REG - Renew Infra Grp Ld - Announcement of Final Results
22/02/2023 07:00
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RNS Number : 6373Q Renewables Infrastructure Grp (The) 22 February 2023
22 February 2023
The Renewables Infrastructure Group Limited
"TRIG" or "the Company", a London-listed investment company advised by
InfraRed Capital Partners ("InfraRed") as Investment Manager and Renewable
Energy Systems ("RES") as Operations Manager
Announcement of 2022 Annual Results
Highlights
For the year ended 31 December 2022
· Strong earnings and NAV performance:
o Earnings per ordinary share of 21.5p (2021: 10p)
o NAV per ordinary share of 134.6p(1) as at 31 December 2022 (2021: 119.3p)
o Portfolio valuation(2) of £3,737m as at 31 December 2022
(2021: £2,726m)
· Healthy operational cash generation:
o 2022 dividend target of 6.84p/share delivered and 2023 dividend target(3)
set at 7.18p/share, a 5% increase
o Dividend cover of 1.55x (2021: 1.12x), or 2.6x before the repayment of
project level debt which was £174m during the year
o Strong reinvestment cashflows
o £694m of investments made
o A renewed Revolving Credit Facility, extended to £750m
· A diversified, 2.8GW portfolio of renewables assets:
o Portfolio generated 5,376GWh of electricity in the year (2021: 4,125GWh)
o 1.9m tonnes of CO(2) avoided in 2022(4)
o 1.6m homes (equivalent) powered with renewable electricity(4)
1. The NAV per share as at 31 December 2022 is calculated on the
basis of the 2,483,583,248 Ordinary Shares in issue and to be issued as at 31
December 2022 due to the Managers' shares in part payment of the management
fee.
2. On an Expanded Basis. Please refer to Section 3.2 of the Annual
Report for an explanation of the Expanded Basis.
3. This is a target only and not a profit forecast. There can be no
assurance that this target will be met.
4. Actual values calculated in accordance with the IFI Approach to
GHG Accounting for Renewable Energy. Calculated based on each project's
generation capacity, pro-rated for TRIG's share of subordinated debt and
equity capital.
Richard Morse, Chairman of TRIG, said:
"This has been an important year in the history of TRIG. The Company's results
have been the strongest in its history since IPO. This is against a
challenging macro-economic backdrop, demonstrating the inherent quality of the
Company's portfolio and management.
The Company has grown significantly in value, while investing to increase
portfolio diversification and earnings visibility. Our highly expert Managers,
InfraRed and RES, continue to combine to provide a unique proposition to
investors. We also thank our shareholders for participating in the Company's
successful equity issue in March, despite the challenges thrown up by the then
recent outbreak of war.
As policy makers in the UK and European Union grapple with rising costs for
consumers and governments, TRIG is well placed to contribute to the
decarbonisation, independence and affordability of Europe's energy supply."
Richard Crawford, Partner, Head of Energy Income Funds, InfraRed Capital
Partners said:
"TRIG has had a very strong financial result for the year, not only
benefitting from high power prices, but also from strong correlation to
inflation, limited cash exposure to interest rate increases and broad
diversification. These characteristics make the Company's assets highly
attractive. With active portfolio and asset management, InfraRed and RES
continue to execute the Company's differentiated strategy with strong progress
made during the year in the priority areas of solar and flexible capacity.
We have completed the construction of Vannier and Blary Hill onshore windfarms
during the year, with Grönhult onshore wind farm and the Cadiz solar
portfolio now being commissioned. Reinvesting cashflows generated into
construction projects is a key value driver for the Company and brings vitally
needed additional renewables capacity.
Looking forward, we are pleased to raise the dividend target of the Company to
7.18p, representing a 5% year on year increase, reflecting strong expected
cashflow generation from the portfolio. We believe TRIG remains a compelling
investment proposition: a robust business model with two market-leading
managers in InfraRed and RES, sound board oversight, a highly supportive
shareholder base, and all underpinned with favourable sector fundamentals."
Publication of documentation
The below information is an extract from TRIG's 2022 Annual Report. The Annual
Report has been submitted to the National Storage Mechanism and will shortly
be available for inspection
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fdata.fca.org.uk%2F%23%2Fnsm%2Fnationalstoragemechanism&data=02%7C01%7Cphilippe.vuillaume%40partnersgroup.com%7C9921b2a94ca84f80abd008d83e0034f3%7C0bcc0075229d4973b0c30ef63eb9c51f%7C0%7C0%7C637327517903944751&sdata=7xdHtTc7SAh63in9nIZT0csRmMwIWJIIjmp6yNOLWDo%3D&reserved=0)
. It can also be obtained from the Company Secretary or from the Reports &
Publications section of the Company's website, at https://www.trig-ltd.com/
(https://www.trig-ltd.com/) .
Enquiries
InfraRed Capital Partners Limited +44 (0)
20 7484 1800
Richard Crawford
Phil George
Minesh Shah
Mohammed Zaheer
Maitland/AMO +44
(0) 20 7379 5151
Rhys Jones
Charles Withey
Investec Bank Plc
+44
(0) 20 7597 4000
Lucy Lewis
Tom Skinner
Denis Flanagan
BNP Paribas
+44
(0) 20 7595 9444
Virginia Khoo
Carwyn Evans
The Company
The Renewables Infrastructure Group ("TRIG" or the "Company") is a leading
London-listed renewable energy infrastructure investment company. The Company
seeks to provide shareholders with an attractive long-term, income-based
return with a positive correlation to inflation by focusing on strong cash
generation across a diversified portfolio of predominantly operating projects.
TRIG is invested in a portfolio of wind, solar and battery storage projects
across six countries in Europe with aggregate net generating capacity of over
2.8GW; enough renewable power for 1.9 million homes and to avoid over 2.4
million tonnes of carbon emissions per annum. TRIG is seeking further suitable
investment opportunities which fit its stated Investment Policy.
Further details can be found on TRIG's website at www.trig-ltd.com
(http://www.trig-ltd.com) .
Investment Manager
InfraRed Capital Partners is an international infrastructure investment
manager, with more than 180 professionals operating worldwide from offices in
London, New York, Sydney and Seoul. Over the past 25 years, InfraRed has
established itself as a highly successful developer and custodian of
infrastructure assets that play a vital role in supporting communities.
InfraRed manages US$14bn+ of equity capital(5) for investors around the globe,
in listed and private funds across both income and capital gain strategies.
A long-term sustainability-led mindset is integral to how InfraRed operates as
it aims to achieve lasting, positive impacts and deliver on its vision of
Creating Better Futures. InfraRed has been a signatory of the Principles of
Responsible Investment since 2011 and has achieved the highest possible PRI
rating(6) for its infrastructure business for seven consecutive assessments,
having secured a 5 star rating for the 2021 period. It is also a member of the
Net Zero Asset Manager's Initiative and is a TCFD supporter.
InfraRed is part of SLC Management, the institutional alternatives and
traditional asset management business of Sun Life. InfraRed represents the
infrastructure equity arm of SLC Management, which also incorporates
BentallGreenOak, a global real estate investment management adviser, and
Crescent Capital, a global alternative credit investment asset manager.
www.ircp.com (http://www.ircp.com/)
(5) Data as at Q3 2022. Equity Capital is calculated using a 5-year average FX
rate.
(6) Principles for Responsible Investment ("PRI") ratings are based on
following a set of Principles, including incorporating ESG issues into
investment analysis, decision-making processes and ownership policies. More
information is available at https://www.unpri.org/about-the-pri
(https://www.unpri.org/about-the-pri)
Operations Manager
TRIG's Operations Manager is RES ("Renewable Energy Systems"), the world's
largest independent renewable energy company.
RES has been at the forefront of wind energy development for over 40 years,
with the expertise to develop, engineer, construct, finance and operate
projects around the globe. RES has developed or constructed onshore and
offshore wind, solar, energy storage and transmission projects totalling more
than 23GW in capacity. RES supports over 10GW of operational assets worldwide
for a large client base. Headquartered in Hertfordshire, UK, RES is active in
11 countries and has over 3,000 employees engaged in renewables globally.
RES is an expert at optimising energy yields, with a strong focus on safety
and sustainability. Further details can be found on the website
at www.res-group.com (http://www.res-group.com/) .
1 Chairman's Statement
Since TRIG's IPO in 2013, the Company has consistently provided shareholders
with sustainable returns from its diversified portfolio of renewable
infrastructure assets. I am delighted to have joined TRIG as Chairman of the
Board and am pleased to report that we delivered a NAV total return 1 for
2022 of 18.9%.
TRIG's diversified portfolio remains resilient against a backdrop of higher
inflation and interest rates, benefiting from strong inflation correlation and
elevated power prices.
InfraRed, as Investment Manager, and RES, as Operations Manager, continue to
enhance the Company's portfolio both organically through value enhancement
initiatives, including the construction of 378MW of new generation
capacity(( 2 )), and also through acquisitions, with investments made into
operating assets during the year totalling 297MW of generation
capacity(( 3 )).
The Board remains grateful for the ongoing support of TRIG's shareholders. The
case for investment in renewables has never been stronger, particularly in the
context of the immediate energy security and affordability challenges, as well
as the decarbonisation agenda. TRIG offers investors access to otherwise
illiquid renewables infrastructure and the opportunity for participation in
the net zero transition. The Company is also very well supported by Managers
who share the Board's commitment to providing sustainable income and capital
growth through investing in the transition to net zero.
Increases in interest rates during the year and the impact of the UK
mini-budget have led to a sustained period of share prices trading at
discounts to Net Asset Values across real assets investments companies.
Specifically for the energy sub-sector, governments' interventions have also
weighed on investor sentiment. In this context, TRIG's diverse portfolio,
which has been stress-tested through the pandemic and the more recent energy
crisis, ensures that the Company is strategically well positioned in 2023 to
continue to enhance value for shareholders and contribute to greater energy
security and faster decarbonisation.
Financial performance
The NAV as at 31 December 2022 was 134.6p per share, an increase of 15.3p per
share in the year. Earnings for 2022 were 21.5p per share. The material
drivers of this strong financial performance in the year were:
· The Managers' ongoing delivery of active asset management to maximise
operational performance and additive investments, providing greater geographic
and technological diversification.
· Increases in wholesale power prices and inflation, which feed into
the Company's revenues and portfolio valuation.
To some extent offset by:
· An increase in valuation discount rates of 50bps on a weighted average
basis across the portfolio. The long-term, inflation-correlated and lower
risk, sustainable nature of renewables infrastructure underpins the demand for
assets.
· Intervention by governments across Europe in the electricity
generation sector, in particular the UK Government's Electricity Generator
Levy and the European Council mandated cap on inframarginal (non-gas)
generator revenues, which were announced in November 2022 and September 2022,
respectively.
Over the next ten years, 63% of TRIG's forecast revenues are directly linked
to inflation through subsidy support mechanisms, with the majority of
remaining revenues indirectly linked to inflation due to the relationship
between power prices and inflation indices, providing strong inflation
protection. The combination of a high degree of fixed revenues, strong
inflation correlation and power price forecasts that fully incorporate
government interventions, serve to reduce the risks arising from a volatile
macro outlook.
The Company has limited interest rate and refinancing risk. Interest rates on
debt across the portfolio investments are substantially fixed. The Company has
no structural short-to-medium term debt and interest paid on the Group's
revolving credit facility ("RCF")(( 4 )) is linked to overnight interest
rates. At the time of publication, the RCF is £413m drawn, with substantial
headroom compared to its enlarged £750m committed capacity, and matures in
December 2025.
Forecast cash flows from the portfolio indicate that the majority of these
drawings can be repaid from re-investment cash flows over the RCF term.
Dividends
Strong achieved power prices and close-to-budget asset availability, tempered
by below-budget generation, have contributed to strong dividend cover in 2022.
After operating and finance costs, net cash flow covered the cash dividend
1.5 times 5 , or 2.6 times before repayment of project-level debt.
Consistent with our policy of increasing the dividend when it is considered
prudent to do so, I am pleased to report a dividend target(( 6 )) for 2023 of
7.18p per share, an increase of 5.0% on the 2022 total dividend. TRIG has
delivered five projects from reinvested excess cash flows including Arenosas,
El Yarte and Blary Hill in 2022, and continues to fund construction
commitments at the Ranasjö and Salsjö onshore wind farms in Sweden from
revenues generated by the portfolio.
Investment activity
The identification of accretive acquisitions is key to portfolio construction
for TRIG. The Company's investment strategy remains unchanged, targeting
renewables and related infrastructure investments(( 7 )) in the UK and
mainland Europe(( 8 )).
TRIG's largest investment during the period was a 10% stake in the 1.2GW
Hornsea One offshore wind farm in the UK. The Group also made an incremental
investment in the Merkur offshore wind farm in Germany, a project we are very
familiar with having first invested in 2019. Offshore wind farms have an
important role to play in the portfolio: each of our six offshore wind
projects benefits from protected cash flows for the term of their government
support arrangements, which reduces the sensitivity of their equity returns to
changes in power price levels. These investments help to facilitate the
addition of unsubsidised, higher-returning projects into the portfolio, such
as the March 2022 acquisition of a 49% stake in the Valdesolar solar park in
Spain, whilst maintaining the portfolio's overall power price sensitivity.
Construction and development assets offer a source of higher risk-adjusted
returns too. We are grateful to shareholders for their support at the 2022 AGM
to increase TRIG's construction and development investment limit from 15% to
25%. In 2022, TRIG acquired four development-stage battery storage sites,
which will provide c. 700MWh / 350MW flexible capacity once built. Flexible
capacity, which includes battery storage, is critical to the energy transition
and complements TRIG's renewable generation assets as it responds, and
financially benefits from, the intermittency of renewables and electricity
price volatility. At the period end, construction and development exposure
represented 8% of the total portfolio.
Portfolio performance
Overall portfolio electricity generation in the year was 5% below budget due
to lower than expected weather resource in some geographies and downtime
resulting from both enhancement activities and unscheduled maintenance.
Further detail is provided in Section 2.3 - Operations Report.
