive relationships with all stakeholders, including
shareholders, debt providers, analysts, potential investors,
suppliers and the wider communities in which the Group and its
investee companies operate. This includes regular engagement with
the Company's shareholders and other stakeholders by the Board, the
Investment Manager and the Administrator. Regular feedback is
provided to the Board to ensure they understand the views of
stakeholders.
Relations with Shareholders
The Company welcomes the views of shareholders and places great
importance on communication with its shareholders. The Investment
Manager is available at all reasonable times to meet with principal
shareholders and key sector analysts. The Chairman, the Senior
Independent Director and other Directors are also available to meet
with shareholders, if required.
All shareholders have the opportunity to put questions to the
Company at its registered address. The AGM of the Company should
provide a forum for shareholders to meet and discuss issues with
the Directors and Investment Manager.
The Board receives comprehensive shareholder reports from the
Company's Registrar and regularly monitors the views of
shareholders and the shareholder profile of the Company. The Board
is also kept fully informed of all relevant market commentary on
the Company by the Investment Manager.
Relations with Other Stakeholders
The Company values its relationships with its debt providers.
The Investment Manager ensures the Company continues to meet its
debt covenants and reporting requirements. During the year, the
Company increased its revolving credit facility with RBS
International, RBC, Santander and Barclays by GBP200 million to
GBP600 million, as disclosed in note 13 to the financial
statements.
The Investment Manager conducts presentations with analysts and
investors to coincide with the announcement of the Company's full
and half year results, providing an opportunity for discussions and
queries on the Company's activities, performance and key metrics.
In addition to these semi-annual presentations, the Investment
Manager meets regularly with analysts and investors to provide
further updates with how the Company and the investment portfolio
are performing.
In October, the Investment Manager hosted a virtual Capital
Markets Event for investors and analysts on active asset management
and driving shareholder value through generation optimisation. The
webinar and subsequent Q&A provided investors with the
opportunity to gain a better understanding of the technical aspects
of the Group's wind farm portfolio and the optimisation
opportunities being explored and implemented by the Investment
Manager.
The Directors and Investment Manager receive informal feedback
from analysts and investors, which is presented to the Board by the
Company's Joint Brokers. The Company Secretary also receives
informal feedback via queries submitted through the Company's
website and these are addressed by the Board, the Investment
Manager or the Company Secretary, where applicable.
The Company recognises that relationships with suppliers are
enhanced by prompt payment and the Company's Administrator ensures
all payments are processed within the contractual terms agreed with
the individual suppliers.
The Company, via its Investment Manager, has long term and
important relationships with its operational site managers and
turbine operations and maintenance managers and reviews
performance, including health and safety, on a monthly basis.
Representatives of the site manager and SPV board directors, from
the Investment Manager, visit all operational sites on a regular
basis and generally carry out safety walks at least once a year on
each site. The Board's Health and Safety Director also visits sites
at regular intervals.
Similarly, environment protection issues are reported on every
month by the site managers and annual habitat management plans are
agreed by each SPV board for all sites to ensure that the
environment in and surrounding each windfarm is carefully
protected.
The Directors recognise that the long term success of the
Company is linked to the success of the communities in which the
Group, and its investee companies, operate. During the year, a
number of community projects were supported by the Group's investee
companies.
Key decisions made or approved by the Directors during the year
and the impact of those decisions on the Company's members and
wider stakeholders is disclosed further in the Strategic
Report.
Shareholders may also find Company information or contact the Company through its website.
On behalf of the Board
Shonaid Jemmett-Page
Chairman of the Board
23 February 2022
Audit Committee Report
At the date of this report, the Audit Committee comprised
Caoimhe Giblin (Chairman), William Rickett C.B., Martin McAdam,
Lucinda Riches C.B.E. and Nick Winser. The AIC Code has a
requirement that at least one member of the Audit Committee should
have recent and relevant financial experience and the Audit
Committee as a whole shall have competence relevant to the sector.
The Board is satisfied that the Audit Committee is properly
constituted in these respects. The qualifications and experience of
all Audit Committee members are disclosed in this Annual
Report.
The Audit Committee operates within clearly defined terms of
reference which were reviewed during the financial year and
approved by the Board, and include all matters indicated by
Disclosure Guidance and Transparency Rule 7.1 and the AIC Code and
are available for inspection on the Company's website:
www.greencoat-ukwind.com . The Company's Annual Report complies
with the provisions of the Competition and Markets Authority's
(CMA) Order.
Audit Committee meetings are scheduled at appropriate times in
the reporting and auditing cycle. The Chairman, other Directors and
third parties may be invited to attend meetings as and when deemed
appropriate.
Summary of the Role and Responsibilities of the Audit
Committee
The duties of the Audit Committee include reviewing the
Company's quarterly NAV, half year report, Annual Report and
financial statements and any formal announcements relating to the
Company's financial performance.
The Audit Committee is the forum through which the external
Auditor reports to the Board and is responsible for reviewing the
terms of appointment of the Auditor, together with their
remuneration. On an ongoing basis, the Audit Committee is
responsible for reviewing the objectivity of the Auditor along with
the effectiveness of the audit and the terms under which the
Auditor is engaged to perform non-audit services (restricted to the
limited scope review of the half year report and reporting
accountant services in relation to equity raises). The Audit
Committee is also responsible for reviewing the Company's corporate
governance framework, system of internal controls and risk
management, ensuring they are suitable for an investment
company.
The Audit Committee reports its findings to the Board,
identifying any matters on which it considers that action or
improvement is needed, and make recommendations on the steps to be
taken.
Overview
During the year, the Audit Committee's discussions have been
broad ranging. In addition to the 4 formally convened Audit
Committee meetings during the year, the Audit Committee has had
regular contact and meetings with the Investment Manager, the
Administrator and the Auditor. These meetings and discussions
focused on, but were not limited to:
-- a detailed analysis of the Company's quarterly NAVs;
-- reviewing the updated risk matrix of the Company, including
climate related reporting disclosures under the TCFD framework;
-- reviewing the Company's corporate governance framework,
including climate related reporting disclosures under the TCFD
framework;
-- reviewing the internal controls framework for the Company,
the Administrator and the Investment Manager, considering the need
for a separate internal audit function;
-- considering any incidents of internal control failure or fraud and the Company's response;
-- considering the ongoing assessment of the Company as a going concern;
-- considering the principal risks and period of assessment for
the longer term viability of the Company;
-- monitoring the ongoing appropriateness of the Company's
status as an investment entity under IFRS 10, in particular
following an acquisition;
-- monitoring compliance with AIFMD, the AIC code and other
regulatory and governance frameworks;
-- reviewing and approving the audit plan in relation to the
audit of the Company's Annual Report and financial statements;
-- monitoring compliance with the Company's policy on the
provision of non-audit services by the Auditor; and
-- reviewing the effectiveness, resources, qualifications and independence of the Auditor.
Financial Reporting
The primary role of the Audit Committee in relation to financial
reporting is to review with the Investment Manager, the
Administrator and the Auditor the appropriateness of the half year
report and Annual Report and financial statements, concentrating
on, amongst other matters:
-- the quality and acceptability of accounting policies and practices;
-- the clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance reporting
requirements;
-- amendments to legislation and corporate governance reporting
requirements and accounting treatment of new transactions in the
year;
-- the impact of new and amended accounting standards on the Company's financial statements;
-- whether the Audit Committee believes that proper and
appropriate processes and procedures have been followed in the
preparation of the half year report and Annual Report and financial
statements;
-- considering and recommending to the Board for approval the
contents of the annual financial statements and reviewing the
Auditor's report thereon including considering whether the
financial statements are overall fair, balanced and
understandable;
-- material areas in which significant judgements have been
applied or there has been discussion with the Auditor; and
-- any correspondence from regulators in relation to the Company's financial reporting.
During the year, the Company received correspondence from the
FRC seeking a better understanding of certain sections of the 2020
Annual Report, specifically with respect to the portfolio's
renewable energy subsidies and variable consideration on forward
committed acquisitions. The FRC also provided minor disclosure
recommendations to be taken into account for future reports. The
Audit Committee, with assistance from the Investment Manager and
the Administrator, collaboratively engaged with the FRC and their
enquiries reached a satisfactory conclusion.
The FRC's review was based on reading the 2020 Annual Report
alone with no prior knowledge of the Group and its investments. It
did not constitute an independent assurance engagement or verify
any information provided in the 2020 Annual Report.
BDO LLP attended 3 of the 4 formal Audit Committee meetings held
during the year. The Audit Committee has also held private meetings
with the Auditor to provide additional opportunities for open
dialogue and feedback. Matters typically discussed include the
Auditor's assessment of the transparency and openness of
interactions with the Investment Manager and the Administrator,
confirmation that there has been no restriction in scope placed on
them, the independence of their audit and how they have exercised
professional scepticism.
Significant Issues
The Audit Committee discussed the planning, conduct and
conclusions of the external audit as it proceeded. At the Audit
Committee meeting in advance of the year end, the Audit Committee
discussed and approved the Auditor's audit plan. The Audit
Committee identified the carrying value of investments as a key
area of risk of misstatement in the Company's financial
statements.
Assessment of the Carrying Value of Investments
The Group has an accounting policy to designate investments at
fair value through profit or loss. Therefore, the most significant
risk in the Group's financial statements is whether its investments
are fairly valued due to the uncertainty involved in determining
the investment valuations. There is also an inherent risk of
management override as the Investment Manager's fee is calculated
based on NAV, as disclosed in note 3 to the financial statements.
The Investment Manager is responsible for calculating the NAV with
the assistance of the Administrator, prior to approval by the
Board.
On a quarterly basis, the Investment Manager provides a detailed
analysis of the NAV highlighting any movements and assumption
changes from the previous quarter's NAV. This analysis and the
rationale for any changes made is considered and challenged by the
Chairman of the Audit Committee and subsequently considered,
challenged and approved by the Board. The Audit Committee has
satisfied itself that the key estimates and assumptions used in the
valuation model are appropriate and that the investments have been
fairly valued. The key estimates and assumptions include the useful
life of the assets, the discount rates, the level of wind resource,
the rate of inflation, the price at which the power and associated
benefits can be sold and the amount of electricity the assets are
expected to produce.
Internal Control
The Audit Committee has established a set of ongoing processes
designed to meet the particular needs of the Company in managing
the risks to which it is exposed.
The process is one whereby the Investment Manager has identified
the principal risks to which the Company is exposed, and recorded
them on a risk matrix together with the controls employed to
mitigate these risks, and has a process in place to identify
emerging risks and to determine whether any actions are required. A
residual risk rating has been applied to each risk. The Audit
Committee is responsible for reviewing the risk matrix and
associated controls before recommending to the Board for
consideration and approval, challenging the Investment Manager's
assumptions to ensure a robust internal risk management
process.
The Audit Committee considers risk and strategy regularly, and
formally reviewed the updated risk matrix in Q1 2022 and will
continue to do so at least annually. By their nature, these
procedures provide a reasonable, but not absolute, assurance
against material misstatement or loss. Regular reports are provided
to the Audit Committee highlighting material changes to risk
ratings.
The Audit Committee reviewed the Group's principal risks and
uncertainties as at 30 June 2021 to determine that these were
unchanged from those disclosed in the Company's 2020 Annual Report
and remained the most likely to affect the Group in the second half
of the year.
During the year, the Audit Committee discussed and reviewed in
depth the internal controls frameworks in place at the Investment
Manager and the Administrator. Discussions were centred around 3
lines of defence: assurances at operational level, internal
oversight, and independent objective assurance. The Administrator
holds the International Standard on Assurance Engagements (ISAE)
3402 Type 2 certification. This entails an independent rigorous
examination and testing of their controls and processes.
The Audit Committee concluded that these frameworks were
appropriate for the identification, assessment, management and
monitoring of financial, regulatory and other risks, with
particular regard to the protection of the interests of the
Company's shareholders.
Internal Audit
The Audit Committee continues to review the need for an internal
audit function and has decided that the systems, processes and
procedures employed by the Company, Investment Manager and
Administrator, including their own internal controls and
procedures, provide sufficient assurance that an appropriate level
of risk management and internal control is maintained. In addition
to this, the Company's external Depositary provides cash
monitoring, asset verification and oversight services to the
Company.
The Audit Committee has therefore concluded that shareholders'
investments and the Company's assets are adequately safeguarded and
an internal audit function specific to the Company is considered
unnecessary.
The Audit Committee is available on request to meet investors in
relation to the Company's financial reporting and internal
controls.
External Auditor
Effectiveness of the Audit Process
The Audit Committee assessed the effectiveness of the audit
process by considering BDO LLP's fulfilment of the agreed audit
plan through the reporting presented to the Audit Committee by BDO
LLP and the discussions at the Audit Committee meeting, which
highlighted the major issues that arose during the course of the
audit. In addition, the Audit Committee also sought feedback from
the Investment Manager and the Administrator on the effectiveness
of the audit process. For this financial year, the Audit Committee
was satisfied that there had been appropriate focus and challenge
on the primary areas of audit risk and assessed the quality of the
audit process to be good.
Non-Audit Services
The Audit Committee has a policy regarding the provision of
non-audit services by the external Auditor. The Audit Committee
monitors the Group's expenditure on non-audit services provided by
the Company's Auditor who should only be engaged for non-audit
services where they are deemed to be the most commercially viable
supplier and prior approval of the Audit Committee has been
sought.
