Greencoat Renewables - Final Results Announcement
27/02/2023 07:00
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RNS Number : 0630R Greencoat Renewables PLC 27 February 2023
Greencoat Renewables 2022 Full Year Results
Dublin, London | 27 February 2023: Greencoat Renewables PLC ("Greencoat
Renewables" or the "Company"), today announces its results for the year ended
31 December 2022.
2022 Highlights
§ The Group's portfolio generated 2,487GWh of electricity in the period
(2021: 1,522GWh).
§ Portfolio increased to 35 assets with the acquisition of 9 wind farms,
including our first offshore wind farm and expansion into Germany, Finland and
Spain, increasing net generating capacity to 1,164MW (2021: 800MW).
§ Net cash generation was €215 million 1 (#_ftn1) (2021: €71 million)
and gross dividend cover was 3.2x (2021: 1.5x).
§ GAV increased to €2,227 million as at 31 December 2022 (2021: €1,566
million) and NAV increased to €1,282 million (2021: €935.2 million).
§ NAV per share increased by 7.3 cents to 112.4 cent per share.
§ €945 million of Group Debt as at 31 December 2022 (2021: €631 million)
equivalent to 42% of GAV (2021: 40%) 2 (#_ftn2) .
§ Declared dividend of 6.18 cent per share with respect to the year, with a
target of
6.42 cent per share for 2023.
§ Successful capital raising activity in the period with gross proceeds of
€281.5 million raised in an oversubscribed placing.
§ Portfolio produced renewable energy to power 538,958 homes, saving 685,997
tonnes of CO(2) emissions and committed €1 million to local communities
across 202 community projects.
Commenting on the results, Ronan Murphy, Non-Executive Chairman of Greencoat
Renewables, said:
"2022 was another very successful year for Greencoat Renewables and I am very
pleased that the business continued to deliver strong returns to shareholders.
We achieved a number of significant milestones, with the acquisition of 9 wind
farms, including our first offshore wind farm, and expansion into Germany,
Finland and Spain. We have built a portfolio of diversified technology across
both onshore and offshore wind, solar, and battery, providing us with a robust
platform from which to capitalise on the opportunities ahead.
I am very pleased with the strong performance of the business and have great
confidence that, as the transition to renewable energy across the region
gathers pace, Greencoat Renewables is very well positioned to be a leading
long-term owner of European renewable infrastructure assets."
Key Metrics
As at 31 December 2022
Market capitalisation €1,295 million
Share price 113.5 cent
Dividends declared with respect to the year €70.5 million
Dividends declared per share 6.18 cent
GAV €2,227 million
NAV €1,282 million
NAV per share 112.4 cent
TSR 49%
Premium to NAV 1.0%
CO(2) emissions reduced 685,997 tonnes
Homes powered 538,958 homes
Funds invested in community and social projects >€1.0 million
Conference call for analysts and investors
A conference call for analysts and investors will be held at 10.00 am GMT
today, 27 February 2023. To register for the call please contact FTI
Consulting by email at Greencoat@fticonsulting.com.
Presentation materials are available on the Company's
website: www.greencoat-renewables.com (http://www.greencoat-renewables.com/)
2022 Annual Report
A copy of the 2022 Annual Report has been submitted to the National Storage
Mechanism and will shortly be available for inspection
at https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
(https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism)
. The Annual Report will also be made available shortly on the Company's
website at www.greencoat-renewables.com
(http://www.greencoat-renewables.com/) , where further information on the
Company can also be found.
--- ENDS ---
For further information on the Announcement, please contact:
Greencoat Renewables
PLC: +44
20 7832 9400
Bertrand Gautier
Paul O'Donnell
Tom Rayner
Davy (Joint Broker, Nomad and Euronext Growth Listing
Sponsor)
+353 1 6796363
Ronan Veale
Barry Murphy
RBC (Joint
Broker)
+44 20 7653 4000
Matthew Coakes
Duncan Smith
Elizabeth Evans
FTI Consulting (Media
Enquiries)
+353 86 401 5250
Melanie
Farrell
greencoat@fticonsulting.com (mailto:greencoat@fticonsulting.com)
Orla Cox
About Greencoat Renewables PLC
Greencoat Renewables PLC is an investor in euro-denominated renewable energy
infrastructure assets. Initially focused solely on the acquisition and
management of operating wind farms in Ireland, the Company is now also
investing in wind and solar assets in certain other European countries with
stable and robust renewable energy frameworks. It is managed by Schroders
Greencoat LLP, an experienced investment manager in the listed renewable
energy infrastructure sector.
At a Glance
Summary
Greencoat Renewables PLC is an owner and operator of renewable infrastructure
and storage assets in the Republic of Ireland, France, Finland, Germany, Spain
and Sweden. The Company's aim is to provide investors with an annual dividend
that increases progressively whilst growing the capital value of its
investment portfolio in the long term through reinvestment of excess cash flow
and the prudent use of portfolio gearing.
Highlights
§ Net cash generation was €215 million((1)) (2021: €71 million) and gross
dividend cover was 3.2x (2021: 1.5x).
§ The Group's investments generated 2,487GWh (2021: 1,522GWh) of electricity.
§ Acquisition of 9 wind farms, including our first offshore wind farm and
expansion into both Germany and Spain, increasing net generating capacity to
1,164MW. Agreements to acquire 22.5% in Butendiek (German offshore wind), 100%
Erstrask North (Sweden onshore wind) and 50% South Meath (Ireland solar).
§ GAV increased to €2,227 million as at 31 December 2022 (2021: €1,566
million).
§ €945 million of Aggregate Group Debt as at 31 December 2022 (2021: €631
million) equivalent to 42% of GAV (2021: 40%).
§ Placing of €275 million of fixed rate term debt.
§ Issuance of 251.3 million new shares at 112 cent per share, raising gross
proceeds of €281.5 million.
§ Company declared total dividends of 6.18 cent per share with respect to the
year.
§ Company classified as Article 9 under EU SFDR.
§ Over €1.0 million committed to local communities across 202 community
projects.
§ Portfolio generation avoided CO(2) emissions by 685,997 tonnes.
Key Metrics
As at 31 December 2022 As at 31 December 2021
Market capitalisation €1,295 million €996.7 million
Share price 113.5 cent 112.0 cent
Dividends declared with respect to the year €70.5 million €49.4 million
Dividends declared per share 6.18 cent 6.06 cent
GAV €2,227 million €1,566 million
NAV €1,282 million €935.2 million
NAV per share 112.4 cent 105.1 cent
TSR 49% 40%
Premium to NAV 1.0% 6.6%
CO(2) emissions avoided 685,997 tonnes 608,856 tonnes
Homes powered 538,958 homes 347,630 homes
Funds invested in community and social projects >€1.0 million €1.0 million
Defining Characteristics
Greencoat Renewables PLC was designed for investors to be simple, transparent
and low risk. Key characteristics include:
§ Investments into geographies with a stable and robust renewable energy
policy framework.
§ Diversification through investing in a growing portfolio of assets across
Continental Europe.
§ Growing mix of renewable technologies, including onshore wind, offshore
wind, solar and battery storage.
§ The Group is wholly independent and thus avoids conflicts of interests in
its investment decisions.
§ The independent Board governs the Group, actively monitors the efficient
operation of the assets and works in conjunction with an experienced
investment management team.
§ Low gearing to ensure a high level of cash flow stability and higher
tolerance to downside sensitivities.
§ The Group invests only in Euro revenue assets and thus does not incur
material currency risk.
Chairman's Statement
I am pleased to present Greencoat Renewables PLC's full year results for the
twelve months ended 31 December 2022 and our fifth full set of accounts since
listing. Backed by the strong support of shareholders since inception,
Greencoat Renewables has expanded from Ireland across Continental Europe,
scaled from 2 assets to 35 and delivered enough clean energy to power 538,958
homes. In the same period, we diversified into a range of technologies,
established an outstanding team and built the financial foundations to capture
the enormous environmental and financial opportunity ahead of us. My pride in
the achievements of the past five years is matched and surpassed by our
ambition for the next.
Europe continues to be the Company's focus and we are extremely well placed to
support the accelerating plans for renewable buildout across the continent,
where we invested or committed €1,056 million in 2022. Acquisitions in
Germany, Finland, France, Spain and Sweden demonstrate the scale of the
pipeline we are now able to access, with our technologies now spanning wind,
solar and battery. The success of the past five years, complimented by the
strong financial performance of the past 12 months, gives us the ability to
capitalise fully on this significant growth opportunity where the need for
long term capital has never been more important.
Our European expansion has already demonstrated the value of our
relationships, capitalising on the Investment Manager's strategic
relationships with most of the large scale European utilities and developers.
The ability to transact across a range of countries, technologies and
development stages provides the Company with access to the most attractive
assets across the broader renewables landscape. Our deep operational
experience has proven to add value across the lifetime of the assets and to
bring in technologies, such as offshore wind and battery storage, when the
right market conditions are met.
The continued pursuit of these opportunities is enabled in turn by maintaining
our leading position in ESG and ensuring our Portfolio continues to meet and
drive standards across the industry. We are committed to ongoing improvements
across the ESG spectrum and to achieving best practice disclosure, with the
business continuing to disclose in line with SFDR (Article 9), TCFD and CDP.
There are few industries with such an important mission over the next decade
as the renewables sector and we are both proud of and excited by our potential
impact on energy security and the environment.
In summary, I am very pleased with the strong financial performance of the
business and have great confidence that Greencoat Renewables is extremely well
positioned to be a leading long term owner of European renewable
infrastructure assets.
Performance
The Portfolio generated 2,487GWh for 2022, compared to 1,522GWh for 2021.
Portfolio generation was 9% below budget. This was primarily a result of lower
wind resource as well as the ongoing adverse impacts from higher dispatch down
in the Irish Portfolio.
As the Portfolio has grown into new geographies, the business has benefitted
from increased diversification both in terms of weather systems and power
markets. Low correlation of wind speeds between Continental Europe and Ireland
increases stability of cashflows in periods of lower regional wind resource.
Net cash generation in the period was €215 million, delivering a record
gross dividend cover of 3.2x. In line with the Company's strategy, surplus
cash generation has been used to prepay debt and reinvest in the Portfolio.
As we witness significant changes to the inflationary environment in Europe
and globally, we are pleased that 59% of our cash flows are inflation linked
to 2032.
The past two years have emphasised the potential volatility in power prices
and the corresponding importance of a prudent approach to forward price curves
and contracting. The Investment Manager's in-house expertise in structuring
and delivering both corporate and utility PPAs is an increasingly valuable
tool for managing this power price risk. We now have merchant assets in
Finland, Spain, Sweden and Ireland, providing opportunities for a pan-European
approach to providing renewable PPAs to corporate customers where required.
Towards the end of the year, price caps were announced in various European
jurisdictions, following a consistent policy framework and helping to remove
short term regulatory uncertainty in energy markets. As of December 2022,
these have been implemented in the markets that the Group operates in,
including Ireland, Germany, France and Spain.
The introduction of a market price cap has not impacted the Group's Portfolio
valuation due to our conservative approach to valuations and power price
curves and the fact that many of our assets are contracted under government
support schemes.
The Group's optimisation strategy continued with increased revenues from
system services, alongside performance enhancement measures implemented across
the Portfolio.
Following the successful commissioning of our first co-located battery project
at Killala wind farm in Ireland, we remain conservative regarding the long
term viability of large scale battery projects although we expect this set of
opportunities to expand as battery costs decrease and the technology becomes
more established.
Dividends and Returns
The Company declared dividends for the year of 6.18 cent per share, with the
final quarterly dividend of 1.545 cent per share paid on 24 February 2023.
Since listing in July 2017, the Company has consistently delivered on its
dividend policy and at 31 December 2022 had a TSR of 49%.
Our dividend policy remains unchanged and aims to increase the dividend each
year, by an amount between zero and Irish CPI. As inflation increased during
2022 to 8%, we are pleased to increase our target dividend by 4% to 6.42 cent
per share for 2023.
NAV per share increased in the period from 105.1 cent per share on 31 December
2021 to 112.4 cent per share on 31 December 2022. This increase is
attributable to higher power prices in the near term and adjustments to short
term inflation assumptions in Ireland and Continental Europe.
Reflecting the fact that cost of financing across Europe has increased and a
resetting of long term bond yields, in 2022, the Investment Manager took the
decision to increase its contracted and merchant discount rates over the
period by 0.5%, resulting in a 6.9% unlevered (post tax nominal) blended
discount rate at the end of the period.
Acquisitions and Diversification
The Company's plans for growth and diversification continued successfully with
value accretive opportunities emerging across Continental Europe and
consolidation of our leading position in Ireland. In aggregate, the Company
invested and committed over €1,056 million in 2022. A number of these
transactions were off-market, bilateral processes, demonstrating the Group's
ability to be a trusted partner for developers and utilities.
The past 12 months have seen:
· 353MW of net operating capacity added to the Portfolio during the
period;
· 175MW agreed acquisitions through our successful forward sale model;
and
· 22.5% of the 288MW Butendiek acquisition signed in December 2022 and
completed on 21 February 2023.
This is reflective, of the scale of opportunities we are seeing in Europe. In
October, an EGM to allow a change to the Investment Policy regarding the 40%
GAV limit on non-Ireland investments was approved by shareholders. This
supports the Company's continued diversification into Europe, enabling the
execution of a greater set of opportunities.
In total, nine operating assets were acquired in 2022:
Germany - 50% stake in the 312MW offshore wind farm Borkum Riffgrund 1,
co-owned alongside Ørsted, benefitting from a government backed floor price
until 2035.
France - Portfolio of 4 wind farms totalling 68MW, each of which benefit from
long term contracts backed by the French government.
Ireland - Tullahennel wind farm, a 37MW onshore wind farm and Taghart wind
farm, a 25MW onshore wind farm, both of which benefit from a long term
government backed guaranteed floor price.
Finland - Kokkoneva wind farm, a 43MW wind farm with a corporate PPA in place
for the first 10 years of operations.
Spain - Soliedra wind farm, a 24MW wind farm that sells its power on the
merchant market.
In addition, the Group entered into forward sale agreements to acquire
Erstrask North, a 134.4MW onshore wind farm located in Sweden and a 50% stake
in South Meath, an 80.5MW solar farm located in Ireland.
The expansion into the Nordics last year and into Spain and Germany this year
is indicative of the Group's strategy, unlocking opportunities to aggregate
significant investments in diversified geographies as we have demonstrated to
be a successful business model in Ireland.
The Company continues to explore new European markets where we can see low
levelized cost of electricity opportunities in both wind and solar, with
underlying Euro denominated cashflows. This includes opportunities in
Portugal, the Baltics and Italy.
As of 31 December 2022, the Group's Portfolio comprised 34 operational wind
farms and a co-located battery storage project, with an aggregate net capacity
of 1,164MW, with a further 327MW contracted to acquire.
Gearing
During the period, the Group entered into a new €275 million 5 year term
debt facility to fund value accretive acquisitions. This new term debt is
complementary to the existing term debt facilities bringing total term debt to
€750 million with bullet payments due between 2025 and 2028.
The RCF was utilised early in the year to support acquisition activity and was
repaid following the equity raise in early April in line with the Company's
investment model. As at 31 December 2022, the RCF was €100 million drawn,
with €200 million available. Post year end the Group agreed a new RCF of
€350 million and extended the repayment date until 13 February 2026.
Total Group debt, including the Company and SPVs, as at 31 December 2022
amounted to €944.7 million, which is 42% of GAV. This does not include the
Group's aggregated pro-rated cash balances of €188 million. While interest
rates are rising, it is important to note that the Group has entered into long
term interest rate hedges to minimise this risk. The Group continues its
prudent use of low-cost debt which has further enhanced the Group's cash
yield, while maintaining gearing levels well within the guidelines detailed in
the Company's Investment Policy which limits debt to 60% of GAV.
Equity Issuance
In line with our longstanding strategy, the Company continued to issue new
equity to maintain agility for acquisitions and growth, whilst ensuring we
remain within our targeted gearing range.
In April 2022, the Company raised €281.5 million of new equity at an issue
price of €1.12 per share. The issuance was oversubscribed and accretive to
NAV. The Group possesses significant gearing headroom to pursue further
investment opportunities.
Environmental, Social and Governance
The Company's business model supports a more sustainable future and every
electron generated by the Portfolio removes a need for thermal generation.
With our larger Portfolio, the Group displaced 685,997 tonnes of CO(2)
emissions in 2022 and 608,856 tonnes in 2021. This is equivalent to providing
sufficient clean energy to meet the needs of 538,958 households.
The key highlights of our ESG agenda are described below:
· Our commitment to operating sustainably does not end with our
renewable generation; the Company has contributed over €1 million during the
year across 202 projects. These include education, sports, public amenities,
community centres, charities and energy efficiency to local community schemes.
We are also excited to welcome our first RESS asset with the acquisition of
Taghart wind farm and the community funding initiative of the RESS scheme.
· As our investments are exclusively focussed on renewable energy
assets, the Company is classified under Article 9 of the EU SFDR pursuant to
which we have complied with all disclosure requirements which can be found on
our website and the Appendices of the report. The Company has also evolved its
disclosures under TCFD to include risk modelling and will continue its
submissions under CDP.
· It is important to us that the Health and Safety standards we
maintain are reflected in our operations worldwide. When we start operating in
a new country, we take care to ensure legal compliance upon entry, the
Investment Manager also provides leadership to our major service providers
during operations to ensure that our high standards are met.
· The Company proactively monitors the risk of modern slavery in its
supply chains. In line with the commitments in the Company's Modern Slavery
Statement, we completed our first Modern Slavery audits using an external
consultant on a number of major service providers. The results from the audit
showed that the service providers are in compliance with legislation and best
practice guidance.
· The Investment Manager on behalf of the Company has completed its
first wind farm recyclability report using an expert renewables consultant.
This report has shown that wind turbine blade recycling poses the most
significant challenge to achieve a circular economy. In response to this, we
have created our first ESG questionnaire to help engage and inform the
discussion with wind turbine companies in a bid to seek change in their supply
chain.
Further details of these and other activities and initiatives can be found in
the latest ESG report on the Company's website: www.greencoat-renewables.com
(http://www.greencoat-renewables.com) .
Outlook
The Company's outlook is strong with increased stability and visibility over
the regulatory landscape, strong protection against the high inflation
economic backdrop and a proven ability to aggregate assets in Continental
Europe.
The past 12 months have seen accelerated national deployment plans for
renewables across the areas in which we invest, as governments recognise
renewables as a source of energy security as well as environmental progress.
In order to meet existing net zero targets alone, Europe needs to more than
double its generating capacity by 2030, equating to a €500bn capital
requirement by early 2030. The Group can play an important role in this
essential financing requirement.
In addition to our geographical expansion, the Group's technology
diversification should continue to grow, with offshore wind, solar and battery
storage likely to increase as a proportion of the Portfolio. We also continue
to find ways to maximise the profitability and generation of our existing
assets, including through hybridization, extending asset life and early
repowering opportunities. Over the medium and long term, we expect these
opportunities to increase in both number and value as technology progresses
and prices decrease.
Board and Governance
The Board places significant emphasis on reviewing its composition and skills;
and ensuring that the Board's diversity - including gender, background,
expertise and ethnicity, among other considerations - meets the needs of the
business; matches the expectations of stakeholders; and brings fresh thinking
to Board deliberations.
The Board has been engaged in a process to identify an additional candidate to
appoint as a non-executive Director over the past year, with the support of an
independent executive search agency. The Board was pleased to appoint Eva
Lindqvist as an independent Director on 7 July 2022.
Eva, a Swedish national, is an experienced company chair and non-executive
director with international experience in telecoms and infrastructure, having
worked for more than 30 years across these sectors. She brings valuable senior
experience to the Board and her appointment raised female representation on
the Board to 40%, an important metric for the Company.
An external evaluation of the Board concluded that the Board operates
effectively. As further described in the Corporate Governance Report, the
Board met seven times during the year.
The Group's governance is further described in the Corporate Governance
Report.
Annual General Meeting
Our AGM will take place at 09:30 on Friday 28 April 2023 at Davy House, 49
Dawson Street, Dublin, D02 PY05, Ireland. Details of the formal business of
the meeting will be set out in a separate circular which will be sent to
shareholders with the Annual Report.
Conclusion
In conclusion, the year has been a very successful one and the opportunity for
the industry to deliver a positive benefit to our communities has never been
greater. The Group is well positioned to lead in this endeavour and I am very
positive about the Company's short and long term prospects as we build one of
Europe's leading renewable energy infrastructure groups.
I would like to thank my fellow directors, Emer Gilvarry, Marco Graziano,
Kevin McNamara and Eva Lindqvist for their valued dedication, stewardship and
counsel. I would also like to acknowledge the Board's appreciation of the
considerable expertise, skill and ambition of our Investment Manager.
Rónán Murphy
Chairman
26 February 2023.
Investment Manager's Report
The Investment Manager's experience covers renewable investment, ownership,
finance and operations. All the skills and experience required to manage the
Group's investments lie within a single Investment Manager. The Investment
Manager has over €10 billion of funds under management, invested in
renewables infrastructure portfolios in the UK, Ireland, Continental Europe
and the United States of America. The Investment Manager is authorised and
regulated by the FCA and is a full scope UK AIFM. In April 2022, Schroders plc
(with over £700 billion of AUM) acquired a 75% interest in the Investment
Manager, which continues to operate as an independent business.
The Investment Manager has a dedicated team, focussed solely on the Group and
the underlying Portfolio of investments and is led by Bertrand Gautier and
Paul O'Donnell. The team is comprised of over 20 investment and asset
management professionals with significant experience across European markets,
including technical asset management and extensive debt and equity capital
markets experience.
Bertrand has over 30 years of operational, financial and investment
experience, including 13 years focussed on renewables. He has been a Partner
of Schroders Greencoat LLP since joining in 2010. Prior to this, Bertrand held
senior positions at Terra Firma Capital Partners, Merrill Lynch and Procter
& Gamble. Bertrand holds an MSc in General Engineering from ICAM (France)
and an MBA from Harvard Business School (USA).
Paul has 20 years of renewables and investment experience, of which the last
16 have been focussed on renewables. He joined Schroders Greencoat LLP, in
2009 and has specialised in managing investments in the wind and solar
generation sectors, working across development, operations, technology and
financing. Prior to joining Schroders Greencoat LLP, he worked with Libertas
Capital, the specialist renewable energy investment bank and PwC Ireland. Paul
has been a Partner of Schroders Greencoat LLP since 2016 and holds a BBS
(Hons) in Finance from Trinity College Dublin.
Overview
The Investment Manager is pleased to report on another successful year of
financial performance, generating €215 million of net cashflow and providing
dividend cover of 3.2x, as it continues to build one of Europe's leading
renewable infrastructure groups.
2022 was a transformative year for the Company and for the wider renewables
sector in general. The recent growth of the European renewables sector is
projected to continue in the medium term, with today's market estimated at a
total of €500 billion and is expected to grow to €1 trillion by early
2030. As regional priorities evolve with national governments increasing focus
on energy security, previous growth expectations are likely to accelerate
underpinning significant opportunity to investors.
In the past year, we bolstered our market leading position in Europe, by
expanding the regional presence of our team and now enjoy a local presence
across the continent with offices in Dublin, London, Copenhagen, Madrid,
Frankfurt and Amsterdam. This regional scale affords us continuous access to
deal flow and major stakeholders across the region. This leaves the Group well
positioned to take advantage of the substantial regional growth opportunity as
well as selecting the most attractive investment opportunities.
During the year, the installed capacity of the Group increased to 1,164 MW
with over €1,056 million invested or committed into Ireland, Germany,
Finland, France, Spain and Sweden.
In addition to further geographic diversification and expansion of our team
over the period, we continued to diversify our technology mix, with the
acquisition of the Group's first offshore wind farm along with further
commitments into solar farms as well as the commencement of operations of our
first co-located battery project.
Portfolio Generation Performance
Net portfolio generation for the year was 2,487GWh, 9% below budget primarily
due to lower wind resource and higher dispatch down level in Ireland.
2022 saw significant growth across Europe. The diversification of the
Portfolio in terms of weather systems underpins low correlation of wind
resources within Europe, which enhances the stability of the cashflows.
European power price markets
The year saw significant upheaval in European energy markets, resulting from
both the global economic recovery from the pandemic and the Ukraine war. The
impact of this was a continued spike in European power prices.
In Ireland, the average baseload power price for 2022 was €226/MWh. A number
of our Irish REFIT projects have the ability to capture higher market prices
while being insulated from power price downside through the effective REFIT
floor.
In line with European wide policy framework, price caps were announced in
various European jurisdictions, reducing short term regulatory uncertainty in
energy markets. As of December 2022, these have been implemented in the
following markets that the Company operates in; Ireland, Germany, France and
Spain.
The introduction of a market cap has minimal impact on the portfolio
valuation, due to our conservative approach to valuations and power price
curves and the fact that many of our assets are contracted. In Ireland, the
Company's NAV continues to not include any potential revenues in excess of the
REFIT tariff level on a forward looking basis.
Contracted Portfolio's revenue benefitting from high levels of inflation
protection
Over 70% of the Portfolio's revenue to 2032 is underpinned by government
support mechanisms or corporate PPAs with strong counterparties, a number of
which have underlying contracted tariffs that are partially or fully
inflation-linked. The past year saw significant rises in inflation across
Europe, a trend which has continued and accelerated throughout 2022, as
average inflation across the geographies in which the Group operates sat at c.
8% in 2022. As inflation has increased, the portfolio value continues to
benefit from this protection with many of the underlying contracts benefitting
from either full or partial inflation linkage.
Active portfolio management continues to deliver value
The Investment Manager has continued to effectively manage the portfolio with
a number of key deliverables during the year, including the following
initiatives:
§ Active PPA strategy:
o Amended a number of PPA agreements in Ireland to maximise constraint
revenue payments and improve balancing services pricing; and
o Participated in a number of PPA tenders and bi lateral negotiations with
corporate offtakers and utilities in Ireland, Germany, Spain and Sweden to
enhance knowledge on market price and terms.
§ Realising generation increases through:
o Continued turbine enhancement program with upgrades carried out on five
wind farms ranging from 0.5% to 1.5% energy yield increase; and
o Active management of grid outages with local utilities to minimise
downtime and move the outages to lower wind periods.
§ Grid ancillary services:
o Continued management of DS3 services in the Irish market, contributing
revenues of approximately €4 million during the year:
§ Achieved through a range of technology upgrades to the portfolio,
capitalising on the technical expertise of the portfolio management team; and
§ Working closely with wind turbine manufacturers, incentivising them to
develop software solutions to allow DS3 services to be provided and continue
on-going discussions to provide similar services in other EU markets.
§ Asset management:
o Ensuring continued good governance of assets through consolidating
portfolio, technical and commercial management services to high quality, local
providers in all markets; and
o Maintaining active communication channels with senior management of key
turbine and electrical maintenance contractors to optimise the standards of
maintenance services, maximising site availability.
§ Co-located 11MW battery project at Killala
o Battery went live in January 2022 ahead of schedule and on budget. Battery
went through successful DS3 testing with Eirgrid in February with the DS3
contract commencing on 1st April 2022;
o Actively engaged with the regulator and Eirgrid to modify the market
systems, to further improve and increase the range of services that batteries
can provide to the grid, which would unlock further revenue streams; and
o We continue to see large-scale battery technology as having a key part to
play in the energy transition and an increasingly investible opportunity.
Health and Safety
Health and safety is of paramount importance for both the Group and the
Investment Manager. The Investment Manager reviews comprehensive health and
safety reports provided by the operations managers on a monthly basis. This
information is then discussed and reviewed by the SPV directors at the monthly
asset management meeting. General safety items and industry trends are
discussed and recorded. Any relevant information is then disseminated back to
our operations managers to ensure all relevant stakeholders are as informed as
possible. Across the Portfolio, there have been in excess of 405 audits and
site inspections carried out to ensure best practice is being maintained.
The Investment Manager is pleased to report that there were no Lost Time
Incidents in the year ended 31 December 2022, with plans in place to further
enhance health and safety reporting over the course of 2023.
As the Group moves into new jurisdictions, it has focussed on assessing
location specific risks prior to commencing operations in a new country.
Environmental, Social and Governance
The Group's number one contribution to sustainability is the clean carbon free
energy it produces. The carbon savings from energy generated by the Portfolio
has increased year on year, accelerating progress towards a net zero future.
Our ESG ambitions go further than the reduction of CO(2) in the atmosphere.
The following summarises our accomplishments in 2022 as we continued to
deliver on the ESG Standards set out in our ESG Policy.
§ As our investments are exclusively focussed on renewable energy assets, the
Company is classified under Article 9 of the EU SFDR pursuant to which we have
complied with all disclosure requirements which can be found on our website
and the Appendices of the Report. The Company engaged an experienced legal
firm to support the implementation, to ensure ongoing compliance by making
disclosures and updating the Company website.
§ The Company also evolved its disclosures under TCFD in 2022 to include risk
modelling. The Company completed a full suite of physical risk modelling for
ten representative assets in the Portfolio. The chosen hazard modelling
reflects the climate related change in the level of hazard exposure of an
asset over time (2030 to 2090) relative to a historical baseline. The output
from the analysis showed that albeit a low risk, the highest physical risks to
the Portfolio were temperature extremes and fluvial flooding in the various
time horizons.
§ In 2022, the Company submitted its second full environmental data
disclosure to CDP for the reporting period of 2021. The Company will further
develop its approach to CDP for the next reporting year, pursuing continuous
improvement of our rating.
§ Using an industry leading consultant, we have for the second time
calculated our full carbon footprint in 2022, with Scope 1, 2 and 3 emissions
calculated in line with the GHG Protocol.
§ The Company proactively monitors the risk of modern slavery in its supply
chains. In line with the commitments in the Company's Modern Slavery
Statement, we completed our first Modern Slavery audits using an external
consultant on a number of major service providers. The results from the audit
showed that the service providers are in compliance with legislation and best
practice guidance.
We believe that effective management of ESG factors produces the best results
for our shareholders and other stakeholders across society. Therefore, ESG is
at the core of how we operate the business. Some highlights for 2022 include:
§ Supported a range of local community projects, committing more than €1
million to community funds across 202 projects in 2022. These include
education, sports, public amenities, community centres, charities and energy
efficiency.
§ Continuous improvement of environmental management which included external
audits by an experienced consultant on management systems and compliance.
§ It is important to us that the H&S standards we maintain are
reflected in our operations worldwide. When we start operating in a new
country, we take care to ensure legal compliance upon entry, the Investment
Manager also provides leadership to our material service providers during
operations to ensure that our standards are met.
§ The Investment Manager on behalf of the Company has completed its first
wind farm recyclability report using an expert renewables consultant. This
report has shown that wind turbine blade recycling poses the most significant
challenge to achieve a circular economy. In response to this, we have created
our first ESG questionnaire to help engage and inform the discussion with wind
turbine companies in a bid to seek change in their supply chain.
Further details of the Group's ESG initiatives can be found in the latest ESG
report, available on the Company's website www.greencoat-renewables.com
(http://www.greencoat-renewables.com) .
Acquisitions
The Company continued to execute against its growth strategy in 2022 with
value accretive opportunities emerging across Continental Europe and
consolidation of our leading position in Ireland. In aggregate, the Company
invested and committed over €1,056 million in 2022. A number of these
transactions were off market, bilateral processes, demonstrating the Group's
ability to be a trusted partner for developers and utilities.