78MW of generation capacity was constructed during the year at Haut Vannier
and Blary Hill onshore wind farms, with Blary Hill in Scotland fully funded
from re-investment proceeds. 301MW of capacity is currently being
commissioned, with Grönhult onshore wind farm and the Cadiz solar projects
well progressed and close to construction completion; both are in the final
commissioning stages and exporting electricity. A further 471MW of capacity is
in construction or development.
Health and Safety ("H&S") has always been core to operations across TRIG's
portfolio. H&S performance is regularly reviewed at both the project
company level and by the Board across the whole portfolio, and we continually
strive to promote a strong safety culture.
Sustainability
Sustainability, and the consideration of environmental, social and governance
("ESG") factors, is central to TRIG's strategy and InfraRed and RES's
investment and asset management ethos, further details of which can be found
in TRIG's annual Sustainability Report.
The United Nations Climate Change conference (COP27) in November 2022 and the
UN Biodiversity Summit (COP15) in December 2022 highlighted the role of
infrastructure in arresting and reducing the impact of adverse climate change
and protecting the environment.
TRIG makes a significant contribution to tackling climate change. Our current
commercially operational portfolio of 2GW is capable of powering 1.8 million
homes and avoiding approximately 2.2 million tonnes of carbon emissions per
annum(( 9 )). TRIG committed to the Science Based Targets initiative (SBTi) in
2021, and has published estimated scope 1, 2 and 3 carbon emissions for its
entire portfolio. We will be setting SBTi targets in line with this initiative
during 2023.
Corporate Governance
In accordance with the Board's succession plan, 2022 saw the retirement of
TRIG's initial three Non-executive Directors: Helen Mahy, Shelagh Mason and
Jon Bridel. On behalf of my fellow Directors and the Managers, I would like to
thank them for their service to TRIG's shareholders and their many
contributions to the success of the Company over the nine years since IPO.
John Whittle has replaced Jon Bridel as the Chair of the Audit Committee and
Tove Feld has assumed the role of Senior Independent Director. Erna-Maria
Trixl and I joined TRIG's Board of Directors in 2022, and the Board looks
forward to welcoming Selina Sagayam as a Non-executive Director in March 2023.
Selina is a successful practising lawyer, with a wealth of relevant M&A
advisory experience, and also a distinctive expertise in ESG matters, which
will be very welcome as she joins the Board.
Klaus Hammer will step down from the Board during 2023. He too has made a
significant contribution since joining the Board a year after IPO, bringing
considerable commercial and industry experience to bear as TRIG has built its
portfolio. The Board joins me in thanking Klaus for all he has done during his
tenure as a Director.
Given the importance of responsible investment practices in the strategy of
the Company and recognising the evolving regulatory landscape, it is the
intention of the Board to form a new committee focused on ESG / sustainability
effective June 2023.
In line with good governance practice, TRIG's Nomination Committee
commissioned an external board evaluation in 2022. The evaluation noted that
TRIG's Board is functioning at a high level and that the transition to new
Directors has been smooth.
Principal Risks and Uncertainties
The Board and the Managers monitor and, where practicable, mitigate a range of
risks to TRIG's strategy. TRIG's principal risks are:
· Regulation and taxation: government or regulatory support for renewables
changing adversely, or further intervention by governments in the electricity
generation sector to levy generators for power prices achieved above threshold
levels;
· Power prices: electricity prices falling or not increasing as
expected; and
· Production performance: portfolio electricity production falling
short of expectations, including as a result of unfavourable weather or asset
unavailability.
These and other risks are considered and expanded on in Section 3.4 - Risks
& Risk Management.
Outlook
Recent years have been challenging for many. In addition to the devastating
impact on human lives and livelihoods, the conflict in Ukraine has underscored
the importance of energy security and affordability.
For the energy sector, this has resulted in an increase in the attraction of,
and competition for, renewables infrastructure assets, and an increase in
power prices and resulting government intervention. In this context, the
Company's business model and investment portfolio has demonstrated its
inherent resilience and relevance. As governments across Europe look to fiscal
policy as a means to address costs to consumers, we believe that our model has
demonstrated the ability to withstand these changes and still deliver
significant returns for our shareholders.
At 2.8GW(( 10 )), capable of generating the equivalent to 1.6% of the UK's
electricity usage, TRIG's diverse portfolio is significant. Within the
portfolio, the Managers continue to enhance value. The Company is delivering
new capacity, with a further 538MW24 generation and flexible capacity
currently in construction and development. As a long-term owner of assets with
a supportive shareholder base, TRIG remains well placed to finance new
renewables capacity - both that which is developed and built by TRIG as well
as the acquisition of operational projects from developers seeking to recycle
capital. Through selective acquisition activity and a focus on value
enhancement, we continue to seek to provide shareholders with accretive
growth.
We remain confident in our business model and the Managers' ability to deliver
sustainable returns to shareholders while contributing towards a net-zero
carbon future.
Richard Morse
Chairman, 21 February 2023
2 Investment Report
Financial highlights
The Company's Net Asset Value as at 31 December 2022 was 134.6p/share (31
December 2021: 119.3p/share) and the Company's Portfolio Valuation was £3,737
million. Earnings for 2022 were 21.5p/share (2021: 10.0p/share). Dividends of
6.84p per share were declared, giving an increase in NAV per share of 15.3p
(2021 NAV per share increase: 4.0p).
The earnings of 21.5p/share in the year were a result of:
· Continued delivery of the investment strategy and active portfolio
management
· The high revenues generated in the year as a result of particularly
high wholesale power prices coupled with higher subsidies as a result of
inflation indexation passing through
· Increases in the portfolio valuation as a result of expectations
for power prices and inflation to continue to be elevated over the short to
medium term compared to expectations last year
· The portfolio valuation increase has been offset to some extent by
an increase in the portfolio weighted average discount rate of 0.5%,
recognising the increased levels of government bond yields. The discount rate
applied to UK cash flows were increased by 0.8%, whilst the equivalent rate
applied in Europe was increased by 0.3%, recognising the increased
macro-economic volatility in the UK in the second half of the year.
Greater detail on these movements can be found in Section 3.1 - Valuation of
the Portfolio.
Net cash flow for 2022 was £249m 11 (2021: £150m) resulting in dividend
cover for the year of 1.5x before the benefit of scrip take-up (2021: 1.06x).
With the benefit of scrip take-up, dividend cover for the year was 1.55x
(2021: 1.12x). Net cash flows in 2022 benefited from high achieved power
prices during the period.
Dividend cover is stated after the repayment of project-level amortising debt,
reflecting the Company's capital structure and prudent debt management which
seeks to repay project debt during subsidy periods without reliance on
merchant receipts. £174m project-level amortising debt was repaid in 2022
(2021: £145m). Whilst we believe having an amortising debt profile is the
most appropriate structure for the Company's risk profile, capital structures
do vary between renewables investment companies. Were dividend cover to be
calculated based on operating cash flows before the repayment of debt,
dividend cover for 2022 would have been 2.55x (2021: 2.1x). The Company has
declared a dividend target for 2023 of 7.18p per share, reflecting the high
earnings and strong cover, but also recognising the importance of the
long-term sustainability of the Company's dividend to shareholders.
The Group also utilises a Revolving Credit Facility ("RCF") which is used to
make new investments and is repaid from surplus earnings or fund raises. The
RCF, which was refinanced in February 2023, has total funding capacity of
£750m and matures in December 2025. At 31 December 2022, the RCF was drawn
£399m. Forecast cash flows from the portfolio, net of Company costs after
having paid the Company's dividend and project-level debt repayments, indicate
that the majority of these drawings can be repaid from re-investment cash
flows over the RCF term. In addition, the Company may use equity issuance,
alternative debt instruments and the proceeds of any divestments which may be
made to enhance portfolio construction, to repay the RCF.
Investment highlights
The benefit of having a large and diversified portfolio has been especially
evident this year, as the impact of regulatory and wind resource challenges on
the portfolio as a whole have been reduced by geographic, technological and
revenue diversification. The Company made investments into seven projects
during the year, each of which will contribute to further portfolio
resilience:
· The acquisition of a 49% equity stake in the 264MW Valdesolar solar
PV project, an unsubsidised project in Spain. The Company is partnered with
Repsol, the Spanish-listed global energy company. The project has the ability
to capture merchant power prices.
· The acquisition of a 10.2% stake in Hornsea One in the UK, one of
the world's largest operational offshore wind farms, and an incremental
investment in the Merkur offshore wind farm taking TRIG's stake from a 25% to
36% shareholding. Both continue the strategy of investing in projects that
benefit from government-backed revenue support. Merkur also benefits from the
current higher power prices due to the functioning of the German Feed-in
Tariff which acts as a floor.
· A strategic milestone was achieved with a significant investment in
the flexible capacity sector through the acquisition of four in-development
battery storage sites. The four projects have grid connection dates ranging
from 2024 to 2031 and, once built, will have combined capacity of 350MW /
700MWh. Flexible capacity, including battery storage, is essential to the
energy transition by providing grid-supporting services and responding to the
intermittency of renewables generation. As such, flexible capacity projects
provide a natural hedge within the portfolio for variability in market
conditions.
The power price exposure of the portfolio as a whole is broadly unchanged as a
result of the acquisitions in the year, as the Managers seek to maintain the
power price risk profile of the Company.
At the Company's 2022 Annual General Meeting, shareholders supported an
increase in the Company's Investment Policy development and construction limit
from 15% to 25% of portfolio value 12 . Successfully managing projects through
development and construction is a key value driver for shareholders, as these
earlier stage investments represent a lower-priced entry point and the
resulting prospect of higher returns. To date, TRIG has delivered 10 projects
through construction since IPO, with five further projects expected to be
delivered in Q1 2023. Development and construction also provides competitive
access to projects that are increasingly being traded before construction has
begun.
TRIG's construction projects have progressed well during the year, with the
Blary Hill and Haut Vannier projects becoming operational in 2022. Both
Grönhult onshore wind farm and the Cadiz solar portfolio started initial
generation in late 2022 and are now in the final stages of construction.
Ranasjö & Salsjö foundation works are being finalised, with turbine
delivery scheduled for later in 2023. Sustainability considerations are made
throughout the construction of these projects - for example with local
employment and environmental plans created to maintain a net positive impact
for the community. Construction on the Cadiz projects has employed the
equivalent of 108 personnel for a year and further hired services in the
municipality of San Jose del Valle, with total local investment reaching
€750,000. The Company will begin to recognise the additional value derived
from taking projects successfully through construction as key milestones are
met, typically in the first 6-12 months from the commencement of operations.
The Managers continue to see construction and development projects as
attractive opportunities to leverage the depth of their expertise and combined
60-year track record for the benefit of TRIG, and as some operating history is
established we can look for valuation uplift. As the Company's portfolio
matures, extending the lives or repowering of older sites is expected also to
enhance value. The first sites to be repowered are likely to be four projects
in the south of France, where two of the projects have secured new feed-in
tariffs.
In addition to the markets in which the Company is already invested, markets
with similar characteristics may offer additional investment opportunities. In
particular, these include the wider Iberian and Nordic regions, particularly
Portugal and Finland, and also the Benelux region.
Date of completion Project Year Equity share Net capacity (MW)32 Revenue type33 Location % of Portfolio on a committed basis34
commissioned
March 2022 Valdesolar solar farm 2021 49% 129 Wholesale market Spain 3%
July 2022 / October 2022 Hornsea One offshore wind farm 2020 10.2% 122 Contract for difference UK 8%
September 2022 / December 2022 Ryton battery storage Expected 2024 100% 74 Wholesale market UK 4%
& ancillary services
Drakelow battery storage Expected 2025 100% 90
Drax battery storage Expected 2029 100% 89
Spennymoor battery storage Expected 2031 100% 100
December 2022 Merkur offshore wind farm (Incremental investment) 2019 11%(35) 143 Feed-in Tariff Germany 2%
In addition to attractive investment opportunities, the Managers continue to
be alert to opportunities for strategic disposals should the Managers observe
marked dislocations in value across the jurisdictions in which it invests or
other portfolio construction benefits.
Current outstanding commitments
The Company has outstanding investment commitments of £205m relating to the
Swedish onshore wind farm (Ranasjö and Salsjö) construction projects, and
the UK battery storage projects (Ryton and Drakelow), broken down in the table
below, by expected due date. Further information on Investment Obligations is
detailed on page 63. The Company's £750m committed revolving credit facility
was drawn £399m as at 31 December 2022.
RCF drawings 2023 2024 2025 Total
Outstanding Commitments (£m) 399 97 78 30 205
Portfolio diversification
The TRIG portfolio benefits from being diversified across jurisdictions, power
markets and generating technologies providing multiple revenue sources, as
well as a variety of geographic areas with differing meteorological conditions
affecting wind speeds and solar irradiation, reducing year-on-year volatility.
The portfolio has been constructed to have low single-asset concentration,
with the largest asset constituting less than 10% of the portfolio value on a
committed basis and the top 10 assets cumulatively accounting for
approximately half.
Revenue profile
TRIG has the benefit of being diversified across several separate power
markets: Great Britain, the Single Electricity Market (of the Republic of
Ireland and Northern Ireland), France and Germany (which sit within the main
continental European power market), Sweden (which sits in the Nordic
electricity market) and Spain (Iberian power market).
The TRIG portfolio has substantial near-term protection in cash revenues from
movements in wholesale power prices, as the portfolio receives a high
proportion of its revenue from selling electricity generated via Power
Purchase Agreements ("PPAs") with fixed prices, and from government subsidies
such as Feed‑in-Tariffs ("FiTs"), Contract for Differences ("CfDs"),
Renewable Obligation Certificates ("ROCs") or from other hedges, together
referred to as fixed revenues.
Over the next 12 months, 65% (2021: 70%) of revenues are fixed per unit of
generation, with 63% (2021: 66%) fixed over the next ten years. The decline in
these percentages is largely driven by the elevated power prices in the near
term compared to last year's assumptions.
The large majority of the expected fixed revenues are derived from government
subsidies. Of the 65% fixed over the next 12 months, 83% are drawn from
subsidised projects in the UK, Ireland and France, which benefit from
inflation linkage, helping to preserve Portfolio Value. Inflation is being
driven to a large extent by commodity price increases, which ultimately
benefit power prices. However, if non‑energy related inflation were to
persist more structurally, inflation linked revenues could play a key role in
value preservation.