Details of fees paid to BDO LLP during the year are disclosed in
note 5 to the financial statements. The Audit Committee approved
these fees after a review of the level and nature of work to be
performed, and are satisfied that they are appropriate for the
scope of the work required. The Audit Committee seeks to ensure
that any non-audit services provided by the external Auditor do not
conflict with their statutory and regulatory responsibilities, as
well as their independence, before giving written approval prior to
their engagement. The Audit Committee was satisfied that provision
of these non-audit services did not provide threats to the
Auditor's independence.
Independence
The Audit Committee is required to consider the independence of
the external Auditor. In fulfilling this requirement, the Audit
Committee has considered a report from BDO LLP describing its
arrangements to identify, report and manage any conflict of
interest and the extent of non-audit services provided by them.
During the year, the Audit Committee were notified by BDO LLP of
a breach of auditor independence detailed in their Independent
Audit.
Notwithstanding the identified this independence breach, the
Audit Committee has concluded that it considers BDO LLP to be
independent of the Company and that the provision of the non-audit
services described above is not a threat to the objectivity and
independence of the conduct of the audit.
Re-appointment
BDO LLP has been the Company's Auditor from its incorporation on
4 December 2012. The Auditor is required to rotate the audit
partner responsible for the Group audit every 5 years. A new lead
partner was appointed in the prior year and therefore the lead
partner will be required to rotate after the completion of the 2024
year end audit.
The external audit contract is required to be put to tender at
least every 10 years. The Audit Committee intends to commence an
external audit appointment tender in the coming year for the year
ended 31 December 2023. The Audit Committee has considered the
re-appointment of the Auditor and decided not to put the provision
of the external audit out to tender for the year ending 31 December
2022. As described above, the Audit Committee reviewed the
effectiveness and independence of the Auditor and remains satisfied
that the Auditor provides effective independent challenge to the
Board, the Investment Manager and the Administrator. The Audit
Committee will continue to monitor the performance of the Auditor
on an annual basis and will consider their independence and
objectivity, taking account of appropriate guidelines.
The Audit Committee has therefore recommended to the Board that
BDO LLP be proposed for re-appointment as the Company's Auditor at
the 2022 AGM of the Company.
Caoimhe Giblin
Chairman of the Audit Committee
23 February 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
For the year ended For the year ended
Note 31 December 2021 31 December 2020
GBP'000 GBP'000
--------------------------------------------------------------------- ----- ------------------- -------------------
Return on investments 4 421,683 154,304
Other income 1,788 1,086
--------------------------------------------------------------------- ----- ------------------- -------------------
Total income and gains 423,471 155,390
Operating expenses 5 (26,258) (20,990)
Investment acquisition costs (3,305) (8,025)
--------------------------------------------------------------------- ----- ------------------- -------------------
Operating profit 393,908 126,375
Finance expense 13 (30,689) (21,368)
--------------------------------------------------------------------- ----- ------------------- -------------------
Profit for the year before tax 363,219 105,007
Tax 6 - (612)
--------------------------------------------------------------------- ----- ------------------- -------------------
Profit for the year after tax 363,219 104,395
Profit and total comprehensive income attributable to:
Equity holders of the Company 363,219 104,395
Earnings per share
--------------------------------------------------------------------- ----- ------------------- -------------------
Basic and diluted earnings from continuing operations in the year
(pence) 7 18.30 6.55
--------------------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the financial
statements.
Consolidated Statement of Financial Position
As at 31 December 2021
Note 31 December 2021 31 December 2020
GBP'000 GBP'000
-------------------------------------------------- ----- ----------------- -----------------
Non current assets
Investments at fair value through profit or loss 9 4,042,545 3,329,768
-------------------------------------------------- ----- ----------------- -----------------
4,042,545 3,329,768
Current assets
Receivables 11 2,632 634
Cash and cash equivalents 4,801 7,888
-------------------------------------------------- ----- ----------------- -----------------
7,433 8,522
Current liabilities
Payables 12 (6,279) (8,417)
-------------------------------------------------- ----- ----------------- -----------------
Net current assets 1,154 105
Non current liabilities
Loans and borrowings 13 (950,000) (1,100,000)
Net assets 3,093,699 2,229,873
-------------------------------------------------- ----- ----------------- -----------------
Capital and reserves
Called up share capital 15 23,171 18,241
Share premium account 15 2,468,940 1,834,477
Retained earnings 601,588 377,155
-------------------------------------------------- ----- ----------------- -----------------
Total shareholders' funds 3,093,699 2,229,873
-------------------------------------------------- ----- ----------------- -----------------
Net assets per share (pence) 16 133.5 122.2
-------------------------------------------------- ----- ----------------- -----------------
Authorised for issue by the Board of Greencoat UK Wind PLC
(registered number 08318092) on 23 February 2022 and signed on its
behalf by:
Shonaid Jemmett-Page Caoimhe Giblin
Chairman Director
The accompanying notes form an integral part of the financial
statements.
Statement of Financial Position - Company
As at 31 December 2021
Note 31 December 2021 31 December 2020
GBP'000 GBP'000
-------------------------------------------------- ----- ----------------- -----------------
Non current assets
Investments at fair value through profit or loss 9 4,046,365 3,332,430
-------------------------------------------------- ----- ----------------- -----------------
4,046,365 3,332,430
Current assets
Receivables 11 107 143
Cash and cash equivalents 1,875 1,212
-------------------------------------------------- ----- ----------------- -----------------
1,982 1,355
Current liabilities
Payables 12 (4,648) (3,912)
-------------------------------------------------- ----- ----------------- -----------------
Net current liabilities (2,666) (2,557)
Non current liabilities
Loans and borrowings 13 (950,000) (1,100,000)
Net assets 3,093,699 2,229,873
-------------------------------------------------- ----- ----------------- -----------------
Capital and reserves
Called up share capital 15 23,171 18,241
Share premium account 15 2,468,940 1,834,477
Retained earnings 601,588 377,155
-------------------------------------------------- ----- ----------------- -----------------
Total shareholders' funds 3,093,699 2,229,873
-------------------------------------------------- ----- ----------------- -----------------
Net assets per share (pence) 16 133.5 122.2
-------------------------------------------------- ----- ----------------- -----------------
The Company has taken advantage of the exemption under section
408 of the Companies Act 2006 and accordingly has not presented a
Statement of Comprehensive Income for the Company alone. The profit
after tax of the Company alone for the year was GBP363,219,000
(2020: GBP 104,395,000 ).
Authorised for issue by the Board on 23 February 2022 and signed
on its behalf by:
Shonaid Jemmett-Page Caoimhe Giblin
Chairman Director
The accompanying notes form an integral part of the financial
statements.
Consolidated and Company Statement of Changes in Equity
For the year ended 31 December 2021
For the year ended
31 December 2021 Note Share capital Share premium Retained earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----- -------------------- ------------------ ------------------- ------------------
Opening net assets
attributable to
shareholders (1 January
2021) 18,241 1,834,477 377,155 2,229,873
Issue of share capital 15 4,930 644,188 - 649,118
Share issue costs 15 - (9,725) - (9,725)
Profit and total
comprehensive income for
the year - - 363,219 363,219
Interim dividends paid in
the year 8 - - (138,786) (138,786)
Closing net assets
attributable to
shareholders 23,171 2,468,940 601,588 3,093,699
---------------------------- ----- -------------------- ------------------ ------------------- ------------------
After taking account of cumulative unrealised gains of
GBP267,346,624, the total reserves distributable by way of a
dividend as at 31 December 2021 were GBP334,240,317.
For the year ended
31 December 2020 Note Share capital Share premium Retained earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- ----- -------------- -------------- ------------------ ----------
Opening net assets attributable to
shareholders (1 January 2020) 15,175 1,442,218 385,373 1,842,766
Issue of share capital 15 3,066 398,434 - 401,500
Share issue costs 15 - (6,175) - (6,175)
Profit and total comprehensive income for the
year - - 104,395 104,395
Interim dividends paid in the year 8 - - (112,613) (112,613)
Closing net assets attributable to
shareholders 18,241 1,834,477 377,155 2,229,873
----------------------------------------------- ----- -------------- -------------- ------------------ ----------
After taking account of cumulative unrealised gains of
GBP111,795,120, the total reserves distributable by way of a
dividend as at 31 December 2020 were GBP265,359,188.
The accompanying notes form an integral part of the financial
statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
For the year ended For the year ended
Note 31 December 2021 31 December 2020
GBP'000 GBP'000
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from operating activities 17 242,261 123,083
Cash flows from investing activities
Acquisition of investments 9 (565,957) (914,106)
Investment acquisition costs (6,263) (3,541)
Repayment of shareholder loan investments 9 8,731 17,307
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from investing activities (563,489) (900,340)
Cash flows from financing activities
Issue of share capital 15 647,618 400,000
Payment of issue costs (9,715) (6,175)
Amounts drawn down on loan facilities 13 110,000 880,000
Amounts repaid on loan facilities 13 (260,000) (380,000)
Finance costs (30,976) (20,784)
Dividends paid 8 (138,786) (112,613)
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from financing activities 318,141 760,428
Net decrease in cash and cash equivalents during the year (3,087) (16,829)
Cash and cash equivalents at the beginning of the year 7,888 24,717
Cash and cash equivalents at the end of the year 4,801 7,888
----------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the financial
statements.
Statement of Cash Flows - Company
For the year ended 31 December 2021
For the year ended For the year ended
Note 31 December 2021 31 December 2020
GBP'000 GBP'000
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from operating activities 17 (21,668) (738)
Cash flows from investing activities
Loans advanced to Group companies 9 (499,800) (893,046)
Repayment of loans to Group companies 9 203,990 133,994
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from investing activities (295,810) (759,052)
Cash flows from financing activities
Issue of share capital 15 647,618 400,000
Payment of issue costs (9,715) (6,175)
Amounts drawn down on loan facilities 13 110,000 880,000
Amounts repaid on loan facilities 13 (260,000) (380,000)
Finance costs (30,976) (20,784)
Dividends paid 8 (138,786) (112,613)
----------------------------------------------------------- ----- ------------------- -------------------
Net cash flows from financing activities 318,141 760,428
Net increase in cash and cash equivalents during the year 663 638
Cash and cash equivalents at the beginning of the year 1,212 574
Cash and cash equivalents at the end of the year 1,875 1,212
----------------------------------------------------------- ----- ------------------- -------------------
The accompanying notes form an integral part of the financial
statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
1. Significant accounting policies
Basis of accounting
The consolidated annual financial statements have been prepared
in accordance with UK adopted international accounting standards
and with the requirements of the Companies Act 2006 as applicable
to companies reporting under those standards.
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into the UK law and became UK adopted
international accounting standards, with future changes being
subject to endorsement by the UK Endorsement Board. The Group and
the Company transitioned to UK adopted international accounting
standards in its consolidated financial statements on 1 January
2021. There was no impact or changes in accounting from the
transition.
The annual financial statements have been prepared on the
historical cost basis, as modified for the measurement of certain
financial instruments at fair value through profit or loss. The
principal accounting policies are set out below.
These consolidated financial statements are presented in pounds
sterling, which is the currency of the primary economic environment
in which the Group operates and are rounded to the nearest
thousand, unless otherwise stated.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Investment Manager's Report. The Group faces a
number of risks and uncertainties, as set out in the Strategic
Report. The financial risk management objectives and policies of
the Group, including exposure to price risk, interest rate risk,
credit risk and liquidity risk are discussed in note 18 to the
financial statements.
The Group continues to meet day-to-day liquidity needs through
its cash resources.
As at 31 December 2021, the Group had net current assets of GBP
1.2 million (2020: GBP0.1 million), which included cash balances of
GBP 4.8 million (2020: GBP7.9 million) (excluding cash balances
within investee companies), which are sufficient to meet current
obligations as they fall due. The major cash outflows of the Group
are the payment of dividends and costs relating to the acquisition
of new assets, both of which are discretionary. The Directors are
confident that the Group has sufficient access to debt, including
its revolving credit facility, as well as equity markets in order
to fund commitments to acquisitions and meet the contingent
liabilities detailed in note 14 to the financial statements, should
they become payable.
The Company had GBP950 million (2020: GBP1,100 million) of
outstanding debt as at 31 December 2021, with GBP350 million
available to borrow under its revolving credit facility. The
covenants on the Company's banking facilities are limited to
gearing and interest cover and the Company is expected to continue
to comply with these covenants going forward.
In the period since 2021 and up to the date of this report, the
outbreak of COVID-19 has had a significant impact on the global
economy. The Directors and Investment Manager are actively
monitoring this and its potential effect on the Group and its SPVs.
In particular, they have considered the following specific key
potential impacts:
-- Unavailability of key personnel at the Investment Manager or Administrator;
-- Disruptions to maintenance or repair at the investee company level; and
-- Allowance for counterparty credit losses.
In considering the above key potential impacts of COVID-19 on
the Group and SPV operations, the Directors have assessed these
with reference to the mitigation measures in place. At the Group
level, the key personnel at the Investment Manager and
Administrator have successfully implemented business continuity
plans to ensure business disruption is minimised, including remote
working, and all staff are continuing to assume their day-to-day
responsibilities.
SPV revenues are derived from the sale of electricity, and
although approximately 62 per cent of the portfolio's revenue in
2021 was exposed to the floating power price, revenue is received
through power purchase agreements in place with large and reputable
providers of electricity to the market and also through government
subsidies. In the period since 2021 and up to the date of this
report, there has been no significant impact on revenue and cash
flows of the SPVs. The SPVs have contractual operating and
maintenance agreements in place with large and reputable providers.
Therefore, the Directors and the Investment Manager do not
anticipate a threat to the Group's revenue.