The past 12 months have seen :
§ 353MW of net operating capacity added to the Portfolio during the period;
§ 175MW agreed to be acquired through our successful forward sale model; and
§ 65MW Butendiek acquisition signed on 29 December 2022 and completed on 21
February 2023.
Bolstering the Company's strong footprint, our team also grew significantly
and we now have a local presence across the continent with offices in Dublin,
London, Copenhagen, Madrid, Frankfurt and Amsterdam. This is a material
advantage in terms of access to deal flow and reinforces our partnerships with
major utilities and vendors across the region.
We continued to see many opportunities for value accretive investments in the
Group's target jurisdictions and during the year priced and assessed over 170
projects totalling over 6GW of installed capacity.
During the year ended 31 December 2022, the Group completed the acquisition of
nine operational assets across six individual transactions including:
§ The 24MW Soliedra wind farm, located in Soria, Castilla y Leon, Spain
comprising six GE-137 turbines. The site has been operational since May 2021
and was developed by Alfanar. The wind farm is operated on a fully merchant
basis, however has flexibility in the future to be contracted via a corporate
PPA.
§ The 67.7MW Portfolio of four wind farms from Axpo, in France including the
Arcy-Précy windfarm in the Burgundy region, the Butte de Menonville, the
Genonville wind farm and the Grande Pièce wind farms in the Centre
Val-de-Loire region. The assets all benefit from government backed, long term
fixed price contracts, with an average contracted duration of 17.5 years from
acquisition date.
§ A 50% stake in the 312MW Borkum Riffgrund 1 offshore wind farm, located in
the German exclusive economic zone in the North Sea. The asset was acquired
from Kirkbi and William Demant Invest, Orsted remains as a 50% shareholder.
The site has been operational since 2015 and benefits from a fixed price
support mechanism until September 2024 with a government backed floor price
until May 2035.
§ The 43.2MW Kokkoneva wind farm in Northern Ostrobothnia, Finland,
comprising nine Nordex N149 4.8MW turbines. Construction was overseen by Abo
Wind and the acquisition was originally signed in March 2021.
The Group's aggregation strategy in the Irish secondary market also continued
in 2022 with the acquisition of two Irish operating wind farms. The Group
continues to be the largest owner of operating wind farms in the country,
having acquired its first Irish wind farms in 2017:
§ The 37.05MW Tullahennel wind farm, located in County Kerry, Ireland
comprising thirteen GE 2.85MW turbines. The site has been operational since
September 2018 and was acquired from Apollo Global Management, Inc. The wind
farm benefits from a REFIT 2 tariff, providing inflation-linked revenue until
2032;
§ The 25.2MW Taghart wind farm located in County Cavan, Ireland comprising 7
Vestas V117 turbines. Construction was overseen by Statkraft and the
acquisition was originally signed in December 2020.
The Group has also entered 3 agreements to acquire the following assets:
§ Under a forward sale structure, the Group agreed to acquire the Ersträsk
North windfarm located in Norrbotten County, Northern Sweden. The site will
comprise 32 Enercon E-138 turbines with a generation capacity of 134.4MW.
Construction is being overseen by Enercon and the project is expected to reach
commercial operations in Q4 2023.
§ Under a forward sale structure, the Group agreed to acquire a 50% stake in
the 80.5MW South Meath solar park located in County Meath, Ireland. The
remaining 50% will be acquired through another fund also investing through the
Investment Manager. Construction will be overseen by Statkraft and the project
is expected to reach commercial operations in Q4 2023.
§ In December 2022, the Group signed an agreement to acquire 22.5% of the
Butendiek offshore wind farm, located in Germany's exclusive economic zone in
the North Sea, from Marguerite Pantheon. Developed by wpd AG, the Butendiek
offshore wind farm has a total capacity of 288MW and has been operational
since 2015. Butendiek benefits from a fixed-price FIT until December 2023.
This transaction completed on 21 February 2023, following regulatory approval.
Gearing
Aggregate Group Debt as at 31 December 2022 was €945 million, which is well
within our acceptable medium term range and below the 60% Investment Policy
limit. In 2022, we secured an additional €275 million, 5 year tranche of
fixed rate term debt which was provided by our existing lenders highlighting
the strong support the Group has from its syndicate of relationship banks and
institutional lenders.
The Group continues to benefit from a scalable debt structure. As at 31
December 2022, €750 million of the €945 million comprised 5 and 7 year
bullet term loans. This non amortising debt is either fixed rate or has an
interest rate swap in place providing a fixed weighted average cost of debt of
2.1%. The remainder of the Group's share of longer term debt is structured as
project finance debt at the SPV level.
As at 31 December 2022, the Group had drawn €100 million under the RCF,
leaving €200 million undrawn. On 13 February 2023, the Group finalised the
terms of a new €350 million 3 year RCF that provides funding flexibility for
the Group's active pipeline of investment opportunities.
Equity Issuance
In April 2022, the Company issued 251,351,351 new shares at an issue price of
112.0 cent per share raising gross proceeds of €281.5 million in an
oversubscribed and NAV accretive share placing. A portion of the net proceeds
from the equity raise were used to fully repay the Group's RCF.
Financial Performance
Despite below budget wind generation, dividend cover remained robust. Net cash
generated by the Group and wind farm SPVs was €215.0 million (gross of SPV
level debt repayment) or €201.5 million (net of SPV level debt repayment),
underpinning dividend cover of 3.2x (gross) or 3.0x (net).
Cash balances (Group and wind farm SPVs) increased by €114.7 million from
€73.5 million to €188.1 million over the year.
Group and wind farm SPV cashflows For the year ended
31 December 2022
Net()) Gross
€'000 €'000
Net cash generation 201,548 215,030
Dividends paid (66,378) (66,378)
SPV level Capex & PSO cashflow 20,494 20,494
SPV level debt repayment 0 (13,482)
Acquisitions (684,967) (684,967)
Acquisition costs (4,895) (4,895)
Equity issuance 281,514 281,514
Equity issuance costs (4,496) (4,496)
Net drawdown under debt facilities 375,000 375,000
Upfront finance costs (3,145) (3,145)
Movement in cash (Group and wind farm SPVs) 114,674 114,674
Opening cash balance (Group and wind farm SPVs) 73,464 73,464
Closing cash balance (Group and wind farm SPVs) 188,138 188,138
Net cash generation 201,548 215,030
Dividends 66,378 66,378
Dividend cover 3.0x 3.2x
The following 2 tables provide further detail in relation to net cash
generation figures of €215.0 million (gross) and €201.5million (net):
For the year ended
31 December 2022
Net Cash Generation - Breakdown
Net Gross
€'000 €'000
Revenue 330,550 330,550
Operating expenses (86,585) (86,585)
Tax / VAT (7,839) (7,839)
Other 9,670 9,670
Wind farm operating cashflow 245,796 245,796
SPV level debt interest (4,602) (4,602)
SPV level debt repayment (13,482) 0
Wind farm cashflow 227,712 241,194
Management fee (10,606) (10,606)
Operating expenses (2,324) (2,324)
Ongoing finance costs (13,264) (13,264)
VAT 31 31
Other (1) (1)
Group cashflow (26,164) (26,164)
Net cash generation 201,548 215,030
Net Cash Generation - Reconciliation to Net Cash Flows from Operating For the year ended
Activities
31 December 2022
Net Gross
€'000 €'000
Net cash flows from operating activities 101,841 101,841
Movement in cash balances of wind farm SPVs 56,793 56,793
Cash used by GR PLC for SPV Bonds (35,651) (35,651)
SPV capex & PSO cashflow (20,188) (20,188)
Repayment of debt at SPV level - 13,482
Repayment of shareholder loan investment 118,306 118,306
Finance costs (16,409) (16,409)
Upfront finance costs (cash) (3,145) (3,145)
Net cash generation 201,548 215,030
NAV as at 31 December 2022 was €1,282.5 million (112.4 cent per share),
which is an increase from the NAV as at 31 December 2021, which was €935.2
million (105.1 cent per share).
During the year, the 7.3 cent per share NAV increase is attributable to:
§ Cash generated over the period (minus dividend paid) of +13.8 cent;
§ Depreciation of the Portfolio (and other movement) of -7.0 cent;
§ Impact of short-term CPI increase of +6.2 cent;
§ Power price mid to long term assumptions of -0.4 cent; and
§ Increase of discount rates (+0.5%) of -5.3 cent.
cent per share %
NAV at 31 December 2021 105.1
Less February 2022 dividend (1.5)
NAV at 31 December 2021 (ex-dividend) 103.6
NAV at 31 December 2022 112.4
Less February 2023 dividend (1.5)
NAV at 31 December 2022 (ex-dividend) 110.9
Movement in NAV (ex-dividend) 7.3 7.0
Dividends declared with respect to the year 6.2 6.0
Total return on NAV 13.5 13.0
The share price at 31 December 2022 was 113.5 cent per share, representing a
1% premium to NAV.
Reconciliation of Statutory Net Assets to Reported NAV
As at As at
31 December 2022
31 December 2021
€'000 €'000
DCF valuation 2,037,227 1,470,117
Other relevant assets (wind farm SPVs) 5,703 20,397
Cash (wind farm SPVs) 161,297 68,419
Fair value of investments 2,204,227 1,558,933
Cash (Group) 26,841 5,045
Other relevant assets (3,951) 2,302
GAV 2,227,117 1,566,280
Aggregate Group Debt (944,660) (631,080)
NAV 1,282,457 935,200
Reconciling items 0 0
Statutory net assets 1,282,457 935,200
Shares in issue 1,141,238,938 889,887,587
NAV per share (cent) 112.4 105.1
NAV Sensitivities
NAV is equal to GAV less Aggregate Group Debt.
GAV is the sum of:
· DCF valuations of the Group's investments;
· Cash (at Group and wind farm SPV level); and
· Other relevant assets/liabilities of the Group and wind farm SPVs.
The DCF valuation of the Group's investments represents the largest component
of GAV and the key sensitivities are considered to be the discount rate used
in the DCF valuation and long term assumptions in relation to energy yield,
power prices, inflation and asset life.
The base case discount rate is a blend of a lower discount rate for fixed cash
flows and a higher discount rate for merchant cash flows. The Portfolio's
blended unlevered discount rate as at 31 December 2022 was 6.9%, which
includes a 0.5% increase in the underlying discount rates during the year.
The DCF valuation is produced by discounting the individual wind farm cash
flows on an unlevered basis. The equivalent levered discount rate (assuming
40% gearing) is approximately 9%.
Base case long term CPI assumption is 2.0% for all countries based on long
term targets of the ECB and European central banks. Higher inflation
assumptions are used for 2023.
Base case energy yield assumptions are P50 (50% probability of exceedance)
forecasts based on long term wind data and operational history. The P90 (90%
probability of exceedance over a 10 year period) and P10 (10% probability of
exceedance over a 10 year period) sensitivities reflect the future variability
of wind and the uncertainty associated with the long term data source being
representative of the long term mean.
Long term power price forecasts are provided by leading market consultants,
updated quarterly and may be adjusted by the Investment Manager where more
conservative assumptions are considered appropriate.
In 2023, contracted cash flows (underpinned by fixed electricity price per
MWh) are forecasted to contribute 92% of total cash flows (8% merchant). Over
the 2020's decade the fixed cash flows are expected to contribute 72% of total
cash flows (28% merchant). Over the life of the portfolio, contracted cash
flows are forecasted to contribute 56% of the total DCF value of the Portfolio
(44% merchant).
The base case asset life depends on the technology which is underpinned by
different design lives. As a result, the Portfolio's onshore wind assets'
lifetime is typically 30 years whilst the Portfolio's offshore wind assets'
lifetime is based on 35 years. There is no terminal value assumed at the end
of operating life.
In 2023, contracted cash flows (underpinned by fixed electricity price per
MWh) are forecasted to contribute 92% of total cash flows (8% merchant). Over
the 2020's decade the contracted cash flows are expected to contribute 73% of
total cash flows (28% merchant). Over the life of the Portfolio, contracted
cash flows are forecasted to contribute 56% of the total DCF value of the
Portfolio (44% merchant).
The sensitivity below assumes that asset life may be 5 years shorter or longer
than the base case, which is impacted by technical durability of the wind farm
components and commercial aspects of each investment, including the renewals
of site leases, planning permission and grid connection agreements.
Dividend
Total dividends of €70.5m have been declared with respect to 2022 (6.18 cent
per share). The target dividend for 2023 is expected to increase by 4% to 6.42
cent per share in line with the Company's dividend policy.
Outlook
The outlook for the Group remains very positive. As governments across Europe
pursue national deployment plans for renewables, driven by net zero targets
and heightened energy security concerns across the continent, there is a
substantial opportunity for specialist investors with the expertise and pan
European reach.
To reach the EU's net zero ambitions, which involve the phasing out of fossil
fuel generation while meeting increasing electricity demand, the region needs
to more than double its renewable generating capacity by early 2030. The past
year has seen deployment plans brought forward as national energy security
debates have intensified.
Our European pipeline is strong and provides an excellent range of investment
opportunities, benefitted by the Investment Manager's scale and longstanding
relationships with major European utilities. This has made us the partner of
choice for many of Europe's largest renewables owners, in a period where their
requirement to recycle capital is set to intensify.
Our ability to capitalise on these relationships and access to deal flow has
been strengthened by the acquisition of the Investment Manager by Schroders
plc and the Investment Manager's on the ground presence in 6 countries across
Europe.
The additional resources resulting from this relationship were especially
useful during the acquisition of the Group's first offshore wind asset, Borkum
Riffgrund 1, a significant milestone as we continue to explore the huge
opportunities presented by the European offshore wind market.
In Ireland, where the Group is already the largest owner of operating wind
farms, we expect to continue our strategy of market consolidation and see
continued drivers for expansion and value enhancement in the future.
The Group continues to deliver on its key objectives of delivering for
investors a stable dividend, strong inflation protection and robust cashflows.
We look forward to continuing to execute on our strategy of building one of
Europe's leading renewable infrastructure companies.
Board of Directors
The Directors are of the opinion that the Board comprises an appropriate
balance of skills, experience and diversity. The Board is comprised of
individuals from relevant and complementary backgrounds offering experience in
investment, financial and business skills, as well as in the energy sector,
from both an investment and a commercial perspective.
Rónán Murphy, Chairman
Rónán Murphy, aged 65, was previously Senior Partner of PwC Ireland, a position he was elected to in 2007 and was re-elected to for a further 4-year term in July 2011. Rónán joined PwC in 1980, qualifying in 1982 and was admitted to the partnership in 1992. Rónán was a member of the PwC EMEA Leadership Board from 2010 to 2015. Rónán is also a non-executive director of Icon PLC and Davy.
Rónán holds a Bachelor of Commerce degree and Masters in Business Studies
from University College Dublin and is a Fellow of the Institute of Chartered
Accountants.
Kevin McNamara, Chairman of the Audit Committee
Kevin McNamara, aged 68, has more than 25 years' experience in the energy
sector. Kevin enjoyed a long career with ESB International, including leading
the investment division of ESB International Investments. More recently Kevin
was CFO of Amarenco Solar, a solar business focussed on the Irish and French
markets and prior to this CEO of Airvolution Energy, a UK wind development
business.
Kevin holds a Bachelor of Commerce degree from University College Dublin and
is a Fellow of the Institute of Chartered Accountants.
Emer Gilvarry, Senior Independent Director
Emer Gilvarry, aged 65, was the Managing Partner of Mason Hayes & Curran
for two consecutive terms from 2008 to 2014. From 2014 until 2018, Emer took
over the role of Chair of the firm. She is also a former Head of the firm's
Litigation Group (2001 to 2008). Emer is a former Board member of Aer Lingus.
Emer is also a non-executive director of Kerry Group PLC and a Patron of
Chapter Zero (a chapter for the education of non-executive directors in
sustainability).
Emer holds a Bachelor of Law degree from University College Dublin (BCL).
Marco Graziano
Marco Graziano, aged 65, has more than 35 years of worldwide experience in the
energy sector, with a demonstrated track record of driving growth and
profitability managing large organisations. He served as both executive and
non-executive director in a number of companies in Europe, Africa, Middle East
and Latin America. After many years with the French multinationals Alstom and
Areva, more recently he was President of South Europe, MENA and LATAM for
Vestas Wind Syst.
Marco holds a doctorate degree in mechanical engineering from Genoa
University.
Eva Lindqvist
Eva, aged 65, has more than 30 years extensive international experience in
telecoms and infrastructure, having worked for more than 30 years across these
sectors. She spent the majority of her career at Ericsson where she held a
number of senior management positions. In 2007, she was appointed CEO of
Xelerated Holdings AB, an international technology company specializing in
semi-conductors, where she held the position until 2011. Since then, she has
held a number of Chair and non-executive director roles, including Bodycote
plc, Keller Group plc and Tele2 AB.
Eva graduated with a Master of Science in Engineering and Applied Physics from
the Linkoping Institute of Technology and holds an MBA from the University of
Melbourne, along with being a member of the Royal Swedish Academy of
Engineering Sciences.
Other Irish Public Company Directorships
In addition to their directorships of the Company, the below Directors
currently hold the following Irish public company directorships:
Rónán Murphy Icon PLC
Emer Gilvarry Kerry Group PLC
The Directors have all offered themselves for re-election and resolutions
concerning this will be proposed at the AGM.
Conflicts of Interest
The Directors have declared any conflicts or potential conflicts of interest
to the Board of Directors which has the authority to approve such situations.
The Company Secretary maintains the Register of Directors' Conflicts of
Interests which is reviewed quarterly by the Board and when changes are
notified. The Directors advise the Company Secretary and the Board as soon as
they become aware of any conflicts of interest. Directors who have conflicts
of interest do not take part in discussions which relate to any of their
conflicts.
Directors' Report
The Directors present their Annual Report, together with the consolidated
financial statements of Greencoat Renewables PLC for the year ended 31
December 2022.
Principal Activity and Business Review
A detailed discussion of the individual project performance and a review of
the business in the period are covered in the Investment Manager's Report.
Results for the Year
The consolidated financial statements for the financial year ended 31 December
2022 are set out in detail including the results for the year which are set
out in the Consolidated Statement of Comprehensive Income.
Future Developments
The Group's outlook is discussed in the Investment Manager's Report.
Investment Objective
The Company's aim is to provide attractive risk-adjusted returns to
shareholders through an annual dividend (target of 6.42 cent per share for
2023) that increases progressively whilst growing the capital value of its
investment portfolio. The Company is targeting an IRR of 7% to 8 % (net of
expenses and fees) on the issue price of the ordinary shares to be achieved
over the longer term via active management of the investment portfolio,
reinvestment of excess cash flows and the prudent use of gearing. The Company
intends to hold assets in its investment portfolio for the long term.
Investment Policy
The Group intends to increase its portfolio of renewable energy generation
assets across Continental Europe while maintaining a continued focus on
Ireland, with the 60% minimum GAV requirement for investments in Ireland no
longer applying.
The Group has used debt facilities to make additional investments in the year.
This has enhanced the Group's attractiveness to sellers since execution risk
is greatly diminished, with the Group effectively being a cash buyer. The
Group will continue to use debt facilities to make further investments.
The Group will look to repay its drawn revolving credit debt facility by
either raising capital in the equity markets at appropriate times or
introducing additional term debt on favourable terms in order to refresh
overall debt capacity. While debt facilities are drawn, the Group benefits
from an increase in investor returns because borrowing costs are below the
underlying return on investments.
Group Structure and Share Capital
The Company is incorporated in the Republic of Ireland. The Group is wholly
independent and is not tied to any particular utility or developer. All of the
ordinary shares in the Company are quoted on the Euronext Growth Market of
Euronext Dublin and on the AIM of the London Stock Exchange. The Group
comprises of the Company, Holdco, Holdco 1 and Holdco 2. Holdco invests in the
underlying portfolio companies and Holdco 2 is the borrowing entity of all
third-party debt facilities at Group level.
The Company has one class of ordinary shares, which carry no rights to fixed
income. Shareholders are entitled to all dividends paid by the Company and, on
a winding up, provided the Company has satisfied all of its liabilities, the
shareholders are entitled to all of the surplus assets of the Company.
All shareholders have the same voting rights in respect of the share capital
of the Company. Shareholders are entitled to attend and vote at general
meetings of the Company and, on a poll, to one vote for each ordinary share
held.
The rights and obligations to the ordinary shares are set out in the Company's
articles of association which are available on the Company's website:
www.greencoat-renewables.com (http://www.greencoat-renewables.com) .
Authority to Purchase Own Shares
The current authority of the Company to make market purchases of up to 14.99%
of its issued share capital expires at the conclusion of every AGM. A special
resolution will be proposed at the forthcoming AGM seeking renewal of such
authority until the date of the next AGM (or the date which is 15 months after
the passing of such resolution, whichever is earlier). The purchases will only
be made for cash at prices below the estimated prevailing NAV per share and
where the Board believes such purchases will result in an increase of the NAV
per share. Any shares repurchased under this authority will either be
cancelled or held in treasury at the discretion of the Board for future resale
in appropriate market conditions.
The Directors believe that the renewal of the Company's authority to purchase
shares, as detailed above, is in the best interests of shareholders as a whole
and therefore recommend shareholders to vote in favour of the special
resolution.
Discount Control
As part of the Company's discount control policies, the Board intends to
propose a continuation vote by shareholders if the share price trades at a
significant discount to NAV. If in any financial year, the shares have traded
on average, at a discount in excess of 10% or more to the NAV per share in any
financial year, the Board will propose a special resolution at the Company's
next annual general meeting that the Company cease to continue in its present
form. Notwithstanding this, the Board could consider buying back its own
shares in the market if the share price is trading at a material discount to
NAV, providing it is in the interests of the shareholders to do so.
Major Interests in Shares
Significant shareholdings as at 31 December 2022 are detailed below:
Shareholder Ordinary shares held %
31 December 2022
BlackRock Inc 10.1%
KBI Global Investors 8.0%
FIL Investment International 6.6%
Newton Investment Management 5.7%
Brewin Dolphin Wealth Management 5.1%
Abrdn Standard Capital 4.9%
Irish Life Investment Managers 4.8%
Foresight Group 4.3%
M&G Investment Management 3.5%
Davy Stockbroker 3.2%
Companies Act 2014 Disclosures
The Directors disclose the following information:
§ the Company's capital structure is detailed in note 15 of the consolidated
financial statements and all shareholders have the same voting rights in
respect of the share capital of the Company. There are no restrictions on
voting rights that the Company is aware of, nor any agreement between holders
of securities that result in restrictions on the transfer of securities or on
voting rights;
§ there are no securities carrying special rights with regard to the control
of the Company;
§ the Company does not have an employees' share scheme;
§ the rules concerning the appointment and replacement of Directors are
contained in the Company's Articles of Association and the Companies Act 2014;
and
§ there are no agreements between the Company and its Directors providing for
compensation for loss of office that may occur because of a takeover bid.
Key Performance Indicators
The Board believes that the key metrics detailed within the At a Glance
section, which are typical for renewables infrastructure investment funds,
will provide shareholders with sufficient information to assess how
effectively the Group is meeting its objectives.
Ongoing Charges
31 December 2022 31 December 2021
€000 % €000 %
Management fee 11,913 1.00% 7,944 1.00%
Directors' fees 358 0.03% 325 0.04%
Ongoing expenses 2,082 0.18% 1,182 0.16%
Total 14,353 1.21% 9,451 1.21%
Weighted Average NAV 1,187,324 778,777
Based on the 31 December 2022 NAV of €1,282 million, the total ongoing
charges ratio is 1.12% of NAV. Assuming no change in NAV, the 2023 ongoing
charges ratio is expected to be 1.20%.
The Investment Manager is not paid any performance or acquisition fees.
Directors' Indemnity
Directors' and Officers' liability insurance cover is in place in respect of
the Directors. The Company's Articles of Association provide, subject to the
provisions of Ireland and UK legislation, an indemnity for Directors in
respect of costs which they may incur relating to the defence of any
proceedings brought against them arising out of their positions as Directors,
in which they are acquitted, or judgement is given in their favour by the
Court.
Except for such indemnity provisions in the Company's Articles of Association
and in the Directors' letters of appointment, there are no qualifying
third-party indemnity provisions in force.
Corporate and Social Responsibility
Environmental, Social and Governance
The Group invests in renewable assets and the environmental benefits of
renewable energy are proven. As the largest owner of wind farms in Ireland,
the Company continues to prove the viability of renewable energy as a robust
sector for investment.
The Company is proud to be playing a critical role in helping to achieve key
renewable energy targets as well as contributing to the broader net zero
economy. The Company recognises that its long term success is tied to the
effective management of ESG factors associated to its business, including
those that are important to its shareholders and stakeholders.
Although the non-executive Board has overall responsibility for the activities
of the Company and its investments, the day-to-day management of the business
is delegated to the Investment Manager. This includes responsibility for ESG
matters. In collaboration, the Board and the Investment Manager assess how ESG
should be managed and the Company has developed its ESG policy in accordance
with the Investment Manager's ESG policy.
The policies in place at the Investment Manager outline the Group's approach
to responsible investing, as well as the environmental standards which it aims
to meet. Responsible investing principles have been applied to each of the
investments made, which require the Group to make reasonable endeavours to
procure the ongoing compliance of its investee companies with its policies on
responsible investment.
The Company's full ESG policy and its ESG report are available on the
Company's website: www.greencoat-renewables.com
(http://www.greencoat-renewables.com) .
Task Force on Climate Related Disclosures ("TCFD")
TCFD was established in 2015, with the goal of developing consistent
disclosure standards for companies, in order to enable investors and other
stakeholders to assess the companies' climate related financial risk.
The premise of such climate related financial disclosures is that financial
markets need clear, comprehensive, high-quality information on the impacts of
climate change. This includes the risks and opportunities presented by rising
temperatures, climate related policy and emerging technologies in a changing
world.
The Company made its first disclosure under TCFD in its 2020 Annual Report.
Having officially become a supporter of the TCFD recommendations in 2021, the
Company continues to evolve and improve its implementation of such
recommendations. The Investment Manager has a dedicated ESG Committee and TCFD
working group to manage the implementation of TCFD disclosures.
The Company remained a partner to the 'Ireland TCFD Supporters Campaign' in
2022. This initiative was created by Sustainable Finance Ireland of which the
Company is a member. It is also supported by the Department of Finance, Irish
Road to COP26 initiative and the UN Environment Programmer's Finance
Initiative. The programme included corporate events, a TCFD implementation
workshop and formal TCFD training throughout 2021 and 2022. The learnings from
this initiative will be incorporated into the development of the TCFD strategy
for 2023.
The core elements of these disclosures, as recommended by the TCFD, comprise
of 4 thematic areas.
1. Governance
As discussed in the Corporate Governance Report, the Company's approach to
governance is to manage risk through robust processes and controls and to
ensure best practices are in place to support its growing business. It does
this through regular meetings between the Board and the Investment Manager
where risk management of the Company and its investments are considered and
discussed, including ESG and climate related risks and opportunities. A formal
risk matrix is maintained by the Investment Manager and reviewed and approved
by the Board on an annual basis. The Board and Investment Manager also
regularly discuss developments in European energy policy, weather patterns and
how the Company's strategy can further support the energy transition.
The Audit Committee also consider the Company's climate related disclosures in
its Annual Report and Financial Statements.
In addition, the Investment Manager has its own ESG committee that meets
regularly to discuss ESG and climate related risks relating to the Group and
other funds it manages. This committee has implemented an ESG Policy that
looks to establish best practice in climate related risk management, reporting
and transparency. Representatives from the Investment Manager also sit on the
Boards of the SPV companies, which meet on a regular basis to discuss ESG and
climate related risk management.
2. Strategy
As a significant investor in renewables energy infrastructure with investments
in Ireland, France, Finland, Germany, Sweden and Spain, the Group's growth has
been achieved through the acquisition and operation of renewable energy
generation assets with stable revenues backed predominately by government
support mechanisms.
The Company's strategy and Investment Policy of acquiring operating capacity
in the secondary market, enables developers and utilities to recycle capital,
facilitating further renewable build-out and thus plays a significant role in
increasing generating capacity.
The Company considers that the decarbonisation of the economy will present
significant investment opportunity and the size of the Company's growth will
be related to the success of the sector and the engagement of its
stakeholders.
The Company's strategy is well aligned for the transition to a low carbon
economy. A description of climate related risks and opportunities is
considered below. The material risk of markets includes scenario modelling and
results of the financial impact to the valuation of the Company.
3. Risk Management
The Board and the Investment Manager monitor climate related risks and their
impact on the Group. This includes both high transition and high physical
risks. The Company's business model is well positioned to take advantage of
the transition to a low carbon economy. More extreme weather patterns arising
from global warming have the capacity to damage infrastructure in general,
including above ground grid infrastructure. However, it is considered unlikely
that damage will be caused to generating equipment that is designed to
withstand changing weather systems. Appropriate insurance against property
damage and business interruption is held for any such eventuality.
As a full scope UK AIFM, the Investment Manager has established a Risk
Management Committee that meets on a quarterly basis to discuss, amongst other
matters, the risk framework of the Group and investee companies including
processes for identifying, assessing and managing climate related risks.
To ensure strong performance, the Group reinforces its specific oversight on
environmental and social issues with a range of activities, including:
§ appointing at least one director from the Investment Manager to the boards
of SPVs companies, to ensure monitoring and influence of both financial and
ESG performance;
§ carrying out due diligence to ensure that any new outsourced service
providers are reputable and responsible organisations;
§ carrying out due diligence during the acquisition of new renewable projects
in accordance with the Investment Manager's established procedures and ESG
Policy and in compliance with the AIFMD Due Diligence Policy; and
§ complying with all applicable anti-bribery and anti-corruption and
anti-money laundering laws and regulations and implementing policies to ensure
this performance is in line with the policies of the Investment Manager.
The Investment Manager's Investment Committee comprises experienced members of
the Investment Manager. Whilst making investment decisions, due consideration
is given to climate related risks as well as to opportunities identified
during due diligence. A formal ESG checklist is also considered by the
Investment Committee in the approval process of any new investment.
Please see Section 3.1 for Risks and Opportunities relating to the portfolio.
4. Metrics and Targets
The Company considers its climate related metrics in the wider context of its
sustainability performance in accordance with the ESG Policy which includes:
§ renewable energy generation;
§ CO(2) savings;
§ equivalent no. of homes powered;
§ number of environmental habitat management plans;
§ number of internal and external health and safety audit visits;
§ amount invested in community funds or social projects in the reporting
year;
§ appropriate internal controls / audit system/ board level oversight at
Company level;
§ appropriate internal controls / audit system / board level oversight at SPV
level; and
§ policies in place at SPV Level (Health and Safety, Anti-Bribery and
Corruption and Conflicts).
The third party operations managers' report to the Investment Manager on a
monthly basis on a standard set of KPIs and qualitative factors, such as
health and safety compliance of O&M providers, compliance with relevant
laws and regulations, local community engagement and habitat management, where
relevant. These KPIs are disclosed annually in the Company's ESG report. Any
material ESG incidents are communicated to the Company's Board, where it is
assessed and decided whether to communicate to investors. KPI data is sourced
directly from the SPVs and supplemented by specialist external advisers such
as environmental consultants, as required.