In the longer term, based on its current portfolio, TRIG is expected to have
greater exposure to future wholesale electricity prices as subsidies and
contracts with pre-determined pricing run off. As existing fixed-price
contracts expire, the replacement contracts may also have fixed-price
elements, and any future additions to the portfolio may have subsidies,
decreasing the merchant proportion.
The Company's prudent capital structure ensures all project-level debt is
repaid within the associated subsidy period, and projects with merchant
revenues do not have any debt in place. This has the result of releasing a
greater portfolio of revenue in the future for re-investment and dividends.
As described in Section 2.5 - Market developments, governments in all the
markets TRIG has investments in have announced or enacted interventions to
reduce the wholesale power prices received by renewable energy projects. The
interventions do not have an impact on subsidies revenues, but work to reduce
or limit the wholesale power price achieved by renewable energy projects.
Macro-economic environment
Due to the ongoing commodity price shock (more details can be found on this in
Section 2.5 - Market Developments), together with other effects of Covid-19
stimulus packages, inflation has risen to multi-decade highs across the
jurisdictions TRIG is invested in. This has led to central banks increasing
base rates to levels not seen since the introduction of quantitative easing.
Portfolio cash flow forecasts are relatively insensitive to rising interest
costs due to project level debt interest rates being fixed, providing
certainty over long-term interest and repayments on debt. This is an essential
and deliberate element in the construction of the Company's portfolio, which
provides resilience in the portfolio's cash flows against moves in interest
rates.
In the second half of 2022, the Portfolio Valuation reflects the rise in both
government bond reference rates and inflation with an increase in weighted
average discount rates by 50bps, as described above on page 21, and near-term
inflation forecasts. The Company benefits from subsidised revenues that are
directly linked to inflation indices in the UK and France, which constitute
more than half of the expected revenues across the Company's portfolio over
the next 10 years.
The direct link to inflation, received from indexed subsidies, and the
indirect link to inflation, observed in power prices over time, functions to
offset potential associated increases in required investment returns (i.e. the
valuation discount rates) when inflation increases.
This can be demonstrated through the following portfolio scenario analysis:
· If annual inflation rates were to be 0.5% higher than assumed in
all forecast periods, portfolio returns would increase by 0.66%, based on the
Company's latest published sensitivities in Section 3.1.
· If inflation rates were to be 3% higher in 2023 than assumed,
portfolio returns would increase by 0.41%.
Reductions in outturn inflation would have broadly similar negative impacts.
Increase to assumption Decrease to assumption NAV impact
NAV impact
(pence per share)
(pence per share)
+ / - 0.5% change in annual inflation rates 6.1 -5.1
+ / - 0.66% change in portfolio discount rate -6.1 5.7
+ / - 0.41% change in portfolio discount rate -3.7 3.5
+ / ‑ 3% change in inflation rates for FY 2023 3.5 -3.5
The portfolio return is positively correlated to inflation, which combined
with the ongoing demand for critical renewables infrastructure make the
Company's assets attractive to own in a shifting environment.
Outlook
The Company has performed well in the year through strong earnings and NAV
growth, benefiting from higher power prices through generating secure and
clean electricity whilst also contributing to the alleviation of the cost of
living crisis through additional taxation throughout the Company's key
markets. The portfolio is well positioned to benefit from inflation protection
whilst the Company's prudent capital structure ensures debt is repaid and has
fixed costs, providing strong downside resilience to higher interest rates.
The critical themes of energy security, affordability and decarbonisation,
together "the energy trilemma", underpin the positive outlook for renewables.
Once built, renewable energy assets provide secure and locally-generated
electricity without carbon emissions. The impetus behind the sector coupled
with sustainability considerations should encourage the development of local
supply chains and reduce the carbon content in construction.
In the wider context, energy security and affordability has been brought into
sharp focus in 2022. Europe's dependence on external sources of key
commodities has been highlighted emphatically by the reduction in Russian gas
supply into Europe. Nonetheless, due to unseasonably warm weather spells
across the UK and the European continent and government-guided reduction in
energy demand in the EU, Europe is better placed at the end of 2022 than many
had feared might be the case. Renewables infrastructure will also play an
increasingly critical role in delivering further European energy independence.
In addition, decarbonisation and the transition to net zero remain central to
government energy strategies, while elevated energy costs to consumers
highlight the essential requirement for increased domestic generating capacity
to make energy more affordable for all.
Critical investment in the flexibility of grids is needed to balance the
intermittency of renewables and improve reliability. As such, TRIG has
increased its investment plans in this area over the last twelve months.
As we enter the next year of the energy transition, the Managers remain well
placed to enhance the value of the Company's portfolio, source growth
opportunities and be selective in their approach to new investments for TRIG.
3 Operations Report
Operations summary
The overall performance of the portfolio was significantly ahead of budget in
the year driven by high electricity prices, REGO and auxiliary service
revenues. This strong performance was somewhat moderated by the underlying
generation from the portfolio falling 5% below-budget in the year.
The geographic diversification of the portfolio meant that the lower than
long-term average weather resource in three regions (France, GB Offshore and
Germany Offshore) was partly offset by four regions experiencing above budget
weather resource (GB Onshore, Scandinavia, Ireland and Solar).
Some operational performance was affected by grid downtime that exceeded
allowances made in budgets and long-term forecasts, and other site-specific
factors including repair or enhancement works to generation equipment and
electrical infrastructure, which improves the operational resilience of the
portfolio going forward.
The new acquisitions of Valdesolar Spanish solar farm and Hornsea 1 GB
offshore wind farm are now fully incorporated into the portfolio and
performing well, along with the recently constructed Vannier French onshore
wind farm. The Cadiz Spanish solar farms and Grönhult Swedish onshore wind
farm have also commenced early generation, as detailed in the Construction
section.
Production
Technology Region Electricity production (GWh) Performance vs budget
Onshore wind GB 1,397 -3%
France 542 -8%
Scandinavia 554 0%
Ireland 298 -13%
Offshore wind GB 1,450 -7%
Germany 730 -5%
Solar GB, France, Spain 405 -3%
Total Portfolio 5,376 -5.2%
GB - onshore wind
Performance was good across the portfolio of twenty projects, with three
projects significantly ahead of budget and three assets that delivered
uncompensated budget shortfalls:
· Solwaybank benefited from higher-than-budgeted availability under
radar curtailment agreements in place at acquisition, due to good
relationships with the neighbouring stakeholders. This resulted in a
significant increase in production compared to budget.
· Earlseat and Rothes 2 both performed well, delivering notably above
budgeted production.
· Hill of Towie had pro-active foundation works performed to protect the
long-term integrity of the assets, which are now complete and not anticipated
to recur.
· Crystal Rig 1 has experienced long-term availability challenges
with turbines which are unique to this site within the portfolio. The asset
manager and O&M provider were challenged to provide retrofits to deliver
long-term solutions for specific problematic aspects, which are in final
stages of implementation.
· Crystal Rig 2 underwent planned four yearly high voltage electrical
system maintenance in the second half of 2022.
Performance shortfalls at Blary Hill and Little Raith are protected by
contractual provisions:
· Blary Hill was curtailed for noise management purposes following
commissioning which has now been resolved, with commercial protection from the
turbine supplier in place for some of the losses incurred.
· In addition to the commercial protections associated with additional
maintenance works, Little Raith's performance has improved in recent months
through a constructive approach to resourcing and additional training for the
on-site technicians, reinforcing the longer-term stability of the project.
There are also a range of technical innovations being trialled or deployed at
various GB onshore windfarms, as referenced within the Enhancements section.
France - onshore wind
Across the fifteen assets that make up this region, the south of France
suffered some poor wind resource in the middle of the year whilst the northern
sites were in line with budget. Construction snagging at the Venelle site,
which was commissioned at the end of 2020, is being addressed. Venelle's
sister site, Vannier, has now completed construction and the contractual
approach is benefitting from the experience gained at Venelle.
Repowering activities continue to progress well on the older southern sites,
with Claves' and Cuxac's Feed-in Tariff applications now approved and
contractual arrangements progressing to enable dismantling activities to
commence in the second half of 2023. Repowering will commence at Claves and
Cuxac; with Haut Languedoc and Haut Cabardes following thereafter. Repowering
under Feed‑in‑Tariff mechanisms allows projects to benefit from a new
20‑year subsidy period.
Scandinavia - onshore wind
Jädraås continues to perform well operationally with strong availability.
However, power price hedging arrangements have been challenging in the
volatile market, requiring settlement of hedges at high market prices during
periods of low production, which has impacting financial performance during
the second half of the year, which may continue into 2023 depending on power
price levels. The financial impact on the portfolio as a whole has not been,
and is not expected to be, material. In constructing a balanced portfolio,
Grönhult does not have such hedging arrangements in place and will receive
market electricity pricing under a route-to-market power price agreement.
Grönhult construction is now substantially complete, with the project
energised and exporting electricity to the grid.
Construction of Ranasjö and Salsjö (collectively known as Twin Peaks) is
progressing well and, as is typical for TRIG's projects in construction, RES
has been contracted to act as Owner's Engineer. Turbine foundations are laid
for both sites, with site tracks and turbine crane hardstands more than 50%
complete and substation works commenced. The sites are on track to commence
operations in 2024.
Northern Ireland & Republic of Ireland - onshore wind
Consisting of seven projects spread across Northern Ireland and the Republic
of Ireland, this region is the smallest of TRIG's regions by value. Downtime
at the Altahullion and Taurbeg sites exceeded budgets due to a combination of
component failures and proactive works to enhance the long-term performance of
the sites.
GB - offshore wind
Hornsea 1, our largest acquisition of 2022, has bedded in well within this
region of four projects spread from North Scotland to East Anglia. Works to
inter-array cabling within the wind farms, connections to the grid and
component exchanges at Sheringham Shoal, each of which adversely affected
production in the year, are now largely complete and expected to improve
performance going forward.
Through extensive negotiations working alongside our investment partners, one
of the offshore projects secured substantially improved commercial rates
mid-term on a core operations contract during the year, upon the investment
case.
East Anglia 1 successfully completed the sale of its associated offshore
substation and grid connection to shore, in accordance with market
requirements.
Beatrice agreed contractual terms for a range of different yield enhancements,
to improve both individual turbine and site-wide performance, for
implementation during 2023.
End of warranty inspections are a core theme for the region given the young
age of the assets, with a campaign of pro-active investigative works performed
or on-going to identify and resolve any potential defects under warranty, or
secure protection against their subsequent cost of resolution. There are also
a range of ongoing contractual performance protections post warranty.
Germany - offshore wind
Merkur has received an extensive inspection, repair and retrofit regime in
connection with the rear frame defect, which has now been completed,
availability brought back in line with budget and liquidated damage payments
for the associated downtime in the contract year ended March 2022 received.
This good progress in resolving the rear frame defect was core to the
investment case for an incremental 11% stake in the project, which was
acquired from a co-shareholder in December 2022. Power curve enhancements are
planned to be rolled out in 2023, which are expected to improve energy yield
by c. 2.5%.
At Gode, yaw and pitch optimisations have been implemented to enhance
production, with further specific opportunities being actively investigated.
A small amount of non-compensated grid downtime was experienced at both sites
at various points during the year.
Solar
The Solar segment of the portfolio currently consists of 29 assets across
southern England, France and Spain. Valdesolar in Spain contributes to over
50% of the segment's generation capacity, and the four Cadiz projects are also
now generating and set to become fully operational in Q1 2023. As the Cadiz
projects become fully operational they will add further geographical
diversification within TRIG's solar sub-portfolio.
Given the relative greater predictability of solar generation compared to wind
power, projects throughout TRIG's solar portfolio were able to secure
electricity price fixes on pay-as-produced basis at attractive levels, in the
context of the high but volatile electricity prices experienced in the year,
for the next four years.
This area of the portfolio has already seen diversification benefits, whereby
lower irradiance in France and Spain in 2022 was offset by high irradiation in
GB. The new Spanish site Valdesolar maintained very high availability across
the year but was impacted by grid curtailment in the summer. New arrangements
have been put in place to reduce future grid curtailment.
Enhancements
As Operations Manager, RES is dedicated to enhancing the operational
performance and shareholder and stakeholder value of the portfolio through
both commercial and technical initiatives. RES applies a structured framework
to identify, appraise and implement enhancements at both individual and
portfolio levels. Examples of some of the commercial and technical value
enhancements secured in 2022 include:
· Blade improvements: Aerodynamic improvements to wind turbine blades
have been developed with specialist, independent experts to increase the
efficiency of the blades in extracting energy from the wind. This enhancement
has been rolled out at a Scottish onshore wind site following a successful
trial, in which a 3% increase in energy yield was secured. Trials allow the
site-specific conditions to be evaluated, including the turbine model and
condition, local topography and wind characteristics such as shear and
turbulence. A second Scottish site trial is currently underway, with other
sites being assessed for further rollout, with greater emphasis on those
onshore sites which use larger blades.
· Software upgrades: More recent vintages of wind turbines use
sophisticated control systems to determine how the wind turbine responds to
the environmental conditions, such as the yawing of the nacelle and pitching
of the blades. Some of these software upgrades are more applicable to large
turbine arrays with flatter topography such as offshore wind farms.
Alternative software enhancements can also be used to secure improved
performance on older turbines within the portfolio.
· TRIG is actively engaging with its offshore wind joint venture partners
to identify and implement a wide range energy yield enhancements, for
implementation during 2023. These enhancements include wake steering - whereby
the overall site production is increased by reducing the wind obstructed by
each turbine on those downwind from them and high wind ride through - allowing
turbines to respond to and withstand gusting without shutting down whilst also
avoiding excessive loading on the structures. RES has a deep experience of
both identification, implementation and technical appraisal of the performance
of such enhancements, helping to ensure that appropriate contractual
structures are adopted.