Wind farm availability has not been significantly affected: wind
farms may be accessed and operated remotely in some instances;
otherwise social distancing has been possible in large part and
personal protective equipment has been used where not possible, for
instance where major component changes have been necessary. The
Investment Manager is confident that there are appropriate
continuity plans in place at each provider to ensure that the
underlying wind farms are maintained appropriately and that any
faults would continue to be addressed in a timely manner.
Based on the assessment outlined above, including the various
risk mitigation measures in place, the Directors do not consider
that the effects of COVID-19 have created a material uncertainty
over the assessment of the Group as a going concern.
The Directors have reviewed Group forecasts and projections
which cover a period of at least 12 months from the date of
approval of this report, taking into account foreseeable changes in
investment and trading performance, which show that the Group has
sufficient financial resources to continue in operation for at
least the next 12 months from the date of approval of this
report.
On the basis of this review, and after making due enquiries, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for at least up to February 2023 from the date of approval of this
report. Accordingly, they continue to adopt the going concern basis
in preparing the financial statements.
Accounting for subsidiaries
The Directors have concluded that the Group has all the elements
of control as prescribed by IFRS 10 "Consolidated Financial
Statements" in relation to all its subsidiaries and that the
Company continues to satisfy the 3 essential criteria to be
regarded as an investment entity as defined in IFRS 10, IFRS 12
"Disclosure of Interests in Other Entities" and IAS 27
"Consolidated and Separate Financial Statements". The 3 essential
criteria are such that the entity must:
1. Obtain funds from one or more investors for the purpose of
providing these investors with professional investment management
services;
2. Commit to its investors that its business purpose is to
invest its funds solely for returns from capital appreciation,
investment income or both; and
3. Measure and evaluate the performance of substantially all of
its investments on a fair value basis.
In satisfying the second essential criteria, the notion of an
investment time frame is critical. An investment entity should not
hold its investments indefinitely but should have an exit strategy
for their realisation. Although the Company has invested in equity
interests in wind farms that have an indefinite life, the
underlying wind farm assets that it invests in have an expected
life of 30 years. The Company intends to hold these wind farms for
the remainder of their useful life to preserve the capital value of
the portfolio. However, as the wind farms are expected to have no
residual value after their 30 year life, the Directors consider
that this demonstrates a clear exit strategy from these
investments.
Subsidiaries are therefore measured at fair value through profit
or loss, in accordance with IFRS 13 "Fair Value Measurement" and
IFRS 9 "Financial Instruments". The financial support provided by
the Company to its unconsolidated subsidiaries is disclosed in note
10.
Notwithstanding this, IFRS 10 requires subsidiaries that provide
services that relate to the investment entity's investment
activities to be consolidated. Accordingly, the annual financial
statements include the consolidated financial statements of
Greencoat UK Wind PLC and Greencoat UK Wind Holdco Limited (a 100
per cent owned UK subsidiary). In respect of these entities,
intra-Group balances and any unrealised gains arising from
intra-Group transactions are eliminated in preparing the
consolidated financial statements. Unrealised losses are eliminated
unless the costs cannot be recovered. The financial statements of
subsidiaries that are included in the consolidated financial
statements are included from the date that control commences until
the dates that control ceases.
In the Parent Company's financial statements, investments in
subsidiaries are measured at fair value through profit or loss in
accordance with IFRS 9, as permitted by IAS 27.
Accounting for associates and joint ventures
The Group has taken the exemption permitted by IAS 28
"Investments in Associates and Joint Ventures" and IFRS 11 "Joint
Arrangements" for entities similar to investment entities and
measures its investments in associates and joint ventures at fair
value. The Directors consider an associate to be an entity over
which the Group has significant influence, through an ownership of
between 20 per cent and 50 per cent. The Group's associates and
joint ventures are disclosed in note 10.
New and amended standards and interpretations applied
There were no new standards or interpretations effective for the
first time for periods beginning on or after 1 January 2021 that
had a significant effect on the Group's or Company's financial
statements. However, the Group has applied the following amendments
for the first time for their annual reporting period commencing 1
January 2021:
-- Interest Rate Benchmark Reform - Phase 2 - amendments to IFRS
9, IAS 39 and IFRS 7. The reference rate of the Company's loans was
amended from LIBOR to SONIA with effect from November 2021. There
was no material impact of the introduction of this standard in the
year.
New and amended standards and interpretations not applied
At the date of authorisation of these financial statements, the
following amendments had been published and will be mandatory for
future accounting periods.
Effective for accounting periods beginning on or after 1 January
2022:
-- a number of narrow-scope amendments to IFRS 3 "Business
combinations", IAS 16 "Property, plant and equipment", IAS 37
"Provisions, contingent liabilities and contingent assets" and
annual improvements on IFRS 1 "First-time Adoption of IFRS", IFRS 9
"Financial instruments", IAS 41 "Agriculture" and the Illustrative
Examples accompanying IFRS 16 "Leases".
Effective for accounting periods beginning on or after 1 January
2023:
-- Narrow-scope amendments to IAS 1 "Presentation of Financial
Statements", Practice statement 2 and IAS 8 "Accounting Policies,
Changes in Accounting Estimates and Errors".
-- Amendments to IAS 12, "Income Taxes" - deferred tax related
to assets and liabilities arising from a single transaction.
-- Amendments to IFRS 17, "Insurance contracts" - this standard
replaces IFRS 4, which currently permits a wide variety of
practices in accounting for insurance contracts.
Effective for accounting periods beginning on or after 1 January
2024:
-- Amendments to IAS 1 on classification of liabilities clarify
that liabilities are classified as either current or non-current,
depending on the rights that exist at the end of the reporting
period.
The impact of these standards is not expected to be material to
the reported results and financial position of the Group.
Other accounting standards and interpretations have been
published and will be mandatory for the Company's accounting
periods beginning on or after 1 January 2022 or later periods. The
impact of these standards is not expected to be material to the
reported results and financial position of the Group.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's Consolidated Statement of Financial Position when the Group
becomes a party to the contractual provisions of the
instrument.
At 31 December 2021 and 2020 the carrying amounts of cash and
cash equivalents, receivables, payables, accrued expenses and short
term borrowings reflected in the financial statements are
reasonable estimates of fair value in view of the nature of these
instruments or the relatively short period of time between the
original instruments and their expected realisation. The fair value
of advances and other balances with related parties which are
short-term or repayable on demand is equivalent to their carrying
amount.
Financial assets
The classification of financial assets at initial recognition
depends on the purpose for which the financial asset was acquired
and its characteristics.
All financial assets are initially recognised at fair value. All
purchases of financial assets are recorded at the date on which the
Group became party to the contractual requirements of the financial
asset.
The Group's and Company's financial assets principally comprise
of investments held at fair value through profit or loss and loans
and receivables.
Loans and receivables at amortised cost
Impairment provisions for loans and receivables are recognised
based on a forward looking expected credit loss model. All
financial assets assessed under this model are immaterial to the
financial statements.
Investments held at fair value through profit or loss
Investments are designated upon initial recognition as held at
fair value through profit or loss. Gains or losses resulting from
the movement in fair value are recognised in the Consolidated
Statement of Comprehensive Income at each valuation point. As
shareholder loan investments form part of a managed portfolio of
assets whose performance is evaluated on a fair value basis, loan
investments are designated at fair value in line with equity
investments.
The Company's loan and equity investments in Holdco are held at
fair value through profit or loss. Gains or losses resulting from
the movement in fair value are recognised in the Company's
Statement of Comprehensive Income at each valuation point.
Financial assets are recognised / derecognised at the date of
the purchase / disposal. Investments are initially recognised at
cost, being the fair value of consideration given. Transaction
costs are recognised in the Consolidated Statement of Comprehensive
Income as incurred.
Fair value is defined as the amount for which an asset could be
exchanged between knowledgeable willing parties in an arm's length
transaction. Fair value is calculated on an unlevered, discounted
cash flow basis in accordance with IFRS 13 and IFRS 9.
Derecognition of financial assets
A financial asset (in whole or in part) is derecognised
either:
-- when the Group has transferred substantially all the risks and rewards of ownership; or
-- when it has neither transferred or retained substantially all
the risks and rewards and when it no longer has control over the
assets or a portion of the asset; or
-- when the contractual right to receive cash flow has expired.
Financial liabilities
Financial liabilities are classified according to the substance
of the contractual agreements entered into and are recorded on the
date on which the Group becomes party to the contractual
requirements of the financial liability.
All loans and borrowings are initially recognised at cost, being
fair value of the consideration received, less issue costs where
applicable. After initial recognition, all interest-bearing loans
and borrowings are subsequently measured at amortised cost using
the effective interest rate method. In the event that an amendment
to a loan agreement leads to a 10 per cent or greater change in the
net present value of all future cash flows payable under that
agreement, then this is considered a substantial modification under
IFRS 9 and accounted for as an extinguishment of the original
financial liability and the recognition of new financial liability.
Any unamortised costs in relation to the prior loan agreement are
expensed through the profit or loss account in the period in which
the substantial modification occurred. Loan balances as at the year
end have not been discounted to reflect amortised cost, as the
amounts are not materially different from the outstanding
balances.
The Group's other financial liabilities measured at amortised
cost include trade and other payables and other short term monetary
liabilities which are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest rate method.
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
Consolidated Statement of Comprehensive Income.
Finance expenses
Borrowing costs are recognised in the Consolidated Statement of
Comprehensive Income in the period to which they relate on an
accruals basis.
Share capital
Financial instruments issued by the Company are treated as
equity if the holder has only a residual interest in the assets of
the Company after the deduction of all liabilities. The Company's
ordinary shares are classified as equity instruments.
Incremental costs directly attributable to the issue of new
shares are shown in share premium as a deduction from proceeds.
Incremental costs include those incurred in connection with the
placing and admission which include fees payable under a placing
agreement, legal costs and any other applicable expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held
on call with banks and other short-term highly liquid deposits with
original maturities of 3 months or less, that are readily
convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Foreign currencies
Transactions in foreign currencies are translated at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
reporting date are translated at the foreign exchange rate ruling
at that date. Foreign exchange differences arising on translation
are recognised in the Consolidated Statement of Comprehensive
Income.
Dividends
Dividends payable are recognised as distributions in the
financial statements when the Company's obligation to make payment
has been established.
Income recognition
Dividend income and interest income on shareholder loan
investments are recognised when the Group's entitlement to receive
payment is established.
Other income is accounted for on an accruals basis using the
effective interest rate method.
Gains or losses resulting from the movement in fair value of the
Group's and Company's investments held at fair value through profit
or loss are recognised in the Consolidated or Company Statement of
Comprehensive Income at each valuation point.
Expenses
Expenses are accounted for on an accruals basis. Share issue
expenses of the Company directly attributable to the issue and
listing of shares are charged to the share premium account.
The Company issues shares to the Investment Manager in exchange
for receiving investment management services. The fair value of the
investment management services received in exchange for shares is
recognised as an expense at the time at which the investment
management fees are earned, with a corresponding increase in
equity. The fair value of the investment management services is
calculated by reference to the definition of investment management
fees in the Investment Management Agreement.
Taxation
Under the current system of taxation in the UK, the Group is
liable to taxation on its operations in the UK.
Payment received or receivable from the Group or Group-owned
SPVs for losses surrendered are recognised in the financial
statements and form part of the tax credit. In some situations, it
might not be appropriate to recognise the tax credit until the
Group's and Group-owned SPVs' tax affairs have been finalised and
the losses elections have been made.
Current tax is the expected tax payable on the taxable income
for the period, using tax rates that have been enacted or
substantively enacted at the date of the Consolidated Statement of
Financial Position.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.
Deferred tax assets and liabilities are not recognised if the
temporary differences arise from goodwill or from the initial
recognition of other assets and liabilities in a transaction that
affects neither the tax profit or the accounting profit. Deferred
tax liabilities are recognised for taxable temporary differences
arising on investments, except where the Group is able to control
the timing of the reversal of the difference and it is probable
that the temporary difference will not reverse in the foreseeable
future. Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is settled or
the asset is realised. Deferred tax is charged or credited to the
Consolidated Statement of Comprehensive Income except when it
relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off tax assets against tax
liabilities and when they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis. Deferred tax assets and
liabilities are not discounted.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board, as a whole. The key
measure of performance used by the Board to assess the Group's
performance and to allocate resources is the total return on the
Group's net assets, as calculated under IFRS, and therefore no
reconciliation is required between the measure of profit or loss
used by the Board and that contained in the financial
statements.
For management purposes, the Group is organised into one main
operating segment, which invests in wind farm assets.
All of the Group's income is generated within the UK.
All of the Group's non-current assets are located in the UK.
2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires the
application of estimates and assumptions which may affect the
results reported in the financial statements. Estimates, by their
nature, are based on judgement and available information.
As disclosed in note 1, the Directors have concluded that the
Company meets the definition of an investment entity as defined in
IFRS 10, IFRS 12 and IAS 27. This conclusion involved a degree of
judgement and assessment as to whether the Company met the criteria
outlined in the accounting standards.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying value of assets and
liabilities are those used to determine the fair value of the
investments as disclosed in note 9 to the financial statements.
The key assumptions that have a significant impact on the
carrying value of investments that are valued by reference to the
discounted value of future cash flows are the useful life of the
assets, the discount rates, the level of wind resource, the rate of
inflation, the price at which the power and associated benefits can
be sold and the amount of electricity the assets are expected to
produce. The sensitivity analysis of these key assumptions is
outlined in note 9 to the financial statements.
Useful lives are based on the Investment Manager's estimates of
the period over which the assets will generate revenue which are
periodically reviewed for continued appropriateness. The assumption
used for the useful life of the wind farms is 30 years. The actual
useful life may be a shorter or longer period depending on the
actual operating conditions experienced by the asset.