Renewable generators avoid carbon dioxide emissions on a net basis at rates of
approximately 0.01 - 0.35t CO(2) per MWh. Given the size of the Group's
investment portfolio in various geographies at 31 December 2022, the
portfolio's CO(2) emission avoided will be in excess of 0.7 million tonnes per
annum. The portfolio is also generating sufficient electricity to power over
0.6 million homes per annum.
The Company's Scope 1, Scope 2 and Scope 3 greenhouse gas emissions are
disclosed below:
Year ended Year ended
Disclosure 31 December 2022 31 December 2021
Scope 1 - direct emissions (tonnes CO(2)) 60 19
Scope 2 - indirect emissions (tonnes CO(2)) 938 383
Scope 3 - indirect emissions (tonnes CO(2)) 214,261 126,098
Total Scope 1, 2 and 3 emissions (tonnes CO(2)) 215,259 125,756
Scope 2 - indirect emissions, market based (tonnes CO(2)) 472 41
These climate related risk and further metric disclosures can be found in the
Company's ESG report available on the Company's website:
www.greencoat-renewables.com (http://www.greencoat-renewables.com) .
Targets
The Board and the Investment Manager will continue to develop the Company's
approach to TCFD recommendations in the coming year. This will include:
§ researching and keeping updated on TCFD developments, including the TCFD
Status Reports;
§ further developing our processes for identifying and incorporating climate
related risks and opportunities into the Company's risk matrix;
§ alongside leading industry bodies, developing an appropriate scenario
modelling methodology.
Transition Risks
Policy and Legal
§ increased pricing of greenhouse gas emissions;
§ enhanced emissions reporting; and
§ mandates on and regulations on existing products and services.
Since 2017, the portfolio has saved millions of tonnes of CO(2) from being
released into the atmosphere. An increase of pricing in greenhouse gas
emissions would have a positive impact on the business model. The Company has
voluntarily reported on emissions through CDP since 2020 (see website and the
Appendices of the Report). It has also made disclosures under TCFD since 2020
and in accordance with SFDR since 2021. The Company is a member of the UK AIC
and applies its Code of Corporate Governance to ensure best practice The
Company keeps abreast of regulations and industry best practice with support
from expert consultants.
Technology
§ substitution of existing products and services with lower emissions
options;
§ unsuccessful investment in new technologies; and
§ costs to transition to lower emissions technology.
Electrification is a key enabler in the transition to a low carbon economy. As
the Group forecasts increased electricity demand in the markets that it
operates in, the Group is well positioned to take advantage of the move to
lower emission products and services. The Group has been in operation since
2017 and has a proven track record across the EU in investment in renewable
technologies. The Investment Manager continues to track the technical maturity
and the associated costs of new renewable technologies.
Market
§ long term power price;
§ uncertainty in market signals; and
§ changing customer behaviour.
The Board and the Investment Manager believe that the key factor that could
impact the Company in the transition to a lower carbon economy is the
variability of long term prices for wholesale electricity. In a lower carbon
economy, where considerable buildout of renewable generation capacity will be
required, there is a risk that the renewable energy power price could be
negatively impacted. This will depend on the pace of renewable deployment and
any future changes to electricity market design.
In a scenario where global temperature increases are limited to only 1.5(o)C
to 2.0(o)C and we are operating in a net zero carbon environment, under our
scenario analysis, power price forecasts could be seen to fall below what is
currently included in the Company's NAV, with a potential financial impact of
24 cent per share reduction.
A large proportion of the Group's revenues are contracted for up to 15 years
in stable economies. As the Company's growth strategy is implemented, all new
jurisdictions are risk assessed during the acquisition process. This includes
government policy, regulatory and political factors.
Physical risks
In 2022, the Company engaged with a number of consultants who offer risk
modelling services and evaluated two modelling techniques for the Portfolio.
After a successful pilot programme, the Company then completed a full suite of
physical risk modelling for ten representative assets in the Portfolio. The
chosen hazard modelling reflects the climate related change in the level of
hazard exposure of an asset over time (2030 to 2090) relative to a historical
baseline. Each hazard is associated with a specific metric, which defines how
the hazard is measured and expressed. The data for all the hazard metrics come
from a variety of climate models and other data sources.
The Risk Hazards are itemised in the table below:
Temperature Extremes Coastal Flooding Fluvial Flooding
Tropical Cyclone Wildfire Water Stress
The modelling incorporates scenarios based on the Representative Concentration
Pathways (RCPs) from the International Panel on climate change (IPCC). Four
RCPs are included in the IPCC AR5: RCP8.5, RCP6, RCP4.5 and RCP2.6. The RCPs
were chosen to represent a broad range of climate outcomes.
The analysis quantifies the direct financial impacts caused by climate change
in a metric known as Modelled Average Annual Loss (MAAL); this is the sum of
climate related expenses, decreased revenue and/or business interruption. It
is reported annually for each decadal period. As the name suggests, the output
reports potential financial losses, to provide decision relevant insights in
like terms as other key financial metrics. The output from the analysis showed
that albeit a low risk, the highest physical risks to the portfolio were due
to temperature extremes and fluvial flooding in the various time horizons.
Physical risks are mitigated as below:
· The development stage of each project includes a technical assessment
of the key risks including location and site suitability. The renewables
equipment is fully compliant with CE certification and is chosen based on
their suitability for the location including high winds, temperatures and
other climate related risks. Appropriate insurance against property damage and
business interruption is held for any such eventuality.
· Renewable energy generation is subject to inter-annual variations
that have a direct impact to annual revenues. Before investment, the
Investment Manager carries out extensive due diligence using historical
resource data that underpins the long term business case.
· In addition, the Investment Manager plays an active role in managing
the portfolio to maximise value. This includes operational energy assessments,
six monthly expert analysis, forestry felling and turbine upgrades.
Opportunities
Energy Source
§ use of lower emission sources of energy;
§ use of supportive policy for incentives;
§ use of new technologies;
§ participation in the carbon market; and
§ shift towards de-centralised energy production.
Across Ireland and its targeted jurisdictions in Continental Europe, the
Company expects over 400GW of renewable capacity to be in operation by 2030.
In 2022, the Company continued to acquire new sites, including the acquisition
of wind farms in Ireland, Germany, France, Finland and Spain. In addition, the
Group entered into forward sale agreements to acquire Erstrask North, a
134.4MW onshore wind farm located in Sweden and a 50% stake in South Meath, an
80.5MW solar farm located in Ireland. The Company continues to see many value
accretive opportunities for growth in the Irish and Continental European
secondary market, benefiting from its execution track record, relationships
with developers and potential asset vendors and the ability to transact at any
scale.
Products and Services
§ development and/or expansion of low emission goods and services;
§ development of new products or services through R&D and innovation;
§ ability to diversify business activities; and
§ shift consumer preferences.
The Company considers that the decarbonisation of the EU economy will present
significant investment opportunities and that the Company's growth will be
related to the success of the sector and the engagement of its stakeholders.
The Company anticipates a growing number of large corporate entities seeking
new products and services including long term PPA arrangements to meet their
energy obligations.
Markets
§ access to new markets, assets and locations; and
§ use of public sector incentives.
In addition to Ireland, the Company can invest in Belgium, Denmark Finland, France, Germany, the Netherlands, Norway, Portugal, Sweden and Spain in line with the Company's Investment policy. Continental Europe provides further diversification of intra year generation volumes and localised risks. It also gives the Company access to a considerably larger pool of assets from which to seek best risk-adjusted returns. Many of the operational assets across the continent are owned by parties with whom the Investment Manager has strong existing relationships. The Company's position is further improved by the absence of currency risk when acquiring assets in Europe. Over time, the Company aims to achieve diversification principally through investing in a growing portfolio of assets across a number of distinct geographies and a mix of renewable energy technologies
Employees and Officers of the Company
The Company does not have any employees but instead engages experienced third
parties to operate the assets that it owns, therefore employee policies are
not required.
Diversity
The Group's policy on diversity is detailed in the Corporate Governance
Report.
Principal Risks and Risk Management
In the normal course of business, each investee company has a rigorous risk
management framework with a comprehensive risk register that is reviewed and
updated regularly and approved by its board.
The Board maintains a risk matrix considering the risks affecting both the
Group and the investee companies. This risk matrix is reviewed and updated
annually to ensure that procedures are in place to identify, mitigate and
minimise the impact of risks should they crystallise. The risk matrix is also
reviewed and updated to identify emerging risks, such as climate related risks
and to determine whether any actions are required. This enables the Board to
carry out a robust assessment of the risks facing the Group, including those
principal risks that would threaten its business model, future performance,
solvency or liquidity.
The risk appetite of the Group is considered in light of the principal risks
and their alignment with the Company's investment objective. The Board
considers the risk appetite of the Group and the Company's adherence to the
Investment Policy in the context of the regulatory environment taking into
account, inter alia, gearing and financing risk, resource risk, the level of
exposure to power prices as well as environmental and health and safety risks.
As it is not possible to eliminate risks completely, the purpose of the
Group's risk management policies and procedures is not to eliminate risks, but
to reduce them to ensure that the Group is adequately prepared to respond to
such risks and to minimise any impact if the risk develops.
The geographical spread of assets across the Portfolio in Ireland and Continental Europe ensure that there are benefits from a diversified renewables resource and spreads the exposure to a number of potential technical risks associated with grid connections and with local distribution and national transmission networks. In addition, the Portfolio includes six different turbine manufacturers, which diversifies technology and maintenance risks. Finally, each site contains a number of individual turbines, the performance of which is largely independent of other turbines.
The key risks to the performance of the Group, identified by the Board, are
detailed below.
Investment Manager Risk
The ability of the Group to achieve its investment objective depends heavily
on the experience of the management team within the Investment Manager and
more generally on the Investment Manager's ability to attract and retain
suitable employees. The sustained growth of the Group depends upon the ability
of the Investment Manager to identify, select and execute further investments
which offer the potential for satisfactory returns.
The Investment Management Agreement includes key man provisions which would
require the Investment Manager to employ alternative employees with similar
experience relating to investment, ownership, financing and management of
renewable energy projects should, for any reason, any key man cease to be
employed by the Investment Manager. The Investment Management Agreement
ensures that no investments are made following the loss of key men until
suitable replacements are found and there are provisions for a reduction in
the investment management fee during the loss period. It also outlines the
process for their replacement with the Board's approval. The key men are also
shareholders in the Company.
Regulatory Risk (Marketing)
The Investment Manager is the UK authorised AIFM of the Company, an Irish
unauthorised AIF. As a non EU AIFM, the Investment Manager manages the AIF,
however it can not avail of the marketing passport under AIFMD and relies on
the national private placement regimes/marketing requirements in place in
certain relevant jurisdictions. On 7 January 2021, the Central Bank of Ireland
confirmed that the Investment Manager can market the Company to Irish
professional investors with effect from 1 January 2021. The Investment Manager
can also market the Company to UK professional investors under the
jurisdiction of the FCA in the UK.
The Board regularly discusses regulatory risks and the Investment Manager
reports to it on AIFMD compliance matters. The Investment Manager also
consults with its own and the Company's legal adviser, as well as the
Company's NOMAD in relation to its plans to ensure that the Company can
continue to be AIFMD compliant.
Financing Risk
The Group will finance further investments either by borrowing or by issuing
further shares. The ability of the Group to deliver its target returns and
consequently to realise expected NAV growth and/or service its dividend as per
its dividend policy, is dependent on access to debt facilities and equity
capital markets. There can be no assurance that the Group will be able to
borrow additional amounts or refinance on reasonable terms or that there will
be a market for further shares.
Inflation Risk
As a result of the demand side of the economy recovering post pandemic and the
war in Ukraine, this has led to an increase in inflation, well above the
target range of the European Central Bank. To mitigate rising prices, central
banks have increased interest rates. This rise in interest rates may make the
listed infrastructure asset class less attractive to investors who are after a
stable yield. As a majority of the revenues and costs of the investee
companies are either indexed or correlated to CPI inflation, the Investment
Manager believes this provides a degree of mitigation against a rise in
interest rates due to inflation.
Electricity Market Regulation Risk
As the renewable energy market has matured and costs of new capacity have
reduced, member states have generally revised their supports for the sector to
reduce the benefits available to new renewable energy generation projects.
However, in order to maintain investor confidence, Ireland (and other relevant
countries) have to date largely ensured that benefits already granted to
operating renewable energy generation projects (which the Group is invested
in) are exempt from future regulatory change adversely affecting those
benefits. The exception to this is the recent EU wide cap on the price
received by renewable generators which is further commented on below.
If these policies were to change, such that subsidy supports presently
available to the renewable energy sector were to be reduced or discontinued,
it could have a material adverse effect on the business, financial position,
results of operations and future growth prospects of the Group, as well as
returns to investors.
The EU recently passed Council Regulation 2022/1854 which is designed to limit
or cap market revenues from non gas generation, introduce a solidarity tax on
fossil fuel producers and introduce electricity demand reduction measures
across the EU. Capping market revenues will have an impact on renewable
generators. EU countries are implementing this in their respective markets.
The proposed EU cap should not exceed €180/MWh and is a temporary measure
for the period 1st December 2022 until 30th June 2023. However, it may be
extended if power prices across the EU remain high. Many EU countries,
including Ireland, have implemented a price cap of less than €180/MWh.
Ireland, for example, is planning to cap revenues at €120/MWh. Spain has
introduced a claw back mechanism which reduces the price received. Generally,
the caps are either allowing generators with support levels above the cap to
retain their level of support until the end of the relevant subsidy support
scheme or are below the cap. The purpose of the cap is to limit potential
excessive revenues or profits for renewable generation plants when market
prices have increased significantly more than any cost increase. Prolonged or
reduced caps could have a material adverse effect on the business.
Some markets, such as Finland, are exploring whether to introduce a tax on
renewable generators instead of a price cap. Depending on the level of tax and
how it is implemented, this could have a material adverse effect on the
business.
The Investment Manager is engaging with regulators directly or through
industry bodies and partners to ensure these measures are implemented in a way
that minimises the impact on the business.
The EU is proposing as a longer term measure to review the electricity market
design to address, amongst other matters, increased renewables penetration and
associated market pricing. The Investment Manager is monitoring the process
and engaging with relevant parties to minimise any impact on the Portfolio.
The electricity market redesign could have a material adverse effect on the
business.
Electricity Price Risk
A number of factors could cause a decline in the market price of electricity
which could adversely affect the investee companies' revenue and financial
condition. Similarly, a decline in the costs of other sources of electricity
generation, such as fossil fuels or nuclear power, could reduce the wholesale
price of electricity and thus the price achieved for electricity generated by
wind and solar.
Since 1995, Ireland has provided operating wind farms with a supportive
regulatory framework (REFIT 1 and REFIT 2) offering an inflation-linked floor
price up to 15 years, while allowing wind farms to capture merchant prices
above the floor. Under REFIT, wind farms are provided with pricing certainty
and no downside exposure to electricity price, as the REFIT price is
c.€83/MWh whereas the 2022 wholesale electricity price was c.€226/MWh.
Under the French subsidy tariff mechanism established in 2000, a producer can
sell its whole production to state companies at a regulated price under a FIT
framework. The FIT offers a fixed price up to 20 years partially linked to
inflation. The level of inflation linkage, the duration of the FIT contract,
as well as the initial reference price are subject to the vintage of the FIT
contract. The average FIT tariff of the French Group's assets is c.€83/MWh
in 2022.
In Sweden and Finland, the market does not typically attract subsidies.
Electricity is typically traded through the Nord Pool, which is a leading
European power market, that offers day ahead and intra-day markets across 16
European countries. The average market price for electricity in the Nord Pool
SE1 region (location of Erstrask South) was c.€59/MWh in 2022 and in Finland
average market prices have been over €150/MWh.
Germany is a mature market for renewable electricity and was one of the first
countries to implement support payments towards renewables, with the
first-generation EEG (Erneubare Energie Gesetz, Renewable Energy Act) in 2000.
Most projects in the market initially benefit from support under the EEG
program with many older projects now exiting and moving into the merchant
market or other PPA. The average market price in Germany for 2022 was
€235/MWh.
Spain is one of the leading countries in Europe in terms of renewables
penetration with over 45% of electricity produced coming from renewables in
2021. Spain was one of the first markets to implement measures to limit the
impact of high gas prices in 2022. The average pool price was €168/MWh in
2022.
When operating outside of the respective contracted subsidy periods, the Group
may trade in the relevant electricity market on a merchant basis and its
financial performance is therefore subject to the wholesale power price
prevalent at the time. The Group may also enter into utility, baseload or
corporate PPAs. Typically, these PPAs introduce some deliverability risk where
the project would have to buy power in the market at times when production is
low. This subjects the project to price risk where prices are higher than the
PPA strike price.
The Ukraine war has driven short term prices and forward price curves for the
next two years up significantly in 2022 leading to the price cap measures
outlined above. A difference in the achieved wholesale price of electricity
in the long term to that which is expected could have a material adverse
effect on the business, financial position, results of operation and future
growth prospects of the Group, as well as returns to investors.
Wind and Solar Resource
The investee companies' revenues are dependent upon wind and solar conditions,
which will vary across seasons and years within statistical parameters. The
Group does not have any control over the wind and solar resource and has
designed its dividend policy such that it can withstand significant short-term
variability in production relating to wind and solar. Before investment, the
Group carries out extensive due diligence using relevant historical wind and
solar data. Typically, the business seeks to acquire assets with proven
operating data to reduce the renewables resource risk uncertainty.
When acquiring wind or solar farms that have recently become operational, only
limited operational data is available. In these instances, a comprehensive due
diligence exercise will be carried out on the wind/solar assessment. The
acquisition agreements with the vendors of these projects may include an
''energy true-up'' which would apply when at least one year's operational data
has become available, or the acquisition price could be adjusted to reflect
resource uncertainty. Under this energy true-up, the net load factor may be
reforecast based on all available data and the purchase price may be adjusted,
subject to de minimis thresholds and caps.
Grid Risk
As more renewable energy is added to the grid, there is a risk of higher
levels of dispatch down (constraints and curtailment) and price
cannibalisation during periods of high wind or solar resource. The grid
systems need to be developed to cater for increased renewable penetration
levels and this is a key part of the EU's plans to support renewables
deployment. In certain jurisdictions including Ireland, Germany and Spain,
higher levels of dispatch down are already becoming more prevalent. Where
dispatch down is not fully compensated, this could have a material adverse
effect on the business.
Asset Life Risk
In the event that the renewable technology does not operate for its expected
life or incurs higher than expected operating costs, this could have a
material adverse effect on the business. Many of the investee companies have a
planning permission shorter than the assumed life of the asset and while it is
expected that an extension to planning will be available, failure to achieve
such extension could have a material adverse effect on the business. Some of
the initial projects acquired by the Group have leases shorter than the asset
life assumed by the Investment Manager and while it is expected that lease
extensions or renewals will be obtained, failure to achieve such extension
could have a material adverse effect on the business.
The Investment Manager performs regular reviews and site visits to ensure that
maintenance is performed on all assets across the Portfolio. Regular
maintenance ensures the projects are in good working order, consistent with
their expected lifespans.
Environmental and Social Governance (ESG) and Health and Safety Risk
The physical location, operation and maintenance of wind and solar farms may,
if inappropriately assessed and managed, pose health and safety risks to those
involved. Operation and maintenance may result in physical injury or
industrial accidents, particularly if an individual were to fall from height
or be electrocuted. If an accident were to occur in relation to one or more of
the Group's investments and if the Group were deemed to be at fault, the Group
could be liable for damages or compensation to the extent such loss is not
covered by insurance policies. In addition, adverse publicity or reputational
damage could ensue.
The Board reviews health and safety at each of its scheduled Board meetings
and Kevin McNamara serves as the appointed Health and Safety Director. The
Group engages an independent health and safety consultant to ensure the
ongoing appropriateness of its health and safety policies.
Wind and solar farms have the potential to cause environmental hazards or
nuisances to their local human populations, flora and fauna and the
surrounding natural environment. Projects can receive complaints relating to
specific environmental issues, or compliance with planning consents and other
relevant permits. Separately, the planning regulations in Ireland historically
included a planning exemption for underground grid connections. There have
been challenges to the basis on which this exemption has been determined and
there is currently uncertainty around how the industry will resolve this
challenge. The Group continues to monitor any development, taking legal advice
where necessary and addresses these as and when required.
Wind and solar farms have potential to have a negative social and
environmental impact through the manufacturing and supply chain process or
locally through the management of the projects. The Investment Manager has an
ESG plan and policy to mitigate these risks. The Company produces an annual
ESG report to measure and report on key initiatives and performance indicators
to manage this risk.
Going Concern and Financial Risk
As further detailed in note 1 of the financial statements, the Directors have
a reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for at least 12 months from the
date of approval of this report.
As at 31 December 2022, the Group had net current liabilities of €81 million
(2021: €1 million) and had cash balances of €27 million (2021: €5
million). This excludes cash balances within investee companies of €161
million (2021: €68 million), which are sufficient to meet current
obligations as they fall due. The significant net current liabilities position
of the Group at 31 December 2022 is due to the Group's RCF being due for
repayment on 3 April 2023 (within 12 months of the year end) and therefore
being classified as a current liability. The Group entered into a new RCF on
13 February 2023.
The Directors have reviewed Group forecasts and projections which cover a
period of not less than 12 months from the date of this report, taking into
account foreseeable changes in investment and trading performance, which show
that the Group has sufficient financial resources. On the basis of this review
and after making due enquiries, the Directors have a reasonable expectation
that the Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they continue
to adopt the going concern basis in preparing the financial statements.
Disclosure of Information to Independent Auditor
The Directors believe that they have taken all steps necessary to make
themselves aware of any relevant audit information and have established that
the Group Statutory Auditors are aware of that information. In so far as they
are aware at the time that this report was approved, there is no relevant
audit information of which the Group Statutory Auditors are unaware.
Independent Auditor
BDO, Statutory Audit Firm, have expressed their willingness to continue in
office in accordance with Section 383 (2) of the Companies Act, 2014.
The Directors will propose the reappointment of BDO as the Company's Auditor
and resolutions concerning this and the remuneration of the Company's Auditor
will be proposed at the AGM.
Audit Committee
Pursuant to the Company's Articles of Association the Board had established an
Audit Committee that in all material respects meets the requirements of
Section 167 of the Companies Act 2014. The Audit Committee was fully
constituted and active during the year ended 31 December 2022. For more
information, see the Audit Committee Report.
Annual Accounts
The Board is of the opinion that the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the performance, strategy and business model of the
Company.
The Directors recommend that the Annual Report, the Directors' Report and the
Independent Auditor's Report for the year ended 31 December 2022 are received
and adopted by the shareholders and a resolution concerning this will be
proposed at the AGM.
Accounting Records
The Directors believe they have complied with the requirements of Section 281
to Section 285 of the Companies Act, 2014 with regard to accounting records by
employing accounting personnel with the appropriate expertise and by providing
adequate resources to the financial function. The accounting records of the
Company are maintained by Northern Trust International Fund Administration
Services (Ireland) Limited at Georges Court, 54-62 Townsend Street, Dublin 2,
Ireland.
Subsequent Events
Significant subsequent events have been disclosed in note 21 to the
consolidated financial statements.
Corporate Governance
The Corporate Governance Report form part of this report.
Directors and Company Secretary
The following Directors held office as at 31 December 2022:
Directors
§ Rónán Murphy (non-executive Chairman)
§ Emer Gilvarry (non-executive Director)
§ Kevin McNamara (non-executive Director)
§ Marco Graziano (non-executive Director)
§ Eva Lindqvist (non-executive Director); appointed 7 July 2022
Company Secretary
§ Ocorian Administration (UK) Limited
The biographical details of the Directors are set out in the Board of
Directors section.
Directors' Interests in Shares in the Company
Directors' interests in Company shares as at 31 December 2022 are detailed
below.
Shareholder Ordinary shares of €0.01 each held as at Ordinary shares of €0.01 each held as at
31 December 2022 31 December 2021
Rónán Murphy 235,194 217,694
Emer Gilvarry 100,000 100,000
Kevin McNamara 78,327 78,327
Marco Graziano 90,000 65,000
Eva Lindqvist - -
The Company does not have any share option schemes in place.
Dividend
The Board recommended an interim dividend of €17.6 million, equivalent to
1.545 cent per share with respect to the quarter ended 31 December 2022,
bringing total dividends with respect to the year to €70.5 million,
equivalent to 6.18 cent per share as disclosed in note 8 of the financial
statements.
Political Donations
No political donations were made during the year ended 31 December 2022.
Longer Term Viability
As further disclosed in the Corporate Governance Report, the Company is a member of the AIC and complies with the AIC Code. In accordance with the AIC Code, the Directors are required to assess the prospects of the Group over a period longer than the 12 months associated with going concern. The Directors conducted this review for a period of 10 years, which it deemed appropriate, given the long term nature of the Group's investments, which are modelled over 30 years for onshore wind farms and 35 years for offshore wind farms, coupled with its long term strategic planning horizon.
In considering the prospects of the Group, the Directors looked at the key
risks facing both the Group and the investee companies, focusing on the
likelihood and impact of each risk as well as any key contracts, future events
or timescales that may be assigned to each key risk.
As a sector focussed infrastructure fund, the Company aims to produce stable
and progressive dividends while preserving the capital value of its investment
portfolio on a real basis. The Directors believe that the Group is well placed
to manage its business risks successfully over both the short and long term
and accordingly, the Board has a reasonable expectation that the Group will be
able to continue in operation and to meet its liabilities as they fall due for
a period of at least 10 years.
While the Directors have no reason to believe that the Group will not be
viable over a longer period, they are conscious that it would be difficult to
foresee the economic viability of any company with any degree of certainty for
a period of time greater than 10 years.
Directors' Compliance Statement
The Directors, in accordance with Section 225(2)(a) of the Companies Act 2014,
acknowledge that they are responsible for securing the Company's compliance
with its "relevant obligations". "Relevant obligations" in the context for the
Company, are the Company's obligations under:
§ The Companies Act 2014, where a breach of the obligations would be a
category 1 or category 2 offence;
§ The Companies Act 2014, where a breach of the obligations would be a
serious Market Abuse or Prospectus offence; and
§ Tax law.
Directors' Compliance Statement Pursuant to Section 225(2)(b) of the Companies
Act 2014, the Directors confirm that:
· a compliance policy statement has been drawn up by the Company in
accordance with Section 225(3)(a) of the Companies Act 2014 setting out the
Company's policies (that, in the directors' opinion, are appropriate to the
Company) regarding compliance by the Company with its relevant obligations;
· appropriate arrangements and structures that in their opinion, are
designed to secure material compliance with the Company's relevant
obligations, have been put in place; and
· a review has been conducted, during the financial year, of the
arrangements and structures referred to above.
By order of the Board
Rónán
Murphy
Kevin McNamara
Director
Director
26 February
2023
26 February 2023
Directors' Remuneration Report
This report has been prepared by the Directors in accordance with the
requirements of the Companies Act 2014. A resolution to consider the
Directors' Remuneration Report will be proposed at the AGM.
The Company's Auditor is required to give their opinion on the information
provided on Directors' remuneration and this is explained further in its
report to shareholders within the Independent Auditor's Report. The remainder
of this report is outside the scope of the external audit.
Annual Statement from the Chairman of the Board
The Board, which is profiled in the Board of Directors section, consists
solely of non-executive Directors and is entirely independent. Annually, the
Board considers the level of remuneration in accordance with the AIC Code.
Since the Company's listing in 2017, the non-executive Directors' remuneration
was first increased on the 1 January 2021 and current Director remuneration is
detailed in the table below.
The Remuneration Committee has committed to conducting a benchmarking exercise
with an independent consultant every 3 years and will commence this review
again in 2023.
Remuneration Policy
As at the date of this report, the Board comprised five Directors, all of whom
are non-executive. The Company has established a Remuneration Committee which
comprises all of the Directors and the Chair is Emer Gilvarry.
Each of the Directors was appointed to the Remuneration Committee with effect
to the date of their appointment. The Committee met at such times as the
Committee Chairman required.
Each Director receives a fixed fee per annum based on their roles and
responsibility within the Company and the time commitment required. It is not
considered appropriate that Directors' remuneration should be performance
related and none of the Directors are eligible for pension benefits, share
options, long term incentive schemes or other benefits in respect of their
services as non-executive Directors of the Company. The total remuneration of
non-executive Directors has not exceeded the limit set out in the Articles of
Association of the Company.
The Company's Articles of Association empower the Board to award a
discretionary bonus where any Director has been engaged in exceptional work on
a time spent basis to compensate for the additional time spent over their
expected time commitment.
The Articles of Association provide that Directors retire and offer themselves
for re-election at the first AGM after their appointment and at least every 3
years thereafter. In accordance with corporate governance best practice, all
of the Directors have opted to offer themselves for re-election on an annual
basis. All of the Directors were provided with letters of appointment which
stipulate that their initial term shall be for 3 years, subject to
re-election.
A Director's appointment may at any time be terminated by and at the
discretion of either party upon 6 months' written notice. A Director's
appointment will automatically end without any right to compensation
whatsoever if they are not re-elected by the Shareholders. A Director's
appointment may also be terminated with immediate effect and without
compensation in certain other circumstances.
The terms and conditions of appointment of non-executive Directors are
available for inspection from the Company's registered office.
Annual Report on Remuneration
The Group is now a significant owner of renewable generation assets in Ireland
and Continental Europe, with further investments planned during 2023, as
indicated by the forward sale agreements. The GAV has grown to €2.2 billion
through acquisitions and equity raisings since listing.
The table below (audited information) shows all remuneration earned by each
individual Director during the year:
Date of Appointment Directors' fees per annum Paid in year ended Paid in year ended
31 December 31 December
2022 2021
Rónán Murphy (chairman) 16 June 2017 €130,000 €130,000 €130,000
Kevin McNamara 16 June 2017 €65,000 €65,000 €65,000
Emer Gilvarry 16 June 2017 €65,000 €65,000 €65,000
Marco Graziano 30 January 2020 €65,000 €65,000 €65,000
Eva Lindqvist 7 July 2022 €65,000 €32,500 ()) -
Total €357,500 €325,000
None of the Directors received any other remuneration or additional
discretionary payments during the year from the Company.
Relative Importance of Spend on Pay
The remuneration of the Directors for the year ended 31 December 2022,
totalled €357,500 (2021: €325,000) in comparison to dividends paid to
shareholders over the same period being €66.4 million (2021: €47.2
million).
On behalf of the Board,
Emer Gilvarry
Chair of the Remuneration Committee
26 February 2023.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the
consolidated financial statements in accordance with applicable law and
regulations.
Irish company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors are required to prepare the
Group financial statements and have elected to prepare the Company financial
statements in accordance with IFRS as adopted by the EU. Under company law the
Directors must not approve the consolidated financial statements unless they
are satisfied that they give a true and fair view of the state of affairs of
the Group and Company and of the profit or loss of the Group for that period.
In preparing these consolidated financial statements, the Directors are
required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether they have been prepared in accordance with IFRS as
adopted by the EU, subject to any material departures disclosed and explained
in the consolidated financial statements; and
· prepare the consolidated financial statements on the going concern
basis unless it is inappropriate to presume that the Company and the Group
will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the consolidated financial statements comply with
the Companies Act 2014 and, as regards the Group financial statements, Article
4 of the IAS Regulation. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities. The Directors are responsible for
ensuring that the Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to
assess the Group's performance, business model and strategy.