· A wake steering and collective control trial, which seeks to enable
turbines to optimise the overall yield from the whole site rather than on a
per turbine basis, is progressing at Altahullion in Northern Ireland, with the
next phase of validation to be completed in H1 2023. Collective control is
expected to be beneficial on any site consisting of a large number of turbines
within an array formation.
· Pallas onshore wind farm in the Republic of Ireland has undergone
testing to evaluate the provision of certain specific grid services,
supporting grid resilience, for which the site is remunerated by the grid
operator.
· Active revenue stream management: Due to reduced market liquidity
in 2022, TRIG ensured a disciplined approach to price fixing, whilst also
engaged with offtakers to maximise value of REGOs across the portfolio (which
have seen a tenfold increase in value on previous years).
· Repowering activities are progressing at the four older sites in
the south of France, commencing at Claves and Cuxac, then following on at Haut
Languedoc and Haut Cabardes thereafter. New 20-year government-supported
tariffs have been secured for Claves and Cuxac. Decommissioning and repowering
contracts are targeted for signing during the second half of 2023.
· Work has continued on extending the life of existing operational
sites across the wholly owned UK and Ireland portfolio with planning
extensions submitted for several solar and wind sites during the year. In
addition, a review of the UK and Ireland onshore wind portfolio has been
undertaken to identify likely repowering opportunities. Several opportunities
have been identified and these will be progressed over the coming years.
Health and Safety
A strong focus on Health & Safety has always been core to TRIG's
operations and the ethos of its Board and Managers. Each quarterly meeting of
the TRIG Board starts with a discussion of Health & Safety across the
portfolio. Health & Safety performance is reviewed at every project
company board meeting throughout the year, using reporting obtained for every
site in the portfolio, providing information on both leading and lagging
indicators.
Leading indicators are those activities pro-actively performed or data
collated to help reduce the risk of an accident ever occurring, such as
performing internal or external safety audits, safety-focussed site walk-overs
supported by discussions with site personnel, as well as collating and sharing
information on:
· Good Catches - potential hazards that are identified and
controlled;
· Hazard Identifications - hazards that have the potential to cause
harm but are currently uncontrolled.
Lagging indicators are more focussed on collecting data on events that
occurred, ensuring that each is appropriately investigated and key
contributing factors identified to enable actions to be taken to reduce future
recurrence and severity, including through sharing information across
different businesses. Lagging indicators include:
· Near-misses - unplanned or uncontrolled events that have the
potential to cause harm or damage.
· Non-lost time accidents - where an injury is sustained, however
slight, and the injured party is able to return to work on the same day as the
accident. The difference between a near-miss and a non-lost time accident can
often be down to an element of timing, separation or good fortune that broke
the chain of events.
· Lost-time accidents: where an injury is sustained and the injured
party is unable to return to work on the day following the accident. A seven
day lost-time accident classification is also used to reflect a higher degree
of severity, such that the injured party is unable to return to their normal
duties within seven days of suffering the injury.
The following provides an update of Health & Safety items of note during
2022:
· There were no severe accidents across the portfolio during the year.
However, the Lost Time Accident Frequency Rate increased compared to 2021, in
part reflecting improved reporting, as well as a larger construction portfolio
and higher offshore activity, with actions taken to avoid recurrence in the
case of each incident.
· The increased number of incidents is in part reflected by the
increased construction activity in the portfolio with manual handling
incidents (associated with the installation of the solar panels) seen at the
Cadiz solar construction sites, where there were up to 400 people across the
four sites at certain times. There were also several incidents reported at the
Merkur offshore site, where there was a high level of activity associated with
the rectification of the rear frame issue.
· The quality of Health & Safety reporting remains high across
most of the portfolio, with good transparency and follow up of incidents.
There has been an increased focus on positive leading indicators such as the
number of independent and internal safety audits or reviews, hazard
identifications and safety walks.
· Approval was given to install improved welfare facilities across
the GB Solar sites in 2023.
· In addition, further safety equipment within the turbine towers of
some of the older GB onshore wind farms will be installed in 2023.
· RES is a Tier 1 member of SafetyOn and sits on the SafetyOn
Management Board. RES's TRIG Operations Management team attended a
collaboration event in November which served as a great opportunity for owners
and subcontractors to share their thoughts on key safety issues. In the same
vein, RES continues to regularly hold its own Health & Safety coordination
group to foster relationships between the various asset managers across the
TRIG portfolio, share information and discuss matters that have occurred in
the portfolio. This year it allowed those working on UK and German offshore
sites to share their experiences, something that they wouldn't normally get
the opportunity to do.
Projects in construction and development
By acquiring assets at an earlier stage in their development, TRIG seeks to
access improved returns and a wider investment opportunity set.
The delivery and de-risking of projects through construction and development
enhances value for shareholders who benefit from the shift to a lower discount
rate used to value operational projects; and enable TRIG's Managers to deploy
TRIG's balance sheet to create new low-carbon generation and flexible capacity
to contribute to the decarbonisation of the electricity system and improve
energy security.
Importantly, TRIG benefits from its Managers' expertise in investing in and
delivering infrastructure projects through construction and development:
InfraRed as a greenfield investor for the past 25 years and RES as a developer
and/or constructor of over 23GW and operator of over 10GW of renewable assets
globally.
In sourcing construction and development stage investments, InfraRed carefully
screens opportunities to ensure they are aligned with TRIG's portfolio
construction strategy and are additive to the portfolio as a whole. InfraRed,
with input from RES, then perform due diligence and structure each opportunity
to ensure that risks are allocated to parties best positioned to manage them
and that the returns reflect the risks being borne by TRIG's portfolio
company. Once an investment is brought into the portfolio, RES, with input
from InfraRed, actively oversees construction and development activities to
manage costs, timetable, quality, contractor interface, transition into
operations, stakeholder engagement and, importantly, health & safety.
At the balance sheet date, 8% of the portfolio by value was in construction
and development. This represents the Ranasjö, Salsjö and Grönhult wind
farms in Sweden as well as the development premium for the four battery
storage projects in development: Ryton, Drakelow, Drax and Spennymoor. Taking
the expected construction spend for the Ryton and Drakelow batteries, which
are expected to be contracted in 2023, would increase the construction and
development exposure to 11% of the portfolio by value.
Recently completed construction projects
Vannier, France; completed Q3 2022
Located in the Haute-Marne department in France, Vannier is a 43MW onshore
wind farm consisting of 17 Envision E-131 2.5MW turbines. Construction
commenced in February 2020. Construction was delivered under an EPC wrap by an
Envision-Velocita consortium.
Following permit issues at the site, for which full commercial protection had
been previously obtained, construction was resumed in September 2021, with
full commercial takeover achieved in September 2022.
Blary Hill, Scotland; completed Q1 2022
Located on the Kintyre Peninsula in Scotland, Blary Hill is a 35MW onshore
wind farm consisting of 14 Nordex 2.5MW turbines. Construction started in 2020
and the project was completed early in 2022. Construction was delivered by RES
under an EPC wrap, a management model in which a principal contractor secures
each of the supply contracts and has contractual commitments to deliver the
project on time and on budget. A third-party technical adviser provided
independent oversight of key milestones.
Both the local community and the local environment have been considered
throughout the construction process. Several local companies were engaged for
construction work, with local employment centres being utilised for the
recruitment of labour operatives. Additionally, habitat management plans will
be implemented along with compensatory planting, to improve the condition of
the natural environment.
Grönhult, Sweden due to complete Q1 2023
Located in southwest Sweden, the 12 x Vestas V162 5.6MW (67.2MW) project was
acquired from Vattenfall in January 2021.
Vattenfall managed the construction to a high standard under a multi-contract
approach with excellent health & safety performance. Construction
commenced in Q1 2021 with all turbines erected prior to the end of 2022 and
early generation achieved in October 2022. Snagging and commissioning
activities are now being completed.
Construction projects
Ranasjö & Salsjö
Located in Sollefteå, Västernorrland County, Central Sweden, the two
adjacent Ranasjö and Salsjö projects will consist of a total of 39 Siemens
6.2MW turbines (242 MW), with TRIG having 50% ownership share alongside
InfraRed's European Infrastructure Income Fund 4.
The projects continue in line with programme. Civil works, electricals and
foundations are all complete at the Salsjö project and the final roads and
two foundations are left to be completed at Ranasjö. 'Dry runs' of turbine
deliveries to site have been completed successfully ahead of deliveries
scheduled to commence during the summer of 2023.
The projects are being managed by the developer Arise and are scheduled for
take-over in spring 2024.
Arenosas, Malabrigo, El Yarte and Guita (Cadiz Solar), Spain Completed
Q1 2023
Located in the province of Cadiz, Spain, the four projects have a total
capacity of 234MW. Construction on the projects began in September 2021 and
was delivered by Statkraft under an EPC wrap.
First export was achieved in December 2022 with commissioning activities
progressing well and due to complete in Q1 2023. Across all projects,
consideration of the local community has been actively embedded throughout the
process, with the construction contractor engaging with its subcontractors to
encourage local employment for less specialised work and the use of local
businesses.
In total, local labour accounted for the equivalent of 108 people hired for a
year, with €0.8m of local investment.
Development
Storage
TRIG acquired four consented battery storage projects in the second half of
2022, which will provide c. 700MWh / 350MW flexible capacity once built.
Located in the North of England, these sites require detailed design works to
be performed prior to procurement and construction.
The timescale for construction will be dictated by grid connection dates,
which currently vary from 2023 to 2031. Ryton will be the first to progress,
with construction anticipated to commence in 2023.
4 Valuation of the Portfolio
Introduction
The Investment Manager is responsible for carrying out the fair market
valuation of the Group's investments, which is presented to the Directors for
their approval and adoption. A valuation is carried out on a six-monthly basis
as at 30 June and 31 December each year.
For non-market traded investments (being all the investments in the current
portfolio), the valuation is based on a discounted cash flow methodology and
in accordance with IFRS 13 and IFRS 10, given the special nature of
infrastructure investments.
The valuation for each investment in the portfolio is derived from the
application of an appropriate discount rate to reflect the perceived risk to
the investment's future cash flows in order to give the present value of those
cash flows. The Investment Manager exercises its judgement in assessing the
expected future cash flows from each investment based on the project's
expected life and the financial model produced by each project entity. In
determining the appropriate discount rate to apply to a given investment, the
Investment Manager takes into account the relative risks associated with the
revenues, which include fixed price per MWh income (lower risk) or merchant
power sales income (higher risk). Where a project has both income types a
theoretical split of future receipts has been applied, with a different
(higher) discount rate used for an investment's return deriving from the
merchant income compared to the fixed price income, equivalent to using an
appropriate blended rate for the investment.
The Directors' Valuation of the portfolio as at 31 December 2022 was
£3,737.0m. This valuation compares to £2,725.8m as at 31 December 2021 and
£3,235.6m as at 30 June 2022 13 .
Valuation movement in the year to 31 December 2022
£m £m
Valuation movement during the year to 31 December 2022
Valuation of portfolio at 31 December 2021 2,725.8
Cash investments net of capital return 693.8
Cash distributions from portfolio (280.5)
Rebased valuation of portfolio 3,139.1
Changes in power price forecasts* 265.7
Movement in discount rates (176.6)
Change in inflation assumptions 233.7
Change in foreign exchange** 73.0
Balance of portfolio return 201.9
Valuation of portfolio at 31 December 2022 3,737.0
* The positive impact from the change in power price forecasts is
net of the UK Electricity Generators Levy, which had an adverse impact of
£188m.
** Foreign exchange movement is stated before the offsetting effect of
hedges which are held at the Company and subsidiary levels. Foreign exchange
gain reduces to £36.6m after the impact of foreign exchange hedges.
The opening valuation at 31 December 2021 was £2,725.8m. Allowing for net
cash investments of £693.8m and cash receipts from investments of £280.5m,
the rebased valuation as at 31 December 2022 was £3,139.1m.
Cash investments of £693.8m during the year is predominantly comprised of the
following investments:
% of Committed Invested to 2022 Invested to Total (fully committed) 15
Portfolio Valuation
31 Dec 2021
Invested 14
31 Dec 2022
Hornsea One 0% 8% 8% 8%
Valdesolar 0% 3% 3% 3%
Cadiz solar projects (Arenosas, Malabrigo, El Yarte and Guita) 2% 2% 5% 5%
Merkur 6% 2% 7% 7%
Battery storage projects (Ryton, Drakelow, Drax and Spennymoor) 0% 1% 1% 4%
Grönhult 1% 1% 3% 3%
Twin Peaks (Ranasjö and Salsjö) 1% 1% 2% 4%
Further detail on each investment is included in Section 2.5.
Each movement between the rebased valuation of £3,139.1m and the 31 December
2022 valuation of £3,737.0m is considered in turn below:
(i) Forecast power prices
The valuation at 31 December 2022 is based on current updated power price
forecasts for each of the markets in which TRIG invests overlayed with a
portion of the lower prices indicated by the forward markets over the next c.2
years. The forecasts are materially up in the short to medium term, but with
the longer term broadly unchanged in real terms, resulting in an overall
increase in valuation of the portfolio from a year ago by £453.8m. This is
reduced by the impact of the UK Electricity Generator Levy ("EGL") which is
explained in more detail below which leads to a net valuation increase arising
from increase in power price forecasts after the impact of the UK EGL of
£265.7m. This impact includes the long-term change in power curve inflation
(see item (iv) changes to inflation assumptions).
Over the year, spot power prices and the short-to-medium term power price
forecasts have markedly increased due to supply chain constraints exacerbated
by the conflict in Ukraine and associated disruption to energy markets. This
has had the effect of contracting the supply and pushing up the cost of
natural gas. Many countries are seeking to reduce and/or eliminate their use
of Russian gas, increasing their demand for other gas sources (including LNG)
in the shorter term and increasing the drive to use and further develop other
energy sources. This includes coal as a stopgap measure (notwithstanding its
high carbon tax). This transition has resulted in wholesale power price
forecasts remaining elevated across the 2020s before reverting to the levels
similar to those being forecast at the previous year end as additional demand
and supply are broadly expected to balance. Over the longer term this also
includes electricity displacing gas usage (for example switching to electric
heating), introducing the use of green hydrogen and including more
intermittent renewable generation and/or nuclear generation.