The discount rates are subjective and therefore it is feasible
that a reasonable alternative assumption may be used resulting in a
different value. The discount rates applied to the cash flows are
reviewed annually by the Investment Manager to ensure they are at
the appropriate level. The Investment Manager will take into
consideration market transactions, where of similar nature, when
considering changes to the discount rates used.
The revenues and expenditure of the investee companies are
frequently partly or wholly subject to indexation and an assumption
is made that inflation will increase at a long term rate.
The price at which the output from the generating assets is sold
is a factor of both wholesale electricity prices and the revenue
received from the Government support regimes. Future power prices
are estimated using external third party forecasts which take the
form of specialist consultancy reports, which reflect various
factors including gas prices, carbon prices and renewables
deployment, each of which reflect the UK and global response to
climate change. The future power price assumptions are reviewed as
and when these forecasts are updated. There is an inherent
uncertainty in future wholesale electricity price projection.
Specifically commissioned external reports are used to estimate
the expected electrical output from the wind farm assets taking
into account the expected average wind speed at each location and
generation data from historical operation. The actual electrical
output may differ considerably from that estimated in such a report
mainly due to the variability of actual wind to that modelled in
any one period. Assumptions around electrical output will be
reviewed only if there is good reason to suggest there has been a
material change in this expectation.
As disclosed in note 10, the fair value of guarantees and
counter-indemnities provided by the Group on behalf of its
investments are considered to be GBPnil, as the Directors do not
expect Group cash flows to crystalise as a result of these
guarantees or counter-indemnities.
3. Investment management fees
Under the terms of the Investment Management Agreement, the
Investment Manager is entitled to a combination of a Cash Fee and
an Equity Element from the Company.
The Cash Fee is based upon the NAV as at the start of the
quarter in question on the following basis:
-- on that part of the then most recently announced NAV up to
and including GBP500 million, an amount equal to 0.25 per cent of
such part of the NAV;
-- on that part of the then most recently announced NAV over
GBP500 million and up to and including GBP1,000 million, an amount
equal to 0.225 per cent of such part of the NAV; and
-- on that part of the then most recently announced NAV over
GBP1,000 million, an amount equal to 0.2 per cent of such part of
the NAV.
The Equity Element is calculated quarterly in advance and has a
value as set out below:
-- on that part of the then most recently announced NAV up to
and including GBP500 million, 0.05 per cent; and
-- on that part of the then most recently announced NAV over
GBP500 million up to and including GBP1,000 million, 0.025 per
cent.
The ordinary shares issued to the Investment Manager under the
Equity Element are subject to a 3 year lock-up starting from the
quarter in which they are due to be paid.
As at 31 December each year, the Cash Fee and Equity Element
shall be subject to a true-up to the value that would have been
deliverable had they been calculated quarterly in arrears.
Investment management fees paid or accrued in the year were as
follows:
For the year ended For the year ended
31 December 2021 31 December 2020
GBP'000 GBP'000
---------------- ------------------- -------------------
Cash Fee 21,906 16,900
Equity Element 1,500 1,500
----------------
23,406 18,400
---------------- ------------------- -------------------
The value of the Equity Element and the Cash Fee detailed in the
table above include the true-up amount for the year calculated in
accordance with the Investment Management Agreement.
4. Return on investments
For the year ended For the year ended
31 December 2021 31 December 2020
GBP'000 GBP'000
------------------------------------------------------------ ------------------- -------------------
Dividends received (note 19) 226,328 123,748
Unrealised movement in fair value of investments (note 9) 155,551 9,763
Interest on shareholder loan investment received (note 19) 39,804 20,793
421,683 154,304
------------------------------------------------------------ ------------------- -------------------
5. Operating expenses
For the year ended For the year ended
31 December 2021 31 December 2020
GBP'000 GBP'000
--------------------------------------------------- ------------------- -------------------
Management fees (note 3) 23,406 18,400
Group and SPV administration fees 857 811
Non-executive Directors' fees 320 308
Other expenses 1,521 1,357
Fees to the Company's Auditor:
for audit of the statutory financial statements 150 110
for other audit related services 4 4
--------------------------------------------------- ------------------- -------------------
26,258 20,990
--------------------------------------------------- ------------------- -------------------
The fees to the Company's Auditor for the year ended 31 December
2021 include GBP3,900 (2020: GBP3,800) payable in relation to a
limited review of the half year report. In addition to the above,
during the year ended 31 December 2021 BDO LLP was paid GBP36,000
(2020: GBP23,000) in relation to capital raises of the Company
which was included in share issue costs. Total fees payable to BDO
LLP for non-audit services during the year were GBP39,900 (2020:
GBP26,800).
6. Taxation
For the year ended For the year ended
31 December 2021 31 December 2020
GBP'000 GBP'000
--------------------------- -------------------- -------------------
UK Corporation Tax charge - 612
--------------------------- -------------------- -------------------
- 612
------------------------------------------------ -------------------
The tax charge for the year shown in the Statement of
Comprehensive Income is lower than the standard rate of corporation
tax of 19 per cent (2020: 19 per cent). The differences are
explained below.
For the year ended For the year ended
31 December 2021 31 December 2020
GBP'000 GBP'000
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year before taxation 363,219 105,007
---------------------------------------------------------------------------- ------------------- -------------------
Profit for the year multiplied by the standard rate of corporation tax of
19 per cent (2020:
19 per cent) 69,012 19,951
Fair value movements (not subject to taxation) (30,389) (1,855)
Dividends received (not subject to taxation) (43,002) (23,512)
Expenditure not deductible for tax purposes 628 1,525
Surrendering of tax losses to unconsolidated subsidiaries for nil
consideration 3,994 3,891
Other net tax deductions (243) -
Payments for prior year losses surrendered - 612
---------------------------------------------------------------------------- ------------------- -------------------
Total tax credit - 612
---------------------------------------------------------------------------- ------------------- -------------------
On 3 March 2021 as part of the Spring Budget announcement, the
UK Government announced that the corporation tax rate will increase
from 19 per cent to 25 per cent (for companies with profits over
GBP250,000), from 1 April 2023.
7. Earnings per share
For the year ended For the year ended
31 December 2021 31 December 2020
--------------------------------------------------------------------------- ------------------- -------------------
Profit attributable to equity holders of the Company - GBP'000 363,219 104,395
Weighted average number of ordinary shares in issue 1,984,849,617 1,594,127,083
--------------------------------------------------------------------------- ------------------- -------------------
Basic and diluted earnings from continuing operations in the year (pence) 18.30 6.55
--------------------------------------------------------------------------- ------------------- -------------------
Dilution of the earnings per share as a result of the Equity
Element of the investment management fee as disclosed in note 3
does not have a significant impact on the basic earnings per
share.
8. Dividends declared with respect to the year
Interim dividends paid during the year
ended Dividend Total
31 December 2021 per share dividend
pence GBP'000
---------------------------------------- ----------- ----------
With respect to the quarter ended 31
December 2020 1.775 32,384
With respect to the quarter ended 31
March 2021 1.795 35,462
With respect to the quarter ended 30
June 2021 1.795 35,467
With respect to the quarter ended 30
September 2021 1.795 35,473
---------------------------------------- ----------- ----------
7.160 138,786
---------------------------------------- ----------- ----------
Interim dividends declared after 31
December 2021 and not accrued in the Dividend Total
year per share dividend
pence GBP'000
---------------------------------------- ----------- ----------
With respect to the quarter ended 31
December 2021 1.795 41,596
---------------------------------------- ----------- ----------
1.795 41,596
---------------------------------------- ----------- ----------
On 24 January 2022, the Company announced a dividend of 1.795
pence per share with respect to the quarter ended 31 December 2021,
bringing the total dividend declared with respect to the year to 31
December 2021 to GBP148.0 million, equivalent to 7.18 pence per
share. The record date for the dividend is 11 February 2022 and the
payment date is 25 February 2022.
The following table shows dividends paid in the prior year.
Interim dividends paid in the year ended
31 December 2020 Dividend per share Total dividend
pence GBP'000
----------------------------------------------------- ------------------- ---------------
With respect to the quarter ended 31 December 2019 1.735 26,335
With respect to the quarter ended 31 March 2020 1.775 26,947
With respect to the quarter ended 30 June 2020 1.775 26,953
With respect to the quarter ended 30 September 2020 1.775 32,378
7.060 112,613
----------------------------------------------------- ------------------- ---------------
9. Investments at fair value through profit or loss
Group - for the year ended 31 December 2021 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- -------- ---------------- ----------
Opening balance 607,956 2,721,812 3,329,768
Additions 328,906 237,051 565,957
Repayment of shareholder loan investments (8,731) - (8,731)
Unrealised movement in fair value of investments (note 4) (3,383) 158,934 155,551
----------------------------------------------------------- -------- ---------------- ----------
924,748 3,117,797 4,042,545
----------------------------------------------------------- -------- ---------------- ----------
Group - for the year ended 31 December 2020 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- ---------------- ----------
Opening balance 360,698 2,062,508 2,423,206
Additions 208,952 705,154 914,106
Repayment of shareholder loan investments (17,307) - (17,307)
Restructure of shareholder loan investments (1) 50,500 (50,500) -
Unrealised movement in fair value of investments (note 4) 5,113 4,650 9,763
----------------------------------------------------------- --------- ----------------
607,956 2,721,812 3,329,768
----------------------------------------------------------- --------- ---------------- ----------
(1) The Group's investment in Corriegarth was restructured
during the prior year. The Group's equity interest decreased by
GBP50,499,818 and its shareholder loan balance increased by an
equivalent amount.
The unrealised movement in fair value of investments of the
Group during the year and the prior year was made up as
follows:
For the year ended For the year ended
31 December 2021 31 December 2020
GBP'000 GBP'000
----------------------------------------------------------------- ------------------- -------------------
Increase/(decrease) in portfolio valuation 116,628 (31,935)
Repayment of shareholder loan investments (note 19) 8,731 17,307
Movement in cash balances of SPVs 26,366 24,391
Windy Rig capital expenditure and Glen Kyllachy working capital 3,827 -
155,551 9,763
----------------------------------------------------------------- ------------------- -------------------
The movement in investments of the Company during the year and
the prior year was made up as follows:
Company - for the year ended 31 December 2021 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
-------------------------------------------------- ---------- ---------------- ----------
Opening balance 2,134,956 1,197,474 3,332,430
Loan advanced to Holdco (note 19) 499,800 - 499,800
Repayment of loan to Holdco (note 19) (203,990) - (203,990)
Unrealised movement in fair value of investments - 418,125 418,125
-------------------------------------------------- ---------- ----------------
2,430,766 1,615,599 4,046,365
-------------------------------------------------- ---------- ---------------- ----------
Company - for the year ended 31 December 2020 Loans Equity interest Total
GBP'000 GBP'000 GBP'000
-------------------------------------------------- ---------- ---------------- ----------
Opening balance 1,392,818 1,052,632 2,445,450
Loan advanced to Holdco (note 19) 893,046 - 893,046
Repayment of loan to Holdco (note 19) (150,908) - (150,908)
Unrealised movement in fair value of investments - 144,842 144,842
-------------------------------------------------- ---------- ---------------- ----------
2,134,956 1,197,474 3,332,430
-------------------------------------------------- ---------- ---------------- ----------
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level.
The level of fair value hierarchy within the financial assets or
financial liabilities is determined on the basis of the lowest
level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in their
entirety into only one of the following 3 levels:
-- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the assets or liabilities, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
-- Level 3 - inputs for assets or liabilities that are not based
on observable market data (unobservable inputs).
The determination of what constitutes 'observable' requires
significant judgement by the Group. The Group considers observable
data to be market data that is readily available, regularly
distributed or updated, reliable and verifiable, not proprietary,
and provided by independent sources that are actively involved in
the relevant market.
The only financial instruments held at fair value are the
instruments held by the Group in the SPVs, which are fair valued at
each reporting date. The Group's investments have been classified
within level 3 as the investments are not traded and contain
unobservable inputs. The Company's investments are all considered
to be level 3 assets. As the fair value of the Company's equity and
loan investments in Holdco is ultimately determined by the
underlying fair values of the SPV investments, the Company's
sensitivity analysis of reasonably possible alternative input
assumptions is the same as for the Group.
Due to the nature of the investments, they are always expected
to be classified as level 3. There have been no transfers between
levels during the year ended 31 December 2021.
Any transfers between the levels would be accounted for on the
last day of each financial period.
Valuations are derived using a discounted cash flow methodology
in line with IPEV Valuation Guidelines and take into account, inter
alia, the following:
-- due diligence findings where relevant;
-- the terms of any material contracts including PPAs;
-- asset performance;
-- power price forecast from a leading market consultant; and
-- the economic, taxation or regulatory environment.
The DCF valuation of the Group's investments represents the
largest component of GAV and the key sensitivities are considered
to be the discount rate used in the DCF valuation and assumptions
in relation to inflation, energy yield, power price and asset
life.
The base case discount rate is a blend of a lower discount rate
for fixed cash flows and a higher discount rate for merchant cash
flows. The blended portfolio discount rate as at 31 December 2021
was 7.2 per cent (31 December 2020: 6.9 per cent), reflecting a
greater proportion of merchant cash flows.
As there is no debt at wind farm level, the DCF valuation is
produced by discounting the individual wind farm cash flows on an
unlevered basis. The equivalent levered discount rate would be
approximately 2 per cent higher than the unlevered discount
rate.