Website Publication
The Directors are responsible for ensuring the Annual Report and the
consolidated financial statements are made available on a website. Financial
statements are published on the Company's website in accordance with
legislation in Ireland and the UK governing the preparation and dissemination
of financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Company's website is the
responsibility of the Directors. The Directors responsibilities also extend to
the ongoing integrity of the consolidated financial statements contained
therein.
On behalf of the Board,
Rónán
Murphy
Kevin McNamara
Director
Director
26 February
2023
26 February 2023
Corporate Governance Report
This Corporate Governance Report forms part of the Report of the Directors as
disclosed in the Directors' Report.
Corporate Governance Framework
The Company is committed to high standards of corporate governance and the
Board is responsible for ensuring those high standards are achieved. Companies
admitted to trading on the AIM or Euronext Growth Market are not required to
comply with the UK Code or Irish Annex, however they are required to disclose
the corporate governance code which they have decided to apply.
For the year ended 31 December 2022, the Company was a member of the AIC and
adopted the AIC Code. The AIC Code provides boards with a framework of best
practice in respect of the governance of investment companies. While the
Company is not an ''investment company'' under the Companies Act, the Company
shares key important characteristics with such companies e.g. it has no
employees and the tasks of portfolio management and risk management are
delegated to the Investment Manager. The FRC has confirmed that investment
companies who report against the AIC Code and follow its requirements will
also be meeting their obligations under the UK Code and the Irish Annex. The
Board considers that reporting against the principles and recommendations of
the AIC Code, by reference to the AIC Guide, provides better information to
shareholders. A summary of the Company's compliance with the AIC code is
provided on the Company's website.
The text of the AIC Code and the AIC Guide are available on the AIC's website,
www.theaic.co.uk. The UK Code is available on the FRC's website,
www.frc.org.uk (http://www.frc.org.uk) .
Statement of Compliance
The Board confirms that the Company has complied with the AIC Code during the
year ended 31 December 2022.
Purpose, Culture and Values
The Company's purpose remains clear; to provide investors with the opportunity
to participate directly in the ownership of a portfolio of renewable energy
generating assets, thus promoting the reduction of greenhouse gas emissions
and the global future target of a net zero economy. The Company also intends
to provide shareholders with an annual dividend that increases between zero
and CPI whilst growing the capital value of its investment portfolio in the
long term on a real basis through reinvestment of excess cash flow and the
prudent use of gearing.
The Company provides investors with the opportunity to participate directly in
the ownership of renewable energy-generating assets in Ireland and other
relevant countries in the Eurozone thereby increasing the resources and
capital dedicated to the deployment of renewable energy and the reduction of
greenhouse gas emissions.
As an investment trust with no employees, the Board have agreed that its
culture and values should be aligned with those of the Investment Manager and
centred on long term relationships with the Company's key stakeholders and
sustainable investment as follows:
§ Integrity is at the heart of every activity, with importance being placed
on transparency, trustworthiness and dependability.
§ The trust of stakeholders is very important to maintain the Company's
reputation, particularly for execution certainty for asset sellers and
delivery of investment promises to investors.
§ Respect for differing opinions is to be shown across all interaction and
communication.
§ Individual empowerment is sought with growth in responsibility and autonomy
being actively encouraged.
§ Collaboration and effectively utilising the collective skills of all
participants is important to ensure ideas and information are best shared.
The Board
As at the date of this report, the Board comprises of five non-executive
Directors, all of whom, are considered to be independent of the Investment
Manager and free from any business or other relationship that could materially
interfere with the exercise of their independent judgement.
Directors' details are detailed in the Board of Directors section, which sets
out the range of investment, financial and business skills and experience
represented.
Director Re-election and Appointment
The Articles of Association provide that Directors shall retire and offer
themselves for re-election at the first AGM after their appointment and at
least every 3 years thereafter. Any Director, who has held office with the
Company for three consecutive 3 year terms shall retire from office. This will
allow for phased Board appointments and retirements and enable the Board to
consider whether there is any risk that such Director might reasonably be
deemed to have lost independence through such long service.
However, all of the Directors, in accordance with best practice, have opted to
offer themselves for re-election on an annual basis. Having considered their
effectiveness, demonstration of commitment to the role, attendance at meetings
and contribution to the Board's deliberations, the Board approves the
nomination for re-election of all Directors.
The terms and conditions of appointment of non-executive Directors are
available for inspection from the Company's registered office.
The Chairman
The Chairman's primary responsibility is to lead the Board and to ensure its
effectiveness both collectively and individually. The Chairman of the Board is
Rónán Murphy. In considering the independence of the Chairman, the Board
took note of the provisions of the AIC Code relating to independence and has
determined that Mr. Murphy is an Independent Director. The Company has no
employees and therefore there is no requirement for a chief executive.
Chair Tenure
The Company's policy on Chair tenure is that the Chair should normally serve
no longer than nine years as a Director and Chair. However, in exceptional
circumstances, where it is in the best interests of the Company, the Chair may
serve for a limited time beyond that. In such circumstances, the independence
of the other directors will ensure that the Board as a whole remains
independent.
Senior Independent Director
The Senior Independent Director works closely with the Chairman and provides
support where required, holding annual meetings with the other non-executive
directors to appraise the performance of the Chairman and be available to
shareholders if they have any reason for concern. The Senior Independent
Director is Emer Gilvarry.
Diversity Policy and Independence
The Board has a policy to base appointments on merit and against objective
criteria, with due regard for the benefits of diversity, including gender
diversity. Its objective is to attract and maintain a Board that, as a whole,
comprises an appropriate balance of skills and experience.
The Board consists of individuals from relevant and complementary backgrounds
offering experience on boards of listed companies, in financial and legal
services as well as in the energy sector. As at the date of this report, the
Board comprised three men and two women, all non-executive Directors who are
considered to be independent of the Investment Manager and free from any
business or other relationship that could materially interfere with the
exercise of their independent judgement.
The Investment Manager operates an equal opportunities policy and its partners
and employees comprised 73 men and 33 women as at 31 December 2022.
Board Responsibilities
The Board will meet, on average, 5 times in each calendar year for scheduled
quarterly Board meetings and on an ad hoc basis where necessary. At each
meeting, the Board follows a formal agenda that will cover the business to be
discussed including, but not limited to, strategy, performance and the
framework of internal controls, as well as review of its own performance and
composition. Between meetings there is regular contact with the Investment
Manager. The Board requires to be supplied, in a timely manner, with
information by the Investment Manager, the Administrator, the Company
Secretary and other advisers in a form and of a quality appropriate to enable
it to discharge its duties.
The Board is responsible for the determination of the Company's investment
objective and policy and has overall responsibility for the Company's
activities. The Company has entered into the Investment Management Agreement
with the Investment Manager pursuant to which the Investment Manager is
responsible for the day-to-day management of the Company.
The Board also has responsibility for ensuring that the Company keeps proper
accounting records which disclose with reasonable accuracy at any time the
financial position of the Company and which enable it to ensure that the
financial statements comply with applicable regulation. It is the Board's
responsibility to present a fair, balanced and understandable Annual Report,
which provides the information necessary for shareholders to assess the
performance, strategy and business model of the Company. This responsibility
extends to the interim and other price-sensitive public reports.
The Board has established procedures which provide a reasonable basis for the
Directors to make proper judgement on an ongoing basis as to the financial
position and prospects of the Company.
The Board has the ability to specify from time to time specific matters that
require prior Board approval (''Reserved Matters'') or specific matters that
it believes ought to be brought to the Board's attention as part of the
general reporting process between the Investment Manager and the Board. The
list of Reserved Matters specified by the Board includes entry into markets
other than those located in the Republic of Ireland, entry into transactions
other than those involving operational onshore wind assets, entry into any
acquisitions increasing GAV by more than 50% and entry into material new
financing facilities.
The Investment Manager, once every calendar quarter, submits to the Board a
report of activities, investments and performance of the Company, including
progress of all investments, details of the pipeline of acquisitions and any
disposals and, in addition, promptly reports to the Board any other
information which could reasonably be considered to be material.
Committees of the Board
The Company's Audit Committee is chaired by Kevin McNamara and consists of
four members. Emer Gilvarry, Marco Graziano and Eva Lindqvist are the other
members of the Audit Committee as the date of this report. In accordance with
best practice, the Company's Chairman is not a member of the Audit Committee,
however he does attend Audit Committee meetings as and when deemed
appropriate. The Audit Committee Report, included in the Audit Committee
Report, describes the work of the Audit Committee.
The Company has established a Management Engagement Committee, which comprises
all the Directors and the Chair is Rónán Murphy. The Management Engagement
Committee's main function is to keep under review the performance of the
Investment Manager and review and make recommendations on any proposed
amendment to the Investment Management Agreement. On the 17 June 2022, the
Company announced the renewal and extension of the Investment Management
Agreement which was extended for a further five‐year term, commencing on 25
July 2022. The Management Engagement Committee also performs a review of the
performance of other key service providers to the Group. The Management
Engagement Committee meets at least once a year.
In accordance with the AIC Code, the Company has also set up Remuneration and
Nomination Committees. The Remuneration Committee comprises of all the
Directors and the Chair is Emer Gilvarry. The Remuneration Committee's main
function is to determine and agree the Board policy for the remuneration of
the Directors and review and consider any additional ad hoc payments in
relation to duties undertaken over and above normal business. The Remuneration
Committee meets at least once a year.
The Nomination Committee comprises all of the Directors and the Chair is Marco
Graziano. The Nomination Committee's main function is to review the structure,
size and composition of the Board regularly and to consider succession
planning for Directors. The Nomination Committee meets at least once a year.
The re-appointment of Marco Graziano, Chairman of the Nominations Committee,
as a non-executive director at the 2022 AGM was opposed by c.21% of
shareholders. Following a consultation process held with shareholders,
feedback indicated that opposition to Marco's reappointment was driven by the
lack of gender diversity of the Board with only a 25% female representation at
the time of the AGM. Since the summer of 2021, the Board was engaged in a
process to appoint an additional Director to the Board and following the
appointment of Eva Lindqvist, the increased female representation on the Board
has addressed the issue raised by shareholders, aligns with market
best-practice and meets the target for gender diversity set by the Board.
Terms of reference for the Management Engagement, Nominations and Remuneration
Committees have been approved by the Board and are available on the Company's
website.
Board Meetings, Committee Meetings and Directors' Attendance
A schedule of Board and Audit Committee meetings is circulated to the Board
one year ahead including the key agenda items for each meeting. Other
Committees meetings are arranged as and when required. The number of meetings
of the full Board of the Company attended in the year to 31 December 2022 by
each Director is set out below:
2022 Scheduled Board Meetings (Total of 7) Additional Board Meetings (Total of 9)
Rónán Murphy 7 9
Emer Gilvarry 7 9
Kevin McNamara 7 9
Marco Graziano 7 9
Eva Lindqvist (max. 4 scheduled and 2 additional) 3 2
During the year, there were also 10 meetings of sub-committees of the Board.
The number of meetings of the Committees attended in the year by each
Committee member is set out below.
2022 Audit Committee Meetings (Total of 4) Management Engagement Committee Meetings (Total of 2) Nomination Committee Meetings (Total of 2) Remuneration Committee Meetings (Total of 2)
Rónán Murphy n/a 2 2 2
Emer Gilvarry 4 2 2 2
Kevin McNamara 4 2 2 2
Marco Graziano 4 2 2 2
Eva Lindqvist 2 2 1 1
Board Performance and Evaluation
Regarding performance and evaluation pursuant to Provision 26 of the AIC Code,
the Board undertakes a formal and rigorous evaluation of its performance each
financial year.
Each individual Directors' training and development needs are reviewed
annually. All new Directors receive an induction, including being provided
with information about the Company and their responsibilities and meetings
with the Investment Manager. In addition, each Director will visit operational
sites and specific Board training days are arranged involving presentations on
relevant topics.
Directors' Indemnity
Directors' and Officers' liability insurance cover is in place in respect of
the Directors. The Company's articles of association provide, subject to the
provisions of Ireland and UK legislation, an indemnity for Directors in
respect of costs which they may incur relating to the defence of any
proceedings brought against them arising out of their positions as Directors,
in which they are acquitted, or judgement is given in their favour by the
Court.
Except for such indemnity provisions in the Company's articles of association
and in the Directors' letters of appointment, there are no qualifying
third-party indemnity provisions in force.
The Investment Manager
The Board has entered into the Investment Management Agreement with the
Investment Manager under which the Investment Manager is responsible for
developing strategy and the day-to-day management of the Group's investment
portfolio, in accordance with the Group's investment objective and policy,
subject to the overall supervision of the Board. A summary of the fees paid to
the Investment Manager are given in note 3 of the financial statements.
As noted above, the Company announced on 17 June 2022 that the Board agreed
to a new five-year agreement with the Investment Manager commencing on 25 July
2022. This process was commenced early in the 2022 year and was supported by
the Company's brokers, RBC and J&E Davy, who provided benchmarking and
independent recommendations that were reviewed and challenged by the Board.
The new contract was agreed on beneficial terms to the Company, with an
additional tier added to the cash fee structure, which will see a reduction in
the fee charged in respect of NAV over €1,750 million, reflecting continued
economies of scale as the business grows.
The Investment Management Agreement may be terminated by either party on
conclusion of the second five-year term provided the party purporting to
terminate provides not less than 12 months prior written notice of its
intention to terminate the agreement. The Investment Management Agreement may
be terminated with immediate effect and without compensation, by either the
Investment Manager or the Company if the other party has gone into
liquidation, administration or receivership or has committed a material breach
of the Investment Management Agreement.
The Investment Manager will, at all times, act within the parameters set out
in the Investment Policy. The Investment Manager reports to the Board and
keeps the Board appraised of material developments on an ongoing basis.
The Investment Manager is responsible for, among other things:
§ management of the portfolio and further investments;
§ identifying, evaluating and executing possible further investments;
§ risk management;
§ reporting to the Board;
§ calculating and publishing NAV, with the assistance of the Administrator;
§ assisting the Company in complying with its ongoing obligations as a
company whose shares are admitted to trading on AIM and Euronext Growth
Market; and
§ directing, managing, supervising and co-ordinating the Company's
third-party service providers, including the Depositary and the Administrator,
in accordance with industry best practice.
Risk Management and Internal Control
The Board is responsible for the Company's system of internal control and for reviewing its effectiveness. The Board confirms that it has an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. This process has been in place throughout the year and has continued since the year end.
The Company's principal risks and uncertainties are detailed below. As further
explained in the Audit Committee Report, the risks of the Company are outlined
in a risk matrix which was reviewed and updated during the year. The Board
continually reviews its policy setting and updates the risk matrix annually to
ensure that procedures are in place with the intention of identifying,
mitigating and minimising the impact of risks should they crystallise. The
Board relies on reports periodically provided by the Investment Manager, the
Depositary and the Administrator regarding risks that the Company faces. When
required, experts are employed to gather information, including tax and legal
advisers. The Board also regularly monitors the investment environment and the
management of the Company's portfolio and applies the principles detailed in
the internal control guidance issued by the FRC.
The Board holds an annual risk and strategy discussion, which enables the
Directors to consider risk outside the scheduled quarterly Board meetings.
This enables emerging risks to be identified and discussions on horizon
scanning to occur, so the Board can consider how to manage and potentially
mitigate any relevant emerging risks.
The principal features of the internal control systems which the Investment
Manager and the Administrator have in place in respect of the Group's
financial reporting are focussed around the 3 lines of defence model and
include:
§ internal reviews of all financial reports;
§ review by the Board of financial information prior to its publication; and
§ authorisation limits over expenditure incurred by the Group.
Information and Support
The Board can seek independent professional advice on a matter, at the
Company's expense, where they judge it necessary to discharge their
responsibilities as Directors. The Committees of the Board are provided with
sufficient resources to undertake their duties. The Directors have access to
the services of the Company Secretary who is responsible for ensuring that
Board procedures are followed.
Whistleblowing
The Board has considered the arrangements by which staff of the Investment
Manager or Administrator may, in confidence, raise concerns within their
respective organisations about possible improprieties in matters of financial
reporting or other matters. It has concluded that adequate arrangements are in
place for the proportionate and independent investigation of such matters and,
where necessary, for appropriate follow-up action to be taken within their
organisation.
Amendment of Articles of Association
The Company's Articles of Association may be amended by the members of the
Company by special resolution (requiring a majority of at least 75% of the
persons voting on the relevant resolution).
General Meetings
The Company holds a general meeting annually and specifies the meeting as
such. All general meetings other than annual general meetings are called
extraordinary general meetings. Extraordinary general meetings are convened on
such requisition, or in default and may be convened by such requisitions as
provided by the Companies Act 2014.
All business shall be deemed special if it is transacted at an extraordinary
general meeting. All business that is transacted at an annual general meeting
shall also be deemed special, with the exception of the consideration of the
Company's statutory financial statements and reports of the Directors and
Auditors, the review by the members of the Company's affairs, the appointment
of Directors in the place of those retiring (whether by rotation or
otherwise), the appointment and re-appointment of the Auditors and the fixing
of the remuneration of the Auditors.
Every member entitled to attend and vote at a general meeting may appoint a
proxy to attend, speak and vote on his or her behalf provided, however, that a
member may appoint more than one proxy provided that each proxy is appointed
to exercise the rights attached to shares held in different securities
accounts. The holders of ordinary shares have the right to receive notice of
and attend and vote at all general meetings of the Company and they are
entitled, on a poll or a show of hands, to one vote for every ordinary share
they hold.
Votes may be given either personally or by proxy. Subject to any rights or
restrictions for the time being attached to any class or classes of shares and
subject to any suspension or abrogation of rights pursuant to the Articles, on
a show of hands every member present in person and every proxy shall have one
vote, so, however, that no individual shall have more than one vote and on a
poll every member shall have one vote for every share carrying rights of which
they are a holder. On a poll a member entitled to more than one vote need not
cast all their votes or cast all the votes they use in the same way.
Engagement with Stakeholders
The Company is committed to maintaining good communications and building
positive relationships with all stakeholders, including shareholders, debt
providers, analysts, potential investors, suppliers and the wider communities
in which the Group and its investee companies operate. This includes regular
engagement with the Company's shareholders and other stakeholders by the
Board, the Investment Manager and the Administrator. Regular feedback is
provided to the Board to ensure they understand the views of stakeholders.
Key decisions are those that are either material to the Company or are
significant to any of the Company's key stakeholders. The below key decisions
were made during the year, with the overall aim of promoting the success of
the Company while considering the impact on its members and wider
stakeholders.
Dividends
The Board has approved total dividends of 6.18 cent per share with the respect
to the year. The Board are confident that with the Company's continuing strong
cashflow and robust dividend cover, the Company can maintain a target dividend
of 6.42 cent per share for 2023, which the Board expects to contribute to the
Company's target return to investors of an IRR in excess of 7%, net of fees
and expenses.
Acquisitions
During the year, the Company acquired nine new wind farms, made up of four in
France, two in Ireland and one in Germany, Spain and Finland. In December
2022, the Company also signed to acquire a minority interest in a German
offshore wind project the acquisition of which completed on 21 February 2023.
To complement this, two forward sale transactions were also agreed during the
year. The Board and the Investment Manager considered each investment in the
context of the Company's Investment Policy, availability of financing and the
potential returns to investors.
Share Issuances
During the year, the Company issued 251,351,351 new shares, raising a total
€281.5 million in gross proceeds, through an oversubscribed share placing.
The Investment Manager engaged with analysts and investors throughout the
share issuance process.
Relations with Shareholders
The Company welcomes the views of shareholders and places great importance on
communication with its shareholders. The Investment Manager is available at
all reasonable times to meet with principal shareholders and key sector
analysts. The Chairman, the Senior Independent Director and other Directors
are also available to meet with shareholders if required.
All shareholders have the opportunity to put questions to the Company at the
registered address. The AGM of the Company will provide a forum for
shareholders to meet and discuss issues with the Directors and Investment
Manager.
The Board receives comprehensive shareholder reports at all quarterly Board
meetings and regularly monitors the views of shareholders and the shareholder
profile of the Company. The Board is also kept fully informed of all relevant
market commentary on the Company by the Investment Manager.
The Board receives comprehensive shareholder reports from the Company's
Registrar and regularly monitors the views of shareholders and the shareholder
profile of the Company. The Board is also kept fully informed of all relevant
market commentary on the Company by the Investment Manager.
Relations with Other Stakeholders
The Company values its relationships with its debt providers. The Investment
Manager ensures the Group continues to meet its debt covenants and reporting
requirements. During the year, the Group entered into a new five-year
non-amortising term debt facility with CBA, ING, NAB and NatWest as disclosed
in note 13 of the financial statements. During the year, the Group also
commenced discussions on the renewal and increase of its RCF, which post year
end has been increased from €300 million to €350 million with the
introduction of a new lender, Commerzbank. The new RCF was signed on 13
February 2023.
The Investment Manager conducts presentations with analysts and investors to
coincide with the announcement of the Company's annual and interim results,
providing an opportunity for discussions and queries on the Company's
activities, performance and key metrics. In addition to these semi-annual
presentations, the Investment Manager meets regularly with analysts and
investors to provide further updates with how the Company and the investment
Portfolio are performing.
The Directors and Investment Manager receive informal feedback from analysts
and investors, which is presented to the Board by the Company's Euronext
Growth Listing Sponsor, NOMAD and Joint Broker. The Company Secretary also
receives informal feedback via queries submitted through the Company's website
and these are addressed by the Board, the Investment Manager or the Company
Secretary, where applicable.
The Company recognises that relationships with suppliers are enhanced by
prompt payment and the Company's Administrator ensures all payments are
processed within the contractual terms agreed with the individual suppliers.
The Company, via its Investment Manager, has long term important relationships
with its operational site managers and turbine operations and maintenance
managers and reviews performance, including health and safety, on a monthly
basis. Representatives of the site manager and SPV Board directors, from the
Investment Manager, visit all operational sites on a regular basis and carry
out safety walks at least once a year on each site. The Board's Health and
Safety Director also visits sites at regular intervals.
Similarly, environmental protection issues are reported on every month by the
SPV site managers and annual habitat management plans are agreed by SPV boards
for all relevant sites to ensure that the environment in and surrounding each
wind farm is carefully protected.
The Directors recognise that the long term success of the Company is linked to
the success of the communities in which the Group and its investee companies,
operate. During the year, a number of community projects were supported by the
Company's investment portfolio companies, further details of which can be
found in the latest ESG report, available on the Company's website:
www.greencoat-renewables.com (http://www.greencoat-renewables.com) .
Shareholders may also find Company information or contact the Company through
its website.
On behalf of the Board
Rónán Murphy
Chairman of the Board
26 February 2023.
Audit Committee Report
At the date of this report, the Audit Committee comprised of Kevin McNamara
(Chairman), Emer Gilvarry, Marco Graziano and Eva Lindqvist. The AIC Code has
a requirement that at least one member of the Audit Committee should have
recent and relevant financial experience and the Audit Committee as a whole
should have competence relevant to the sector. The Board is satisfied that the
Audit Committee is properly constituted in these respects. The qualifications
and experience of all Audit Committee members are disclosed in the Board of
Directors section.
The Audit Committee operates within clearly defined terms of reference which
were reviewed during the financial year. The revised terms have been approved
by the Board and include all matters indicated by the AIC Code and are
available for inspection on the Company's website:
www.greencoat-renewables.com (http://www.greencoat-renewables.com) .
Audit Committee meetings are scheduled at appropriate times in the reporting
and auditing cycle. The Chairman, other Directors and third parties may be
invited to attend meetings as and when deemed appropriate.
Meetings
The Audit Committee met 4 times up to 31 December 2022. A breakdown of
Director attendance is set out in the Corporate Governance Report. BDO
attended 2 of the 4 formal Audit Committee meetings held during the year.
Summary of the Role and Responsibilities of the Audit Committee
The duties of the Audit Committee include reviewing the Interim Report, Annual
Report and Financial Statements and any formal announcements relating to the
Company's financial performance.
The Audit Committee is the forum through which the external Auditor reports to
the Board and is responsible for reviewing the terms of appointment of the
Auditor, together with their remuneration. On an ongoing basis, the Audit
Committee is responsible for reviewing the objectivity of the Auditor along
with the effectiveness of the audit and the terms under which the Auditor is
engaged to perform non-audit services (restricted to the limited scope review
of the Interim Report). The Audit Committee is also responsible for reviewing
the Company's corporate governance framework, system of internal controls and
risk management, ensuring they are suitable for an investment company.
The Audit Committee reports its findings to the Board, identifying any matters
on which it considers that action or improvement is needed and make
recommendations on the steps to be taken.
Overview
During the year, the Audit Committee's discussions have been broad ranging. In
addition to the 4 formally convened Audit Committee meetings, during the year,
the Audit Committee has had regular contact and meetings with the Investment
Manager and the Administrator. These meetings and discussions focussed on, but
were not limited to:
§ detailed analysis of the Company's quarterly NAVs;
§ reviewing the updated risk matrix of the Company including climate related
reporting disclosures under the TCFD framework;
§ reviewing the Company's corporate governance framework;
§ reviewing the internal controls framework for the Company, the
Administrator and the Investment Manager, considering the need for a separate
internal audit function;
§ considering potential incidents of fraud and the Company's response
thereto;
§ considering the ongoing assessment of the Company as a going concern;
§ considering the principal risks and period of assessment for the longer
term viability of the Company;
§ monitoring the ongoing appropriateness of the Company's status as an
investment entity under IFRS 10, in particular following an acquisition;
§ monitoring compliance with AIFMD, the AIC code and other regulatory and
governance frameworks;
§ reviewing and approving the audit plan in relation to the audit of the
Company's Annual Report and financial statements;
§ monitoring compliance with the Company's policy on the provision of
non-audit services by the Auditor; and
§ reviewing the effectiveness, resources, qualifications and independence of
the Auditor.
Financial Reporting
The primary role of the Audit Committee in relation to financial reporting is
to review, with the Investment Manager, the Administrator and the Auditor, the
appropriateness of the Interim Report and Annual Report and financial
statements, concentrating on, amongst other matters:
§ the quality and acceptability of accounting policies and practices;
§ the clarity of the disclosures and compliance with financial reporting
standards and relevant financial and governance reporting requirements;
§ amendments to legislation and corporate governance reporting requirements
and accounting treatment of new transactions in the period;
§ the impact of new and amended accounting standards on the Company's
financial statements;
§ whether the Audit Committee believes that proper and appropriate processes
and procedures have been followed in the preparation of the Interim and Annual
Report and financial statements;
§ consideration and recommending to the Board for approval of the contents of
the annual financial statements and reviewing the Auditors' report thereon
including consideration of whether the consolidated financial statements are
overall fair, balanced and understandable;
§ material areas in which significant judgements have been applied or there
has been discussion with the Auditor; and
§ any correspondence from regulators in relation to the Company's financial
reporting.
BDO attended 2 of the 4 formal Audit Committee meetings held during the year
and have presented their audit findings to the Audit Committee. Matters
typically discussed include the Auditor's assessment of the transparency and
openness of interactions with the Investment Manager and the Administrator,
confirmation that there has been no restriction in scope placed on them, the
independence of their audit and how they have exercised professional
scepticism.
Significant Issues
The Audit Committee discussed the planning, conduct and conclusions of the
external audit as it proceeded. At the Audit Committee meeting in advance of
the year end, the Audit Committee discussed and approved the Auditor's audit
plan. The Audit Committee identified the fair value of investments as a key
area of risk of misstatement in the Company's financial statements.
Assessment of the Fair Value of Investments
The Group's accounting policy is to designate investments at fair value
through profit or loss. Therefore, the most significant risk in the Group's
accounts is whether its investments are fairly valued due to the uncertainty
involved in determining the investment valuations. There is also an inherent
risk of management override as the Investment Manager's fee is calculated
based on NAV as disclosed in note 3 to the consolidated financial statements.
The Investment Manager is responsible for calculating the NAV with the
assistance of the Administrator, in accordance with its valuation policy and
is subject to the approval of its independent valuation committee.
On a quarterly basis, the Investment Manager provides a detailed analysis of
the NAV highlighting any movements and assumption changes from the previous
quarter's NAV. The Audit Committee considers and challenges this analysis and
the rationale of any changes made. The Audit Committee has satisfied itself
that the key estimates and assumptions used in the valuation model, which are
disclosed in note 2 to the consolidated financial statements, are appropriate
and that the investments have been fairly valued.
The key estimates and assumptions include the useful life of the assets, the
discount rates, the level of wind resource, the rate of inflation, the price
at which the power and associated benefits can be sold and the amount of
electricity the assets are expected to produce.
Internal Control
The Audit Committee has established a set of ongoing processes designed to
meet the particular needs of the Company in managing the risks to which it is
exposed.
The process is one whereby the Investment Manager has identified the key risks
to which the Company is exposed and recorded them on a risk matrix together
with the controls employed to mitigate these risks. The Audit Committee also
has a process in place to identify emerging risks, such as climate related
risks and to determine whether any actions are required. A residual risk
rating has been applied to each risk. The Audit Committee is responsible for
reviewing the risk matrix and associated controls before recommending to the
Board for consideration and approval, challenging the Investment Manager's
assumptions to ensure a robust internal risk management process.
The Audit Committee considers risk and strategy regularly and formally
reviewed the updated risk matrix in January 2022 and will continue to do so at
least annually. By their nature, these procedures provide a reasonable, but
not absolute, assurance against material misstatement or loss. Regular reports
will be provided to the Audit Committee highlighting material changes to risk
ratings.
The Audit Committee reviewed the Group's principal risks and uncertainties as
at 30 June 2021, to determine that these were unchanged from those disclosed
in the Company's 2020 Annual Report and remained the most likely to affect the
Group in the second half of the year.
During the year, the Audit Committee also discussed and reviewed the internal
controls framework in place at the Investment Manager and the Administrator in
depth. Discussions focussed on 3 lines of defence: assurances at operational
level; internal oversight; and independent objective assurance.
The Audit Committee concluded that these frameworks were appropriate for the
identification, assessment, management and monitoring of financial and
regulatory risks, with particular regard to the protection of the interests of
the Company's shareholders.
Internal Audit
The Audit Committee continues to review the need for an internal audit
function and has decided that the systems, processes and procedures employed
by the Company, Investment Manager and Administrator, including their own
internal controls and procedures, provide sufficient assurance that an
appropriate level of risk management and internal control is maintained. In
addition to this, the Company's external Depositary provides cash monitoring,
asset verification and oversight services to the Company. The Investment
Manager is a full scope AIFM, regulated by the FCA in the UK and has a robust
framework of internal controls and an independent compliance function.
The Audit Committee has therefore concluded that shareholders' investments and
the Company's assets are adequately safeguarded and an internal audit function
specific to the Company is considered unnecessary.
The Audit Committee is available on request to meet investors in relation to
the Company's financial reporting and internal controls, should it be deemed
appropriate.