Prior to the Ukraine conflict, near-term power prices across Europe were
already elevated, mainly caused by increasing gas demand during 2021 and early
2022. Gas storage levels were low over the last winter period (2021/22) as
electricity demand increased during 2021 as economies came out of lockdown and
electricity generated from other sources, such as wind and nuclear, was lower
than usual (due to unusually low wind levels and outages, respectively). This
has led to European gas prices, and hence electricity prices, being more
sensitive to reduced supply and/or increased demand.
Power prices are one of the key risks faced by the Company: a number of
factors go into power price forecasting to estimate electricity demand,
including the mix of generation technology meeting this demand and for each
technology, their associated costs of supply. As such, it is inherently
difficult to estimate and then apply these factors to accurately forecast the
outcome of this dynamic market. Please refer to Section 3.4 - Risk and Risk
Management for further analysis.
The weighted average power price used to determine the valuation is shown
below in real terms (average of 2022 prices) - this is comprised of the blend
of forecasts for each of the power markets in which TRIG is invested after
applying expected PPA power sales discounts and reflecting cannibalisation 16
and, where it is believed appropriate, overlaying shorter-term forwards to
reflect current market pricing.
Illustrative blended power price curve (real prices) for TRIG's portfolio 17
Region Average Average Average
2023-2027
2028-2050
2023-2050
GB (Real, £/MWh) Before EGL 121 41 56
After EGL 100 41 52
Average of 5 euro jurisdictions* After intervention 89 48 55
(Real EUR/MWh)
* France, SEM, Germany, Sweden (SE2 and SE3) and Spain
Cannibalisation is assumed within the adopted power price forecasts across
each jurisdiction. The reduction in captured wholesale electricity power
prices is forecast to be further impacted in each geography over time as the
proportion of production coming from renewables in each market increases.
The EU markets are imposing windfall taxes via inframarginal caps applied by
EU markets to each county. These materially remove the benefit of power prices
in excess of a threshold (set individually by country) and this has been
incorporated within the assumed power price forecasts for each affected
market. Further additional legislation applicable in Spain (a gas cap and a
more onerous windfall tax related to gas pricing) is also incorporated within
the power price forecast assumed. Additional detail by market is included
within the market background section.
Electricity Generator Levy (UK-specific)
The Autumn Statement in November announced the introduction of the Electricity
Generator Levy to applicable UK wind and solar assets. This imposes an
effective 70% tax on "excess" revenues from the sale of electricity (excluding
where these are derived from government support, i.e. ROCs, CfDs and FiTs).
Excess revenues are defined as those above £75/MWh. The 70% effective tax
comprises a direct 45% levy on revenues above the threshold and 25%
corporation tax as the levy is not considered a deductible expense for
corporation tax. The levy is expected to be applied for 5 years from
1 January 2023 and the £75 is indexed by CPI, with the first £10m of
"excess revenue" provided as an allowance each year (i.e. escapes the levy).
The impact of the EGL is to reduce the uplift in value from increased power
price forecasts. The adverse valuation impact of the introduction of the EGL
has been £188.1m. It also has the effect of reducing project sensitivity to
changes in power prices down to the £75 threshold, as analysed in the key
sensitivities section.
(ii) Movement in valuation discount rates:
The weighted average portfolio valuation discount rate as at 31 December 2022
was 7.2% (31 December 2021: 6.6%). The discount rates used for valuing each
investment represent an assessment of the rate of return at which it is
estimated infrastructure investments with similar risk profiles would trade on
the open market.
During the year we have observed continuing strong competition for renewables
infrastructure, which remains a sought-after asset class. Whilst transaction
evidence is not yet demonstrating a clear increase in discount rates, the
yield of long-term government bonds has increased since 30 June 2022. The
Investment Manager has applied an average increase of 0.5% to discount rates
across the portfolio. The valuation discount rates applied to investments in
the UK have been increased by more than those in the EU, reflecting the higher
long-term government bond yields in the UK. The average increase of 0.5%
represents an average increase of 0.8% applied to UK investments and 0.3% to
non-UK investments compared to 31 December 2021.
As the portfolio progresses through time, assets with fixed price arrangements
in the earlier years will see their future returns become proportionally more
exposed to market price movements (unless current arrangements, notably
subsidies, are renewed) and consequently contain an increased level of risk.
This effect has increased the portfolio weighted average discount rate by 0.1%
since December 2021.
During the year, the Company commissioned an independent valuation of the
portfolio and undertook a further review of the discount rates adopted for the
December 2022 valuation, which confirmed that the rates used were reasonable.
This change in assumption has led to a reduction in the valuation of the
investments of £176.6m.
(iv) Changes to inflation assumptions
Throughout 2022, the material increases in energy prices (as described in (i)
above) as well as increases in food and other commodity prices exacerbated by
the conflict in Ukraine have contributed to material increases in headline
inflation (measured versus price levels 12 months previously) across all the
geographies TRIG invests in.
In respect of energy prices, the most significant increase in the UK resulted
from the step-up in the retail consumer energy price caps in April and October
of 2022 (with a further change in energy price cap in January 2023), while
other contributions have been more evenly spread. Headline inflation figures
are likely to remain high both from continued inflationary pressures (in
energy and in other factors) and as a result of the "base effect", while the
material increase in April will remain within the headline figure until the
April 2023 inflation figure is released.
Inflation applied to cash flows has been uplifted for actual inflation in all
geographies for the 11 months to November 2022. For December 2022 we have
assumed 6% for UK RPI, 5.25% for UK CPI and 3% for CPI in the other European
countries TRIG invests in.
We have shown below the revised inflation assumptions and also the effective
annual rate for 2022, which combines the very high actual inflation to date
with the expected inflation levels for the balance of 2022.
Inflation applied to future UK power prices tracks UK RPI till 2030 and is
assumed to be 2.25% thereafter.
Inflation assumptions used in the Portfolio Valuation
Index 2022 2023 2024-2029 2030+
Forecast (Dec) full-year equivalent*
UK RPI 6.00% 13.3% 5.00% 2.75% 2.00%
(December 2021: 3.75%)
(December 2021: 3.50%)
UK CPI 5.25% 10.5% 4.25% 2.00% 2.00%
(December 2021: 3.00%)
(December 2021: 2.75%)
UK Power Price 6.00% 13.3% 5.00% 2.75% 2.25% (December 2021: 2.75%)
(December 2021: 3.75%)
(December 2021: 3.50%)
Eurozone 3.00% 8.2% 3.00% 2.00% 2.00%
(December 2021: 2.00%)
(December 2021: 2.00%)
* This represents the average inflation across the year 2022 measured against
the prior 12 months.
The inflation changes above have had the impact of increasing the valuation by
£233.7m. This number was mainly driven by inflation actuals accounting for
approximately 80% of the total.
(v) Foreign Exchange Movement:
Over the year the sterling has depreciated 5% against the euro (31 December
2021: EUR 1.1899; 31 December 2022: EUR 1.1304). In aggregate this has led to
a gain in the year of £73.0m in the valuation of the euro-denominated
investments located in France, the Republic of Ireland, Sweden 18 , Spain and
Germany. After the impact of forward currency hedges held at Company level are
taken into account, the foreign exchange gain reduces to £36.6m.
Euro-denominated investments comprised 41% of the portfolio at the year end.
The Group enters into forward hedging contracts (selling euros, buying
sterling) for an amount equivalent to its expected income from
euro-denominated investments over the short term, currently approximately the
next 48 months. In addition, the Group enters into further forward hedging
contracts such that, when combined with the "income hedges", the overall level
of hedge achieved in relation to the euro-denominated assets is typically in
the range of 60% to 80% of their valuation. Hedging is also effected when
making investments using the revolving credit facility by drawing in euros for
euro acquisitions.
The Investment Manager keeps under review the level of euro exposure and
utilises hedges, with the objective of minimising variability in shorter term
cash flows with a balance between managing the sterling value of cash flow
receipts and potential mark-to-market cash outflows.
(vi) Balance of portfolio return:
This refers to the balance of valuation movements in the year (excluding (i)
to (v) above) and represents an uplift of £201.9m and a 6.4% increase over
the rebased value of the portfolio. The balance of portfolio return mostly
reflects the net present value of the cash flows brought forward at the
prevailing portfolio discount rate (6.6% at 31 December 2021). Accounting for
the fact that the acquisitions during the year occurred partway through the
year and consequently these cash flows were brought forward by less than 12
months, then the increase in value would be the equivalent of an annualised
rate of 6.9%.
In addition to the unwinding of the discount rate:
· Actual operating performance has been greater than forecast, with
higher-than-forecast power prices being partially offset by lower overall
generation for the year.
· Changes have been made to deposit rate assumptions, increasing
interest rate forecasts in line with market expectations and the recent rises
enacted by central banks across TRIG's markets. The portfolio has a low
sensitivity to the changes in interest rates, which is an advantage to TRIG's
approach of favouring long-term structured project financing rather than
short-term corporate debt. Structured project financing is secured against the
underlying assets, with the substantial majority benefitting from long-term
interest rate swaps which fix the interest costs to the projects. As such, the
overall impact of interest rate changes is not material. Please see further
detail on page 157.
· Several projects secured new fixed price power purchase agreements,
while others utilised existing optionality to fix some prices at attractive
rates, providing additional value and revenue security.
Investment Obligations
At the balance sheet date, the Company had outstanding investment commitments
in relation to the construction of the Ranasjö, Salsjö and Grönhult onshore
wind farms, and the Cadiz solar projects (Arenosas, Malabrigo, El Yarte and
Guita).
The commitment amounts below include further development and subsequent
construction spend on two battery storage projects (Ryton and Drakelow). These
two projects for a combined size of 165MW/30MWh of flexible capacity are
expected to become operational in 2024 and 2025. The expected cost to build
these two projects is included in Outstanding Commitments, even though
contracts have not yet been entered into, given that the contracts to build
these projects are expected to be signed in the short term (in 2023).
TRIG has acquired the rights to develop and construct two further battery
storage projects (located near Spennymoor and Drax). These projects are
scheduled for grid connection in 2029 and 2031, and are expected to have total
capacity of c. 190MW / 380MWh once built. The construction costs for these two
projects are not included in the Company's Outstanding Commitments as no build
contracts have been entered into, nor are they expected to be entered into in
the short term.
Name Acquired Net MW Status Completion Date
Grönhult Feb-21 67.0 Construction Q1 2023
Ranasjö Jul-21 43.4 Construction 2024
Salsjö Jul-21 77.5 Construction 2024
Arenosas Sept-21 58.1 Construction* Q1 2023
El Yarte Sept-21 58.1 Construction* Q1 2023
Guita Sept-21 58.1 Construction* Q1 2023
Malabrigo Sept-21 58.1 Construction* Q1 2023
Ryton Sept-22 74.0 Late Stage Development 2024
Drakelow Sept-22 90.0 Late Stage Development 2025
* TRIG does not bear construction risk on the Cadiz solar projects.
TRIG has a right to put any of the four projects back to the developer of the
projects in the event that a project is not successfully commissioned by its
long stop date.
The timeline of outstanding commitments is presented below (approximately half
in relation to Ryton and Drakelow):
2023 2024 2025 Total
Outstanding Commitments (£m) 97 78 30 205
Fully invested Portfolio Valuation
The valuation of the portfolio on a fully invested basis can be derived by
adding the valuation at 31 December 2022 and the expected outstanding
commitments as follows:
Portfolio valuation at 31 December 2022 £3,737.0m
Future investment commitments £204.5m
Portfolio valuation once fully invested £3,941.6m*
* Table does not cast due to rounding.
Key sensitivities
For each of the sensitivities, it is assumed that potential changes occur
independently of each other with no effect on any other base case assumption,
and that the number of investments in the portfolio remains static throughout
the modelled life.
The sensitivities assume the portfolio is fully invested and hence the
Portfolio Value for the sensitivity analysis is £3,941.6m. Accordingly, the
NAV per share impacts shown above assumes the issue of further shares to fund
the balance of these commitments.
All of TRIG's sensitivities above are stated after taking into account the
impact of project-level gearing on returns.
The output sensitivity above incorporates an updated calculation of the
portfolio effect which reduces the variability as a result of the
diversification of the portfolio. The increased diversification of the
portfolio has increased this effect and consequently reduced the sensitivity
of the portfolio.
The windfall taxes imposed by the UK (the Electricity Generator Levy) and the
EU (Inframarginal Cap and Spanish-specific legislation) result in price
sensitivity becoming lower while the assumed pricing exceeds the threshold for
the imposition of these taxes (e.g. for the UK in 2023 for prices in excess of
£75/MWh, the valuation sensitivity to change in price would be reduced by
approximately 60% compared to the sensitivity were the Electricity Generator
Levy not in place).
Ten Largest Investments
Set out below are the ten largest investments in the portfolio. As at 31
December 2022, the largest investment (Hornsea One) accounted for
approximately 9% of the portfolio by invested value. In total, the 10 largest
projects accounted for approximately 52% of the project portfolio by invested
value (2021: 55%).
Ten largest investments - Invested to date basis
Project Location Type % of portfolio by value at
31 December 2022 31 December 2021
Hornsea One England Offshore Wind 9% -
Merkur Germany Offshore Wind 7% 6%
Jädraås Sweden Onshore Wind 7% 8%
Beatrice England Offshore Wind 6% 10%
East Anglia 1 England Offshore Wind 6% 9%
Gode Wind 1 Germany Offshore Wind 4% 5%
Garreg Lwyd Wales Onshore Wind 4% 5%
Crystal Rig II Scotland Onshore Wind 3% 3%
Valdesolar Spain Solar PV 3% -
Sheringham Shoal England Offshore Wind 3% 3%
December 2022 ten largest investments 52%
Solwaybank Scotland Onshore Wind 2% 3%
Blary Hill Scotland Onshore Wind 2% 2%
December 2021 ten largest investments 55% 19
The table below sets out the top ten largest investments in the portfolio, including investment commitments:
Ten largest investments - Committed basis
Project Location Type % of portfolio by value at
31 December 2022
Hornsea One England Offshore Wind 8%
Merkur Germany Offshore Wind 7%
Jädraås Sweden Onshore Wind 6%
Beatrice England Offshore Wind 6%
East Anglia 1 England Offshore Wind 6%
Gode Wind 1 Germany Offshore Wind 4%
Garreg Lwyd Wales Onshore Wind 3%
Grönhult Sweden Onshore Wind 3%
Crystal Rig II Scotland Onshore Wind 3%
Valdesolar Spain Solar PV 3%
December 2022 ten largest investments 49%
5 Analysis of Financial Results
As at 31 December 2022, the Group had investments in 90 projects. As an
investment entity for IFRS reporting purposes, the Company carries these
investments at fair value. The results below are shown on a statutory and on
an "expanded" basis as we have done in previous years. See the box below for
further explanation.