Base case long term inflation assumptions are 3.5 per cent to
2030 and 2.5 per cent thereafter for RPI and 2.5 per cent (all
years) for CPI.
Base case energy yield assumptions are P50 (50 per cent
probability of exceedance) forecasts based on long term wind data
and operational history. The P90 (90 per cent probability of
exceedance over a 10 year period) and P10 (10 per cent probability
of exceedance over a 10 year period) sensitivities reflect the
future variability of wind and the uncertainty associated with the
long term data source being representative of the long term
mean.
Long term power price forecasts are provided by a leading market
consultant, updated quarterly, and may be adjusted by the
Investment Manager where more conservative assumptions are
considered appropriate.
Short term power price assumptions reflect the forward curve as
at 4 January 2022 with an appropriate discount applied reflecting
the higher volatility associated with short term prices.
The power price sensitivity below assumes a 10 per cent increase
or decrease in power prices relative to the base case for every
year of the asset life.
The base case asset life is 30 years.
Sensitivity analysis
The fair value of the Group's investments is GBP4,042,545,081
(2020: GBP3,329,768,023). The analysis below is provided to
illustrate the sensitivity of the fair value of investments to an
individual input, while all other variables remain constant. The
Board considers these changes in inputs to be within reasonable
expected ranges. This is not intended to imply the likelihood of
change or that possible changes in value would be restricted to
this range.
Change in fair value Change in NAV per
Input Base case Change in input of investments share
------------------------ ----------------------- ----------------- ----------------------- -----------------------
GBP'000 pence
Discount rate 7.2 per cent + 0.5 per cent (107,603) (4.6)
- 0.5 per cent 113,763 4.9
RPI: 3.5 per cent to
2030, 2.5 per cent
Long term inflation thereafter
rate CPI: 2.5 per cent - 0.5 per cent (108,045) (4.7)
+ 0.5 per cent 113,573 4.9
Energy yield P50 10 year P90 (234,246) (10.1)
10 year P10 234,142 10.1
Forecast by leading
Power price consultant - 10 per cent (218,684) (9.4)
+ 10 per cent 218,014 9.4
Asset life 30 years - 5 years (158,356) (6.8)
+ 5 years 108,087 4.7
The sensitivities above are assumed to be independent of each
other. Combined sensitivities are not presented. The sensitivity
analysis shown above would be the same for the Company as for the
Group. Also see the High Transition Risk Scenario discussed in the
Strategic Report.
10. Unconsolidated subsidiaries, associates and joint
ventures
The following table shows subsidiaries of the Group. As the
Company is regarded as an Investment Entity as referred to in note
1, these subsidiaries have not been consolidated in the preparation
of the financial statements:
Ownership
Interest Ownership Interest
as at as at
31 December 31 December
Investment Place of Business 2021 2020
----------------------- --------------------- ------------- --------------------------------
Andershaw Scotland(10) 100% -
Bin Mountain Northern Ireland(9) 100% 100%
Bishopthorpe England(10) 100% 100%
Braes of Doune Scotland(11) 100% 50%
Breeze Bidco(1) Scotland(10) 100% 100%
Brockaghboy Northern Ireland(9) 100% 100%
Carcant Scotland(11) 100% 100%
Church Hill Northern Ireland(9) 100% 100%
Corriegarth Scotland(11) 100% 100%
Cotton Farm England(10) 100% 100%
Crighshane Northern Ireland(9) 100% 100%
Douglas West Scotland(11) 100% 100%
Earl's Hall Farm England(10) 100% 100%
Glen Kyllachy Scotland(9) 100% -
Kildrummy Scotland(10) 100% 100%
Langhope Rig Scotland(10) 100% 100%
Maerdy Wales(10) 100% 100%
North Hoyle Wales(10) 100% 100%
Screggagh Northern Ireland(9) 100% 100%
Slieve Divena Northern Ireland(9) 100% 100%
Slieve Divena II Northern Ireland(9) 100% 100%
Stroupster Scotland(10) 100% 100%
Tappaghan Northern Ireland(9) 100% 100%
Walney Holdco(2) England(10) 100% 100%
Windy Rig Scotland(10) 100% -
Bicker Fen England(10) 80% 80%
Fenlands(3) England(10) 80% 80%
Nanclach Scotland(10) 75% 75%
Humber Holdco(4) England(10) 77.2% 77.2%
Dunmaglass Holdco(5) Scotland(10) 71.2% 71.2%
Stronelairg Holdco(6) Scotland(10) 71.2% 71.2%
Hoylake (7) England(10) 63% -
Drone Hill Scotland(11) 51.6% 51.6%
North Rhins Scotland(10) 51.6% 51.6%
Sixpenny Wood England(10) 51.6% 51.6%
Yelvertoft England(10) 51.6% 51.6%
SYND Holdco(8) UK(10) 51.6% 51.6%
----------------------- --------------------- ------------- --------------------------------
(1) The Group's investment in Nanclach is held through Breeze
Bidco. The investment was previously held through Nanclach Holdco,
which was held through Nanclach Midco, which was held through
Breeze Bidco until 19 December 2019, at which point the investment
was restructured. Nanclach Holdco and Nanclach Midco were dissolved
in September 2020.
(2) The Group holds 100 per cent of Walney Holdco, which owns
25.1 per cent of Walney Wind Farm, resulting in the Group holding a
25.1 per cent indirect investment in Walney Wind Farm.
(3) The Group's investments in Deeping St. Nicholas, Glass Moor,
Red House and Red Tile are held through Fenlands.
(4) The Group holds 77.2 per cent of Humber Holdco, which owns
49 per cent of Humber Wind Farm, resulting in the Group holding a
37.8 per cent indirect investment in Humber Wind Farm.
(5) The Group holds 71.2 per cent of Dunmaglass Holdco, which
owns 49.9 per cent of Dunmaglass Wind Farm, resulting in the Group
holding a 35.5 per cent indirect investment in Dunmaglass Wind
Farm.
(6) The Group holds 71.2 per cent of Stronelairg Holdco, which
owns 49.9 per cent of Stronelairg Wind Farm, resulting in the Group
holding a 35.5 per cent indirect investment in Stronelairg Wind
Farm.
(7) The Group's investment in Burbo Bank Extension is held
through Hoylake.
(8) The Group's investments in Drone Hill, North Rhins, Sixpenny
Wood and Yelvertoft are held through SYND Holdco.
(9) The registered office address is The Legacy Building,
Northern Ireland Science Park, Belfast, BT3 9DT.
(10) The registered office address is 27-28 Eastcastle Street,
London, England, W1W 8DH.
(11) The registered office address is Collins House, Rutland
Square, Edinburgh, EH1 2AA.
There are no significant restrictions on the ability of the
Group's unconsolidated subsidiaries to transfer funds in the form
of cash dividends.
The following table shows associates and joint ventures of the
Group which have been recognised at fair value as permitted by IAS
28 "Investments in Associates and Joint Ventures":
Ownership Interest as at Ownership Interest as at
Investment Place of Business 31 December 2021 31 December 2020
--------------------- ------------------- ------------------------- -------------------------
ML Wind(1) England(2) 49% 49%
Little Cheyne Court England(2) 41% 41%
Clyde Scotland(3) 28.2% 28.2%
Rhyl Flats Wales(2) 24.95% 24.95%
--------------------- ------------------- ------------------------- -------------------------
(1) The Group's investments in Middlemoor and Lindhurst are 49
per cent (2020: 49 per cent). These are held through ML Wind.
(2) The registered office address is Windmill Hill Business
Park, Whitehill Way, Swindon, Wiltshire, SN5 6PB.
(3) The registered office address is Inveralmond House, 200
Dunkeld Road, Perth, PH1 3AQ.
Loans advanced by Holdco to the investments are disclosed in
note 19.
Guarantees and counter-indemnities provided by the Group on
behalf of its investments are as follows:
Provider Amount
of security Investment Beneficiary Nature Purpose GBP'000
-------------- ----------------- -------------------- ------------------- ------------------- ---------
Kype Muir
Holdco Extension Nordex Guarantee Turbine supply 42,032
Douglas
The Company West Vestas Guarantee Turbine supply 27,022
Grid, radar,
Holdco Clyde SSE Counter-indemnity decommissioning 21,771
Decommissioning,
The Company North Hoyle The Crown Estate Guarantee rent 18,263
Decommissioning,
The Company Glen Kyllachy RWE Counter-indemnity grid 12,238
Burbo Bank
The Company Extension Orsted Guarantee Rent, radar 11,000
The Company Humber Gateway RWE Guarantee Radar 4,900
The Company Andershaw Statkraft Counter-indemnity Decommissioning 3,500
The Company Rhyl Flats The Crown Estate Guarantee Decommissioning 3,156
Braes of
The Company Doune Land owner Guarantee Decommissioning 2,000
Access rights,
decommissioning,
The Company Windy Rig Santander Counter-indemnity grid 1,409
Tom nan
The Company Clach RBS Counter-indemnity Decommissioning 1,348
Douglas
The Company West Land owner Guarantee Decommissioning 1,200
The Company Windy Rig NATS Guarantee Radar 1,028
Burbo Bank
The Company Extension Santander Counter-indemnity OFTO 970
The Company Stroupster RBS Counter-indemnity Decommissioning 366
Holdco Stronelairg SSE Guarantee Grid 301
Holdco Dunmaglass SSE Guarantee Grid 201
The Company Cotton Farm Land owner Guarantee Decommissioning 165
Sixpenny Community
The Company Wood Land owner Guarantee fund 150
Daventry District
The Company Yelvertoft Council Guarantee Decommissioning 82
Langhope
The Company Rig Barclays Counter-indemnity Decommissioning 81
The Company Maerdy Natural Resource Guarantee Access rights n/a
Wales to neighbouring
land
153,183
--------------------------------------------------------------------------------------------- ---------
The fair value of these guarantees and counter-indemnities
provided by the Group are considered to be GBPnil (2020: GBPnil) as
disclosed in note 2.
11. Receivables
Group 31 December 2021 31 December 2020
GBP'000 GBP'000
--------------------------------- ----------------- -----------------
Amounts due from SPVs (note 19) 1,798 -
VAT receivable 407 480
Prepayments 107 90
Other receivables 320 64
2,632 634
--------------------------------- ----------------- -----------------
Company 31 December 2021 31 December 2020
GBP'000 GBP'000
------------------- ----------------- -----------------
Prepayments 107 90
Other receivables - 53
107 143
------------------- ----------------- -----------------
12. Payables
Group 31 December 2021 31 December 2020
GBP'000 GBP'000
----------------------------------- ----------------- -----------------
Loan interest payable 2,788 3,045
Commitment fee payable 344 328
Other finance costs payable - 43
Acquisition costs payable 1,595 4,538
Investment management fee payable 1,072 -
Share issue costs payable 10 -
Other payables 470 463
6,279 8,417
----------------------------------- ----------------- -----------------
31 December 31 December
Company 2021 2020
GBP'000 GBP'000
----------------------------------- ------------ ------------
Loan interest payable 2,788 3,045
Commitment fee payable 344 328
Other finance costs payable - 43
Investment management fee payable 1,072 -
VAT payable - 48
Share issue costs payable 10 -
Other payables 434 448
4,648 3,912
----------------------------------- ------------ ------------
13. Loans and borrowings
Group and Company 31 December 2021 31 December 2020
GBP'000 GBP'000
--------------------------- ----------------- -----------------
Opening balance 1,100,000 600,000
Revolving credit facility
Drawdowns 110,000 780,000
Repayments (260,000) (380,000)
Term debt facilities
Drawdowns - 100,000
Closing balance 950,000 1,100,000
--------------------------- ----------------- -----------------
For the year ended For the year ended
Group and Company 31 December 2021 31 December 2020
GBP'000 GBP'000
--------------------------- ------------------- -------------------
Loan interest 23,113 18,399
Facility arrangement fees 6,375 1,100
Commitment fees 921 1,638
Other facility fees 142 140
Professional fees 138 91
--------------------------- ------------------- -------------------
Finance expense 30,689 21,368
--------------------------- ------------------- -------------------
The loan balance as at 31 December 2021 has not been adjusted to
reflect amortised cost, as the amounts are not materially different
from the outstanding balances.
In relation to non-current loans and borrowings, the Board is of
the view that the current market interest rate is not significantly
different to the respective instrument's contractual interest rates
therefore the fair value of the non-current loans and borrowings at
the end of the reporting periods is not significantly different
from their carrying amounts.
On 29 October 2021, the Company renewed its revolving credit
facility with RBS International, RBC, Barclays and Santander with a
refreshed tenor and increased the facility by GBP200 million to
GBP600 million. The terms of the amended revolving credit facility
remain unchanged and comprise a margin of 1.75 per cent per annum
and a commitment fee of 0.65 per cent per annum.
As at 31 December 2021 the company has a total revolving credit
facility of GBP600 million (2020: GBP400 million), accrued interest
was GBP12,554 (2020: GBP410,767) and the outstanding commitment fee
payable was GBP343,699 (2020: GBP327,671).
During the year, the Company refinanced GBP150 million of term
debt, replacing loans with NAB and CBA previously maturing in 2022
with maturities in 2024 and 2027 respectively. In parallel, the
Company also amended and restated all term debt facilities to
accommodate the discontinuation of LIBOR from 1 January 2022 and
its replacement as a reference rate with SONIA. The renewal of the
Company's revolving credit facility and amendment and restatement
of the Company's respective term debt facilities met the definition
of a substantial modification under IFRS 9. The Company's term debt
facilities and associated interest rate swaps have various maturity
dates, as set out in the below table.