External Auditor
Effectiveness of the Audit Process
The Audit Committee assessed the effectiveness of the audit process by
considering BDO's fulfilment of the agreed audit plan through the reporting
presented to the Audit Committee by BDO and the discussions at the Audit
Committee meeting, which highlighted the major issues that arose during the
course of the audit. In addition, the Audit Committee also sought feedback
from the Investment Manager and the Administrator on the effectiveness of the
audit process. For this financial year, the Audit Committee was satisfied that
there had been appropriate focus and challenge on the primary areas of audit
risk and assessed the quality of the audit process to be good.
Non-Audit Services
Details of fees paid to BDO during the year are disclosed in note 5 of the
consolidated financial statements. The Audit Committee approved these fees
after a review of the level and nature of work to be performed and are
satisfied that they are appropriate for the scope of the work required. The
Audit Committee seeks to ensure that any non-audit services provided by the
external Auditor do not conflict with their statutory and regulatory
responsibilities, as well as their independence, before giving written
approval prior to their engagement. The Audit Committee was satisfied that BDO
had adequate safeguards in place and that provision of these non-audit
services did not provide threats to the Auditor's independence.
The Audit Committee monitors the Group's expenditure on non-audit services
provided by the Company's Auditor who should only be engaged for non-audit
services where they are deemed to be the most commercially viable supplier and
prior approval of the Audit Committee has been sought.
Independence
The Audit Committee is required to consider the independence of the external
Auditor. In fulfilling this requirement, the Audit Committee has considered a
report from BDO describing its arrangements to identify, report and manage any
conflict of interest and the extent of non-audit services provided by them.
The Audit Committee has concluded that it considers BDO to be independent of
the Company and that the provision of the non-audit services described above
is not a threat to the objectivity and independence of the conduct of the
audit.
Re-appointment
BDO has been the Company's Auditor from its incorporation on 15 February 2017.
The external audit contract is intended to be put to tender at least every 10
years. The Audit Committee shall give advance notice of any retendering plans
within the Annual Report. The Audit Committee has considered the
re-appointment of the Auditor and decided not to put the provision of the
external audit out to tender at this time. As described above, the Audit
Committee reviewed the effectiveness and independence of the Auditor and
remain satisfied that the Auditor provides effective independent challenge to
the Board, the Investment Manager and the Administrator. The Audit Committee
will continue to monitor the performance of the Auditor on an annual basis and
will consider their independence and objectivity, taking account of
appropriate guidelines.
The Audit Committee has therefore recommended to the Board that BDO be
proposed for re-appointment as the Company's Auditor at the 2023 AGM of the
Company.
Annual General Meeting
The Chairman of the Audit Committee will be present at the Company's AGM to
answer questions on the Audit Committee's activity and matters within the
scope of the Audit Committee's responsibilities.
Kevin McNamara
Chairman of the Audit Committee
26 February 2023.
Independent Auditor's Report
To the members of Greencoat Renewables PLC
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Greencoat Renewables PLC
("Company") and its subsidiaries ("Group") for the financial year ended 31
December 2022, which comprise the Consolidated Statement of Comprehensive
Income, Consolidated and Company Statement of Financial Position, Consolidated
and Company Statement of Changes in Equity, Consolidated and Company Statement
of Cash Flows, and the related notes including the summary of significant
accounting policies set out in note 1. The financial reporting framework that
has been applied in their preparation is Irish Law and International Financial
Reporting Standards ("IFRS") as adopted by the European Union and, as regards
the Company financial statements, as applied in accordance with the provisions
of the Companies Act 2014.
In our opinion:
§ the Group financial statements give a true and fair view of the assets,
liabilities and financial position of the Group as at 31 December 2022 and of
its profit for the financial year then ended;
§ the Company Statement of Financial Position gives a true and fair view of
the assets, liabilities and financial position of the Company as at 31
December 2022;
§ the Group financial statements have been properly prepared in accordance
with IFRS as adopted by the European Union;
§ the Company financial statements have been properly prepared in accordance
with IFRS as adopted by the European Union as applied in accordance with the
provisions of the Companies Act 2014; and
§ the Group financial statements and Company financial statements have been
properly prepared in accordance with the requirements of the Companies Act
2014 and, as regards the Group financial statements, Article 4 of the IAS
Regulation.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(Ireland) ("ISAs (Ireland)") and applicable law. Our responsibilities under
those standards are further described in the Auditor's Responsibilities for
the Audit of the Financial Statements section of our report. We are
independent of the Group and Company in accordance with ethical requirements
that are relevant to our audit of financial statements in Ireland, including
the Ethical Standard as applied to public interest entities issued by the
Irish Auditing and Accounting Supervisory Authority ("IAASA"), and we have
fulfilled our other ethical responsibilities in accordance with these
requirements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
financial year and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter
The entire investment portfolio is represented by unquoted equity and loan
investments and all investments are individually material to the financial
statements.
The valuation of investments is calculated using discounted cash flow models.
This is a highly subjective accounting estimate where there is an inherent
risk of bias arising from the investment valuations being prepared by the
Investment Manager, who is remunerated based on the Net Asset Value ("NAV") of
the Company.
These estimates include judgements including future power prices, wind
generation, discount rates, asset lives and inflation.
Related Disclosures
Refer to:
- Note 1 - Significant accounting policies;
- Note 2 - critical accounting judgments, estimates and assumptions;
- Note 4 - return on investments; and
- Note 9 - investments at fair value through profit or loss;
of the accompanying financial statements.
Audit Response
For investments valued using a discounted cash flow model we performed the
following procedures:
- Challenged the appropriateness of the selection and application of
key assumptions in the discounted cash flow model including discount rate,
energy yield, power price, inflation rate and asset life by benchmarking to
available industry data and consulting with our internal valuation
specialists;
- Agreed energy yield, power price and inflation rate used in the
model to independent reports;
- For new investments we obtained and reviewed all key agreements and
contracts and considered if they were accurately reflected in the valuation
model;
- For existing investments, we analysed changes in significant
assumptions compared with assumptions audited in previous periods and vouched
these to independent evidence including available industry data;
- Reviewed the valuation model to track changes to inputs or structure
from the valuation model used in the prior year and applied spreadsheet
analysis tools to assess the integrity of the valuation model;
- Agreed cash and other net assets to bank statements and investee
company management accounts, including interrogating the valuation of the
interest rate swaps to a 3rd party pricing source;
- Considered the accuracy of forecasting by comparing previous
forecasts to actual results;
- We vouched to loan agreements and verified the terms of the loan;
and
- We evaluated and challenged management's assessment as to the
recoverability of the loan investments.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial
statements that makes it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. We use materiality both
in planning the scope of our audit work and in evaluating the results of our
work.
Based on our professional judgement, we determined materiality for the
financial statements as a whole as follows:
§ For the purpose of our audit we used overall materiality of €25.6m, which
represents approximately 2% of the Group and Company's NAV.
§ We applied this threshold, together with qualitative considerations, to
determine the scope of our audit and the nature, timing and extent of our
audit procedures and to evaluate the effect of misstatements on the Financial
Statements as a whole.
§ We chose NAV as the benchmark because of the Group and Company's
asset-based structure. We selected 2% based on our professional judgment,
noting that it is also within the range of commonly accepted asset-related
benchmarks.
§ In addition, we used a specific materiality for the purpose of testing
transactions and balances which impact on the Group's return. Specific
materiality of €13.6m represents approximately 10% of the profit for the
year.
We agreed with the Audit Committee that we would report to the Audit Committee
all audit differences in excess of €1.3m, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Our evaluation of the directors' assessment of the Group and Company's ability
to continue to adopt the going concern basis of accounting including agreeing
the inputs and assumptions within the directors' assessment to supporting
documentation and our own understanding of the Group and Company. We stress
tested their assessment as well as conducting a robust review of the liquidity
position of the Group and Company. We have also reviewed the adherence to bank
covenants in place based on the stress tested forecasts and considered the
likelihood of these being breached in the future.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group or Company's ability to
continue as a going concern for a period of at least twelve months from the
date when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
We have nothing to report in respect of the following information in the
annual report, in relation to which the ISAs (Ireland) require us to report to
you whether we have anything material to add or draw attention to:
§ the disclosures in the annual report that describe the principal risks and
explain how they are being managed or mitigated;
§ the directors' confirmation in the annual report that they have carried out
a robust assessment of the principal risks facing the Group and the Company,
including those that would threaten its business model, future performance,
solvency or liquidity;
§ the directors' statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of
accounting in preparing the financial statements and the directors'
identification of any material uncertainties to the Group's and the Company's
ability to continue to do so over a period of at least twelve months from the
date of approval of the financial statements;
§ the directors' explanation in the annual report as to how they have
assessed the prospects of the Group and the Company, over what period they
have done so and why they consider that period to be appropriate, and their
statement as to whether they have a reasonable expectation that the Group and
the Company will be able to continue in operation and meet its liabilities as
they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2014
Based solely on the work undertaken in the course of the audit, we report
that:
§ in our opinion, the information given in the Directors' report is
consistent with the financial statements; and
§ in our opinion, the Directors' report has been prepared in accordance with
the Companies Act 2014.
We have obtained all the information and explanations which we consider
necessary for the purposes of our audit.
In our opinion, the accounting records of the Company were sufficient to
permit the financial statements to be readily and properly audited and the
Company Statement of Financial Position is in agreement with the accounting
records.
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and the Company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the Directors' report.
We are also required to review:
§ the Directors' statement in relation to going concern and longer-term
viability;
§ the part of the Corporate Governance Statement relating to the Company's
compliance with the
provisions of the Corporate Governance Code and AIC Code specified for our
review; and
§ certain elements of disclosures in the report to shareholders by the Board
of Directors' remuneration committee.
Also, the Companies Act 2014 requires us to report to you if, in our opinion,
the disclosures of directors' remuneration and transactions required by
sections 305 to 312 of the Act are not made.
We have nothing to report in this regard.
Respective responsibilities
Responsibilities of directors for the financial statements
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are responsible for
assessing the Group and Company's ability to continue as going concerns,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to
liquidate the Group or the Company or to cease operations, or has no realistic
alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (Ireland) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the IAASA's website at:
http://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Desc
ription_of_auditors_responsiblities_for_audit.pdf
(http://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Desc%20ription_of_auditors_responsiblities_for_audit.pdf)
This description forms part of our auditor's report.
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company's members, as a body, in accordance
with section 391 of the Companies Act 2014. Our audit work has been undertaken
so that we might state to the Company's members those matters we are required
to state to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members, as a body, for our
audit work, for this report, or for the opinions we have formed.
Stewart Dunne
For and on behalf of BDO
Dublin
Statutory Audit Firm
AI223876
Date
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
For the year ended For the year ended
31 December 2022 31 December 2021
Note €'000 €'000
Return on investments 4 172,415 93,023
Other income 13 67
Total income and gains 172,428 93,090
Operating expenses 5 (15,228) (10,283)
Investment acquisition costs (5,349) (3,166)
Operating profit 151,851 79,641
Finance expense 13 (15,279) (8,498)
Profit for the year before tax 136,572 71,143
Taxation 6 - -
Profit for the year after tax 136,572 71,143
Profit and total comprehensive income attributable to:
Equity holders of the Company 136,572 71,143
Earnings per share
Basic and diluted earnings from continuing operations in the year (cent) 7 12.7 9.3
The accompanying notes form an integral part of the consolidated financial
statements.
Consolidated Statement of Financial Position
As at 31 December 2022
31 December 2022 31 December 2021
Note €'000 €'000
Non current assets
Investments at fair value through profit or loss 9 2,109,570 1,408,802
2,109,570 1,408,802
Current assets
Receivables 11 290 359
Cash and cash equivalents 26,841 5,045
27,131 5,404
Current liabilities
Loans and borrowings 13 (100,000) -
Payables 12 (8,164) (6,297)
Net current (liabilities) (81,033) (893)
Non current liabilities
Loans and borrowings 13 (746,080) (472,709)
Net assets 1,282,457 935,200
Capital and reserves
Called up share capital 15 11,412 8,898
Share premium account 15 942,954 668,405
Other distributable reserves 48,219 114,597
Retained earnings 279,872 143,300
Total shareholders' funds 1,282,457 935,200
Net assets per share (cent) 16 112.4 105.1
Authorised for issue by the Board on 26 February 2023 and signed on its behalf
by:
Rónán
Murphy
Kevin McNamara
Chairman
Director
The accompanying notes form an integral part of the consolidated financial
statements.
Company Statement of Financial Position
As at 31 December 2022
31 December 2022 31 December 2021
Note €'000 €'000
Non current assets
Investments at fair value through profit or loss 9 1,278,474 935,069
1,278,474 935,069
Current assets
Receivables 11 324 227
Cash and cash equivalents 7,283 2,480
7,607 2,707
Current liabilities
Payables 12 (3,624) (2,576)
Net current assets 3,983 131
Net assets 1,282,457 935,200
Capital and reserves
Called up share capital 15 11,412 8,898
Share premium account 15 942,954 668,405
Other distributable reserves 48,219 114,597
Retained earnings 279,872 143,300
Total shareholders' funds 1,282,457 935,200
Net assets per share (cent) 16 112.4 105.1
The Company has taken advantage of the exemption under section 304 of the
Companies Act 2014 and accordingly has not presented a Statement of
Comprehensive Income for the Company alone. The profit after tax of the
Company for the year was €136,572,238 (2021: €71,143,477).
Authorised for issue by the Board on 26 February 2023 and signed on its behalf
by:
Rónán
Murphy
Kevin McNamara
Chairman
Director
The accompanying notes form an integral part of the consolidated financial
statements.
Consolidated and Company Statement of Changes in Equity
For the year ended 31 December 2022
Note Share capital Share premium Other distributable reserves Retained earnings Total
€'000 €'000 €'000 €'000 €'000
Opening net assets attributable to shareholders (1 January 2022) 8,898 668,405 114,597 143,300 935,200
Issue of share capital 15 2,514 279,000 - - 281,514
Share issue costs 15 - (4,451) - - (4,451)
Dividends 8 - - (66,378) - (66,378)
Profit and total comprehensive income for the year - - - 136,572 136,572
Closing net assets attributable to shareholders 11,412 942,954 48,219 279,872 1,282,457
After taking account of cumulative unrealised gains of €188,043,313, the
total reserves distributable by way of a dividend as at 31 December 2022 were
€140,048,064.
For the year ended 31 December 2021
Note Share capital Share premium Other distributable reserves Retained earnings Total
€'000 €'000 €'000 €'000 €'000
Opening net assets attributable to shareholders (1 January 2021) 7,412 507,476 161,768 72,157 748,813
Issue of share capital 15 1,486 163,514 - - 165,000
Share issue costs 15 - (2,585) - - (2,585)
Dividends 8 - - (47,171) - (47,171)
Profit and total comprehensive income for the year - - - 71,143 71,143
Closing net assets attributable to shareholders 8,898 668,405 114,597 143,300 935,200
The accompanying notes form an integral part of the consolidated financial
statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
For the year ended For the year ended
31 December 2022 31 December 2021
Note €'000 €'000
Net cash flows from operating activities 17 101,841 16,067
Cash flows from investing activities
Acquisition of investments (762,732) (449,647)
Investment acquisition costs (4,895) (3,603)
Repayment of shareholder loan investments 9 118,306 56,810
Net cash flows from investing activities (649,321) (396,440)
Cash flows from financing activities
Issue of share capital 15 281,514 165,000
Payment of issue costs (4,451) (2,585)
Dividends paid 8 (66,378) (47,171)
Amounts drawn down on loan facilities 13 470,660 654,780
Amounts repaid on loan facilities 13 (95,660) (394,780)
Finance costs 13 (16,409) (6,343)
Net cash flows from financing activities 569,276 368,901
Net increase/(decrease) in cash and cash equivalents during the year 21,796 (11,472)
Cash and cash equivalents at the beginning of the year 5,045 16,517
Cash and cash equivalents at the end of the year 26,841 5,045
The accompanying notes form an integral part of the consolidated financial
statements.
Company Statement of Cash Flows
For the year ended 31 December 2022
For the year ended For the year ended
31 December 2022 31 December 2021
Note €'000 €'000
Net cash flows from operating activities 17 (9,672) (5,663)
Cash flows from investing activities
Equity investments to Group companies (205,200) -
Loans advanced to Group companies 9 (35,651) (162,000)
Repayment of loans advanced to Group companies 9 30,289 34,400
Repayment of shareholder loan investments 9 14,352 18,954
Net cash flows from investing activities (196,210) (108,646)
Cash flows from financing activities
Issue of share capital 15 281,514 165,000
Payment of issue costs (4,451) (2,585)
Dividends paid 8 (66,378) (47,171)
Net cash flows from financing activities 210,685 115,244
Net increase in cash and cash equivalents during the year 4,803 935
Cash and cash equivalents at the beginning of the year 2,480 1,545
Cash and cash equivalents at the end of the year 7,283 2,480
The accompanying notes form an integral part of the consolidated financial
statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
1. Significant accounting policies
Basis of accounting
The consolidated financial statements have been prepared in accordance with
IFRS to the extent that they have been adopted by the EU and with those parts
of the Companies Act 2014 applicable to companies reporting under IFRS.
These consolidated financial statements are presented in Euro ("€") which
is the currency of the primary economic environment in which the Group
operates and are rounded to the nearest thousand, unless otherwise stated.
The annual 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 financial statements have been
prepared on the going concern basis. The principal accounting policies are set
out below.
New and amended standards and interpretations applied
There were no new standards or interpretations effective for the first time
for periods beginning on or after 1 January 2022 that had a significant effect
on the Group or Company's financial statements. Furthermore, none of the
amendments to standards that are effective from that date had a significant
effect on the financial statements.
New and amended standards and interpretations not applied
Updated accounting standards and interpretations have been published and will
be mandatory for the Company's accounting periods beginning on or after 1
January 2023 or later periods. The impact of these standards is not expected
to be material to the reported results and financial position of the Group.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the
Investment Manager's Report. The Group faces a number of risks and
uncertainties, as set out in the Directors' Report. The financial risk
management objectives and policies of the Group, including exposure to price
risk, interest rate risk, credit risk and liquidity risk are discussed in note
18 to the financial statements.
The Group continues to meet day-to-day liquidity needs through its cash
resources.
As at 31 December 2022, the Group had net current liabilities of €81 million
(2021: net liabilities of €0.9 million) and had cash balances of €26.8
million (2021: €5.0 million). This excludes cash balances within investee
companies of €161.3 million (2021: €68.4 million), which are sufficient to
meet current obligations as they fall due. The significant net current
liabilities position of the Group at 31 December 2022 is due to the Group's
RCF being due for repayment on 3 April 2023 (within 12 months of the year end)
and therefore being classified as a current liability. The Group entered into
a new RCF on 13 February 2023 and on signing, repaid the old RCF, with
additional information contacted in Note 21.
The major cash outflows of the Group are the payment of dividends and costs
relating to the acquisition of new assets, both of which are discretionary.
The Directors are confident that the Group has sufficient access to both debt
and equity markets in order to fund commitments to acquisitions and meet the
contingent liabilities detailed in note 14 of the financial statements, when
they become payable.
The Group had €846 million (2021: €472.7 million) of outstanding debt as
at 31 December 2022. The covenants on the Company's banking facilities are
limited to gearing and interest cover and the Company is expected to continue
to comply with these covenants going forward.
SPV revenues are derived from the sale of electricity and although
approximately 10% of the portfolio's revenue in 2022 is exposed to the
floating power price, revenue is received through power purchase agreements in
place with large and reputable providers of electricity to the market and also
through government subsidies.
The Directors have reviewed Group forecasts and projections which cover a
period of at least 12 months from the date of approval of this report, taking
into account foreseeable changes in investment and trading performance, which
show that the Group has sufficient financial resources to continue in
operation for at least the next 12 months from the date of approval of this
report.
On the basis of this review and after making due enquiries, the Directors have
a reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for at least 12 months from the
date of approval of this report. Accordingly, they continue to adopt the going
concern basis in preparing the financial statements.
Accounting for subsidiaries
The Directors have concluded that the Group has all the elements of control as
prescribed by IFRS 10 ''Consolidated Financial Statements'' in relation to all
its subsidiaries and that the Company satisfies the criteria to be regarded
as an investment entity as defined in IFRS 10, IFRS 12 ''Disclosure of
Interests in Other Entities'' and IAS 27 ''Consolidated and Separate Financial
Statements''. The three essential criteria are such that the entity must:
1. Obtain funds from one or more investors for the purpose of
providing these investors with professional investment management services;
2. Commit to its investors that its business purpose is to invest its
funds solely for returns from capital appreciation, investment income or both;
and
3. Measure and evaluate the performance of substantially all of its
investments on a fair value basis.
In satisfying the second essential criteria, the notion of an investment time
frame is critical. An investment entity should not hold its investments
indefinitely but should have an exit strategy for their realisation. Although
the Company has invested in equity interests in wind farms that have an
indefinite life, the underlying wind farm assets that it invests in have an
expected life of 30 years for onshore wind farms and 35 years for offshore
wind farms. The Company intends to hold these wind farms for the remainder of
their useful life to preserve the capital value of the Portfolio. However, as
the wind farms are expected to have no residual value after their expected
life, the Directors consider that this demonstrates a clear exit strategy from
these investments.
Notwithstanding this, IFRS 10 requires subsidiaries that provide services that
relate to the investment entity's investment activities but are not themselves
investment entities to be consolidated. Accordingly, the annual financial
statements include the consolidated financial statements of the Company and
Holdcos. In respect of these entities, intra-Group balances and any unrealised
gains arising from intra-Group transactions are eliminated in preparing the
consolidated financial statements. Unrealised losses are eliminated unless the
costs cannot be recovered. The consolidated financial statements of
subsidiaries that are included in the consolidated financial statements are
included from the date that control commences until the dates that control
ceases.
Subsidiaries are therefore measured at fair value through profit or loss, in
accordance with IFRS 13 ''Fair Value Measurement'' and IFRS 9 as permitted by
IAS 27. The financial support provided by the Group to its unconsolidated
subsidiaries is disclosed in note 9.
Consolidation
Subsidiaries are all entities (including structured entities) over which the
Company has control. The Company controls an entity when the Company has power
over the entity, is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Company. They are derecognised
from the date that control ceases.
The Company applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of a
subsidiary (for accounting purposes) is the fair value of the assets
transferred, the liabilities incurred to the former owners of the acquiree and
the equity interests issued by the Company. The consideration transferred
includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
The Company recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised amounts of
the acquiree's identifiable net assets.
The following table outlines the consolidated entities.
Investment Date of Control Place of Business
Registered Owner-ship % Country of
Office Incorporation
Holdco 9 March 2017 Riverside One, Sir 100% Ireland Ireland
John Rogerson's
Quay, Dublin 2
Holdco 1 2 March 2020 Riverside One, Sir 100% Ireland Ireland
John Rogerson's
Quay, Dublin 2
Holdco 2 2 March 2020 Riverside One, Sir 100% Ireland Ireland
John Rogerson's
Quay, Dublin 2
Based on control, the results of Holdco, Holdco 1 and Holdco 2 are
consolidated into the Consolidated Financial Statements.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions
between group companies are eliminated on Consolidation. Unrealised losses are
also eliminated. When necessary, amounts reported by subsidiaries have been
adjusted to conform to the Company's accounting policies. During the year, no
such adjustments have been made, given all subsidiaries have uniform
accounting policies.
Acquisition method
The acquisition method is used for all business combinations.
Steps in applying the acquisition method are:
· Identification of the acquirer;
· Determination of the acquisition date;
· Recognition and measurement of the identifiable assets acquired, the
liabilities assumed and any non-controlling interest (NCI, formerly called
minority interest) in the acquiree; and
· Recognition and measurement of goodwill or a gain from a bargain
purchase.
The guidance in IFRS 10 "Consolidated Financial Statements" is used to
identify an acquirer in a business combination, i.e. the entity that obtains
control of the acquiree. An acquirer considers all pertinent facts and
circumstances when determining the acquisition date, i.e. the date on which it
obtains control of the acquiree. The acquisition date may be a date that is
earlier or later than the closing date.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's
Statement of Financial Position when the Group becomes a party to the
contractual provisions of the instrument. Financial assets and financial
liabilities are only offset and the net amount reported in the Consolidated
Statement of Financial Position when there is a currently enforceable legal
right to offset the recognised amounts and the Group intends to settle on a
net basis or realise the asset and liability simultaneously.
At 31 December 2022 and 2021, the carrying amounts of cash and cash
equivalents, receivables, payables and borrowings 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 and the Company
became party to the contractual requirements of the financial asset.
Loans and receivables
These assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They principally comprise
cash and trade and other receivables and they are initially recognised at fair
value and subsequently carried at amortised cost using the effective interest
rate method, less provision for impairment. Transaction costs are recognised
in the Consolidated Statement of Comprehensive Income as incurred. The Group
and Company assesses whether there is any objective evidence that financial
assets are impaired at the end of each reporting period. If any such evidence
exists, the amount of the impairment loss is measured as the difference
between the asset's carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate. The amount of
any impairment is recognised in the Consolidated Statement of Comprehensive
Income. Impairment provisions for loans and receivables are recognised based
on a forward-looking expected credit loss model. All financial assets assessed
under this model are immaterial to the financial statements.
Investments at Fair Value Through Profit or Loss
Investments are designated upon initial recognition as held at fair value
through profit or loss. Movements in fair value are recognised in the
Consolidated Statement of Comprehensive Income during the reporting period. As
shareholder loan investments form part of a managed portfolio of assets whose
performance is evaluated on a fair value basis, loan investments are
designated at fair value in line with equity investments.
The Company's loan and equity investments in Holdcos are held at fair value
through 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. Gains or losses resulting from the revaluation of
investments are recognised in the Consolidated Statement of Comprehensive
Income.
De-recognition of financial assets
A financial asset (in whole or in part) is derecognised either:
· When the Group has transferred substantially all the risks and
rewards of ownership; or
· When it has neither transferred or retained substantially all the
risks and rewards and when it no longer has control over the assets or a
portion of the asset; or
· When the contractual right to receive cash flow has expired.
Financial liabilities
Financial liabilities are classified according to the substance of the
contractual agreements entered into.
All financial liabilities are initially recognised at fair value net of
transaction costs incurred. All financial liabilities are recorded on the
date on which the Group becomes party to the contractual requirements of the
financial liability.
All loans and borrowings are initially recognised at cost, being fair value of
the consideration received, less issue costs where applicable. After initial
recognition, all interest-bearing loans and borrowings are subsequently
measured at amortised cost using the effective interest rate method. Loan
balances as at the year end have not been discounted to reflect amortised
cost, as the amounts are not materially different from the outstanding
balances.
The Group's other financial liabilities measured at amortised cost include
trade and other payables and other short term monetary liabilities which are
initially recognised at fair value and subsequently measured at amortised cost
using the effective interest rate method.
A financial liability (in whole or in part) is derecognised when the Group
has extinguished its contractual obligations, it expires or is cancelled. Any
gain or loss on de-recognition is taken to the Consolidated Statement of
Comprehensive Income.
Finance expenses
Borrowing costs are recognised in the Consolidated Statement of Comprehensive
Income in the period to which they relate on an accruals basis using the
effective interest rate method.
Share capital
Financial instruments issued by the Company are treated as equity if the
holder has only a residual interest in the assets of the Company after the
deduction of all liabilities. The Company's ordinary shares are classified as
equity instruments.
Share issue costs of the Company directly attributable to the issue and
listing of shares are charged to the share premium account. Share issue costs
include those incurred in connection with the placing and admission which
include fees payable under a placing agreement, legal costs and any other
applicable expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held on call with
banks and other short-term highly liquid deposits with original maturities of
3 months or less, that are readily convertible to a known amount of cash and
are subject to an 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 consolidated
financial statements when the Company's obligation to make payment has been
established.
Income recognition
Interest income on shareholder loan investments is recognised when the Group's
entitlement to receive payment is established.
Other income is accounted for on an accruals basis.
Gains or losses resulting from the movement in fair value of the Group's and
Company's investments held at fair value through profit and loss are
recognised in the Consolidated Statement of Comprehensive Income at each
valuation point.
Expenses
Expenses are accounted for on an accruals basis.
Taxation
Under the current system of taxation in Ireland, the Company is liable to
taxation on its operations in Ireland.
Current tax is the expected tax payable on the taxable income for the period,
using tax rates that have been enacted or substantively enacted at the date of
the Consolidated Statement of Financial Position.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
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
nor the accounting profit. Deferred tax liabilities are recognised for
taxable temporary differences arising on investments, except where the Company
is able to control the timing of the reversal of the difference and it is
probable that the temporary difference will not reverse in the foreseeable
future. Deferred tax is calculated at the tax rates that are expected to apply
in the period when the liability is settled or the asset is realised. Deferred
tax is charged or credited to the Consolidated Statement of Comprehensive
Income except when it relates to items charged or credited directly to equity,
in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off tax assets against tax liabilities and when they
relate to income taxes levied by the same taxation authority and the Company
intends to settle its current tax assets and liabilities on a net basis.
Deferred tax assets and liabilities are not discounted.
Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors, as a whole.
The key measure of performance used by the Board to assess the Group's
performance and to allocate resources is the total return on the Group's net
assets, as calculated under IFRS and therefore no reconciliation is required
between the measure of profit or loss used by the Board and that contained in
the consolidated financial statements.
For management purposes, the Group is organised into one main operating
segment, which invests in renewable generation and storage assets.
The Group is engaged in a single segment of business, being investment in
renewable infrastructure to generate investment returns while preserving
capital. The Group presents the business as a single segment comprising a
homogeneous portfolio.
2. Critical accounting judgements, estimates and assumptions
The preparation of the 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.
Classification of an investment entity
One area of judgement relates to the Company's classification as 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. IFRS 10 requires that a
Company has to fulfil 3 criteria to be an investment entity:
· Obtains funds from one or more investors for the purpose of providing
those investor(s) with investment management services;
· Commits to its investor(s) that its business purpose is to invest
funds solely for returns from capital appreciation, investment income, or
both; and
· Measures and evaluates the performance of substantially all of its
investments on a fair value basis.
IFRS 10 also determines that an investment entity would have the following
typical characteristics:
· It has more than one investment;
· It has more than one investor;
· It has investors that are not related parties; and
· It has ownership interest in the form of equity or similar interests.
An entity that does not display all of the above characteristics could,
nevertheless, meet the definition of an investment entity. The estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying value of assets and liabilities are those used to determine the
fair value of the investments as disclosed in note 9 to the financial
statements.
The Directors have concluded that the Company meets the definition of an
investment entity.
Fair value of investments
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. A sensitivity analysis of these assumptions is included
in note 9.
Useful lives are based on the Investment Manager's estimates of the period
over which the assets will generate revenue which are periodically reviewed
for continued appropriateness. The standard assumption used for the useful
life of an onshore wind farm is 30 years and 35 years for an offshore wind
farm, which is commonly used by similar investment companies that invest in
operating wind farms. Other factors for consideration are the lengths of site
leases and planning permission of the wind farms, which the Investment Manager
monitors closely. The weighted average lease length across the portfolio is 30
years with many leases having options to extend and planning permission across
the portfolio is between 20 and 25 years from commissioning. The Investment
Manager fully expects to be able to renew leases and planning.
The discount rates are subjective and therefore it is feasible that a
reasonable alternative assumption may be used resulting in a different value.
The discount rates applied to the cash flows are reviewed quarterly by the
Investment Manager to ensure they are at the appropriate level. The Investment
Manager will take into consideration market transactions, where of similar
nature, when considering changes to the discount rates used.