Basis of preparation
In accordance with IFRS 10, the Group carries investments at fair value as the
Company meets the conditions of being an Investment Entity. In addition, IFRS
10 states that investment entities should measure their subsidiaries that are
themselves investment entities at fair value. Being investment entities, The
Renewables Infrastructure Group (UK) Limited ("TRIG UK") and The Renewables
Infrastructure Group (UK) Investments Limited ("TRIG UK I"), the Company's
subsidiaries, through which investments are purchased, are measured at fair
value as opposed to being consolidated on a line-by-line basis, meaning their
cash, debt and working capital balances are included as an aggregate number in
the fair value of investments rather than the Group's current assets. In order
to provide shareholders with more transparency into the Group's capacity for
investment, ability to make distributions, operating costs and gearing levels,
adjusted results have been reported in the pro forma tables below.
The pro forma tables that follow show the Group's results for the year ended
31 December 2022 and the prior year on a non‑statutory "Expanded basis",
where TRIG UK and TRIG UK I are consolidated on a line-by-line basis, compared
to the Statutory IFRS financial statements (the "Statutory IFRS basis"). The
Directors have provided the non-statutory Expanded basis to assist users of
the accounts in understanding the performance and position of the Company, by
including the cash and debt balances carried in TRIG UK and TRIG UK I and
expenses incurred in TRIG UK and TRIG UK I.
The necessary adjustments to get from the Statutory IFRS basis to the
non-statutory Expanded basis are shown for the primary financial statements.
The commentary provided on the primary statements of TRIG is on the Expanded
Basis.
Income Statement
The Statutory IFRS basis does not include TRIG UK and TRIG UK I's costs, such
as overheads, management fees and acquisition costs against income.
The Expanded basis includes the expenses incurred within TRIG UK and TRIG UK
I to enable users of the accounts to fully understand the Group's costs. There
is no difference in profit before tax or earnings per share between the two
bases.
Balance Sheet
The Statutory IFRS basis includes TRIG UK and TRIG UK I's cash, debt and
working capital balances as part of portfolio value. The Expanded basis shows
these balances gross. There is no difference in net assets between the
Statutory IFRS basis and the Expanded basis.
The majority of cash generated from investments had been passed up from TRIG
UK and TRIG UK I to the Company by 31 December 2022.
At 31 December 2022, TRIG UK I was £398.5m drawn on its revolving credit
facility (2021: £72.8m drawn) being the majority of the difference between
the Statutory IFRS basis and the Expanded basis.
Cash Flow Statement
The Statutory basis shows cash movements for the top company only (TRIG
Limited). The Expanded basis shows the consolidated cash movements above the
investment portfolio which are relevant to users of the accounts. Differences
include income received by TRIG UK and TRIG UK I applied to reinvestment and
expenses incurred by TRIG UK and TRIG UK I that are excluded under the
Statutory IFRS basis.
The purchase of investments on the Expanded basis is funded by both the
company's revolving credit facility and amounts passed down after capital
raises. The remaining balance is that of reinvestment.
Income statement
Summary income statement Year to 31 December 2022 Year to 31 December 2021
£'million £'million
Statutory Adjustments(1) Expanded Basis Statutory Adjustments(1) Expanded Basis
IFRS Basis
IFRS Basis
Operating income 555.2 43.4 598.6 174.8 29.5 204.3
Acquisition costs - (2.6) (2.6) - (1.9) (1.9)
Net operating income 555.2 40.8 596.0 174.8 27.6 202.4
Fund expenses (2.3) (27.1) (29.4) (1.9) (21.9) (23.8)
Foreign exchange (loss)/gains (32.1) (4.3) (36.4) 37.6 0.0 37.6
Finance costs (0.1) (9.4) (9.5) (0.0) (5.7) (5.7)
Profit before tax 520.7 0.0 520.7 210.5 0.0 210.5
EPS(2) 21.5p - 21.5p 10.0p - 10.0p
1. The following were incurred within TRIG UK and TRIG UK I; acquisition
costs, the majority of expenses and credit facility fees and interest. The
income adjustment offsets these cost adjustments.
2. Calculated based on the weighted average number of shares during the
year being approximately 2,424.0 million shares.
Analysis of Expanded Basis financial results
Profit before tax for the year to 31 December 2022 was £520.7 million,
generating earnings per share of 21.5p, which compares to £210.5 million and
earnings per share of 10.0p for the year to 31 December 2021.
The EPS of 21.5p reflects high revenues generated in the year as a result of
particularly high wholesale power prices coupled with higher subsidies as a
result of their indexation to inflation, and increases in the portfolio
valuation (which is included in Operating Income) primarily as a result of
expectations for power prices and inflation continuing to be elevated over the
short-medium term.
Other areas contributing to valuation growth have been foreign exchange
movements as sterling has weakened against the euro.
These increases are partially offset by the Electricity Generator Levy (EGL)
introduced in the UK applied to actual revenues from the sale of electricity
in excess of the threshold schemes and other government intervention schemes
(clawback and caps) across the other markets. The valuation discount rate has
also been increased in the year with the portfolio discount rate increasing to
7.2% (2021: 6.6%) reflecting increasing long-term government borrowing rates.
This also had the effect of reducing the overall valuation. The factors
causing the movement in the valuation are more fully described in Section 3.1
- Valuation of the Portfolio.
Generation volume in the year was below budget, although this was more than
offset by the higher-than-budgeted power prices achieved during the year.
Acquisition costs of £2.6m (2021: £1.9m) relate to the investments in the
year, mostly attributable to the investments in Hornsea One, Valdesolar,
Spennymoor, Ryton, Drakelow and Drax battery storage projects as well as the
incremental investment in Merkur.
Year to Year to
31 December 2022
31 December 2021
(£'million) (£'million)
Acquisition costs 2.6 1.9
Total acquisition commitments made in the year 648.1 677.9
Acquisition costs as % of investments 0.4% 0.3%
An increase in fund expenses in the year to 31 December 2022 as compared to
the year to 31 December 2021 reflects the increase in the size of the
portfolio.
Fund expenses of £29.4 million (2021: £23.8 million) includes all operating
expenses and £26.6 million (2021: £21.5 million) in fees paid to the
Investment and Operations Managers. Management fees are charged as follows: at
1% of Adjusted Portfolio Value up to £1 billion, 0.8% of Adjusted Portfolio
Value in excess of £1 billion, 0.75% of Adjusted Portfolio Value in excess of
£2 billion and 0.7% of Adjusted Portfolio Value in excess of £3 billion.
This is set out in more detail in the Related Party and Key Advisor
Transactions note, Note 19 to the financial statements.
During the year the sterling weakened against the euro by 5% resulting in a
positive foreign exchange valuation movement for existing euro-denominated
assets, giving a valuation gain of £73.0 million (2021: £58.7 million loss),
partially offset by loss on foreign exchange hedges and cash and debt balances
held at Company level of £36.4 million (2021: £37.6 million gain) recorded
in the Income Statement. The net foreign exchange gain in the period is hence
£36.6 million (2021: £21.1 million loss).
Finance costs relate to the interest and fees incurred relating to the Group's
revolving credit facility. The finance costs in the period are higher than the
comparative period, reflecting increased interest rates in the year.
Ongoing charges
Ongoing Charges (Expanded Basis) Year to Year to
31 December 2022
31 December 2021
£'000s £'000s
Investment and Operations Managers' fees 26,639 21,520
Audit fees 300 272
Directors' fees and expenses 375 342
Other ongoing expenses 1,934 1,519
Total expenses(1) 29,246 23,653
Average net asset value 3,123,518 2,435,718
Ongoing Charges Percentage (OCP) 0.93% 0.97%
1. Total expenses excludes £0.1m (2021: £1.1m) of lost bid costs
incurred during the year.
The Ongoing Charges Percentage is 0.93% (2021: 0.97%). The ongoing charges
have been calculated in accordance with AIC guidance and are defined as
annualised ongoing charges (i.e. excluding acquisition costs and other
non-recurring items) divided by the average published undiluted net asset
value in the year. The Ongoing Charges Percentage has been calculated on the
Expanded Basis and therefore takes into consideration the expenses of TRIG UK
and TRIG UK I as well as those of the Company.
The decrease in OCP level reflects the tiered Manager Fees that reduce as
Portfolio Value grows as well as the growth of the Company in the year,
meaning the Company's expenses are spread over a larger capital base. There is
no performance fee paid to any service provider.
Balance sheet
Summary balance sheet As at 31 December 2022 As at 31 December 2021
£'million £'million
Statutory IFRS Basis Adjustments Expanded Basis Statutory IFRS Basis Adjustments Expanded Basis
Portfolio value 3,322.6 414.4 3,737.0 2,636.8 89.0 2,725.8
Working capital 12.4 (16.0) (3.6) 13.9 (15.9) (2.0)
Hedging Asset/(Liability) (16.8) (0.7) (17.5) 27.3 (0.6) 26.7
Debt - (398.5) (398.5) - (72.8) (72.8)
Cash 24.5 0.8 25.3 28.2 0.3 28.5
Net assets(1) 3,342.7 - 3,342.7 2,706.2 - 2,706.2
Net asset value per share 134.6p - 134.6p 119.3p - 119.3p
1. The hedging liability has been shown net above, this consists of
current and non-current asset and liability balances relating to FX forward
contracts, this is discussed further in note 18 of the financial statements.
Analysis of Expanded Basis financial results
Portfolio value grew by £1,011.2 million in the year to £3,737.0 million,
primarily as a result of the investments made in the year to 31 December 2022
and strong valuation growth as described more fully in the "Valuation of the
Portfolio" section of this Strategic Report.
Hedging liabilities and assets represent the value of outstanding foreign
exchange derivatives used to manage the Company's risk to movements in the
foreign exchange rate between the sterling and euro. Working capital amounts
include debtors, liabilities and capitalised financing costs.
Group cash at 31 December 2022 was £25.3 million (2021: £28.5 million) and
credit facility debt drawn at 31 December 2022 was £398.5 million (2021:
£72.8 million).
Net assets grew by £636.5 million in the year to £3,342.7 million. The
Company raised £276.3 million (after issue expenses) of new equity during the
year to support investment activity and produced a £520.7 million profit in
the year, with net assets being stated after accounting for dividends paid in
the year (net of scrip take-up) of £160.4 million. Other movements in net
assets totalled £1.0 million, being the Managers' shares which form part of
the management fee accrued at 31 December 2022 and to be issued on or around
30 March 2023.
Net asset value ("NAV") and Earnings per share ("EPS") reconciliation
Net asset value ("NAV") per share as at 31 December 2022 was 134.6p compared
to 119.3p at 31 December 2021.
NAV per share Shares in issue (m) Net assets
(£m)
Net assets at 31 December 2021 119.3p 2,267.2 2,705.2
Profit/EPS to 31 December 2022 21.5p(1) - 520.7
Shares issued (net of costs)(2) 0.6p(3) 211.7 276.3
Dividends paid in 2022 (6.8)p (165.6)
Scrip dividend take-up(4) - 3.9 5.2
H2 2022 Managers' shares to be issued - 0.8 1.0
Net assets at 31 December 2022 134.6p 2,483.6(5) 3,342.8(5)
1. Calculated based on the weighted average number of shares during the
year being 2,424.0 million shares.
2. Includes shares issued to managers (less costs) during the year.
3 The increase in net assets per share of 0.6p was the result of
accretive share issues where shares were issued above the Company's net asset
value per share.
4. Scrip dividend take-up comprises 3.9 million shares issued during the
year.
5. Balance may not cast due to rounding.
Cash flow statement
Summary cash flow statement Year to 31 December 2022 Year to 31 December 2021
£'million £'million
Statutory IFRS Basis Adjustments Expanded Basis Statutory IFRS Basis Adjustments Expanded Basis
Cash received from investments 184.8 98.9 283.7 155.4 20.5 175.9
Operating and finance costs (2.0) (33.0) (35.0) (1.9) (23.6) (25.5)
Cash flow from operations 182.8 65.9 248.7 153.5 (3.1) 150.4
Debt arrangement costs - (0.3) (0.3) - (0.1) (0.1)
Foreign exchange gains/(losses) 11.8 (6.5) 5.3 3.1 0.5 3.6
Issue of share capital (net of costs) 276.3 (2.0) 274.3 434.9 (2.0) 432.9
Credit facility drawn/(repaid) - 325.7 325.7 - 32.8 32.8
Purchase of new investments (including acquisition costs) (314.1) (382.1) (696.4) (452.3) (28.6) (480.9)
Distributions paid (160.5) - (160.5) (134.1) - (134.1)
Cash movement in year (3.7) 0.5 (3.2) 5.1 (0.5) 4.6
Opening cash balance 28.2 0.3 28.5 23.1 0.8 23.9
Net cash at end of year 24.5 0.8 25.3 28.2 0.3 28.5
Analysis of Expanded Basis financial results
Cash received from investments in the year was £283.7 million (2021: £175.9
million). The increase in cash received compared with the previous year
reflects the increase in the size of the portfolio. The adjustment reflects
working capital movements and cash flow available for reinvestment and
proceeds in the year.
Dividends paid in the year totalled £160.5 million (net of £5.2 million
scrip dividends). Dividends paid in the prior year totalled £134.1 million
(net of £7.5 million scrip dividends).