Provider Maturity date Loan margin Swap fixed rate Loan principal Accrued interest at 31 December 2021
% % GBP'000 GBP'000
---------- ------------------ ------------ ---------------- --------------- -------------------------------------
NAB 1 November 2023 1.20 1.42800 75,000 319
NAB 1 November 2023 1.20 0.77250 25,000 80
CBA 7 December 2023 1.00 0.11300 50,000 88
NAB 4 November 2024 1.15 1.06100 50,000 64
CBA 14 November 2024 1.35 0.80750 50,000 175
CBA 6 March 2025 1.55 1.52650 50,000 253
CIBC 3 November 2025 1.50 1.51030 100,000 445
NAB 1 November 2026 1.50 1.59800 75,000 376
NAB 1 November 2026 1.50 0.84250 25,000 95
CIBC 14 November 2026 1.40 0.81325 100,000 327
CBA 4 November 2027 1.60 1.36800 100,000 554
700,000 2,776
----------------------------- ------------ ---------------- --------------- -------------------------------------
These loans contain swaps that are contractually linked.
Accordingly, they have been treated as single fixed rate loan
agreements which effectively set interest payable at fixed
rates.
All borrowing ranks pari passu and is secured by a debenture
over the assets of the Company, including its shares in Holdco, and
a floating charge over Holdco's bank accounts.
14. Contingencies and commitments
In December 2019, the Group announced that it had agreed to
acquire the Twentyshilling wind farm for a headline consideration
of GBP51.4 million. The Investment is scheduled to complete in
March 2022 once the wind farm is fully operational.
In April 2020 , the Group announced that it had agreed to
acquire the South Kyle wind farm project for a headline
consideration of GBP320 million. The investment is scheduled to
complete in Q1 2023 once the wind farm is fully operational.
In December 2020, the Group entered into an agreement to acquire
49.9 per cent of the Kype Muir Extension wind farm project for a
headline consideration of GBP51.4 million, to be paid once the wind
farm is fully operational (target Q4 2022). The Group also agreed
to provide construction finance of up to GBP47 million, of which
GBP10.6 million had been utilised as at 31 December 2021.
15. Share capital - ordinary shares of GBP0.01
Date Issued and fully paid Number of shares issued Share capital Share premium Total
GBP'000 GBP'000 GBP'000
------------------ ------------------------- ------------------------ -------------- -------------- ----------
1 January 2021 1,824,129,348 18,241 1,834,477 1,852,718
Shares issued to the Investment Manager
True-up of 2020 and
5 February 2021 Q1 2021 Equity Element 308,798 3 372 375
7 May 2021 Q2 2021 Equity Element 306,862 3 372 375
6 August 2021 Q3 2021 Equity Element 299,438 3 372 375
5 November 2021 Q4 2021 Equity Element 290,685 3 372 375
1,205,783 12 1,488 1,500
Other
19 February 2021 Capital raise 150,853,600 1,509 196,109 197,618
19 February 2021 Less share issue costs - - (2,933) (2,933)
29 November 2021 Capital raise 340,909,091 3,409 446,591 450,000
29 November 2021 Less share issue costs - - (6,792) (6,792)
31 December 2021 2,317,097,822 23,171 2,468,940 2,492,111
--------------------------------------------- ------------------------ -------------- -------------- ----------
Date Issued and fully paid Number of shares issued Share capital Share premium Total
GBP'000 GBP'000 GBP'000
------------------ ------------------------- ------------------------ -------------- -------------- ----------
1 January 2020 1,517,537,310 15,175 1,442,218 1,457,393
Shares issued to the Investment Manager
True-up of 2019 and
7 February 2020 Q1 2020 Equity Element 316,145 3 372 375
20 April 2020 Q2 2020 Equity Element 309,434 3 372 375
7 August 2020 Q3 2020 Equity Element 312,344 3 372 375
5 November 2020 Q4 2020 Equity Element 310,604 3 372 375
1,248,527 12 1,488 1,500
Other
1 October 2020 Capital raise 305,343,511 3,054 396,946 400,000
1 October 2020 Less share issue costs - - (6,175) (6,175)
------------------------- ------------------------ -------------- ----------
31 December 2020 1,824,129,348 18,241 1,834,477 1,852,718
--------------------------------------------- ------------------------ -------------- -------------- ----------
Shareholders are entitled to all dividends paid by the Company
and, on a winding up, provided the Company has satisfied all of its
liabilities, the shareholders are entitled to all of the residual
assets of the Company.
Pursuant to the terms of the Investment Management Agreement,
the Investment Manager receives an Equity Element as part payment
of its investment management fee as disclosed in note 3 to the
financial statements. The figures given in the table in note 3
include the true-up amount of the investment management fee for the
periods calculated in accordance with the Investment Management
Agreement and issued subsequent to 31 December 2021.
16. Net assets per share
Group and Company
31 December 2021 31 December 2020
---------------------------------- ----------------- -----------------
Net assets - GBP'000 3,093,699 2,229,873
Number of ordinary shares issued 2,317,097,822 1,824,129,348
---------------------------------- ----------------- -----------------
Total net assets - pence 133.5 122.2
---------------------------------- ----------------- -----------------
17. Reconciliation of operating profit for the year to net cash from operating activities
For the year ended For the year ended
Group 31 December 2021 31 December 2020
GBP'000 GBP'000
----------------------------------------------------- ------------------- -------------------
Operating profit for the year 393,908 126,375
Adjustments for:
Movement in fair value of investments (notes 4 & 9) (155,551) (9,763)
Investment acquisition costs 3,305 8,025
Increase in receivables (1,995) (30)
Increase/(decrease) in payables 1,094 (2,412)
Equity Element of Investment Manager's fee (note 3) 1,500 1,500
Consideration for investee company taxable losses - (612)
Net cash flows from operating activities 242,261 123,083
----------------------------------------------------- ------------------- -------------------
For the year ended For the year ended
Company 31 December 2021 31 December 2020
GBP'000 GBP'000
----------------------------------------------------- ------------------- -------------------
Operating profit for the year 393,908 125,763
Adjustments for:
Movement in fair value of investments (note 9) (418,125) (144,842)
Non cash settlement of loans to Group companies - 16,914
Decrease/(increase) in receivables 39 (61)
Decrease in payables 1,010 (12)
Equity Element of Investment Manager's fee (note 3) 1,500 1,500
-----------------------------------------------------
Net cash flows from operating activities (21,668) (738)
----------------------------------------------------- ------------------- -------------------
Reconciliation of cash flows and non-cash flow changes in
liabilities arising from financing activities
Group and Company Loans and borrowings Other liabilities
GBP'000 GBP'000
---------------------------------------------------------- --------------------- ------------------
As at 1 January 2021 1,100,000 3,369
Cash flows (net) (150,000) (30,976)
Movements in Statement of Comprehensive Income (note 13) - 30,689
As at 31 December 2021 950,000 3,082
---------------------------------------------------------- --------------------- ------------------
Group and Company Loans and borrowings Other liabilities
GBP'000 GBP'000
---------------------------------------------------------- --------------------- ------------------
As at 1 January 2020 600,000 2,785
Cash flows (net) 500,000 (20,784)
Movements in Statement of Comprehensive Income (note 13) - 21,368
As at 31 December 2020 1,100,000 3,369
---------------------------------------------------------- --------------------- ------------------
18. Financial risk management
The Investment Manager and the Administrator report to the Board
on a quarterly basis and provide information to the Board which
allows it to monitor and manage financial risks relating to its
operations. The Group's activities expose it to a variety of
financial risks: market risk (including price risk, interest rate
risk and foreign currency risk), credit risk and liquidity
risk.
The Group's market risk is managed by the Investment Manager in
accordance with the policies and procedures in place. The Group's
overall market positions are monitored on a quarterly basis by the
Board.
Price risk
Price risk is defined as the risk that the fair value of a
financial instrument held by the Group will fluctuate. Investments
are measured at fair value through profit or loss and are valued on
an unlevered, discounted cash flow basis. Therefore, the value of
these investments will be (amongst other risk factors) a function
of the discounted value of their expected cash flows and, as such,
will vary with movements in interest rates and competition for such
assets. As disclosed in note 9, the discount rates are subjective
and therefore it is feasible that a reasonable alternative
assumption may be used resulting in a different valuation for these
investments.
Interest rate risk
The Group's interest rate risk on interest bearing financial
assets is limited to interest earned on cash. The Group's only
other exposure to interest rate risk is due to floating interest
rates required to service external borrowings through the revolving
credit facility. An increase of 1 per cent represents the
Investment Manager's assessment of a reasonably possible change in
interest rates. Should the SONIA rate increase by 1 per cent (2020:
increase by 1 per cent in the Libor rate), the annual interest due
on the facility would increase by GBP2,500,000 (2020: GBP4,000,000)
on the basis that the revolving credit facility is GBP250 million
drawn (2020: GBP400 million). The Investment Manager regularly
monitors interest rates to ensure the Group has adequate provisions
in place in the event of significant fluctuations.
T he associated interest rate swaps on amounts drawn under the
CBA, CIBC and NAB term debt facilities effectively set interest
payable at a fixed rate for the full term of the loans, thereby
mitigating the risks associated with the variability of cash flows
arising from interest rate fluctuations.
The Board considers that, as shareholder loan investments bear
interest at a fixed rate, they do not carry any interest rate
risk.
The Group's interest and non-interest bearing assets and
liabilities as at 31 December 2021 are summarised below:
Interest bearing
Group Fixed rate Floating rate Non-interest bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- -------------- --------------------- ----------
Assets
Cash at bank - - 4,801 4,801
Other receivables (note 11) - - 727 727
Investments (note 9) 924,748 - 3,117,797 4,042,545
-------------------------------- ----------- -------------- --------------------- ----------
924,748 - 3,123,325 4,048,073
-------------------------------- ----------- -------------- --------------------- ----------
Liabilities
Other payables (note 12) - - (6,279) (6,279)
Loans and borrowings (note 13) (700,000) (250,000) - (950,000)
-------------------------------- ----------- -------------- --------------------- ----------
(700,000) (250,000) (6,279) (956,279)
-------------------------------- ----------- -------------- --------------------- ----------
The Group's interest and non-interest bearing assets and
liabilities as at 31 December 2020 are summarised below:
Interest bearing
Fixed
Group rate Floating rate Non-interest bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ---------- -------------- --------------------- ------------
Assets
Cash at bank - - 7,888 7,888
Other receivables (note 11) - - 544 544
Investments (note 9) 607,956 - 2,721,812 3,329,768
-------------------------------- ---------- -------------- --------------------- ------------
607,956 - 2,730,244 3,338,200
-------------------------------- ---------- -------------- --------------------- ------------
Liabilities
Other payables (note 12) - - (8,417) (8,417)
Loans and borrowings (note 13) (700,000) (400,000) - (1,100,000)
-------------------------------- ---------- -------------- --------------------- ------------
(700,000) (400,000) (8,417) (1,108,417)
-------------------------------- ---------- -------------- --------------------- ------------
The Company's interest and non-interest bearing assets and
liabilities as at 31 December 2021 are summarised below:
Interest bearing
Company Fixed rate Floating rate Non-interest bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- -------------- --------------------- ----------
Assets
Cash at bank - - 1,875 1,875
Other receivables (note 11) - - - -
Investments (note 9) - - 4,046,365 4,046,365
-------------------------------- ----------- -------------- --------------------- ----------
- - 4,048,240 4,048,240
-------------------------------- ----------- -------------- --------------------- ----------
Liabilities
Other payables (note 12) - - (4,648) (4,648)
Loans and borrowings (note 13) (700,000) (250,000) - (950,000)
-------------------------------- ----------- -------------- --------------------- ----------
(700,000) (250,000) (4,648) (954,648)
-------------------------------- ----------- -------------- --------------------- ----------
The Company's interest and non-interest bearing assets and
liabilities as at 31 December 2020 are summarised below:
Interest bearing
Fixed
Company rate Floating rate Non-interest bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ---------- -------------- --------------------- ------------
Assets
Cash at bank - - 1,212 1,212
Other receivables (note 11) - - 53 53
Investments (note 9) - - 3,332,430 3,332,430
-------------------------------- ---------- -------------- --------------------- ------------
- - 3,333,695 3,333,695
-------------------------------- ---------- -------------- --------------------- ------------
Liabilities
Other payables (note 12) - - (3,912) (3,912)
Loans and borrowings (note 13) (700,000) (400,000) - (1,100,000)
-------------------------------- ---------- -------------- --------------------- ------------
(700,000) (400,000) (3,912) (1,103,912)
-------------------------------- ---------- -------------- --------------------- ------------
Foreign currency risk
Foreign currency risk is defined as the risk that the fair
values of future cash flows will fluctuate because of changes in
foreign exchange rates. The Group's financial assets and
liabilities are denominated in GBP and substantially all of its
revenues and expenses are in GBP. The Group is not considered to be
materially exposed to foreign currency risk.
Credit risk
Credit risk is the risk of loss due to the failure of a borrower
or counterparty to fulfil its contractual obligations. The Group is
exposed to credit risk in respect of other receivables, cash at
bank and loan investments. The Group's credit risk exposure is
minimised by dealing with financial institutions with investment
grade credit ratings and making loan investments which are equity
in nature, and having at least one common board director of Holdco
and the respective wind farm SPVs in which the loan investments
have been made.