The revenues and expenditure of the investee companies are frequently, partly
or wholly subject to indexation and an assumption is made that inflation will
increase at a long term rate.
The price at which the output from the revenue generating assets is sold is a
factor of both wholesale electricity prices and the revenue received under
various government support regimes. Future power prices are estimated using
external third-party forecasts which take the form of specialist consultancy
reports, which reflect various factors including gas prices, carbon prices and
renewables deployment, each of which reflect the global response to climate
change. The future power price assumptions are reviewed as and when these
forecasts are updated. There is an inherent uncertainty in future wholesale
electricity price projection.
Specifically commissioned external reports are used to estimate the expected
electrical output from the wind farm assets taking into account the expected
average wind speed at each location and generation data from historical
operation. The actual electrical output may differ considerably from that
estimated in such a report mainly due to the variability of actual wind to
that modelled in any one period. Assumptions around electrical output will be
reviewed only if there is good reason to suggest there has been a material
change in this expectation.
3. Investment management fees
Under the terms of the Investment Management Agreement, the Investment Manager
is entitled to a management fee from the Company, which is calculated
quarterly in arrears in accordance with the Investment Management Agreement.
The Fee is calculated in respect of each quarter and in each case based upon
the NAV:
§ on that part of the NAV up to and including €1 billion, an amount equal
to 0.25% of such part of the NAV;
§ 0.2% of NAV per quarter on that part of NAV from €1 billion to €1.75
billion; and
§ 0.1875% of NAV per quarter on that part of NAV over €1.75 billion.
Investment management fees paid or accrued in the years ended 31 December 2022
and 31 December 2021 were as follows:
For the year ended For the year ended
31 December 2022 31 December 2021
€'000 €'000
Investment management fees 11,913 7,944
11,913 7,944
As at 31 December 2022, €3,140,251 was payable in relation to investment
management fees (2021: €2,155,526).
4. Return on investments
For the year ended For the year ended
31 December 2022 31 December 2021
€'000 €'000
Interest on shareholder loan investment (note 19) 32,757 16,741
Dividends received (note 19) 83,587 11,350
Unrealised movement in fair value of investments (note 9) 56,071 64,932
172,415 93,023
5. Operating expenses
For the year ended For the year ended
31 December 2022 31 December 2021
€'000 €'000
Investment management fees (note 3) 11,913 7,944
Other expenses 2,593 1,684
Non-executive Directors' remuneration 358 325
Group and SPV administration fees 246 251
Fees to the Company's Auditor:
for audit of the statutory financial statements 115 76
for other services 3 3
15,228 10,283
The fees to the Company's Auditor include €3,150 (2021: €3,000) paid in
relation to a limited review of the Interim Report during the year.
6. Taxation
For the year ended For the year ended
31 December 2022
31 December 2021
€'000 €'000
Taxation - -
The tax reconciliation is explained below.
For the year ended For the year ended
31 December 2022
31 December 2021
€'000 €'000
Profit for the year before taxation 136,572 71,143
Profit for the year multiplied by the standard rate of corporation tax of 17,072 8,893
12.5%
Tax on income at a higher rate 1,565 997
Fair value movements (not subject to taxation) (7,201) (8,117)
Dividends received (not subject to taxation) (10,859) (1,419)
Losses available for surrender 138 129
Group relief at higher rate of tax (1,565) (997)
Expenditure not deductible for tax purposes 850 514
- -
7. Earnings per share
For the For the
year ended year ended
31 December 31 December
2022 2021
Profit attributable to equity holders of the Company - €'000 136,572 71,143
Weighted average number of ordinary shares in issue 1,076,507,357 767,303,359
Basic and diluted earnings from continuing operations in the year (cent) 12.7 9.3
8. Dividends declared with respect to the year
Interim dividends paid during the year ended 31 December 2022 Dividend per Total
Share Dividend
cent €'000
With respect to the quarter ended 31 December 2021 1.515 13,482
With respect to the quarter ended 31 March 2022 1.545 17,632
With respect to the quarter ended 30 June 2022 1.545 17,632
With respect to the quarter ended 30 September 2022 1.545 17,632
6.150 66,378
Interim dividends declared after 31 December 2022 and not accrued in the year Dividend per Total
Share Dividend
cent €'000
With respect to the quarter ended 31 December 2022 1.545
17,632
1.545 17,632
On 26 January 2023, the Company announced a dividend of 1.5450 cent per share
with respect to the quarter ended 31 December 2022, bringing the total
dividend declared with respect to the year to 31 December 2022 to 6.18 cent
per share. The record date for the dividend was 3 February 2023 and the
payment date was 24 February 2023.
The following table shows dividends paid in the prior year.
Interim dividends paid during the year ended 31 December 2021 Dividend per Total
Share Dividend
cent €'000
With respect to the quarter ended 31 December 2020 1.515 11,230
With respect to the quarter ended 31 March 2021 1.515 11,230
With respect to the quarter ended 30 June 2021 1.515 11,230
With respect to the quarter ended 30 September 2021 1.515 13,481
6.060 47,171
9. Investments at fair value through profit or loss
Loans Equity interest Total
Group as at 31 December 2022 €'000 €'000 €'000
Opening balance 779,865 628,937 1,408,802
Additions 601,648 161,084 762,732
Repayment of shareholder loan investments (note 19) (118,306) - (118,306)
Restructure of shareholder loan investments / Equity Investments (note 19) 2,708 (2,939) (231)
Unrealised movement in fair value of investments (note 4) 502 56,071 56,573
1,266,417 843,153 2,109,570
Loans Equity interest Total
Group as at 31 December 2021 €'000 €'000 €'000
Opening balance 505,552 438,800 944,352
Additions 378,342 74,205 452,547
Repayment of shareholder loan investments (note 19) (56,810) - (56,810)
Restructure of shareholder loan investment (note 19) (51,000) 51,000 -
Shareholder loan adjustment (657) - (657)
Unrealised movement in fair value of investments (note 4) 4,438 64,932 69,370
779,865 628,937 1,408,802
The unrealised movement in fair value of investments of the Group during the
year were made up as follows:
For the year ended For the year ended
31 December 2022 31 December 2021
€'000 €'000
Decrease in valuation of investments (93,685) (24,792)
Movement in swap fair values within SPVs 36 4,166
Repayment of debt at SPV level 13,481 14,527
Repayment of shareholder loan investments 118,306 56,810
Shareholder loan balance adjustment (2,708) 657
Movement in cash balances of SPVs 21,143 18,002
56,573 69,370
Loans Equity interest Total
Company as at 31 December 2022 €'000 €'000 €'000
Opening balance 575,336 359,733 935,069
Equity investments (note 19) - 205,200 205,200
Loans repaid by Holdcos (note 19) (30,289) - (30,289)
Loans advanced to SPVs (note 19) 35,651 - 35,651
Loans repaid by wind farm SPVs (note 19) (14,352) - (14,352)
Unrealised movement in fair value of investments - 147,195 147,195
566,346 712,128 1,278,474
Loans Equity interest Total
Company as at 31 December 2021 €'000 €'000 €'000
Opening balance 517,690 228,217 745,907
Loans advanced to Holdcos (note 19) 162,000 - 162,000
Loans repaid by Holdcos (note 19) (34,400) - (34,400)
Loans repaid by wind farm SPVs (note 19) (69,954) - (69,954)
Restructure of shareholder loan (note 19) - 51,000 51,000
Unrealised movement in fair value of investments - 80,516 80,516
575,336 359,733 935,069
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level. The level of
fair value hierarchy which the financial assets or financial liabilities are
recognised is on the basis of the lowest level input that is significant to
the fair value measurement. Financial assets and financial liabilities are
classified in their entirety into only one of the following 3 levels:
· Level 1 - quoted prices (unadjusted) in active
markets for identical assets or liabilities;
· Level 2 - inputs other than quoted prices
included within Level 1 that are observable for the assets or liabilities,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
· Level 3 - inputs for assets or liabilities that are not based on
observable market data (unobservable inputs).
The determination of what constitutes 'observable' requires significant
judgement by the Group. The Group considers observable data to be market data
that is readily available, regularly distributed or updated, reliable and
verifiable, not proprietary and provided by independent sources that are
actively involved in the relevant market.
The only financial instruments held at fair value are the investments held by
the Group in the SPVs, which are fair valued at each reporting date. The
Group's investments have been classified within level 3 as the investments are
not traded and contain unobservable inputs. The Company's investments are all
considered to be level 3 assets. As the fair value of the Company's equity and
loan investments in Holdcos is ultimately determined by the underlying fair
values of the SPV investments, the Company's sensitivity analysis of
reasonably possible alternative input assumptions is the same as for the
Group.
Due to the nature of the investments, they are always expected to be
classified as level 3. There have been no transfers between levels during the
year ended 31 December 2022.
Any transfers between the levels would be accounted for on the last day of
each financial period.
The Investment Manager carries out the asset valuations, which form part of
the NAV calculation. These asset valuations are based on discounted cash flow
methodology in line with IPEV Valuation Guidelines and adjusted where
appropriate, given the special nature of wind farm investments.
Valuations are derived using a discounted cashflow methodology in line with
IPEV Valuation Guidelines and take into account, inter alia, the following:
· due diligence findings where relevant;
· the terms of any material contracts including PPAs;
· asset performance;
· power price forecast from a leading market consultant; and
· the economic, taxation or regulatory environment.
The DCF valuation of the Group's investments represents the largest component
of GAV and the key sensitivities are considered to be the discount rate used
in the DCF valuation and long term assumptions in relation to inflation,
energy yield, power prices and asset life.
The base case discount rate is a blend of a lower discount rate for fixed cash
flows and a higher discount rate for merchant cash flows. The Portfolio's
blended unlevered discount rate as at 31 December 2022 was 6.9%, which
includes a 0.5% increase in the underlying discount rates during the year
reflecting higher discount rate.
The DCF valuation is produced by discounting the individual wind farm cash
flows on an unlevered basis. The equivalent levered discount rate (assuming
40% gearing) is approximately 9%.
Base case long term CPI assumption is 2.0% for all countries based on long
term target of the ECB and European central banks. Higher inflation
assumptions are used for 2023 and 2024.
A variance of +/- 0.5% is considered to be a reasonable range of alternative
assumptions for both discount and inflation rate.
Base case energy yield assumptions are P50 (50% probability of exceedance)
forecasts based on long term wind data and operational history. The P90 (90%
probability of exceedance over a 10 year period) and P10 (10% probability of
exceedance over a 10 year period) sensitivities reflect the future variability
of wind and the uncertainty associated with the long term data source being
representative of the long term mean.
Long term power price forecasts are provided by leading market consultants,
updated quarterly and may be adjusted by the Investment Manager where more
conservative assumptions are considered appropriate.
The base case asset life depends on the technology as those are underpinned by
different design life. As a result, the Portfolio's wind onshore assets'
lifetime is typically 30 years whilst the Portfolio's wind offshore assets'
lifetime is based on 35 years. There is no terminal value assumed at the end
of operating life.
The sensitivity below assumes that asset life may be 5 years shorter or longer
than the base case, which is impacted by technical durability of the wind farm
components and commercial aspects of each investment, including the renewals
of site leases, planning permission and grid connection agreements.
Sensitivity analysis
The fair value of the Group's investments is €2,109,569,844 (2021:
€1,408,802,257). The following analysis is provided to illustrate the
sensitivity of the fair value of investments to a change in an individual
input, while all other variables remain constant. The Board considers these
changes in inputs to be within reasonable expected ranges. This is not
intended to imply the likelihood of change or that possible changes in value
would be restricted to this range.
Input Base case Change in input Change in fair value of investments Change in NAV per share
€'000 cent
Discount rate 6-7 % +0.5 % (69,667) (6.1)
-0.5 % 74,206 6.5
Energy yield P50 10-year P90 (128,748) (11.3)
10-year P10 127,684 11.2
Power price Forecast by leading consultant -10 % (135,947) (11.9)
10 % 130,850 11.5
Inflation rate 2.0 % - 0.5 % (60,757) (5.3)
Long term +0.5 % 64,581 5.7
Asset Life 30 years (onshore)/ - 5 years (148,179) (13.0)
35 years (offshore) + 5 years 102,394 9.0
The sensitivities above are assumed to be independent of each other. Combined
sensitivities are not presented.
10. Unconsolidated subsidiaries, associates and joint ventures
The following table shows subsidiaries of the Group. As the Company is
regarded as an investment entity as referred to in note 1, these subsidiaries
have not been consolidated in the preparation of the consolidated financial
statements:
Place of Business Ownership Interest as at
31 December 2022
Investment
Registered Office
Ballybane Windfarms Limited Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Beam Wind Limited Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Carrickallen Wind Limited Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 50%
Cloosh Valley Wind Farm Holdings DAC((1)) Ireland 6(th) Floor, South Bank House, Barrow Street, Dublin 4 75%
Cnoc Windfarms Limited((2)) Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Cordal Windfarm Holdings Limited((3)) Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Cregg Wind Farm Limited((4)) Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Glencarbry Windfarm Limited Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Gortahile Windfarm Limited Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
GRW1 AH Limited((5)) Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Killala Community Wind Farm DAC Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Killhills Windfarm Limited Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Knockacummer Wind Farm Limited Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Knocknalour Wind Farm Limited Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Kostroma Holdings Limited ((6)) Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
100%
Lisdowney Wind Farms Limited Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2
Meenaward Wind Farm Limited ((7)) Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Monaincha Sigatoka Wind Holdings DAC ((8)) Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Parc Eolien Des Tournevents du Cos SAS ((9)) France 20, Avenue de la Paix, 67000 Strasbourg, France 100%
Parc Eolien Des Courtibeaux SAS ((10)) France 20, Avenue de la Paix, 67000 Strasbourg, France 100%
Raheenleagh Power DAC Ireland Two Gateway, East Wall Road, Dublin 3 50%
Ronaver Energy Limited ((11)) Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Seahound Wind Developments Limited ((12)) Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Sliabh Bawn Wind Holdings DAC((13)) Ireland Dublin Road, Newtownmountkennedy, Co. Wicklow 25%
SMSF Holdings Limited Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Société d'Exploitation du Parc Eolien du Tonnerois ((14)) France 20, Avenue de la Paix, 67000 Strasbourg, France 100%
Tra Investments Limited((15)) Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
Tullynamoyle Wind Farm II Limited Ireland Riverside One, Sir John Rogerson's Quay, Dublin 2 100%
( )
((1)) The Group's investment in Cloosh Valley is held through Cloosh Valley
Wind Farm Holdings DAC
((2)) The Group's investment in Cnoc Energy Supply is held through Cnoc
Windfarm Holdings Limited
((3)) The Group's investment in Cordal Windfarms and Oak Energy Supply Limited
is held through Cordal Windfarm Holdings Limited
((4)) The Group's investment in Taghart is held through Cregg Wind Farm
Limited
((5)) The Group's investment in GRP Sweden Holdings AB((16)), Boston Holding
A/S (Danish HoldCo)((17)), GRP Finland Holdings Oy((18)), GRP Germany Holdings
GmbH((19)) and Soliedra is held through GRW1 AH Limited
((6)) The Group's investment in Glanaruddery is held through Kostroma Holdings
Limited
((7)) The Group's investment in Beam Hill Extension is held through Meenaward
Wind Farm Limited
((8)) The Group's investments in Monaincha and Garranereagh are held through
Monaincha Sigatoka Wind Holdings DAC
((9)) The Group's investment in Pasilly is held through Parc Eolien Des
Tournevents du Cos SAS
((9)) The Group's investment in Saint Martin is held through Parc Eolien Des
Courtibeaux SAS
((11)) The Group's investment in Tullahennel is held through Ronaver Energy
Limited
((12)) The Group's investment in Letteragh is held through Seahound Wind
Developments Limited
((13)) The Group's investment in Sliabh Bawn Power and Sliabh Bawn Supply is
held through Sliabh Bawn Wind Holdings DAC
((14)) The Group's investment in Sommette is held through Société
d'Exploitation du Parc Eolien du Tonnerois
((15)) The Group's investment in Ballincollig Hill is held through Tra
Investments Limited
((16)) The Group's investment in Erstrask South is held through GRP Sweden
Holdings AB Limited
((17)) The Group's investment in Borkum is held through Boston Holding A/S
(Danish HoldCo)
((18)) The Group's investment in Kokkaneva is held through GRP Finland
Holdings Oy
((19)) The Group's investment in Genonville, Grande Piece, Menonville and Arcy
Precy is held through GRP Germany Holdings GmbH
Security deposits and guarantees provided by the Group on behalf of its
investments are as follows:
Provider of security Investment Beneficiary Nature Purpose Amount
€'000
The Company Killhills AIB Cash Planning 100
100
The fair value of cash security deposits are as disclosed in the table above.
11. Receivables
31 December 2022 31 December 2021
Group €'000 €'000
Sundry receivables 25 157
VAT receivable 48 118
Prepayments 50 46
Accrued income 167 20
Withholding tax receivable - 18
290 359
31 December 2022 31 December 2021
Company €'000 €'000
Due from wind farm SPVs 219 108
VAT receivable 65 83
Prepayments 40 36
324 227
The Company has reviewed the receivable from wind farm SPVs in accordance with
IFRS 9 "Financial Instruments" and has not accounted for any expected credit
losses. At 26 February 2023, the current balance outstanding is €219,000.
12. Payables
31 December 2022 31 December 2021
Group €'000 €'000
Investment management fee payable 3,140 2,156
Other payables 1,706 1,739
Acquisition costs payable 1,787 1,327
Loan interest payable 1,210 781
Commitment fee payable 321 257
Share issue costs payable - 37
8,164 6,297
31 December 2022 31 December 2021
Company €'000 €'000
Investment management fee payable 3,140 2,156
Other payables 484 383
Share issue costs payable - 37
3,624 2,576
13. Loans and borrowings
The Company did not hold any loans or borrowings at 31 December 2022 (2021:
€nil).
31 December 2022 31 December 2021
Group at 31 December 2022 €'000 €'000
Opening balance 472,709 210,808
Revolving Credit Facility
Drawdowns 195,660 379,780
Repayments (95,660) (394,780)
Amortisation - 2,173
Term debt facilities
Drawdowns 275,000 275,000
Finance costs capitalised during the year (2,829) (816)
Amortisation 1,200 544
Closing balance 846,080 472,709
Reconciled as
Current liabilities 100,000 -
Non-current liabilities 746,080 472,709
Closing balance 846,080 472,709
The finance costs associated with the RCF and term debt facilities that were
capitalised and amortised during the year ended 31 December 2022 was €1.6
million (2021: €nil).
In the prior period finance costs associated with the RCF were fully
amortised, as the balance owing was Nil.
For the year ended 31 December 2022 For the year ended 31 December 2021
€'000 €'000
Loan interest 12,407 4,550
Professional fees 46 490
Amortised facility arrangement fees 1,200 2,717
Commitment fees 1,626 741
15,279 8,498
In relation to non-current loans and borrowings, the Directors are of the view
that the current market interest rate is not significantly different to the
respective instruments' contractual interest rates, therefore the fair value
of the non-current loans and borrowings at the end of the reporting period is
not significantly different from their carrying amounts.
The Group maintained a €300 million RCF with CIBC, RBC and Santander with a
margin of 1.3% per annum plus EURIBOR. On 13 February, 2023, the Group entered
into a new RCF as detailed in note 21.
The Group is obliged to pay a quarterly commitment fee of 0.46% per annum of
the undrawn commitment available under the facility. Lenders' security
consists of comprehensive debentures incorporating a fixed and floating charge
over the Group including a charge over the Group's bank accounts and shares in
the underlying investments.
As at 31 December 2022, the principal balance of the RCF outstanding was
€100 million (2021: €nil), which is recorded as a current liability.
Term debt facilities of the Group are detailed below:
Facility A
In April 2021, the Group increased the aggregate 5-year term debt arrangements
adding ING into the banking syndicate. Details of the Group's term debt
facilities and associated interest rate swaps are set out in the tables below:
Provider Maturity date Loan Swap fixed Loan
margin rate principal
% % €'000
CBA 7 October 2025 1.55 (0.399) 75,000
NAB 7 October 2025 1.55 (0.399) 75,000
ING 7 October 2025 1.55 (0.300) 75,000
Natwest 7 October 2025 1.55 (0.396) 50,000
275,000
Facility B
In July 2021, the Group entered into a 7-year term debt arrangement with AXA.
This fixed rate non-amortising term debt of €200 million was utilised in
three tranches on 30 September 2021 (€100 million), 10 December 2021 (€50
million) and 17 December 2021 (€50 million).
Provider Maturity date Loan Mid swap Loan
margin rate principal
% % €'000
AXA 30 September 2028 1.85 (0.141) 150,000
AXA 30 September 2028 1.85 (0.045) 50,000
200,000
Facility C
In April 2022, the Group entered into a new 5-year term debt arrangements with
the existing term debt lenders, being, CBA, ING, NAB and NatWest. Details of
the Group's term debt facilities under Facility C and associated interest rate
swaps are set out in the below table:
Provider Maturity date Loan Swap fixed Loan
margin rate principal
% % €'000
CBA 01 April 2027 1.45 2.062 75,000
NAB 01 April 2027 1.45 2.057 75,000
ING 01 April 2027 1.45 2.059 75,000
Natwest 01 April 2027 1.45 2.077 50,000
275,000
All borrowing ranks pari passu with a debenture over the assets of, Holdco 1
and Holdco 2 and a floating charge over Holdco 1 and Holdco 2's bank accounts.
These loans contain swaps that are contractually linked. Accordingly, they
have been treated as single fixed rate loan agreements, which effectively set
interest payable at fixed rates.
14. Contingencies and Commitments
In December 2020, the Group entered into an agreement to acquire the Cloghan
and Taghart wind farms for a headline consideration of €123 million. Taghart
was acquired in December 2022, with Cloghan expected to be completed in March
2023, once the wind farm is fully operational.
In December 2021, the Group entered into an agreement to acquire Torrubia, a
50MW solar farm currently under construction in La Muela, Spain. The
investment is scheduled to complete in March 2023 once the solar farm is fully
operational.
In June 2022, the Group entered into an agreement to acquire the Estrack North
wind farm a 134.4MW onshore wind farm in Norrbotten County, Sweden from
Enercon on a forward sale basis. The investment is scheduled to complete in
Q4, 2023, once the wind farm is fully operational.
In July 2022, the Group entered into an acquisition agreement to acquire the
80.5MW South Meath Solar Farm from Statkraft. The Group will acquire a 50%
stake in the asset with the remaining 50% being acquired in partnership with a
pension fund, investing through a fund also managed by Schroders Greencoat
Capital LLP, the Group's Investment Manager. The asset is currently under
construction in County Meath, Ireland, with commencement of commercial
operations expected in Q4 2023. The transaction is structured under a forward
sale model and will only complete once the solar farm is fully operational.
In December 2022, the Group signed an agreement to acquire 22.5% of the
Butendiek offshore wind farm, located in Germany's exclusive economic zone in
the North Sea, from Marguerite Pantheon. Developed by wpd AG, the Butendiek
offshore wind farm has a total capacity of 288MW and has been operational
since 2015. This transaction completed on 21 February 2023, following
regulatory approval and was funded in part by a drawdown on the Group's RCF of
€150 million.
15. Share capital - ordinary shares
At 31 December 2022, the Company had authorised share capital of 2,000,000,000
ordinary shares of €0.01 each.
Date Issued and fully paid Number of shares issued Share capital Share premium Total
€'000 €'000 €'000
1 January 2022 Opening balance 889,887,587 8,898 668,405 677,303
5 April 2022 Issued and paid 251,351,351 2,514 279,000 281,514
5 April 2022 Less share issue costs - - (4,451) (4,451)
31 December 2022 1,141,238,938 11,412 942,954 954,366
Date Issued and fully paid Number of shares issued Share capital Share premium Total
€'000 €'000 €'000
1 January 2021 Opening balance 741,238,938 7,412 507,476 514,888
29 October 2021 Issued and paid 148,648,649 1,486 163,514 165,000
29 October 2021 Less share issue costs - - (2,585) (2,585)
31 December 2021 889,887,587 8,898 668,405 677,303
Shareholders are entitled to all dividends paid by the Company and, on a
winding up, provided the Company has satisfied all of its liabilities, the
shareholders are entitled to all of the residual assets of the Company.
16. Net assets per share
Group and Company 31 December 2022 31 December 2021
Net assets - €'000 1,282,457 935,200
Number of ordinary shares issued 1,141,238,938 889,887,587
Total net assets - cent 112.4 105.1
17. Reconciliation of operating profit for the year to net cash from operating activities
Group For the year ended 31 December 2022 For the year ended 31 December 2021
€'000 €'000
Operating profit for the year 151,851 79,641
Adjustments for:
Movement in fair value of investments (note 4) (56,071) (64,932)
Investment acquisition costs 5,349 3,166
Finance costs capitalised during the period (2,829) (816)
Amortisation of finance costs (note 13) 1,200 2,717
Decrease in receivables (note 11) 69 3,736
Increase/(decrease) in payables 2,272 (7,445)
Net cash flows from operating activities 101,841 16,067
Company For the year ended 31 December 2022 For the year ended 31 December 2021
€'000 €'000
Operating profit for the year 136,572 71,143
Adjustments for:
Movement in fair value of investments (note 9) (147,195) (80,516)
(Increase)/decrease in receivables (note 11) (97) 3,545
Increase in payables 1,048 165
Net cash flows from operating activities (9,672) (5,663)
18. Financial risk management
The Investment Manager and the Administrator report to the Board on a
quarterly basis and provide information to the Board which allows it to
monitor and manage financial risks relating to its operations. The Group's
activities expose it to a variety of financial risks: market risk (including
price risk, interest rate risk and foreign currency risk), credit risk and
liquidity risk.
The Group's market risk is managed by the Investment Manager in accordance
with the policies and procedures in place. The Group's overall market
positions are monitored on a quarterly basis by the Board of Directors.
Price risk
Price risk is defined as the risk that the fair value of a financial
instrument held by the Group will fluctuate. Investments are measured at fair
value through profit or loss and are valued on an unlevered, discounted cash
flow basis. Therefore, the value of these investments will be (amongst other
risk factors) a function of the discounted value of their expected cash flows
and, as such, will vary with movements in interest rates and competition for
such assets. Note 9 details sensitivity analysis on the impact of changes to
the inputs used on the fair value of the investments.
Interest rate risk
The Group's most significant exposure to interest rate risk is due to floating
interest rates required to service external borrowings through the RCF. An
increase of 0.5% represents the Investment Manager's assessment of a
reasonably possible change in interest rates. Should the EURIBOR rate increase
by 0.5%, the annual interest due on the facility would increase by €500,000
based on the amount drawn of €100,000,000.The Investment Manager regularly
monitors interest rates to ensure the Group has adequate provisions in place
in the event of significant fluctuations.
In accordance with the Company's investment policy, it may enter into hedging
transactions in relation to interest rates for the purposes of efficient
financial risk management. The Company will not enter into derivative
transactions for speculative purposes.
The Directors consider shareholder loan investments to be similar in nature to
equity investments and, as these loans bear interest at a fixed rate, they do
not carry an interest rate risk. The Group's interest and non-interest-bearing
assets and liabilities as at 31 December 2022 are summarised below:
Interest bearing
Group Fixed rate Floating rate Non-interest bearing Total
€'000 €'000 €'000 €'000
Assets
Cash at bank - 26,841 - 26,841
Other receivables (note 11) - - 290 290
Investments (note 9) 541,812 683,164 884,594 2,109,570
541,812 710,005 884,884 2,136,701
Liabilities
Other payables (note 12) - - (8,164) (8,164)
Loans and borrowings (note 13) (750,000) (100,000) - (850,000)
(750,000) (100,000) (8,164) (858,164)
The Group's interest and non-interest-bearing assets and liabilities as at 31
December 2021 are summarised below:
Interest bearing
Group Fixed rate Floating rate Non-interest bearing Total
€'000 €'000 €'000 €'000
Assets
Cash at bank - 5,045 - 5,045
Other receivables (note 11) - - 359 359
Investments (note 9) 757,937 - 650,865 1,408,802
757,937 5,045 651,224 1,414,206
Liabilities
Other payables (note 12) - - (6,297) (6,297)
Loans and borrowings (note 13) (472,709) - - (472,709)
(472,709) - (6,297) (479,006)
The Company's interest and non-interest-bearing assets and liabilities as at
31 December 2022 are summarised below:
Interest bearing
Company Fixed rate Floating rate Non-interest bearing Total
€'000 €'000 €'000 €'000
Assets
Cash at bank - 7,283 - 7,283
Other receivables (note 11) - - 324 324
Investments (note 9) - 162,000 1,116,474 1,278,474
- 169,283 1,116,798 1,286,081
Liabilities
Other payables (note 12) - - (3,624) (3,624)
- - (3,624) (3,624)
The Company's interest and non-interest-bearing assets and liabilities as at
31 December 2021 are summarised below:
Interest bearing
Company Fixed rate Floating rate Non-interest bearing Total
€'000 €'000 €'000 €'000
Assets
Cash at bank - 2,480 - 2,480
Other receivables (note 11) - - 227 227
Investments (note 9) - 162,000 773,069 935,069
- 164,480 773,296 937,776
Liabilities
Other payables (note 12) - - (2,576) (2,576)
- - (2,576) (2,576)
Foreign currency risk
Foreign currency risk is defined as the risk that the fair values of future
cash flows will fluctuate because of changes in foreign exchange rates. The
Group's financial assets and liabilities are denominated in EUR and
substantially all of its revenues and expenses are in EUR. The Group is not
considered to be materially exposed to foreign currency risk.
Credit risk
Credit risk is the risk of loss due to the failure of a borrower or
counterparty to fulfil its contractual obligations. The Group is exposed to
credit risk in respect of other receivables and cash at bank. The Group
minimises its credit risk exposure by dealing with financial institutions with
investment grade credit ratings and making loan investments which are equity
in nature.
The table below details the Group's maximum exposure to credit risk:
31 December 2022 31 December 2021
Group €'000 €'000
Other receivables (note 11) 290 359
Cash at bank 26,841 5,045
Loan investments (note 9) 1,266,417 779,865
1,293,548 785,269
The table below details the Company's maximum exposure to credit risk:
31 December 2022 31 December 2021
Company €'000 €'000
Other receivables (note 11) 324 227
Cash at bank 7,283 2,480
Loan investments (note 9) 566,346 575,336
573,953 578,043
The tables below shows the cash balances of the Group and credit rating for
each counterparty:
Rating 31 December 2022
Group €'000
AIB BBB+ 26,841
26,841
Rating 31 December 2021
Group €'000
AIB BBB+ 5,045
5,045
The table below shows the cash balances of the Company and the credit rating
for each counterparty:
Rating 31 December 2022
Company €'000
AIB BBB+ 7,283
7,283
Rating 31 December 2021
Company €'000
AIB BBB+ 2,480
2,480
Liquidity risk
Liquidity risk is the risk that the Group and the Company may not be able to
meet a demand for cash or fund an obligation when due. The Investment Manager
and the Board continuously monitor forecast and actual cash flows from
operating, financing and investing activities to consider payment of
dividends, repayment of the Company's outstanding debt or further investing
activities. The Group intends to manage liquidity risk through a number of
sources, including:
§ Existing cash reserves contained in the investee Companies;
§ Surplus cash generated by the underlying investments;
§ The undrawn portion of the RCF;
§ Additional use of additional long term debt; and
§ Expected future equity raises.