Cash flow from operations in the year was £248.7 million (2021: £150.4
million) and covers dividends paid of £160.5 million in the year (2021:
£134.1 million) by 1.55 times (or 1.50 times without the benefit of scrip
take-up), or 2.55 times before factoring in amounts invested in the repayment
in project-level debt. The Group repaid £174 million of project-level debt
(pro-rata to the Company's equity interest) in the year.
Share issue proceeds (net of costs) totalled £274.3 million (2021: £432.9
million) reflecting the net proceeds of the 210.1 million shares issued in the
March 2022 equity fund raise.
In the year, £696.4 million was invested in acquisitions. These were funded
through the March equity fund raise (net proceeds of £274.3 million),
drawing on the Company's credit facility of £325.7 million, as well as the
reinvestment of surplus cash flows.
Cash balances decreased slightly in the period by £3.2 million.
The company has future commitments relating to the Cadiz solar projects
(Arenosas, El Yarte, La Guita and Malabrigo), Ranasjö and Salsjö wind farms,
Grönhult and Goshawk (Ryton, Drakelow and Drax) as follows.
2023 2024 2025 Total
(£'m) (£'m) (£'m) (£'m)
Outstanding Commitments 98 64 37 205
Financing
The Group's recently increased £750m revolving credit facility is with a
banking group comprising Royal Bank of Scotland International, National
Australia Bank, ING, Sumitomo Mitsui Banking Corporation, Barclays, Lloyds,
BNP Paribas, ABN Amro, Skandinaviska Enskilda Banken (SEB) and Intesa
SanPaolo. The facility expiry date is 31 December 2025 with options to extend
for up to an additional 24 months. Margins on the facility when drawn are
1.85% over the relevant reference rate. The facility can be drawn in sterling
or euros.
The revolving credit facility enables the Group to fund new acquisitions and
to provide letters of credit should they be required. The facility includes a
£45m working capital element.
The short-term financing provided by the revolving credit facility is limited
to 30% of the portfolio value. It is intended that any drawings used to
finance acquisitions are repaid, in normal market conditions, within a year
through equity fundraisings.
The credit facility was drawn at the commencement of the year having funded
investments in 2021 and was subsequently repaid following the capital raising
in March 2022. During the second half of the year further new investments were
funded in addition to providing funding to the Spanish solar projects and
Swedish wind projects the Group has in construction. The balance at the year
end is £399m.
In addition to the revolving credit facility, the projects may have underlying
project-level debt. There is an additional gearing limit in respect of such
debt, which is typically non-recourse to TRIG, of 50% of the Gross Portfolio
Value (being the total enterprise value of such portfolio companies), measured
at the time the debt is drawn down or acquired as part of an investment. The
Company may, in order to secure advantageous borrowing terms, secure a project
finance facility over a group of portfolio companies.
The project-level gearing at 31 December 2022 across the portfolio was 38%
(2021: 40%). Principal repayments in the year totalled £174m, as the debt is
retired over the project's subsidy periods. Gearing has reduced during 2022
partially due to the scheduled repayment of debt in the year and partially due
to the mix of acquisitions in the year, some of which introduced new debt in
projects and some of which were acquired without project debt.
The vast majority of the project debt is fixed and has an average cost of 3.6%
(including margin). The project-level debt is fully amortising and repaid in
each case over the period of the subsidy term. The portfolio weighted average
subsidy life remaining is 11 years.
Foreign Exchange Hedging
At the year end, 41% of the portfolio was located within France, the Republic
of Ireland, Sweden 20 , Germany and Spain and hence is invested in
euro-denominated assets.
The Group enters into forward hedging contracts against expected income from
the euro-denominated investments' distributions up to four years ahead. In
addition, the Group aims to enter into further forward hedging contracts such
that, when combined with the "income hedges", the overall level of hedge
achieved in relation to the euro-denominated assets is at least 50% of their
aggregate value. The group may also make drawings under the revolving credit
facility in euros, which provides further foreign exchange hedging.
During the majority of 2022, the Group targeted hedging of approximately 60%
to 80% of the overall euro portfolio value. The Group has been maintaining
this increased hedging level since 2019 in light of increased euro / sterling
exchange rate volatility risk related to Brexit and subsequently due to other
economic factors.
The Investment Manager keeps the level of euros hedged under review, with the
objective of minimising variability in shorter-term cash flows and reducing
NAV volatility. It seeks to maintain a balance between managing the sterling
value of cash flow receipts and mark-to-market cash outflows.
As well as addressing foreign exchange uncertainty on the conversion of the
expected euro distributions from investments, the hedge also provides a
partial offset to foreign exchange movements in the portion of the portfolio
value relating to the euro-denominated assets.
The impact on NAV per share of a 10% movement in the euro exchange rate after
the impact of hedges held by the Group outside of the investment portfolio is
1.7p assuming an effective euro foreign exchange hedge of 60% - this is
explained in more detail in Section 3.1 and Note 4 in the Notes to the
Financial Statements (Valuation Sensitivities - euro/sterling exchange rate).
Going Concern
Having performed the assessment of going concern, the Directors considered it
appropriate to prepare the financial statements of the Company on a going
concern basis. The Company has sufficient financial resources and liquidity
and is well placed to manage business risks in the current economic
environment (including but not limited to the conflict in Ukraine and current
upward inflationary pressures) and can continue operations for a period of at
least 12 months from the date of these financial statements.
Further information on the Directors, assessment and decision to prepare the
financial statement on a going concern basis can be found in the Report of the
Directors in Section 4.6 of this report.
Related Parties
Related party transactions are disclosed in Note 19 to the set of financial
statements.
6 Financial Statements
Income Statement
For the year ended 31 December 2022
Note Year ended Year ended
31 December 2022
31 December 2021
£'000s
£'000s
Net gain on investments 6 433,960 68,775
Dividend income 6 - 4,900
Interest income from investments 6 121,247 101,121
Total operating income 555,207 174,796
Fund expenses 7 (2,290) (1,904)
Operating profit 552,917 172,892
Finance and other (expense)/income 8 (32,207) 37,570
Profit before tax 520,710 210,462
Income tax 9 - -
Profit after tax 10 520,710 210,462
Attributable to:
Equity holders of the parent 520,710 210,462
520,710 210,462
Earnings per share (pence) 10 21.5 10.0
All results are derived from continuing operations. The accompanying notes are
an integral part of these financial statements.
There is no other comprehensive income or expense apart from those disclosed
above and consequently, a separate statement of comprehensive income has not
been prepared.
Balance Sheet
As at 31 December 2022
Note As at As at
31 December 2022
31 December 2021
£'000s
£'000s
Non-current assets
Investments at fair value through profit or loss 13 3,322,611 2,636,785
Fair value of FX forward contracts 18 1,622 13,219
Total non-current assets 3,324,233 2,650,004
Current assets
Other receivables 14 12,913 14,232
Fair value of FX forward contracts 18 1,096 14,074
Cash and cash equivalents 15 24,469 28,229
Total current assets 38,478 56,535
Total assets 3,362,711 2,706,539
Non-current liabilities
Fair value of FX forward contracts 18 (16,780) -
Total non-current liabilities (16,780) -
Current liabilities
Fair value of FX forward contracts 18 (2,753) -
Other payables 16 (440) (362)
Total current liabilities (3,193) (362)
Total liabilities (19,973) (362)
Net assets 12 3,342,738 2,706,177
Equity
Share capital and share premium 17 2,770,050 2,488,594
Other reserves 17 1,008 1,008
Retained reserves 17 571,680 216,575
Total equity attributable to owners of the parent 12 3,342,738 2,706,177
Net assets per Ordinary Share (pence) 12 134.6 119.3
The accompanying notes are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board
of Directors on 21 February 2023, and signed on its behalf by:
Director: John Whittle
Director: Richard Morse
Statement of Changes in Shareholders' Equity
For the year ended 31 December 2022
Share capital and share premium Other reserves Retained reserves Total equity
£'000s
£'000s
£'000s
£'000s
Shareholders' equity at beginning of year 2,488,594 1,008 216,575 2,706,177
Profit for the year - - 520,710 520,710
Dividends paid - - (160,454) (160,454)
Scrip shares issued in lieu of dividend 5,151 - (5,151) -
Ordinary Shares issued 277,338 - - 277,338
Costs of Ordinary Shares issued (3,033) - - (3,033)
Ordinary Shares issued in year in lieu of Management Fees earned in H2 20211 1,008 (1,008) - -
Ordinary Shares issued in year in lieu of Management Fees earned in H1 20222 992 - - 992
Ordinary Shares to be issued in lieu of Management Fees earned in H2 20223 - 1,008 - 1,008
Shareholders' equity at end of year 2,770,050 1,008 571,680 3,342,738
For the year ended 31 December 2021
Share capital and share premium Other reserves Retained reserves Total equity
£'000s
£'000s
£'000s
£'000s
Shareholders' equity at beginning of year 2,046,237 1,005 147,629 2,194,871
Profit for the year - - 210,462 210,462
Dividends paid - - (134,058) (134,058)
Scrip shares issued in lieu of dividend 7,458 - (7,458) -
Ordinary Shares issued 439,850 - - 439,850
Costs of Ordinary Shares issued (6,948) - - (6,948)
Ordinary Shares issued in year in lieu of Management Fees earned in H2 20204 1,005 (1,005) - -
Ordinary Shares issued in year in lieu of Management Fees earned in H1 20215 992 - - 992
Ordinary Shares to be issued in lieu of Management Fees earned in H2 20211 - 1,008 - 1,008
Shareholders' equity at end of year 2,488,594 1,008 216,575 2,706,177
In line with the Investment Management Agreement and the Operations Management
Agreement, 20 per cent of the management fees are to be settled in Ordinary
Shares up to an Adjusted Portfolio Value of £1 billion.
1 The £1,008,219 transfer between reserves represents the 857,254
shares that relate to management fees earned in the six months to 31 December
2021 and were recognised in other reserves at 31 December 2021, and were
issued to the Managers during the year, with the balance being transferred to
share premium reserve on 31 March 2022.
2 The £991,779 addition to the share premium reserve represents the
748,569 shares that relate to management fees earned in the six months to 30
June 2022 and were issued to the Managers on 30 September 2022.
3 As at 31 December 2022, 758,686 shares equating to £1,008,219,
based on a Net Asset Value ex dividend of 132.89 pence per share (the Net
Asset Value at 31 December 2022 of 134.6 pence per share less the interim
dividend of 1.71 pence per share) were due but had not been issued. The
Company intends to issue these shares to the Managers around 31 March 2023.
4 The £1,005,462 transfer between reserves represents the 885,012
shares that relate to management fees earned in the six months to 31 December
2020 and were recognised in other reserves at 31 December 2020, and were
issued to the Managers during 2021, with the balance being transferred to
share premium reserves on 31 March 2021.
5 The £991,778 addition to the share premium reserve represents the
880,719 shares that relate to management fees earned in the six months to 30
June 2021 and were issued to the Managers on 30 September 2021.
The accompanying notes are an integral part of these financial statements.
Cash Flow Statement
For the year ended 31 December 2022
Note Year ended Year ended
31 December 2022
31 December 2021
£'000s
£'000s
Cash flows from operating activities
Profit before tax 10 520,710 210,462
Adjustments for:
Net gain on investments 6, 13 (433,960) (68,775)
Dividend income - (4,900)
Investment income from investments 6 (121,247) (101,121)
Acquisition costs 7 16 -
Movement in other reserves relating to Manager shares 0 3
Realised gains on settlement of FX forwards 9,689 7,643
Finance and other expense/(income) 8 32,207 (36,336)
Operating cash flow before changes in working capital 7,415 6,976
Changes in working capital:
Increases in receivables (2) (4)
Decreases in payables 77 63
Cash flow from operations 7,490 7,035
Distributions from investments 13 184,763 149,522
Interest on bank deposits 120 1
Net cash from operating activities 192,373 156,558
Cash flows from investing activities
Purchases of investments 13 (314,059) (452,289)
Acquisition costs 7 (16) -
Net cash used in investing activities (314,075) (452,289)
Cash flows from financing activities
Proceeds from issue of share capital during year 279,338 441,847
Costs in relation to issue of shares 17 (3,033) (6,948)
Dividends paid to shareholders 11 (160,454) (134,058)
Net cash from financing activities 115,851 300,841
Net (decrease)/increase in cash and cash equivalents (5,851) 5,110
Cash and cash equivalents at beginning of year 15 28,229 23,116
Exchange gains on cash 2,091 3
Cash and cash equivalents at end of year 15 24,469 28,229
The accompanying notes are an integral part of these financial statements.
7 Notes to the Financial Statements
1. General information
The Renewables Infrastructure Group Limited ("TRIG" or the "Company") is a
closed-ended investment company incorporated in Guernsey under Section 20 of
the Companies (Guernsey) Law, 2008. The shares are publicly traded on the
London Stock Exchange under a premium listing. Through its subsidiaries, The
Renewables Infrastructure Group (UK) Limited ("TRIG UK"), and The Renewables
Infrastructure Group (UK) Investments Limited ("TRIG UK I"), TRIG invests in
mainly operational renewable energy generation projects, predominantly in
onshore and offshore wind and solar PV segments, across the UK and Europe. The
Company, TRIG UK, TRIG UK I and its portfolio of investments are known as the
"Group".
These financial statements are for the year ended 31 December 2022 and
comprise only the results of the Company, as all of its subsidiaries are
measured at fair value as explained below in Note 2 (a).
2. Key accounting policies
(a) Basis of preparation
The financial statements were approved and authorised for issue by the Board
of Directors on 21 February 2023.
The financial statements, which give a true and fair view, have been prepared
in compliance with the Companies (Guernsey) Law, 2008 and in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the
European Union ("EU") using the historical cost basis, except that the
financial instruments classified at fair value through profit or loss are
stated at their fair values. All accounting policies have been applied
consistently in these financial statements.
The financial statements are presented in pounds sterling, which is the
Company's functional currency. Foreign operations are included in accordance
with the policies set out in this note.