The table below details the Group's maximum exposure to credit
risk:
Group 31 December 2021 31 December 2020
GBP'000 GBP'000
----------------------------- ----------------- -----------------
Other receivables (note 11) 727 544
Cash at bank 4,801 7,888
Loan investments (note 9) 924,748 607,956
930,276 616,388
----------------------------- ----------------- -----------------
The table below details the Company's maximum exposure to credit
risk:
Company 31 December 2021 31 December 2020
GBP'000 GBP'000
----------------------------- ----------------- -----------------
Other receivables (note 11) - 53
Cash at bank 1,875 1,212
Loan investments (note 9) 2,430,766 2,134,956
----------------------------- ----------------- -----------------
2,432,641 2,136,221
----------------------------- ----------------- -----------------
The table below shows the cash balances of the Group and the
credit rating for each counterparty:
Group Rating 31 December 2021 31 December 2020
GBP'000 GBP'000
------------------- -------- ----------------- -----------------
RBS International BBB+ 3,099 6,753
The Crown Estate n/a 1,702 1,135
4,801 7,888
---------------------------- ----------------- -----------------
The table below shows the cash balances of the Company and the
credit rating for each counterparty:
Company Rating 31 December 2021 31 December 2020
GBP'000 GBP'000
------------------- -------- ----------------- -----------------
The Crown Estate n/a 1,702 1,135
RBS International BBB+ 173 77
1,875 1,212
---------------------------- ----------------- -----------------
Liquidity risk
Liquidity risk is the risk that the Group and the Company may
not be able to meet a demand for cash or fund an obligation when
due. The Investment Manager and the Board continuously monitor
forecast and actual cash flows from operating, financing and
investing activities to consider payment of dividends, repayment of
the Company's outstanding debt or further investing activities.
The following tables detail the Group's expected maturity for
its financial assets (excluding equity) and liabilities together
with the contractual undiscounted cash flow amounts:
Group - 31 December 2021 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------------- ------------ ---------- ------------
Assets
Other receivables (note 11) 727 - - 727
Dividends receivable - - - -
Cash at bank 4,801 - - 4,801
Loan investments (note 9) - - 924,748 924,748
Liabilities
Other payables (note 12) (6,279) - - (6,279)
Loans and borrowings (24,694) (912,688) (102,529) (1,039,911)
(25,445) (912,688) 822,219 (115,914)
----------------------------- ----------------- ------------ ---------- ------------
Group - 31 December 2020 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------------- ------------ ---------- ------------
Assets
Other receivables (note 11) 544 - - 544
Cash at bank 7,888 - - 7,888
Loan investments (note 9) - - 607,956 607,956
Liabilities
Other payables (note 12) (8,417) - - (8,417)
Loans and borrowings (24,701) (948,496) (204,359) (1,177,556)
(24,686) (948,496) 403,597 (569,585)
The shareholder loan investments are repayable on demand.
The following tables detail the Company's expected maturity for
its financial assets (excluding equity) and liabilities together
with the contractual undiscounted cash flow amounts:
Company - 31 December 2021 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----------------- ------------ ----------
Assets
Cash at bank 1,875 - - 1,875
Loan investments (note 9) - - 2,430,766 2,430,766
Liabilities
Other payables (note 12) (4,648) - - (4,648)
Loans and borrowings (24,694) (912,688) (102,529) (1,039,911)
(27,467) (912,688) 2,328,237 1,388,082
Company - 31 December 2020 Less than 1 year 1 - 5 years 5+ years Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Other receivables (note 11) 53 - - 53
Cash at bank 1,212 - - 1,212
Loan investments (note 9) - - 2,134,956 2,134,956
Liabilities
Other payables (note 12) (3,912) - - (3,912)
Loans and borrowings (24,701) (948,496) (204,359) (1,177,556)
(27,348) (948,496) 1,930,597 954,753
The Group and Company will use cash flow generation, equity
placings , debt refinancing or disposal of assets to manage
liabilities as they fall due in the longer term.
Capital risk management
The Company considers its capital to comprise ordinary share
capital, distributable reserves and retained earnings. The Company
is not subject to any externally imposed capital requirements.
The Group's and the Company's primary capital management
objectives are to ensure the sustainability of its capital to
support continuing operations, meet its financial obligations and
allow for growth opportunities. Generally, acquisitions are
anticipated to be funded with a combination of current cash, debt
and equity.
19. Related party transactions
Amounts paid to the Directors during the year are as outlined in
the Directors' Remuneration Report. GBP38,060 (2020: GBP35,221) of
employer's national insurance was paid on non-executive Directors'
fees during the year.
During the year, the Company increased its loan to Holdco by
GBP499,800,000 (2020: GBP893,045,995) and Holdco settled amounts of
GBP203,989,872 (2020: GBP150,908,753). The amount outstanding at
the year end was GBP2,430,765,820 (31 December 2020:
GBP2,134,955,692).
During the year, Holdco received GBP2,420,077 (2020:
GBP2,937,063) in relation to renewables obligation proceeds on
behalf of Bin Mountain, Carcant and Tappaghan. Amounts due to these
investee companies as at 31 December 2021 were GBPnil (2020:
GBPnil).
Under the terms of a Management Services Agreement with Holdco,
the Company receives GBP 800,000 per annum in relation to
management and administration services. During the year, GBP
800,000 (2020: GBP800,000) was paid from Holdco to the Company
under this agreement and amounts due to the Company at the year end
were GBP nil (2020: GBPnil).
Holdco has Management Service Agreements in place with various
wind farms. Total amounts received by Holdco, amounts paid to the
Investment Manager and amounts paid to the Administrator during the
year, are outlined in the table below.
As at 31 December 2021, GBP490,236 (2020: GBPnil) was due from
Bicker Fen and GBP1,292,390 (2020: GBPnil) was due from Fenlands in
respect of quarterly corporation tax payments made by Holdco.
As at 31 December 2021, under the terms of Management Services
Agreements with the SPVs, Holdco was due to receive GBP15,171 from
Andershaw.
For the year ended
31 December 2021
Expenses paid to the Investment Expenses paid to the
Income received Manager Administrator
GBP GBP GBP
Andershaw(1) , Bishopthorpe,
Brockaghboy, Church Hill,
Corriegarth, Crighshane,
Langhope Rig,
North Hoyle, Screggagh, Slieve
Divena, Slieve Divena II,
Stroupster, Tom Nan Clach:
GBP48,445 income receivable per
wind farm per annum
GBP24,223 expenses payable to
the Investment Manager per wind
farm per annum
GBP24,223 expenses payable to
the Administrator per wind farm
per annum 593,984 296,992 296,992
Bin Mountain, Braes of Doune,
Carcant, Cotton Farm, Drone
Hill, Earl's Hall Farm,
Kildrummy,
Maerdy, North Rhins, Sixpenny
Wood, Tappaghan, Yelvertoft:
GBP36,334 income receivable per
wind farm per annum
GBP12,111 expenses payable to
the Investment Manager per wind
farm per annum
GBP24,223 expenses payable to
the Administrator per wind farm
per annum 436,007 145,336 290,671
Douglas West:
Q1-3:
GBP26,582 income receivable per
annum
GBP18,167 expenses payable to
the Investment Manager per annum
GBP8,415 expenses payable to the
Administrator per annum
Q4:
GBP12,111 income receivable per
annum
GBP6,056 expenses payable to the
Investment Manager per annum
GBP6,056 expenses payable to the
Administrator per annum 38,694 24,223 14,471
Dunmaglass Holdco, Stronelairg
Holdco:
GBP14,595 income receivable per
wind farm per annum
GBPnil expenses payable to the
Investment Manager per wind farm
per annum
GBP14,595 expenses payable to
the Administrator per wind farm
per annum 14,595 - 14,595
Bicker Fen, Fenlands:
GBP5,573 income receivable per
wind farm per annum
GBP5,573 expenses payable to the
Investment Manager per wind farm
per annum
GBPnil expenses payable to the
Administrator per wind farm per
annum 5,574 5,574 -
Walney Holdco:
GBP19,790 income receivable per
annum
GBP9,895 expenses payable to the
Investment Manager per annum
GBP9,895 expenses payable to the
Administrator per annum 19,790 9,895 9,895
Humber Holdco(2) :
GBP7,969 income receivable per
wind farm per annum
GBPnil expenses payable to the
Investment Manager per wind farm
per annum
GBP7,969 expenses payable to the
Administrator per wind farm per
annum 7,969 - 7,969
Total 1,116,613 482,020 634,593
(1) Acquired in September 2021. GBP12,642 income received and
GBP6,321 paid to the Investment Manager during the year.
(2) Acquired in December 2020. GBP7,969 income received and
GBPnil paid to the Investment Manager during the year.
For the year ended
31 December 2020
Expenses paid to the Investment Expenses paid to the
Income received Manager Administrator
GBP GBP GBP
Bishopthorpe, Brockaghboy, Church
Hill, Corriegarth, Crighshane,
Langhope Rig, North Hoyle,
Screggagh, Slieve Divena, Slieve
Divena II(1) , Stroupster, Tom
Nan Clach:
GBP47,495 income receivable per
wind farm per annum
GBP23,748 expenses payable to
the Investment Manager per wind
farm per annum
GBP23,748 expenses payable to
the Administrator per wind farm
per annum 558,066 279,033 279,033
Bin Mountain, Braes of Doune,
Carcant, Cotton Farm, Drone
Hill, Earl's Hall Farm,
Kildrummy,
Maerdy, North Rhins, Sixpenny
Wood, Tappaghan, Yelvertoft:
GBP35,622 income receivable per
wind farm per annum
GBP11,874 expenses payable to
the Investment Manager per wind
farm per annum
GBP23,748 expenses payable to
the Administrator per wind farm
per annum 427,464 142,488 284,976
Douglas West:
GBP32,313 income receivable per
annum
GBP23,748 expenses payable to
the Investment Manager per annum
GBP8,565 expenses payable to the
Administrator per annum 32,313 23,748 8,565
Dunmaglass Holdco, Stronelairg
Holdco:
GBP7,154 income receivable per
wind farm per annum
GBPnil expenses payable to the
Investment Manager per wind farm
per annum
GBP7,154 expenses payable to the
Administrator per wind farm per
annum 14,308 - 14,308
Bicker Fen, Fenlands:
GBP2,732 income receivable per
wind farm per annum
GBP2,732 expenses payable to the
Investment Manager per wind farm
per annum
GBPnil expenses payable to the
Administrator per wind farm per
annum 5,464 5,464 -
Walney Holdco(2) :
GBP18,000 income receivable per
annum
GBP9,000 expenses payable to the
Investment Manager per annum
GBP9,000 expenses payable to the
Administrator per annum 4,500 2,250 2,250
Total 1,042,115 452,983 589,132
(1) Acquired in March 2020. GBP35,620 income received and
GBP17,805 paid to the Investment Manager and Administrator during
the year.
(2) Acquired in August 2020. GBP4,500 income received and
GBP2,250 paid to the Investment Manager and Administrator during
the year.
The table below shows dividends received in the year from the
Group's investments.
For the year ended For the year ended
31 December 2021 31 December 2020
GBP'000 GBP'000
------------------------- ------------------ ------------------
Humber Holdco (1) 31,853 -
Clyde 21,654 17,770
Andershaw 15,150 -
Walney Holdco (2) 14,441 -
Brockaghboy 14,331 7,518
Corriegarth (3) 13,778 -
Braes of Doune 11,110 3,862
Stroupster 8,491 3,876
SYND Holdco (4) 8,303 6,782
North Hoyle 8,193 6,242
Fenlands (5) 7,993 5,844
Stronelairg Holdco (6) 7,019 11,454
ML Wind (7) 6,664 5,978
Rhyl Flats 6,163 5,639
Cotton Farm 4,621 4,468
Tappaghan 4,484 3,691
Maerdy 4,382 3,219
Bishopthorpe 4,208 2,811
Dunmaglass Holdco (8) 3,801 3,954
Little Cheyne Court 3,649 4,428
Earl's Hall Farm 3,468 2,794
Kildrummy 3,407 4,488
Slieve Divena 3,295 2,670
Langhope Rig 3,075 3,057
Slieve Divena II 2,714 -
Bicker Fen 2,566 2,841
Screggagh 2,427 1,855
Bin Mountain 1,764 1,256
Carcant 1,601 1,400
Church Hill 903 -
Crighshane 820 -
Corriegarth Holdings (3) - 5,851
226,328 123,748
(1) The Group's investment in Humber Gateway is held through
Humber Holdco.
(2) The Group's investment in Walney is held through Walney
Holdco.
(3) The Group's investment in Corriegarth was previously held
through Corriegarth Holdings, until 27 April 2020, at which point
the investment was restructured. Corriegarth Holdings was dissolved
in September 2020.
(4) The Group's investments in Drone Hill, North Rhins, Sixpenny
Wood and Yelvertoft are held through SYND Holdco.
(5) The Group's investments in Deeping St. Nicholas, Glass Moor,
Red House and Red Tile are held through Fenlands.
(6) The Group's investment in Stronelairg is held through
Stronelairg Holdco.
(7) The Group's investments in Middlemoor and Lindhurst are held
through ML Wind.
(8) The Group's investment in Dunmaglass is held through
Dunmaglass Holdco.
The table below shows interest received in the year from the
Group's shareholder loan investments.
For the year ended 31 December 2021 For the year ended 31 December 2020
GBP'000 GBP'000
Walney Holdco 13,051 -
Stronelairg 5,194 5,201
Clyde 4,394 4,290
Dunmaglass 3,410 3,414
Corriegarth 3,410 478
Douglas West 2,505 -
Tom nan Clach 2,996 5,118
Crighshane 1,906 1,040
Slieve Divena II 1,714 544
Church Hill 1,042 708
Andershaw 182 -
39,804 20,793
The table below shows the Group's shareholder loans with the
wind farm investments.