The following tables detail the Group's expected maturity for its financial
assets (excluding equity) and liabilities together with the contractual
undiscounted cash flow amounts as at 31 December 2022 and 31 December 2021:
Group - 31 December 2022 Less than 1 year 1 - 5 years 5+ years Total
€'000 €'000 €'000 €'000
Assets
Other receivables (note 11) 290 - - 290
Cash at bank 26,841 - - 26,841
Loan investments 1,266,417 - - 1,266,417
Liabilities
Other payables (note 12) (8,164) - - (8,164)
Loan and borrowings (116,366) (601,669) (202,349) (920,384)
1,169,018 (601,669) (202,349) 365,000
Group - 31 December 2021 Less than 1 year 1 - 5 years 5+ years Total
€'000 €'000 €'000 €'000
Assets
Other receivables (note 11) 359 - - 359
Cash at bank 5,045 - - 5,045
Loan investments 779,865 - - 779,865
Liabilities
Other payables (note 12) (6,297) - - (6,297)
Loan and borrowings (6,341) (300,364) (206,200) (512,905)
772,631 (300,364) (206,200) 266,067
The following tables detail the Company's expected maturity for its financial
assets (excluding equity) and liabilities together with the contractual
undiscounted cash flow amounts as at 31 December 2022 and 31 December 2021:
Company - 31 December 2022 Less than 1 year 1 - 5 years 5+ years Total
€'000 €'000 €'000 €'000
Assets
Other receivables 324 - - 324
Cash at bank 7,283 - - 7,283
Loan investments 411,038 168,694 - 579,732
Liabilities
Other payables (3,624) - - (3,624)
415,021 168,694 - 583,715
Company - 31 December 2021 Less than 1 year 1 - 5 years 5+ years Total
€'000 €'000 €'000 €'000
Assets
Other receivables 227 - - 227
Cash at bank 2,480 - - 2,480
Loan investments 416,618 165,285 573,284 589,484
Liabilities
Other payables (2,576) - - (2,576)
416,749 165,285 573,284 582,034
The Group and Company will use cash flow generation, equity raisings, debt
refinancing or disposal of assets to manage liabilities as they fall due in
the longer term.
Capital risk management
The Company considers its capital to comprise ordinary share capital,
distributable reserves and retained earnings. The Company is not subject to
any externally imposed capital requirements.
The Group's and the Company's primary capital management objectives are to
ensure the sustainability of its capital to support continuing operations,
meet its financial obligations and allow for growth opportunities. Generally,
acquisitions are anticipated to be funded by a combination of current cash,
debt and equity.
19. Related party transactions
During the year, the Company:
§ Advanced interest-bearing loans to Holdco of €nil (2021: €162,000,000)
and Holdco made principle repayments of €30,289,305 to the Company (2021:
€34,400,000).
§ Advanced non interest bearing loans to Tullahennel of €3,480,153 (2021:
€nil), to Boston Holdings A/S of €31,889,547 (2021: €nil) and to
Soliedra of €281,564 (2021: €nil).
§ Provided capital to Holdco 2 of €205,200,000 (2021: €51,000,000).
§ Received shareholder loan repayments from Knockacummer of €6,850,400
(2021: €67,353,852) and Killhills of €7,501,217 (2021: €2,600,428).
During the year, the Company also paid remuneration to the Directors as
disclosed in the Directors' Remuneration Report. The Directors' interests in
Company Shares as at 31 December 2022 are also disclosed in the Directors'
Report. The table below shows the number of Company shares acquired by the
Directors:
For the year ending 31 December 2022 For the year ending 31 December 2021
Rónán Murphy 17,500 25,000
Emer Gilvarry - 32,168
Kevin McNamara - 10,000
Marco Graziano 25,000 -
42,500 67,168
The below tables shows the Group's dividend income from wind farm SPVs:
For the year ended For the year ended
31 December 2022 €'000 31 December 2021 €'000
Cordal 10,762 5,500
Cloosh Valley 1,426 -
Ballybane 3,539 1,700
Gortahile 2,050 1,450
Beam 2,150 700
Knocknalour 1,000 600
Raheenleagh 1,000 500
Knockacummer 38,336 -
Kilhills 5,277 -
Glanaruddery 10,647 -
Carrickallen 3,300 350
Letteragh 600 -
An Cnoc 1,700 -
Garranereagh 850 350
Lisdowney 950 200
83,587 11,350
20. Ultimate controlling party
In the opinion of the Directors, on the basis of the shareholdings advised to
them, the Company has no ultimate controlling party.
21. Subsequent events
On 26 January 2023, the Board approved a dividend of €17.6 million,
equivalent to 1.545 cent per share in relation to the quarter ended 31
December 2022. The record date for the dividend was 3 February 2023 and the
payment date was 24 February 2023.
On 13 February 2023, the Group entered into a new RCF and on signing, repaid
the old RCF, via a €100 million utilisation. The terms of the new RCF
include the following (previous RCF terms in brackets):
§ Margin: 1.4% (1.3%)
§ Size: €350 million (€300 million)
§ Repayment date 13 February 2026.
On 21 February 2023, the Group acquired 22.5% in Butendiek (German offshore
wind), which required a further RCF utilisation of €150 million, leaving
€100 million available under the RCF to fund future commitments.
Company Information
Registered Company Number
Directors (all non-executive)
Rónán Murphy (Chairman) 598470
Emer Gilvarry
Kevin McNamara
Marco Graziano Registered Office
Eva Lindqvist (appointed 7 July 2022) Riverside One
Sir John Rogerson's Quay
Dublin 2
Investment Manager
Schroders Greencoat LLP
(formally Greencoat Capital LLP)
4(th) Floor The Peak
5 Wilton Road
London SW1V 1AN Registered Auditor
BDO
Block 3, Miesian Plaza
Company Secretary 50-58 Baggot Street Lower
Ocorian Administration (UK) Limited Dublin 2
Unit 18 Innovation Centre
Northern Ireland Science Park Legal Advisers
Queens Road McCann FitzGerald LLP
Belfast BT3 9DT Riverside One
Sir John Rogerson's Quay
Dublin 2
Administrator
Northern Trust International Fund
Administration Services (Ireland) Limited
Georges Court Euronext Growth Listing Sponsor, NOMAD and Broker
J&E Davy
54-62 Townsend Street
Dublin 2
Davy House
49 Dawson Street
Depositary Dublin 2
Northern Trust International Fiduciary
Services (Ireland) Limited
Georges Court Account Banks
54-62 Townsend Street Allied Irish Banks plc.
Dublin 2 40/41 Westmoreland Street
Dublin 2
Registrar Northern Trust International Fiduciary
Computershare Investor Services Services (Ireland) Limited
(Ireland) Limited Georges Court
Heron House, Corrig Road 56-62 Townsend Street
Sandyford Industrial Estate Dublin 2
Dublin 18
Supplementary Information (unaudited)
Disclosure required under the Alternative Investment Fund Managers Directive ("AIFMD") for annual reports of alternative investment funds ("AIFs")
Alternative Investment Fund Manager's Directive
Under the Alternative Investment Fund Manager Regulations 2013 (as amended)
the Company is an Irish AIF and the Investment Manager is a full scope UK
AIFM.
Northern Trust International Fiduciary Services (Ireland) Limited provide
depositary services under the AIFMD. Northern Trust International Fund
Administration Services (Ireland) Limited provide accounting and
administration services to the Company.
The AIFMD outlines the required information which has to be made available to
investors prior to investing in an AIF and directs that material changes to
this information be disclosed in the Annual Report of the AIF. There were no
material changes in the year.
All information required to be disclosed under the AIFMD is either disclosed
in this Annual Report or within a schedule of disclosures on the Company's
website at
www.greencoat-renewables.com (http://www.greencoat-renewables.com)
The information in this paragraph relates to the Investment Manager, the AIFM
and its subsidiary company providing services to the AIFM and it does not
relate to the Company.
The information in this paragraph relates to the Investment Manager, the AIFM
and its subsidiary company providing services to the AIFM and it does not
relate to the Company. The total amount of remuneration paid by the Investment
Manager, in its capacity as AIFM, to its 104 staff for the financial year
ending 31 December 2022 was £31.5 million, consisting of £16.0 million fixed
and £15.5 million variable remuneration. The aggregate amount of remuneration
for the 5 staff members of the Investment Manager constituting senior
management and those staff whose actions have a material impact on the risk
profile of the Company was £2.1 million.
The Investment Manager covers the potential professional liability risks
resulting from its activities by holding professional indemnity insurance in
accordance with Article 9(7)(b) of AIFMD.
Annex V Disclosure
ANNEX V
Template periodic disclosure for the financial products referred to in Article
9, paragraphs 1 to 4a, of Regulation (EU) 2019/2088 and Article 5, first
paragraph, of Regulation (EU) 2020/852
Product name:
Greencoat Renewables PLC (the "Company")
Legal entity identifier: 635400TVSIFFQOB8RB67
Sustainable investment objective
Did this financial product have a sustainable investment objective?
Yes - It made sustainable investments with an environmental objective: 100% -
in economic activities that qulaify as environmentally sustainable under the
EU Taxonomy
To what extent was the sustainable investment objective of this financial
product met?
The Company invests in euro denominated operational renewable electricity
generation assets in Relevant Countries within the Eurozone. The Company's aim
is to provide investors with an annual dividend per Ordinary Share that
increases progressively while growing the capital value of its investment
portfolio over the long term, through re-investment of excess cash flows and
the prudent use of leverage.
The Company has sustainable investment as its objective within the meaning of
Article 9 SFDR. More specifically, the Company is intended to contribute to
the environmental objective of climate change mitigation on the basis of the
activities of the assets targeted by the Company, which are renewable power
generation assets that help to facilitate the transition to a low-carbon
economy.
The Company does not have a carbon reduction objective and has not designated
a reference benchmark for the purpose of attaining the sustainable investment
objective.
As of the 31st December 2022, the Company's portfolio consists of interests in
34 operating wind farms located in Ireland, France, Germany, Spain, Sweden
& Finland, along with a 11MW co-located battery storage project, with an
aggregate net installed capacity of 1,164MW. The Company has also committed in
2022 to purchase a further wind farm under construction in Sweden, and a solar
farm under construction in Ireland, totalling 175MW capacity.
These sustainable investments contribute to the Company's sustainable
investment objective as the electricity generated from wind and solar farms
can be used in place of non-renewable energy sources, thereby helping to
stabilise greenhouse gas concentrations in the atmosphere and contributing to
climate change mitigation. These investments are considered environmentally
sustainable in accordance with the Technical Screening Criteria of the EU
Taxonomy relating to the environmental objective of climate change mitigation
(activities 4.1 and 4.3).
How did the sustainability indicators perform?
The sustainability indicators used to measure attainment of the sustainable
investment objective of the Company performed as follows in the reporting
period:
- Renewable energy
generated: 2,487 GWh
- GHG emissions avoided:
o Scope 1:
0.06 ktes CO2e
o Scope 2:
0.5 ktes CO2e (Market),
0.9 ktes CO2e (Location)
o Scope 3:
214.3 ktes CO2e
- Equivalent number of homes powered: 538,958 homes
Notes:
(1) Carbon footprint indicators are measured in line with the industry
standard GHG Protocol based on an equity control approach, meaning emissions
from the Company's operations are weighted according to the Company or its
Special Purpose Vehicle's (SPV's) ownership interest.
(2) Scope emissions calculations are verified by third party
consultants.
(3) Scope 3 emissions are the result of activities from assets not owned
or controlled by the Group, but that the Company indirectly impacts in its
value chain. Scope 3 emissions include all sources not within the Company's
Scope 1 and 2 boundary and include, inter alia, emissions arising from the
construction of each wind farm acquired in 2022, including those emissions
associated with the manufacturing and transport of all equipment and material,
before the wind farm was commissioned as well as the expected spare part
provision throughout its lifetime.
…and compared to previous periods?
Not applicable as this is the Company's first reporting period.
How did the sustainable investments not cause significant harm to any
sustainable investment objective?
The Investment Manager has sought to ensure that the Company's sustainable
investments cause no significant harm to any sustainable investment objective
by only investing in renewable energy infrastructure assets and by actively
engaging and managing sustainability risks and opportunities for the Company
and its investments prior to investment and on an ongoing basis once an
investment has been made.
Prior to each investment, the Investment Manager's Investment Committee
responsible for the Company considered the Company's investment policy,
investment restrictions and the Company's ESG Policy (a copy of which can be
found here (https://www.greencoat-renewables.com/about-us/esg) ) (the "GRP ESG
Policy"), as well as the sustainability risks and opportunities identified
during due diligence (including by means of an ESG checklist).
Each investment made is held through special purpose vehicles ("SPVs") and the
Investment Manager has appointed directors to each of the boards of those SPVs
to oversee all major strategic and operational decisions.
Sustainability risks and opportunities have been fully embedded into the risk
management framework at both a Company and asset SPV level. A risk register
has been set up for each new SPV which includes sustainability risks and
assesses risks (in respect of the likelihood of its occurrence and the impact
of its occurrence) on a numerical scale.
Ongoing sustainability risks for the portfolio were monitored, managed and
reported on by the Investment Manager to the Company's board of directors
which has overall responsibility for the activities of the Company and its
investments. Material risks relating to sustainability were escalated on a
quarterly basis to the Investment Manager's Risk Management Committee. Across
the portfolio, there were no material sustainability-related incidents during
2022. Specifically with regards to health and safety, there were no reportable
incidents.
In addition, the Company complied with the principles of good governance
contained in the AIC Code, which ensures the Company is in accordance with the
requirements of the UK Corporate Governance Code and provides a framework of
best practice for listed investment companies.
How were the indicators for adverse impacts on sustainability factors taken
into account?
The Investment Manager considers the principal adverse impacts ("PAIs") of its
investment decisions relating to the Company on sustainability factors and
this informs its approach to long-term investment stewardship and stakeholder
engagement.
As the Company predominantly targets investments in operating European wind
farms, the PAIs that are most relevant to the Company include (but are not
limited to):
· Greenhouse gas emissions (Table 1 RTS: PAIs 1-6); and
· Number of days lost to injuries, accidents, fatalities or illness
(Table 3 RTS: PAI 3)
The Investment Manager sought to mitigate the impact of the PAIs and other
indicators considered in relation to the Company firstly by implementing the
GRP ESG Policy, which has been developed in line with the Investment Manager's
ESG Policy (a copy of which can be found on the Investment Manager's website).
This sets guidance and principles for integrating sustainability across the
Company's business and looks to establish best practice in climate related
risk management, reporting and transparency. It outlines areas of focus for
wind power generation assets including environment, workplace standards,
health and safety practices, governance (including compliance with applicable
laws and regulations) and local community engagements. It also includes a list
of key performance indicators that are monitored and reported on (as
appropriate). Sustainability factors were considered prior to investment as
part of early-stage screening, detailed due diligence and the Investment
Committee's decision-making, and are managed post-acquisition in accordance
with the Investment Manager's wider asset management practices.
A statement on principal adverse impacts on sustainability factors (the "PAI
Statement"), including the list of PAI indicators and associated metrics
considered in relation to the Company, can be found in Company's Annual
Report.
The Investment Manager considers the impacts reported within the PAI Statement
do not constitute significant harm to any sustainable investment objective, as
further described in the PAI Statement.
Were sustainable investments aligned with the OECD Guidelines for
Multinational Enterprises and the UN Guiding Principles on Business and Human
Rights? Details:
Yes - the Investment Manager considers that the Company's sustainable
investments were aligned with the OECD Guidelines for Multinational
Enterprises and the UN Guiding Principles on Business and Human Rights (the
"Minimum Safeguards").
During 2022, the Investment Manager conducted initial due diligence (for new
investments) and ongoing monitoring (for existing investments) of the SPVs in
which the underlying renewable energy assets are held to ensure their
alignment with the Minimum Safeguards. For the existing investments this
included the completion of Modern Slavery audits by an external competent
consultant for a number of key service providers.
Further, the Investment Manager ensured that the new key service providers
involved in the operations and management of the SPVs acquired in 2022 comply
with all applicable laws, rules, regulations and overarching principles in the
countries where they operate. This covers anti-bribery and corruption,
financial crime, data protection and employment and health and safety laws
(including those relating to human rights, human trafficking, modern slavery,
and public safety). This was achieved where possible through the application
of the Investment Manager's 'Code of Conduct' Side Letter or otherwise
provided for in the key service provider contracts, and monitoring by the
Investment Manager's risk function.
There has been no material change to any existing service providers, or any
reports by the SPVs of any misalignment to the Minimum Safeguards.
For more information on how the sustainable investment objective of this
financial product was met, please refer to the Company's ESG Report which can
be found at the following link: Report and Publications - Greencoat Renewables
(greencoat-renewables.com)
(https://www.greencoat-renewables.com/investors/reports-and-publications/2022)
How did this financial product consider principal adverse impacts on
sustainability factors?
See the response to the question above "How were the indicators for adverse
impacts on sustainability factors taken into account."
What were the top investments of this financial product?
Largest investments Sector % Assets (NAV) Country
Borkum Wind 16.6% Germany
Cloosh Valley Wind 9.8% Ireland
Knockacummer Wind 8.5% Ireland
Cordal Wind 8.3% Ireland
Erstrask South Wind 4.2% Sweden
Tullahennel Wind 3.8% Ireland
What was the proportion of sustainability-related investments?
What was the asset allocation?
Investments
• #1 Sustainable 100% > Environmental 100% > Taxonomy-aligned
(100%)
• #2 Not sustainable 0%
#1 Sustainable covers sustainable investments with environmental or social
objectives.
#2 Not sustainable includes investments which do not qualify as sustainable
In which economic sectors were the investments made?
All investments of the Company are in the economic sector "electricity
generation from wind power" (activity 4.3 of the Climate Change Mitigation
Technical Screening Criteria). There are also two forward purchases of solar
farms which falls under "electricity generation using solar photovoltaic
technology" (activity 4.1 of the Climate Change Mitigation Technical Screening
Criteria).
To what extent were sustainable investments with an environmental objective
aligned with the EU Taxonomy?
Did the financial product invest in fossil gas and/or nuclear energy related
activities complying with the EU Taxonomy ?
[ ] Yes
[ ] In fossil gas
[ ] In nuclear energy
[ x ] No
What was the share of investments made in transitional and enabling
activities?
All activities of the Company are low-carbon activities so the share of
investments in transitional and enabling activities is zero.
How did the percentage of investments aligned with the EU Taxonomy compare
with previous reference periods?
Not applicable as this is the Company's first report produced in respect of
the EU Taxonomy-alignment of the Company's investments.
What was the share of sustainable investments with an environmental objective
that were not aligned with the EU Taxonomy?
There was no share of sustainable investments with an environmental objective
that were not aligned with the EU Taxonomy. 100% of the Company sustainable
investments are in wind generation assets which are considered aligned with
the EU Taxonomy in accordance with the relevant Technical Screening Criteria
for climate change mitigation (activity 4.3). There are also two forward
purchase's of solar farm's which fall under "electricity generation using
solar photovoltaic technology" (activity 4.1 of the Climate Change Mitigation
Technical Screening Criteria).
As at 31 December 2022, 100% of the Company's sustainable investments
(expressed as a % of the Net Asset Value) were in sustainable investments with
an environmental objective that were aligned with the EU Taxonomy, in
accordance with the relevant Technical Screening Criteria for climate change
mitigation.
What was the share of socially sustainable investments?
0% of the Company's investments are socially sustainable investments. The
Company does not target sustainable investments with a social objective.
What investments were included under "not sustainable", what was their purpose
and were there any minimum environmental or social safeguards?
The investments included under "#2 Not sustainable" comprise a cash reserve
(to the extent not generated from sustainable investments) and hedging
arrangements for the purposes of efficient portfolio management.
Given the purpose of these investments, there were no minimum environmental
and social safeguards applied to such investments
What actions have been taken to attain the sustainable investment objective
during the reference period?
The Investment Manager sought to attain the Company's sustainable investment
objective by implementing the binding elements described in the Company's
pre-contractual disclosures (Annex 3 RTS) on a continuous basis, and by
integrating sustainability risks in its investment decision-making as
described above: "How did the sustainable investments not cause significant
harm to any sustainable investment objective?".
As the binding elements of the Company's investment strategy were formalised
in late 2022, work is underway to enhance the Investment Manager's processes
to measure and monitor the application of the binding elements. For example,
the Schroders Greencoat ESG Policy, based upon which the Company's ESG Policy
has been developed was updated in Q4 2022 to incorporate a list of investment
exclusions with the effect of avoiding investment in activities which the
Investment Manager believes to be incompatible with a sustainable investment
objective. Similarly, new investments are being assessed against the Technical
Screening Criteria as part of normal course pre-investment screening and
recorded as having been assessed in the Investment Committee papers, to
determine the extent of EU Taxonomy-alignment of the Company's sustainable
investments.
Further, the Investment Manager continued to engage with stakeholders relevant
to the Company's portfolio to ensure its renewable investments positively
impact the communities in which they operate. Sustainability-related risks and
challenges were regularly discussed within the Investment Manager's asset
management teams which were also reported to and discussed with the Board
through regular meetings and specific risk register review discussions. Key
sustainability factors such as those relating to health and safety, compliance
with environmental standards and stakeholder relations were regularly
discussed and documented.
For more information on the application of good governance and active
ownership of the investments, please refer to the Company's ESG Report's which
can be found at the following link: Report and Publications - Greencoat
Renewables (greencoat-renewables.com)
(https://www.greencoat-renewables.com/investors/reports-and-publications/2022)
How did this financial product perform compared to the reference sustainable
benchmark?
Not applicable (N/a) as the Company does not have a carbon reduction objective
and is not managed against a reference benchmark.
How did the reference benchmark differ from a broad market index?
N/a
How did this financial product perform with regard to the sustainability
indicators to determine the alignment of the reference benchmark with the
sustainable investment objective?
N/a
How did this financial product perform compared with the reference benchmark?
N/a
How did this financial product perform compared with the broad market index?
N/a
Principal Adverse Impact Statement
Statement on principal adverse impacts of investment decisions on
sustainability factors
Financial Product: Greencoat Renewables PLC (LEI: 635400TVSIFFQOB8RB67) (the
"Company"), managed by Schroders Greencoat LLP (the "Investment Manager")
1. Summary
The Investment Manager considers principal adverse impacts of its investment
decisions on sustainability factors in relation to the Company. The present
statement is the consolidated statement on principal adverse impacts on
sustainability factors of the Company. This statement on principal adverse
impacts on sustainability factors of the Company covers the reference period
from 1(st) January to 31(st) December 2022.
The adverse sustainability indicators applicable to investee companies
considered by the Investment Manager are summarised in the table below
(including the relevant table and number associated with the adverse
sustainability indicators listed in Annex I of the RTS 3 (#_ftn3) ).
Theme Adverse Sustainability Indicator RTS Annex I Table RTS Annex I Number
Climate and other environment-related indicators GHG emissions 1 1
Carbon footprint 1 2
GHG intensity of investee companies 1 3
Exposure to companies active in the fossil fuel sector 1 4
Share of non-renewable energy consumption and production 1 5
Energy consumption intensity per high impact climate sector 1 6
Emissions to water 1 8
Hazardous waste and radioactive waste ratio 1 9
Natural species and protected areas 2 14
Social and employee, respect for human rights, anti-corruption and Violations of UN Global Compact principles and Organisation for Economic 1 10
anti-bribery matters Cooperation and Development (OECD) Guidelines for Multinational Enterprises
Lack of processes and compliance mechanisms to monitor compliance with UN 1 11
Global Compact principles and OECD Guidelines for Multinational Enterprises
Exposure to controversial weapons (anti-personnel mines, cluster munitions, 1 14
chemical weapons and biological weapons)
Number of days lost to injuries, accidents, fatalities or illness 3 3
Lack of a supplier code of conduct 3 4
Lack of anti-corruption and anti-bribery policies 3 15
Description of the principal adverse impacts on sustainability factors
CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS
Adverse sustainability indicator Metric Impact 2022 Impact 2021 Explanation Actions taken, and actions planned and targets set for the next reference
period
Greenhouse gas emissions 1. GHG emissions Scope 1 GHG emissions 60 tonnes of CO2e 19 tonnes of CO2e The increase in scope emissions is due to the acquisition of 9 wind farms in The Board and the Investment Manager expect to take steps to reduce the
2022 increasing net generation capacity to 1,164MW (from 800MW in 2021). Company's future Scope 1 and 2 GHG emissions in 2023.
Carbon footprint indicators are measured in line with the industry standard
GHG Protocol based on an equity control approach, meaning emissions from the
Company's operations are weighted according to the Company or its SPVs'
ownership interest. Scope emissions calculations are verified by third party
consultants.
Scope 3 emissions are the result of activities from assets not owned or
controlled by the Group, but that the Group indirectly impacts in its value
chain. Scope 3 emissions include all sources not within the Company's Scope 1
and 2 boundary and include, inter alia, emissions arising from the
construction of each wind farm acquired in 2022, including those emissions
associated with the manufacturing and transport of all equipment and material,
before the wind farm was commissioned as well as the expected spare part
provision throughout its lifetime.
Scope 2 GHG emissions 472 tonnes of CO2e (market based), 41 tonnes of CO2e
938 tonnes of CO2e (location based)
Scope 3 GHG emissions 214,261 tonnes of CO2e 125,697 tonnes of CO2e
Total GHG emissions 214,793 tonnes of CO2e (market based) 125,757 tonnes of CO2e
215,259 tonnes of CO2e (location based)
2. Carbon footprint Carbon footprint 214,793 tonnes of CO2e (market based) N/a
215,259 tonnes of CO2e (location based)
3. GHG intensity of investee companies GHG intensity of investee companies 649 tonnes of CO2e/ €m net revenue N/a
4. Exposure to companies active in the fossil fuel sector Share of investments in companies active in the fossil fuel sector 0% 0% The Company does not have any exposure to the fossil fuel sector and will only At the end of 2022, the Investment Manager formalised its investment exclusion
invest in renewable energy generation assets, also in accordance with the criteria with the effect of avoiding investment in activities that it believes
Investment Manager's investment exclusions list. to be incompatible with a sustainable investment objective.
The Company's ESG Policy is due for revision in September 2023, however, the
Company will update the policy in 2023 to incorporate the latest obligations
under SFDR. A copy of the policy can be found below:
ESG - Greencoat Renewables (greencoat-renewables.com)
(https://www.greencoat-renewables.com/about-us/esg)
The Investment Manager monitor a set of KPI's to improve environmental
management and to continuously improve performance. They are reported monthly,
at a minimum, directly to the asset management team, the Directors of the wind
farm companies, and the Board.
5. Share of non-renewable energy consumption and production Share of non-renewable energy consumption and non-renewable energy production Production share: N/A The Company's renewable energy generation assets generate green electricity
of investee companies from non-renewable energy sources compared to renewable
that saves the carbon emissions and air pollution that would have otherwise
energy sources, expressed as a percentage of total energy sources 0% non-renewable. been generated using fossil fuels. These assets consume electricity in the
generation of green electricity, the majority of which is provided from
Consumption share: renewable sources.
19% non-renewable.
6. Energy consumption intensity per high impact climate sector Energy consumption in GWh per million EUR of revenue of investee companies, N/A N/A N/A Will develop appropriate methodology and will report on relevent PAI's for the
per high impact climate sector reporting year of 2023.
Water 8. Emissions to water Tonnes of emissions to water generated by investee companies per million EUR N/A N/A
invested, expressed as a weighted average
Waste 9. Hazardous waste and radioactive waste ratio Tonnes of hazardous waste and radioactive waste generated by investee N/A N/A
companies per million EUR invested, expressed as a weighted average
INDICATORS FOR SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION
AND ANTI-BRIBERY MATTERS
Adverse sustainability indicator Metric Impact 2022 Impact 2021 Explanation Actions taken, and actions planned and targets set for the next reference
period
Social and employee matters 10. Violations of UN Global Compact principles and Organisation for Economic Share of investments in investee companies that have been involved in N/A N/A The Company predominantly targets investments in operating renewable energy The Investment Manager will develop a standard methodology to assess the
Cooperation and Development (OECD) Guidelines for Multinational Enterprises violations of the UNGC principles or OECD Guidelines for Multinational generation assets which will be held through special purpose vehicles alignment of the key service providers with the OECD Guidelines for
Enterprises ("SPVs"): standalone legal entities which typically do not have any employees Multinational Enterprises and the UN Guiding Principles on Business and Human
or management teams. The SPVs will typically outsource all operations and Rights (the "Minimum Safeguards").
management requirements to third parties, through long-term contracts.
The Investment Manager conducts initial due diligence and provides ongoing
monitoring of SPVs to ensure their alignment with the Minimum Safeguards.
Where possible, the Investment Manager imposed obligations on the key service
providers involved in the operations and management of the SPVs to ensure
their ongoing compliance. In most instances, this was achieved by the
Investment Manager's 'Code of Conduct Side Letter' (or an equivalent standard)
which requires key service providers to comply with all applicable laws,
rules, regulations and overarching principles in the countries where they
operate (which includes the Minimum Safeguards). This covers anti-bribery and
corruption, financial crime, data protection and employment and health and
safety laws (including those relating to human rights, human trafficking,
modern slavery, and public safety).
11. Lack of processes and compliance mechanisms to monitor compliance with UN Share of investments in investee companies without policies to monitor N/A N/A In 2022, to deepen our understanding of modern slavery risks in our supply
Global Compact principles and OECD Guidelines for Multinational Enterprises compliance with the UNGC principles or OECD Guidelines for Multinational chain, the Investment Manager commissioned a number of ethical audits on our
Enterprises or grievance /complaints handling mechanisms to address violations key service providers. The audit covered for direct and indirect workers:
of the UNGC principles or OECD Guidelines for Multinational Enterprises legislation, best practice, policies, recruitment processes, right to work,
disciplinary processes, equal opportunities, welfare provision, working hours,
rates of pay, bullying and harassment, modern slavery, occupational &
mental health and freedom of association. Overall the auditor found that the
key services providers were substantially in compliance with legislation and
best practice.
The Investment Manager is currently enchancing its processes to monitor the
percentage of O&Ms with policies addressing the following issues:
· Bribery and corruption
· Data protection and privacy (including cyber security)
· Governance, business ethics and integrity
· Modern slavery
· Environmental management
· Workers' health & safety
· Community engagement
· Gender diversity across firm / senior positions
We will develop appropriate methodology and will report on for the reporting
year of 2023.
14. Exposure to controversial weapons (anti-personnel mines, cluster Share of investments in investee companies involved in the manufacture or 0% 0% Exposure to controversial weapons is not permissible within the investment At the end of 2022, the Investment Manager formalised its investment exclusion
munitions, chemical weapons and biological weapons) selling of controversial weapons strategy of the Company and is captured in the Investment Managers' investment criteria with the effect of avoiding investment in activities that it believes
exclusions list. to be incompatible with a sustainable investment objective.
The Company's ESG Policy, available below, is due for revision on in September
2023.