Accrued interest
Loans at 1 Loans advanced in Loan repayments Loans at 31 at 31 December
Windfarm January 2021(1) the year in the year December 2021 2021 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Andershaw - 32,641 - 32,641 333 32,974
Church Hill 15,075 - (373) 14,702 118 14,820
Clyde 71,503 - - 71,503 954 72,457
Corriegarth 42,553 - - 42,553 427 42,980
Crighshane 24,665 - (2,401) 22,264 66 22,330
Douglas West 19,217 25,168 (737) 43,648 352 44,000
Dunmaglass 56,864 - - 56,864 860 57,724
Glen Kyllachy - 51,470 - 51,470 93 51,563
Hoylake (2) - 172,279 - 172,279 1,007 173,286
Kype Muir - 10,606 - 10,606 96 10,702
Slieve Divena II 22,182 - - 22,182 91 22,273
Stronelairg 86,619 - - 86,619 1,310 87,929
Tom nan Clach 85,874 - (5,220) 80,654 568 81,222
Walney 172,727 - - 172,727 880 173,607
Windy Rig - 36,772 - 36,772 109 36,881
597,279 328,936 (8,731) 917,484 7,264 924,748
(1) Excludes accrued interest at 31 December 2020 of
GBP10,675,825.
(2) The Group's investment in Burbo Bank Extension is held
through Hoylake.
20. Ultimate controlling party
In the opinion of the Board, on the basis of the shareholdings
advised to them, the Company has no ultimate controlling party.
21. Subsequent events
On 24 January 2022, the Company announced a dividend of GBP41.6
million, equivalent to 1.795 pence per share with respect to the
quarter ended 31 December 2021, bringing the total dividend
declared with respect to the year to 31 December 2021 to 7.18 pence
per share. The record date for the dividend was 11 February 2022
and the payment date is 25 February 2022.
On 31 January 2022, the Company utilised GBP200 million under
its 8 year term debt facility with AXA and repaid the Company's
revolving credit facility, leaving GBP50 million drawn as at the
date of this report.
Company Information
Directors (all non-executive) Registered Company Number
Shonaid Jemmett-Page (Chairman) 08318092
William Rickett C.B.
Martin McAdam Registered Office
Lucinda Riches C.B.E 27-28 Eastcastle Street
Caoimhe Giblin London
Nicholas Winser W1W 8DH
Investment Manager Registered Auditor
Greencoat Capital LLP BDO LLP
4(th) Floor, The Peak 55 Baker Street
5 Wilton Road London
London W1U 7EU
SW1V 1AN
Administrator and Company Secretary Joint Broker
Ocorian Administration (UK) Limited RBC Capital Markets
Unit 4, The Legacy Building Riverbank House
Northern Ireland Science Park 2 Swan Lane
Queen's Road London
Belfast EC4R 3BF
BT3 9DT
Depositary Joint Broker
Ocorian Depositary (UK) Limited Jefferies International
Limited
Unit 4, The Legacy Building 100 Bishopsgate
Northern Ireland Science Park London
Queen's Road EC2N 4JL
Belfast
BT3 9DT
Registrar
Computershare Limited
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Supplementary Information (unaudited)
Under the Alternative Investment Fund Manager Regulations 2013
(as amended) the Company is a UK AIF and the Investment Manager is
a full scope UK AIFM.
Ocorian Depositary (UK) Limited provides depositary services
under the AIFMD.
The AIFMD outlines the required information which has to be made
available to investors prior to investing in an AIF and directs
that material changes to this information be disclosed in the
Annual Report of the AIF. There were no material changes in the
year.
All information required to be disclosed under the AIFMD is
either disclosed in this Annual Report or is detailed within a
schedule of disclosures on the Company's website at
www.greencoat-ukwind.com .
The Investment Manager covers the potential professional
liability risks resulting from its activities by holding
professional indemnity insurance in accordance with Article 9(7)(b)
of AIFMD.
The information in this paragraph relates to the Investment
Manager, the AIFM, and its subsidiary company providing services to
the AIFM and it does not relate to the Company. The total amount of
remuneration paid by the Investment Manager, in its capacity as
AIFM, to its 88 staff for the financial year ending 31 December
2021 was GBP16.5 million, consisting of GBP11.4 million fixed and
GBP5.1 million variable remuneration. The aggregate amount of
remuneration for the 5 staff members of the Investment Manager
constituting senior management and those staff whose actions have a
material impact on the risk profile of the Company was GBP1.1
million.
Defined Terms
Aggregate Group Debt means the Group's proportionate share of
outstanding third party borrowings
AGM means Annual General Meeting of the Company
AIC means the Association of Investment Companies
AIC Code means the AIC's Code of Corporate Governance
AIF means an Alternative Investment Fund as defined under the
AIFMD
AIFM means an Alternative Investment Fund Manager as defined
under the AIFMD
AIFMD means the Alternative Investment Fund Managers
Directive
Alternative Performance Measure means a financial measure other
than those defined or specified in the applicable financial
reporting framework
Andershaw means Andershaw Wind Power Limited
AXA means funds managed by AXA Investment Managers UK
Limited
Balancing Mechanism means the system by which electricity demand
and supply is balanced by National Grid in close to real time
Barclays means Barclays Bank PLC
BDO LLP means the Company's Auditor as at the reporting date
Bicker Fen means Bicker Fen Windfarm Limited
Bin Mountain means Bin Mountain Wind Farm (NI) Limited
Bishopthorpe means Bishopthorpe Wind Farm Limited
Board means the Directors of the Company
Braes of Doune means Braes of Doune Wind Farm (Scotland)
Limited
Breeze Bidco means Breeze Bidco (TNC) Limited
Brockaghboy means Brockaghboy Windfarm Limited
Burbo Bank Extension means Hoylake Wind Limited, Greencoat Burbo
Extension Holding (UK) Limited, Burbo Extension Holding Limited and
Burbo Extension Limited
Carcant means Carcant Wind Farm (Scotland) Limited
Cash Fee means the cash fee that the Investment Manager is
entitled to under the Investment Management Agreement
CBA means Commonwealth Bank of Australia
CFD means Contract For Difference between an electricity
generator and Low Carbon Contracts Company
Church Hill means Church Hill Wind Farm Limited
CIBC means Canadian Imperial Bank of Commerce
Clyde means Clyde Wind Farm (Scotland) Limited
Company means Greencoat UK Wind PLC
COP26 means the 2021 United Nations Climate Change
Conference
Corriegarth means Corriegarth Wind Energy Limited
Corriegarth Holdings means Corriegarth Wind Energy Holdings
Limited
Cotton Farm means Cotton Farm Wind Farm Limited
COVID-19 means an infectious disease discovered in late 2019 and
caused by the corona virus.
CPI means the Consumer Price Index
Crighshane means Crighshane Wind Farm Limited
DCF means Discounted Cash Flow
Deeping St. Nicholas means Deeping St. Nicholas wind farm
Douglas West means Douglas West Wind Farm Limited
Drone Hill means Drone Hill Wind Farm Limited
DTR means the Disclosure Guidance and Transparency Rules
sourcebook issued by the Financial Conduct Authority
Dunmaglass means Dunmaglass Holdco and Dunmaglass Wind Farm
Dunmaglass Holdco means Greencoat Dunmaglass Holdco Limited
Dunmaglass Wind Farm means Dunmaglass Wind Farm Limited
Earl's Hall Farm means Earl's Hall Farm Wind Farm Limited
Equity Element means the ordinary shares issued to the
Investment Manager under the Investment Management Agreement
ESG means Environmental, Social and Governance
EU means the European Union
Fenlands means Fenland Windfarms Limited
FRC means the Financial Reporting Council
GAV means Gross Asset Value
Glass Moor means Glass Moor wind farm
Glen Kyllachy means Glen Kyllachy Wind Farm Limited
Group means Greencoat UK Wind PLC and Greencoat UK Wind Holdco
Limited
HMP means Habitat Management Plan
Holdco means Greencoat UK Wind Holdco Limited
Hoylake means Hoylake Wind Limited
Humber Gateway means Humber Holdco and Humber Wind Farm
Humber Holdco means Greencoat Humber Limited
Humber Wind Farm means RWE Renewables UK Humber Wind Limited
IAS means International Accounting Standards
IFRS means International Financial Reporting Standards
Investment Management Agreement means the agreement between the
Company and the Investment Manager
Investment Manager means Greencoat Capital LLP
IPEV Valuation Guidelines means the International Private Equity
and Venture Capital Valuation Guidelines
IRR means Internal Rate of Return
Kildrummy means Kildrummy Wind Farm Limited
KPI means Key Performance Indicator
Langhope Rig means Langhope Rig Wind Farm Limited
LIBOR means the London Inter Bank Offered Rate
Lindhurst means Lindhurst Wind Farm
Listing Rules means the listing rules made by the UK Listing
Authority under Section 73A of the Financial Services and Markets
Act 2000
Little Cheyne Court means Little Cheyne Court Wind Farm
Limited
Maerdy means Maerdy Wind Farm Limited
Middlemoor means Middlemoor Wind Farm
ML Wind means ML Wind LLP
NAB means National Australia Bank
Nanclach means Nanclach Limited
NAV means Net Asset Value
North Hoyle means North Hoyle Wind Farm Limited
North Rhins means North Rhins Wind Farm Limited
PPA means Power Purchase Agreement entered into by the Group's
wind farms
RBC means the Royal Bank of Canada
RBS International means the Royal Bank of Scotland International
Limited
Red House means Red House wind farm
Red Tile means Red Tile wind farm
Review Section means the front end review section of this report
(including but not limited to the Chairman's Statement, Strategic
Report, Investment Manager's Report and Report of the
Directors)
Rhyl Flats means Rhyl Flats Wind Farm Limited
ROC means Renewable Obligation Certificate
RPI means the Retail Price Index
Santander means Santander Global Banking and Markets
Screggagh means Screggagh Wind Farm Limited
Sixpenny Wood means Sixpenny Wood Wind Farm Limited
Slieve Divena means Slieve Divena Wind Farm Limited
Slieve Divena II means Slieve Divena Wind Farm No. 2 Limited
SONIA means the Sterling Overnight Index Average
SPVs means the Special Purpose Vehicles which hold the Group's
investment portfolio of underlying wind farms
Stronelairg means Stronelairg Holdco and Stronelairg Wind
Farm
Stronelairg Holdco means Greencoat Stronelairg Holdco
Limited
Stronelairg Wind Farm means Stronelairg Wind Farm Limited
Stroupster means Stroupster Caithness Wind Farm Limited
SYND Holdco means SYND Holdco Limited
Tappaghan means Tappaghan Wind Farm (NI) Limited
TCFD means Task Force on Climate-Related Financial
Disclosures
Tom nan Clach means Breeze Bidco and Nanclach
TSR means Total Shareholder Return
UK means the United Kingdom of Great Britain and Northern
Ireland
UK Code means the UK Corporate Governance Code issued by the
FRC
Walney means Walney Holdco and Walney Wind Farm
Walney Holdco means Greencoat Walney Holdco Limited
Walney Wind Farm means Walney (UK) Offshore Windfarms
Limited
Wind Rig means Windy Rig Wind Farm Limited
Yelvertoft means Yelvertoft Wind Farm Limited
Alternative Performance Measures
Performance Measure Definition
CO(2) emissions avoided The estimate of the portfolio's annual
per annum CO(2) emissions avoided through the displacement
of thermal generation, based on the portfolio's
estimated generation as at the relevant
reporting date.
Homes powered per annum The estimate of the number of homes powered
by electricity generated by the portfolio,
based on the portfolio's estimated generation
as at the relevant reporting date.
NAV movement per share Movement in the ex-dividend Net Asset
(adjusting for dividends) Value per ordinary share during the year.
NAV per share The Net Asset Value per ordinary share.
Net cash generation The operating cash flow of the Group
and wind farm SPVs.
Premium to NAV The percentage difference between the
published NAV per ordinary share and
the quoted price of each ordinary share
as at the relevant reporting date.
Total return (NAV) The movement in the ex-dividend NAV per
ordinary share, plus dividend per ordinary
share declared or paid to shareholders
with respect to the year.
Total Shareholder Return The movement in share price, combined
with dividends paid during the year,
on the assumption that these dividends
have been reinvested.
Cautionary Statement
The Review Section of this report has been prepared solely to
provide additional information to shareholders to assess the
Company's strategies and the potential for those strategies to
succeed. These should not be relied on by any other party or for
any other purpose.
The Review Section may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "may", "will" or "should" or,
in each case, their negative or other variations or comparable
terminology.
These forward-looking statements include all matters that are
not historical facts. They appear in a number of places throughout
this document and include statements regarding the intentions,
beliefs or current expectations of the Directors and the Investment
Manager concerning, amongst other things, the investment objectives
and Investment Policy, financing strategies, investment
performance, results of operations, financial condition, liquidity,
prospects, and distribution policy of the Company and the markets
in which it invests.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Company's actual investment performance, results
of operations, financial condition, liquidity, distribution policy
and the development of its financing strategies may differ
materially from the impression created by the forward-looking
statements contained in this document.
Subject to their legal and regulatory obligations, the Directors
and the Investment Manager expressly disclaim any obligations to
update or revise any forward-looking statement contained herein to
reflect any change in expectations with regard thereto or any
change in events, conditions or circumstances on which any
statement is based.
In addition, the Review Section may include target figures for
future financial periods. Any such figures are targets only and are
not forecasts.
This Annual Report has been prepared for the Company as a whole
and therefore gives greater emphasis to those matters which are
significant in respect of Greencoat UK Wind PLC and its subsidiary
undertakings when viewed as a whole.
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