ESG - Greencoat Renewables (greencoat-renewables.com)
(https://www.greencoat-renewables.com/about-us/esg)
OTHER INDICATORS FOR PRINCIPAL ADVERSE IMPACTS ON SUSTAINABILITY FACTORS
Table 2 ADDITIONAL CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS
Adverse sustainability indicator Metric Impact 2022 Impact 2021 Explanation Actions taken, and actions planned and targets set for the next reference
period
Water, waste and material emissions 14. Natural species and protected areas Share of investments in investee companies whose operations affect threatened N/A N/A All habitat management plans are agreed for relevant sites to ensure that the Renewable energy assets have the potential to have a negative environmental
species
environment in and surrounding each wind farm is carefully protected. impact through the manufacturing and supply chain process or locally through
the ongoing management of the projects. The Company has an ESG policy to help
We monitor a set of KPIs to improve our health and safety management and to mitigate these risks. The policies in place outline the environmental
continuously improve performance. They are reported monthly, at a minimum, standards which it aims to meet.
directly to the asset management team, the Directors of the wind farm
companies, and the Board. We are pleased that in 2021 & 2022 there were no There is a strong commitment to continuous improvement of environmental
lost time incidents at our wind farms. management which in 2022 included external audits by a competent consultant on
management systems and compliance.
Share of investments in investee companies without a biodiversity protection No. of Habitat Management plans not in place: 0% No. of Habitat Management plans not in place: 0%
policy covering operational sites owned, leased, managed in a protected area
or an area of high biodiversity value outside protected areas
Adverse sustainability indicator
Adverse sustainability indicator Metric Impact 2022 Impact 2021 Explanation Actions taken, and actions planned and targets set for the next reference
period
Social and employee matters 3. Number of days lost to injuries, accidents, fatalities or illness Number of workdays lost to injuries, accidents, fatalities or illness of Reportable Injuries: 0 Reportable Injuries: 0 We monitor a set of KPIs to improve our health and safety management and The Investment Manager has a specific Health, Safety and Environmental Plan in
investee companies expressed as a weighted average performance continuously. They are reported monthly, at a minimum, directly to place, which is reviewed monthly by the asset management team. It allows for
the asset management team, the Directors of the wind farm companies, and the efficient planning, monitoring and tracking of key management pillars. The
Board. plan includes policies, safety statements, audits, monthly meetings, a
Greencoat Capital Health and Safety Forum, incidents/developing trends
reports, site visits, onboarding and training.
There is a nominated Health and Safety Director for each fully owned wind farm
company. Our Board also reviews health and safety matters at each of its
scheduled meetings.
We have strong health and safety policies/safety statements in place at each
wind farm company. These are reviewed annually, and their implementation is
audited externally by a specialist health and safety consultant.
Our operating managers conduct health and safety audits on oru renewbales
energy assets. Also, independent accredited professionals audit of our wind
farms on various risk assessed topics. These audits are used to support
continuous improvement in health and safety outcomes on our renewable energy
projects.
4. Lack of a supplier code of conduct Share of investments in investee companies without any supplier code of N/A N/A Where possible, the Investment Manager impose obligations on the key service S
conduct (against unsafe working conditions, precarious work, child labour and
providers involved in the operations and management of the SPVs to ensure e
forced labour) their ongoing compliance. In most instances, this was achieved by the e
Investment Manager's 'Code of Conduct Side Letter' (or an equivalent standard) '
which requires key service providers to comply with all applicable laws, S
rules, regulations and overarching principles in the countries where they o
operate (which includes the Minimum Safeguards). This covers anti-bribery and c
corruption, financial crime, data protection and employment and health and i
safety laws (including those relating to human rights, human trafficking, a
modern slavery, and public safety). l
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Anti-corruption and anti-bribery 15. Lack of anti-corruption and anti-bribery policies Share of investments in entities without policies on anti-corruption and 0% 0% Upon acquisition, all wholly owned SPV's adopt the policies of the Company See ' Social and employee matters 10 - 14' above.
anti-bribery consistent with the United Nations Convention against Corruption
including anti-corruption and anti-bribery. These policies are regulalry
reviewed by legal experts, and are updated for new legislation and new Will develop appropriate methodology and will report on for the reporting year
geographies. of 2023.
Description of policies to identify and prioritise principal adverse impacts
on sustainability factors
The Investment Manager seeks to mitigate the impact of principal adverse
impacts ("PAIs") and other indicators considered in relation to the Company
firstly by implementing the Company's ESG Policy (a copy of which can be found
here: ESG - Greencoat Renewables (greencoat-renewables.com)
(https://www.greencoat-renewables.com/about-us/esg) (the "GRP ESG Policy").
The GRP ESG Policy, which has been developed in line with the Investment
Manager's ESG Policy (a copy of which can be found on the Investment Manager's
website), sets guidance and principles for integrating sustainability across
the Company's business and looks to establish best practice in climate related
risk management, reporting and transparency. It outlines areas of focus for
wind power generation assets including environment, workplace standards,
health and safety practices, governance (including compliance with applicable
laws and regulations) and local community engagements. It also includes a list
of key performance indicators that are monitored and reported on (as
appropriate). Sustainability factors are considered prior to investment as
part of early-stage screening, detailed due diligence and the Investment
Committee's decision-making, and managed post-acquisition in accordance with
the Investment Manager's wider asset management practices.
The GRP ESG Policy is reviewed at least annually by the Investment Manager's
ESG Committee and approved by the Board. It was last updated on 8th September
2022, it will be updated in 2023 to incorporate the latest obligations under
SFDR.
In implementing its approach to integrating sustainability and the
consideration of PAIs on sustainability factors, the Investment Manager does
not rely on a dedicated team, but rather responsibilities are shared on a
holistic basis:
· the investment and asset management team (as the first line of
defence) who embed sustainability practices (including the consideration of
PAIs on sustainability factors) into their investment decision making and
ongoing management of the assets;
· a dedicated ESG Committee focussed on developing the ESG Policy;
· the Investment Committees; and
· valuation independent of portfolio management and the Investment
Manager Risk Management Committee (as overseen by the AIFM).
Sustainability related risks and challenges are regularly discussed within the
Investment Manager's asset management team, which are also reported to and
discussed with the Board through regular meetings and specific risk register
review discussions. Key sustainability factors such as those relating to
health and safety, compliance with environmental standards and stakeholder
relations are regularly discussed and documented.
The boards of each SPV are responsible for ensuring sustainability factors are
considered in the context of the operational performance, business objectives
and broader stakeholder relationships. During the holding period,
representatives of the Investment Manager will take one or more seats on the
board of each SPV and will oversee all major strategic and operational
decisions. Given this structure, outside health and safety risks, the
organizational (including governance) risks of the SPVs are limited. None of
the SPVs have employees or management teams and therefore any employee related
social factors are focussed on the third-party service providers.
The Investment Manager's ESG Committee is responsible for (i) determining
the ESG Policy and reviewing it regularly to ensure it remains relevant to
evolving conditions, (ii) developing and evolving sustainability integration
practices for material sustainability factors within the different businesses
and assets, (iii) leveraging existing resources and research capabilities on
sustainability related topics for the benefit of the investment management
team, and (iv) promoting education and awareness of sustainability trends and
developments and sharing best practice. The ESG Committee meets at least
quarterly and is comprised of representatives of each investment strategy.
The Investment Manager uses information provided directly from investee
companies in relation to the PAIs. In order to ensure data quality, the
Investment Manager works with specialist external advisers, such as
environmental consultants. These advisors review the Investment Manager's
methodologies for identifying and prioritising PAIs and advise on industry
best practices.
The data collected as described above is processed as follows:
· KPI data is sourced directly from SPVs and supplemented by
specialist external advisers such as environmental consultants, as required.
· O&M service providers used by the Company or its SPVs report
to the Investment Manager, on a monthly basis, on a standard set of KPIs and
qualitative factors, such as health and safety, compliance with relevant laws
and regulations, local community engagement and habitat management, where
relevant.
· Carbon footprint indicators are measured in line with the
industry standard GHG Protocol based on an equity control approach, meaning
emissions from the Company's operations are weighted according to the Company
or its SPV's ownership interest. Scope emissions calculations will be verified
by third party consultants.
In some instances, the Company may need to use estimates or proxy data. Where
estimated data is used it will typically represent the minority of data used
and will be based upon reasonable assumptions and appropriate comparators. The
Investment Manager will act reasonably in using estimated or proxy data. As
the use of such data will vary on a case-by case basis, it is not possible to
provide a proportion of estimated data.
Engagement policies
The Company is committed to engaging with all stakeholders relevant to its
portfolio to ensure its renewable investments positively impact the
communities in which they operate. The Board recognises that engagement is
critical to long term sustainable investment. It seeks to build strong,
long-term relationships with high-quality, experienced counterparties to give
consistency of service and standards, allow for learnings across the varies
businesses it manages and drive efficiency.
References to international standards
The Investment Manager holds memberships and/or proactively engages with the
following responsible business codes and/or internationally recognised
standards to promote sustainable investment practices.
1. Task Force on Climate-Related Financial Disclosures ("TCFD")
Relevant for Table 1, PAI 1-5 (Greenhouse gas emissions)
The Company and the Investment Manager supports and aligns with the TCFD
recommendations and reports the disclosures in the annual reports of the funds
it manages. These disclosures report on climate change related impacts,
opportunities and risks to the funds, as well as fund level carbon emissions.
Given its long-term investment perspective, the Investment Manager constantly
assesses the risks its assets might be exposed to and factors them into
decision making and risk monitoring.
2. UN Principles of Responsible Investment
The Investment Manager has been a signatory to the PRI since 2016, committed
to adopting the PRI's six principles of responsible investment.
Principle 1: We will incorporate ESG issues into investment analysis and We have embedded practices that consider ESG risks and opportunities across
decision-making processes all of our investment teams, each applying them as applicable, across
investment identification (screening), due diligence and ongoing management of
the assets
Principle 2: We will be active owners and incorporate ESG issues into our Where applicable, ESG considerations are embedded within our policies and
ownership policies and practices approach to good governance and oversight. For example, SPVs may have specific
ESG considerations to address based on the nature of the assets they own, the
maturity of the project or asset and the third-party service providers engaged
to manage the assets. The SPV Boards will develop their policies and practices
accordingly
Principle 3: We will seek appropriate disclosure on ESG issues by the entities We undertake a robust investment due diligence process, which includes ESG
in which we invest factors, when making an investment and will reject any that have unacceptable
ESG related risks which cannot be mitigated
Principle 4: We will promote acceptance and implementation of PRI within the We support the PRI through attendance at its conferences and forums
investment industry
Principle 5: We will work together to enhance our effectiveness in We proactively share our learnings and approaches to ESG across our teams and
implementing PRI we engage with investors on our PRI reporting as and when requested. Our PRI
reporting forms the foundation for relevant elements of our investor Due
Diligence Questionnaires and Requests for Proposal
Principle 6: We will each report on our activities and progress towards We have since becoming a PRI signatory, continued to report each year as
implementing PRI required and make these reports available to investors who request them
Historical comparison
None available. The earliest historical comparison will be provided in
periodic reporting in respect of financial year ending December 2023.
ANNEX
Defined terms used in this statement
For the purposes of this statement, the following definitions shall apply:
(1) 'scope 1, 2 and 3 GHG emissions' means the scope
of greenhouse gas emissions referred to in points (1)(e)(i) to (iii) of Annex
III to Regulation (EU) 2016/1011 of the European Parliament and of the
Council 4 (#_ftn4) ;
(2) 'greenhouse gas (GHG) emissions' means
greenhouse gas emissions as defined in Article 3, point (1), of Regulation
(EU) 2018/842 of the European Parliament and of the Council 5 (#_ftn5) ;
(3) 'weighted average' means a ratio of the weight
of the investment by the financial market participant in an investee company
in relation to the enterprise value of the investee company;
(5) 'companies active in the fossil fuel sector'
means companies that derive any revenues from exploration, mining, extraction,
production, processing, storage, refining or distribution, including
transportation, storage and trade, of fossil fuels as defined in Article 2,
point (62), of Regulation (EU) 2018/1999 of the European Parliament and of
the Council 6 (#_ftn6) ;
(6) 'renewable energy sources' means renewable
non-fossil sources, namely wind, solar (solar thermal and solar photovoltaic)
and geothermal energy, ambient energy, tide, wave and other ocean energy,
hydropower, biomass, landfill gas, sewage treatment plant gas, and biogas;
(7) 'non-renewable energy sources' means energy
sources other than those referred to in point (6);
(8) 'energy consumption intensity' means the ratio
of energy consumption per unit of activity, output or any other metric of the
investee company to the total energy consumption of that investee company;
(9) 'high impact climate sectors' means the sectors
listed in Sections A to H and Section L of Annex I to Regulation (EC) No
1893/2006 of the European Parliament and of the Council 7 (#_ftn7) ;
(10) 'protected area' means designated areas in the
European Environment Agency's Common Database on Designated Areas (CDDA);
(11) 'area of high biodiversity value outside protected
areas' means land with high biodiversity value as referred to in Article 7b(3)
of Directive 98/70/EC of the European Parliament and of the Council 8
(#_ftn8) ;
(12) 'emissions to water' means direct emissions of
priority substances as defined in Article 2(30) of Directive 2000/60/EC of the
European Parliament and of the Council 9 (#_ftn9) and direct emissions of
nitrates, phosphates and pesticides ;
(13) 'areas of high water stress' means regions where
the percentage of total water withdrawn is high (40-80%) or extremely high
(greater than 80%) in the World Resources Institute's (WRI) Water Risk Atlas
tool "Aqueduct";
(14) 'hazardous waste and radioactive waste' means
hazardous waste and radioactive waste;
(15) 'hazardous waste' means hazardous waste as defined
in Article 3(2) of Directive 2008/98/EC of the European Parliament and of the
Council 10 (#_ftn10) ;
(16) 'radioactive waste' means radioactive waste as
defined in Article 3(7) of Council Directive 2011/70/Euratom 11 (#_ftn11) ;
(17) 'non-recycled waste' means any waste not recycled
within the meaning of 'recycling' in Article 3(17) of Directive 2008/98/EC;
(18) 'activities negatively affecting
biodiversity-sensitive areas' means activities that are characterised by all
of the following:
(a) those activities lead to the deterioration of
natural habitats and the habitats of species and disturb the species for which
a protected area has been designated;
(b) for those activities, none of the conclusions,
mitigation measures or impact assessments adopted pursuant to any of the
following Directives or national provisions or international standards that
are equivalent to those Directives have been implemented:
(i) Directive 2009/147/EC of the European Parliament and of
the Council 12 (#_ftn12) ;
(ii) Council Directive 92/43/EEC 13 (#_ftn13) ;
(iii) an Environmental Impact Assessment (EIA) as defined in
Article 1(2), point (g), of Directive 2011/92/EU of the European Parliament
and of the Council 14 (#_ftn14) ;
(iv) for activities located in third countries, conclusions,
mitigation measures or impact assessments adopted in accordance with national
provisions or international standards that are equivalent to the Directives
and impact assessments listed in points (i), (ii) and (iii);
(19) 'biodiversity-sensitive areas' means Natura 2000
network of protected areas, UNESCO World Heritage sites and Key Biodiversity
Areas ('KBAs'), as well as other protected areas, as referred to in Appendix D
of Annex II to Commission Delegated Regulation (EU) 2021/2139 15 (#_ftn15) ;
(20) 'threatened species' means endangered species,
including flora and fauna, listed in the European Red List or the IUCN Red
List, as referred to in Section 7 of Annex II to Delegated Regulation (EU)
2021/2139;
(22) 'UN Global Compact principles' means the ten
Principles of the United Nations Global Compact;
(24) 'board' means the administrative, management or
supervisory body of a company;
(25) 'human rights policy' means a policy commitment
approved at board level on human rights that the economic activities of the
investee company shall be in line with the UN Guiding Principles on Business
and Human Rights;
For the purposes of this Annex, the following formulas shall apply:
(1) 'GHG emissions' shall be calculated in
accordance with the following formula:
(2) 'carbon footprint' shall be calculated in
accordance with the following formula:
(3) 'GHG intensity of investee companies' shall be
calculated in accordance with the following formula:
(4) 'GHG intensity of sovereigns' shall be
calculated in accordance with the following formula:
(5) 'inefficient real estate assets' shall be
calculated in accordance with the following formula:
For the purposes of the formulas, the following definitions shall apply:
(1) 'current value of investment' means the value in
EUR of the investment by the financial market participant in the investee
company;
(2) 'enterprise value' means the sum, at fiscal
year-end, of the market capitalisation of ordinary shares, the market
capitalisation of preferred shares, and the book value of total debt and
non-controlling interests, without the deduction of cash or cash equivalents;
(3) 'current value of all investments' means the
value in EUR of all investments by the financial market participant;
(4) 'nearly zero-energy building (NZEB)', 'primary
energy demand (PED)' and 'energy performance certificate (EPC)' shall have the
meanings given to them in paragraphs 2, 5 and 12 of Article 2 of Directive
2010/31/EU of the European Parliament and of the Council 16 (#_ftn16) .
Defined Terms
Admission Document means the Admission Document of the Company published on 25
July 2017
Aggregate Group Debt means the Group's proportionate share of outstanding
third-party debt
AIB means Allied Irish Bank plc
AIC means the Association of Investment Companies
AIC Code of Corporate Governance sets out a framework of best practice in
respect of the governance of investment companies. It has been endorsed by the
Financial Reporting Council as an alternative means for our members to meet
their obligations in relation to the UK Corporate Governance Code
AIC Guide means the AIC's Corporate Governance Guide for Investment Companies
AIF means Alternative Investment Funds (as defined in AIFMD)
AIFM means Alternative Investment Fund Manager (as defined in AIFMD)
AIFMD means Alternative Investment Fund Managers Directive
AIM means Alternative Investment Market
AGM means Annual General Meeting of the Company
Arcy-Precy means Ferme Eolenne D'Arcy-Precy
AUM means Assets Under Management
AXA means funds managed by AXA Investment Managers UK Limited
Ballincollig Hill means Tra Investments Limited
Ballybane means Ballybane Windfarms Limited
BDO means the Company's Auditor as at the reporting date
Beam means Beam Hill and Beam Hill Extension
Beam Hill means Beam Wind Limited
Beam Hill Extension means Meenaward Wind Farm Limited
Brexit mean the withdrawal of the United Kingdom from the European Union
Board means the Directors of the Company
Borkum Riffgrund 1 means Borkum Riffgrund oHG
Boston Holding means Boston Holding A/S
Carrickallen means Carrickallen Wind Limited
CBA means Commonwealth Bank of Australia
CBI means the Central Bank of Ireland
CDP means Carbon Disclosure Project
CE means Conformité Européene (CE) Mark
CFD means Contract for Difference
CIBC means Canadian Imperial Bank of Commerce
Cloosh Valley means Cloosh Valley Wind Farm Holdings DAC and Cloosh Valley
Wind Farm DAC
Cnoc means Cnoc Windfarms Limited
Company means Greencoat Renewables PLC
Cordal means Cordal Windfarm Holdings Limited, Oak Energy Supply Limited and
Cordal Windfarms Limited
CPI means Consumer Price Index
DCF means Discounted Cash Flow
DS3 means Delivering a Secure, Sustainable Electricity System
ECB means European Central Bank
EGM means Extraordinary General Meeting of the Company
Erstrask South means Erstrask Vind South AB
ESG means the Environmental, Social and Governance
EU means the European Union
Euronext means the Euronext Dublin, formerly the Irish Stock Exchange
EURIBOR means the Euro Interbank Offered Rate
Eurozone means the area comprising 20 of the 27 Member States which have
adopted the euro as their common currency and sole legal tender
EU SFDR means the European Union Sustainable Finance Disclosure Regulation
FCA means Financial Conduct Authority
FIT means Feed-In Tariff
FRC means Financial Reporting Council
GAV means Gross Asset Value as defined in the Admission Document
Garranereagh means Sigatoka Limited
Genonville means Ferme Eolienne de Genonville
GHG Protocol means Greenhouse Gas Protocol
Glanaruddery means Glanaruddery Windfarms Limited and Glanaruddery Energy
Supply Limited
Glencarbry means Glencarbry Windfarm Limited
Gortahile means Gortahile Windfarm Limited
Grande Piece means Ferme Eolienne de la Grande Piece
Group means the Company, Holdco, Holdco 1 and Holdco 2
Group Statutory Auditors means BDO
GRP Sweden means GRP Sweden Holding AB
Holdco means GR Wind Farms 1 Limited
Holdco 1 means Greencoat Renewables 1 Holdings Limited
Holdco 2 means Greencoat Renewables 2 Holdings Limited
Holdcos mean GR Wind Farms 1 Limited, Greencoat Renewables 1 Holdings Limited
and Greencoat Renewables 2 Holdings Limited
H&S means Health and Safety
IAS means International Accounting Standards
IFRS means International Financial Reporting Standards
ING means ING Bank N.V.
Investment Management Agreement means the agreement between the Company and
the Investment Manager
Investment Manager means Schroders Greencoat LLP (formally Greencoat Capital
LLP)
IPEV means the International Private Equity and Venture Capital Valuation
Guidelines
IPO means Initial Public Offering
Irish Corporate Governance Annex is a corporate governance annex addressed to
companies with a primary equity listing on the Main Securities Market of
Euronext
IRR means internal rate of return
I-SEM means the Integrated Single Electricity Market, which is the wholesale
electricity market arrangement for Ireland and Northern Ireland
Joint Broker means RBC and J&E Davy
Killala means Killala Community Wind Farm DAC
Killala Battery means Bat project at Killala Community Wind Farm DAC
Killhills means Killhills Windfarm Limited
Kokkoneva means Kestilan Kokkaneva Tuulivoima Oy
Knockacummer means Knockacummer Wind Farm Limited
Knocknalour means Knocknalour Wind Farm Limited
Kostroma Holdings means Kostroma Holdings Limited
KPI means Key Performance Indicator
Letteragh means Seahound Wind Developments Limited
Levelized Cost of Energy (LCOE) means a measure of the lifetime costs divided
by energy production
Lisdowney means Lisdowney Wind Farm Limited
Lost Time Incidents means an accident that results in time off work or loss of
productive work
Menonville means Ferme Eolienne de la Butte de Menonville
Monaincha means Monaincha Wind Farm Limited
NAB means National Australia Bank
Natwest means National Westminster Bank
NAV means Net Asset Value as defined in the Admission Document
NAV per Share means the Net Asset Value per Ordinary Share
NOMAD means a company that has been approved as a nominated advisor for the
Alternative Investment Market (AIM), by Euronext Dublin and London Stock
Exchange
O&M means operations and maintenance
Pasilly means Société d'Exploitation du Parc Eolien du Tonnerois
PPA means Power Purchase Agreement entered into by the Group's wind farms
PRI means the world's leading proponent of responsible investment
PSO means Public Support Obligation
Raheenleagh means Raheenleagh Power DAC
RBC means Royal Bank of Canada
RCF means the Group's Revolving Credit Facility
REFIT means Renewable Energy Feed-In Tariff
RESS means Renewable Energy Support Scheme
R&D means Research and Development
Saint Martin means Parc Eolien Des Courtibeaux SAS
Santander means Abbey National Treasury Services Plc (trading as Santander
Global Corporate Banking)
SEM means the Single Electricity Market, which is the wholesale electricity
market operating in the Republic of Ireland and Northern Ireland
SFDR means Sustainable Finance Disclosure Regulation
Sliabh Bawn means Sliabh Bawn Holding DAC, Sliabh Bawn Supply DAC and Sliabh
Bawn Power DAC
SMSF means SMSF Holdings Limited
Solar PV means a solar photovoltaic system, which is a power system designed
to supply usable solar power by means of photovoltaics
Soliedra means Parque Eolico Soliedra
Sommette means Parc Eolien Des Tournevents SAS
South Meath means SMSF Holdings Limited
SPVs means the Special Purpose Vehicles, which hold the Group's investment
portfolio of underlying operating wind farms
Taghart means Cregg Wind Farm Limited
TCFD means Task Force on Climate Related Financial Disclosures
TSR means Total Shareholder Return
Tullahennel means Ronaver Energy Limited
Tullynamoyle II means Tullynamoyle Wind Farm II Limited
UK means United Kingdom of Great Britain and Northern Ireland
UK Code means UK Corporate Governance Code issued by the FRC
Alternative Performance Measures
Performance Measure Definition
CO(2) emissions avoided per annum The estimate of the portfolio's annual CO(2) emissions avoided through the
displacement of alternative generation, based on the portfolio's estimated
generation as at the relevant reporting date.
Homes powered per annum The estimate of the number of homes powered by electricity generated by the
portfolio, based on the portfolio's estimated generation as at the relevant
reporting date.
Generation The amount of energy generated by the underlying SPVs (investments) in the
portfolio over the period.
NAV movement per share (adjusting for dividends) Movement in the ex-dividend Net Asset Value per ordinary share during the
year.
NAV per share The Net Asset Value per ordinary share.
Net cash generation The operating cash flow of the Group and wind farm SPVs.
Premium to NAV The percentage difference between the published NAV per ordinary share and the
quoted price of each ordinary share as at the relevant reporting date.
Total return (NAV) The movement in the ex-dividend NAV per ordinary share, plus dividend per
ordinary share declared or paid to shareholders with respect to the year.
Total Shareholder Return The movement in share price, combined with dividends paid during the year, on
the assumption that these dividends have been reinvested.
Forward Looking Statements and other Important Information
This document may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "may", "plans",
"projects", "will", "explore" or "should" or, in each case, their negative or
other variations or comparable terminology or by discussions of strategy,
plans, objectives, goals, future events or intentions.
These forward-looking statements include all matters that are not historical
facts. They may appear in a number of places throughout this document and may
include, but are not limited to, statements regarding the intentions, beliefs
or current expectations of the Company, the Directors and/or the Investment
Manager concerning, amongst other things, the investment objectives and
investment policy, financing strategies, investment performance, results of
operations, financial condition, liquidity, prospects and distribution policy
of the Company and the markets in which it invests.
By their nature, forward-looking statements involve risks and uncertainties
because they relate to future events and depend on circumstances that may or
may not occur in the future. Forward-looking statements are not guarantees of
future performance. The Company's actual investment performance, results of
operations, financial condition, liquidity, distribution policy and the
development of its financing strategies may differ materially from the
impression created by, or described in or suggested by, the forward-looking
statements contained in this document.
In addition, even if actual investment performance, results of operations,
financial condition, liquidity, distribution policy and the development of its
financing strategies, are consistent with any forward-looking statements
contained in this document, those results or developments may not be
indicative of results or developments in subsequent periods. A number of
factors could cause results and developments of the Company to differ
materially from those expressed or implied by the forward-looking statements
including, without limitation, general economic and business conditions,
global renewable energy market conditions, industry trends, competition,
changes in law or regulation, changes in taxation regimes, the availability
and cost of capital, currency fluctuations, changes in its business strategy,
political and economic uncertainty. Any forward-looking statements herein
speak only at the date of this document.
As a result, you are cautioned not to place any reliance on any such
forward-looking statements and neither the Company nor any other person
accepts responsibility for the accuracy of such statements.
Subject to their legal and regulatory obligations, the Company, the Directors
and the Investment Manager expressly disclaim any obligations to update or
revise any forward- looking statement contained herein to reflect any change
in expectations with regard thereto or any change in events, conditions or
circumstances on which any statement is based.
In addition, this document may include target figures for future financial
periods. Any such figures are targets only and are not forecasts. Nothing in
this document should be construed as a profit forecast or a profit estimate.
This Annual Report has been prepared for the Company as a whole and therefore
gives greater emphasis to those matters which are significant in respect of
Greencoat Renewables PLC and its subsidiary undertakings when viewed as a
whole.
1 (#_ftnref1) Gross cash generation before the repayment of project level
debt of €13.5 million.
2 (#_ftnref2) Post-acquisition of a 22.5% stake in the German Butendiek
offshore wind farm on 21 February 2023, Group Debt increased to 46% of GAV.
3 (#_ftnref3) The Regulatory Technical Standards accompanying the EU
Sustainable Finance Disclosure Regulation.
4 (#_ftnref4) Regulation (EU) 2016/1011 of the
European Parliament and of the Council of 8 June 2016 on indices used as
benchmarks in financial instruments and financial contracts or to measure the
performance of investment funds and amending Directives 2008/48/EC and
2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).
5 (#_ftnref5) Regulation (EU) 2018/842 of the
European Parliament and of the Council of 30 May 2018 on binding annual
greenhouse gas emission reductions by Member States from 2021 to 2030
contributing to climate action to meet commitments under the Paris Agreement
and amending Regulation (EU) No 525/2013 (OJ L 156, 19.6.2018, p. 26).
6 (#_ftnref6) Regulation (EU) 2018/1999 of the
European Parliament and of the Council of 11 December 2018 on the Governance
of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009
and (EC) No 715/2009 of the European Parliament and of the Council, Directives
94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and
2013/30/EU of the European Parliament and of the Council, Council Directives
2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the
European Parliament and of the Council (OJ L 328, 21.12.2018, p. 1).
7 (#_ftnref7) Regulation (EC) No 1893/2006 of
the European Parliament and of the Council of 20 December 2006 establishing
the statistical classification of economic activities NACE Revision 2 and
amending Council Regulation (EEC) No 3037/90 as well as certain EC
Regulations on specific statistical domains Text with EEA relevance (OJ L 393,
30.12.2006, p. 1-39).
8 (#_ftnref8) Directive 98/70/EC of the
European Parliament and of the Council of 13 October 1998 relating to the
quality of petrol and diesel fuels and amending Council Directive 93/12/EEC
(OJ L 350, 28.12.1998, p. 58).
9 (#_ftnref9) Directive 2000/60/EC of the
European Parliament and of the Council of 23 October 2000 establishing a
framework for Community action in the field of water policy (OJ L 327,
22.12.2000, p. 1).
10 (#_ftnref10) Directive 2008/98/EC of the
European Parliament and of the Council of 19 November 2008 on waste and
repealing certain Directives (OJ L 312, 22.11.2008, p. 3).
11 (#_ftnref11) Council Directive 2011/70/Euratom
of 19 July 2011 establishing a Community framework for the responsible and
safe management of spent fuel and radioactive waste (OJ L 199, 2.8.2011, p.
48).
12 (#_ftnref12) Directive 2009/147/EC of the
European Parliament and of the Council of 30 November 2009 on the conservation
of wild birds (OJ L 20, 26.1.2010, p. 7).
13 (#_ftnref13) Council Directive 92/43/EEC of 21
May 1992 on the conservation of natural habitats and of wild fauna and flora
(OJ L 206, 22.7.1992, p. 7).
14 (#_ftnref14) Directive 2011/92/EU of the
European Parliament and of the Council of 13 December 2011 on the assessment
of the effects of certain public and private projects on the environment (OJ L
026, 28.1.2012, p. 1).
15 (#_ftnref15) Commission Delegated Regulation
(EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the
European Parliament and of the Council by establishing the technical screening
criteria for determining the conditions under which an economic activity
qualifies as contributing substantially to climate change mitigation or
climate change adaptation and for determining whether that economic activity
causes no significant harm to any of the other environmental objectives (OJ L
442, 9.12.2021, p. 1).
16 (#_ftnref16) Directive 2010/31/EU of the
European Parliament and of the Council of 19 May 2010 on the energy
performance of buildings (recast) (OJ L 153, 18.6.2010, p. 13).
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