The preparation of financial statements in conformity with IFRS as adopted by
the EU requires the Directors to make judgements, estimates and assumptions
that affect the application of policies and the reported amounts of assets and
liabilities, income and expense. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to
be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which the
estimate is revised if the revision affects only that year, or in the year of
the revision and future years if the revision affects both current and future
years. Note 3 shows critical accounting judgements, estimates and assumptions.
(b) 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 Strategic
Report and also commented on in the Viability Statement on page 82. The
financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described in the Financial Results on pages 67 to 73.
In addition, Notes 1 to 4 of the financial statements include the Group's
objectives, policies and processes for managing its capital, its financial
risk management objectives, details of its financial instruments and hedging
activities and its exposures to credit risk and liquidity risk.
The Group has the necessary financial resources to meet its obligations for
the foreseeable future. The Group benefits from a range of long-term contracts
with various major UK and European utilities and well-established suppliers
across a range of infrastructure projects.
On 3 February 2023, the revolving credit facility was renewed and extended
from £600m to £750m with an expiry date of 31 December 2025. The revolving
credit facility includes a working capital component of £45m and is limited
to 30% of Portfolio Value.
The revolving credit facility is ESG-linked, resulting in a possible increase
or reduction to future interest payments based on the company's performance
against KPIs relating to ESG targets over time.
The Group's project-level financing is non - recourse to the Company and is
limited to 50% of Gross Portfolio Value. As a consequence, the Directors
believe that the Group is well placed to manage its business risks
successfully.
At 31 December 2022, the Company's leverage was 11% for fund-level financing
(2021: 3%) and 38% for project-level financing (2021: 40%).
The Company has sufficient headroom on its revolving credit facility
covenants. These covenants have been tested and relate to interest cover
ratios and group gearing limits and the Company does not expect these
covenants to be breached. The Company and its direct subsidiaries have a
number of guarantees, detailed in note 20 of these financial statements. These
guarantees relate to certain obligations that may become due by the underlying
investments over their useful economic lives. We do not anticipate these
guarantees to be called in the next 12 months and in many cases the potential
obligations are insured by the underlying investments.
A cash balance of £24.5m at 31 December 2022 is held by the Company, with
further amounts held in the Company's direct and indirect subsidiaries. In
addition, the Company has a working capital facility on its revised revolving
credit facility of £45m, which remains undrawn at the date of signing this
report.
Further to the above, the Company has a number of outstanding commitments
which are detailed in Section 2.2 of this Annual Report and Note 20 of these
financial statements. These commitments can be fully covered by the Company's
revolving credit facility.
As a consequence, the Directors believe that the Group is well placed to
manage its business risks successfully. The directors do not believe that
there is a significant risk to the business as a result of the Russian
invasion of Ukraine but will continue to monitor any future developments.
The Company is affected by climate-related risks, as set out in the Company's
TCFD reporting, and the Board consider these when they assess the Company's
ability to continue as a going concern. The Company continues to assess,
monitor and where necessary and possible, mitigate and manage these risks.
Having performed the assessment of going concern, the Directors considered it
appropriate to prepare the financial statements of the Company on a going
concern basis. The Company has sufficient financial resources and liquidity
and is well placed to manage business risks in the current economic
environment (including but not limited to the conflict in Ukraine and current
upward inflationary pressures) and can continue operations for a period of at
least 12 months from the date of these financial statements.
(c) Basis of consolidation
The Company applies IFRS 10 "Consolidated Financial Statements", and as an
investment entity is required to measure all of its subsidiaries at fair
value. The financial statements therefore comprise the results of the Company
only. Subsidiaries are those entities owned by the Company. The Company has
ownership of an investee, when it is exposed, or has rights to variable
returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee as defined in IFRS 10
"Consolidated Financial Statements".
The Directors believe it is appropriate and relevant to the investor to
account for the investment portfolio at fair value, where consolidating it
would not be.
The Company's subsidiaries, TRIG UK and TRIG UK I, carry out investment
activities and incur overheads and borrowings on behalf of the Group. The
Directors therefore provide an alternative presentation of the Company's
results in the Strategic Report on pages 67 to 73 prepared under the "Expanded
basis", which includes the consolidation of TRIG UK and TRIG UK I.
An entity shall consider all facts and circumstances when assessing whether it
is an investment entity, including its purpose and design. Under the
definition of an investment entity, as set out in paragraph 27 in the
standard, the entity must satisfy all three of the following tests:
▲ Obtains funds from one or more investors for the purpose of
providing those investors with investment management services; and
▲ Commits to its investors that its business purpose is to invest
funds solely for returns from capital appreciation, investment income or both
(including having an exit strategy for investments); and
▲ Measures and evaluates the performance of substantially all of its
investments on a fair value basis.
In respect of the first criterion, TRIG is an investment company which enables
shareholders to gain exposure to a diversified portfolio of renewable energy
and related infrastructure investments coupled with the management of these
investments.
In respect of the second criterion, the Company's purpose is to invest funds
for returns from capital appreciation and investment income. The Company's
exit of its investments in project companies may be at the time the existing
turbines or other generation assets get to the end of their economic lives or
planning or leasehold land interests expire, at which point the project
companies may be considering redevelopment (referred to as a "repowering") of
the site. The Company may remain invested in the event there is the
opportunity to repower and undertake the repowering, subject to its investment
limits on construction activity being met and depending on economic
considerations at the time. The Company may also exit investments earlier for
reasons of portfolio balance or profit, as there is an active secondary market
for renewables projects in the countries in which we operate.
In respect of the third criterion, the board evaluates the performance of the
assets on a fair market value basis throughout the year as part of the
management accounts review, and the company undertakes a fair market valuation
of its portfolio twice a year for inclusion in its report and accounts with
the movement in the valuation taken to the Income Statement and thus measured
within its earnings.
Taking these factors into consideration, the Directors are of the opinion that
the Company has all the typical characteristics of an investment entity and
meets the definition in the standard.
(d) Financial instruments
Financial assets and liabilities are recognised on the balance sheet when the
Company becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the contractual rights to the cash
flows from the instrument expire or the asset is transferred, and the transfer
qualifies for derecognition in accordance with IFRS 9 "Financial Instruments".
Financial derivatives are valued using a mark to market valuation based on the
underlying derivative contracts that are executed with the banks. The
movements in mark to market valuation are recognised in the profit and loss
statement.
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt
securities, trade and other receivables, cash and cash equivalents, loans and
borrowings and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value
(including directly attributable transaction costs where these instruments are
held at amortised cost). Subsequent to initial recognition, non-derivative
financial instruments are measured as described below.
Investments in equity and debt securities
Investments in the equity, loan stock and mezzanine debt of entities engaged
in renewable energy activities are designated upon initial recognition as held
at fair value through profit or loss. Gains or losses resulting from the
movement in fair value are recognised in the Income Statement at each
valuation point.
Financial assets are recognised/derecognised at fair value at the date of the
purchase/disposal. A financial asset (in whole or part) is derecognised
either:
▲ when the group has transferred substantially all of the risks and
rewards of ownership; or
▲ when it has neither transferred nor retained substantially all of the
risks and rewards when it no longer has control over the asset or a portion of
the asset; or
▲ when the contractual rights to receive cash flow have expired.
The initial difference between the transaction price and the fair value,
derived from using the discounted cash flows methodology at the date of
acquisition, is recognised only when observable market data indicates there is
a change in a factor that market participants would consider in setting the
price of that investment. For the years ended 31 December 2022 and 31 December
2021, there were no such differences.
The Group manages these investments and makes purchase and sale decisions
based on their fair value.
The Directors consider the equity and loan stock to share the same investment
characteristics and risks and they are therefore treated as a single unit of
account for valuation purposes and a single class for disclosure purposes.
(e) Impairment
Financial assets
Financial assets, other than those at fair value through profit or loss, are
assessed for indicators of impairment at each balance sheet date. A financial
asset is considered to be impaired if objective evidence indicates that one or
more events have had a negative effect on the estimated future cash flows of
that asset. An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying amount and
the present value of the estimated future cash flows discounted at the
original effective interest rate. Significant financial assets are tested for
impairment on an individual basis. The remaining financial assets are assessed
collectively in groups that share similar credit risk characteristics. All
impairment losses are recognised in the income statement. An impairment loss
is reversed if the reversal can be related objectively to an event occurring
after the impairment loss was recognised. For financial assets measured at
amortised cost the reversal is recognised in the income statement. Expected
credit losses are assessed and measured annually and where appropriate,
recognised as a loss allowance.
(f) Share capital and share premium
Ordinary Shares are classified as equity. Costs directly attributable to the
issue of new shares or associated with the establishment of the Company that
would otherwise have been avoided are written off against the value of the
ordinary share premium.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held on call with
banks and other short-term, highly liquid investments with original maturities
of three months or less. Bank overdrafts that are repayable on demand are
included as a component of cash and cash equivalents for the purpose of the
cash flow statement.
(h) Investment income
Income from investments relates solely to returns from the Company's
subsidiaries, TRIG UK and TRIG UK I. This is recognised as it accrues by
reference to the principal outstanding and the effective interest rate
applicable and dividends when these are received.
(i) Income tax
Under the current system of taxation in Guernsey, the Company is exempt from
paying taxes on non-Guernsey source income or capital gains.
(j) Foreign exchange gains and losses
Transactions entered into by the Company in a currency other than its
functional currency are recorded at the rates ruling when the transactions
occur. Foreign currency monetary assets and liabilities are translated at the
rates ruling at the balance sheet date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are recognised
immediately in the income statement.
(k) Segmental reporting
The Chief Operating Decision Maker (the "CODM") is of the opinion that the
Group is engaged in a single segment of business, being investment in
renewable infrastructure to generate investment returns while preserving
capital. The financial information used by the CODM to allocate resources and
manage the Group presents the business as a single segment comprising a
homogeneous portfolio.
(l) Fund expenses
All expenses are accounted for on an accruals basis. The Company's investment
management and administration fees (refer to Note 7), finance costs and all
other expenses are charged through the income statement.
(m) Acquisition costs
In line with IFRS 3 (Revised), acquisition costs are expensed to the income
statement as incurred.
(n) Dividends
Dividends are recognised when they become legally payable. In the case of
interim dividends, this is when they are paid. For scrip dividends, where the
Company issues shares with an equal value to the cash dividend amount as an
alternative to the cash dividend, a credit to equity is recognised when the
shares are issued.
(o) Statement of compliance
Pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987 the
Company is a Registered Closed-Ended Investment Scheme. As an authorised
scheme, the Company is subject to certain ongoing obligations to the Guernsey
Financial Services Commission and meets its compliance requirements.
(p) Share-based payments
Equity-settled share-based payment transactions with parties other than
employees are measured at the fair value of the goods or services received,
except where the fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments granted, measured at
that date the entity obtains the goods or the counterparty renders the
service.
(q) New and revised standards
The Company notes the following standards and interpretations which were in
issue but not effective at the date of these financial statements. They are
not expected to have a material impact.
▲ Amendments to IAS 1 Classification of Liabilities as Current or
Non-current (effective for annual periods beginning on or after 1 January
2023)
▲ Amendments to IAS 8 Definition of Accounting Estimates (effective
for annual periods beginning on or after 1 January 2023)
▲ New IFRS 17 Insurance Contracts (effective for annual periods
beginning on or after 1 January 2023)
3. Critical accounting judgements, estimates and assumptions
The preparation of financial statements in accordance with IFRS requires
management to make judgements, estimates and assumptions in certain
circumstances that affect reported amounts. The judgements, estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are outlined below.
Key source of estimation uncertainty: Investments at fair value through profit
or loss
IFRS 13 establishes a single source of guidance for fair value measurements
and disclosures about fair value measurements. Fair value is defined as the
price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date.
The Board base the fair value of the investments on information received from
the Investment Manager. Fair value is calculated on a discounted cash flow
basis.
Fair values for those investments for which a market quote is not available,
in this instance being all investments, are determined using the income
approach, which discounts the expected cash flows at the appropriate rate. In
determining the discount rate, relevant long-term government bond yields,
specific risks associated with the technology (onshore wind, offshore wind,
battery storage and solar) and geographic location of the underlying
investment, and the evidence of recent transactions have all been considered.
The investments at fair value through profit or loss, whose fair values
include the use of level 3 inputs, are valued by discounting future cash flows
from investments in both equity (dividends and equity redemptions) and
subordinated loans (interest and repayments) to the Group at an appropriate
discount rate.
The weighted average discount rate applied in the December 2022 valuation was
7.2% (2021: 6.6%). The discount rate is considered one of the most significant
unobservable inputs through which an increase or decrease would have a
material impact on the fair value of the investments at fair value through
profit or loss, which are further discussed in Note 4 under sensitivities.
The other material impacts on the measurement of fair value are the
forward-looking power price curve, energy yields, operating costs and
macro economic assumptions (including rates of inflation) which are further
discussed in Note 4 under sensitivities. The company considers climate-related
risks such as power prices (including the impact of net zero curves), asset
availability and maintenance costs when assessing these assumptions. Further
information on these climate change risks is discussed in more detail in part
4 of Section 3.6 in of this Annual Report.
The Investment Manager, when considering the assumptions to apply to the
valuation of the investments at 31 December 2022, considers several key
assumptions.
Key judgements
By virtue of the Company's status as an investment fund, and in conjunction
with IFRS 10 for investment entities, investments are designated upon initial
recognition to be accounted for at fair value through profit or loss.
The Directors consider that the carrying value amounts of financial assets and
financial liabilities recorded at amortised cost in the financial statement
are approximately equal to their fair values.
4. Financial instruments
Financial risk management
The objective of the Group's financial risk management is to manage and
control the risk exposures of its investment portfolio. The Board of Directors
has overall responsibility for overseeing the management of financial risks,
however the review and management of financial risks are delegated to the
Investment Manager, which has documented procedures designed to identify,
monitor and manage the financial risks to which the Group is exposed. Note 4
presents information about the Group's exposure to financial risks, its
objectives, policies and processes for managing risk and the Group's
management of its financial resources.
Through its subsidiaries, TRIG UK and TRIG UK I, the Company invests in a
portfolio of investments predominantly in the subordinated loan stock and
ordinary equity of renewable energy project companies. These companies are
structured at the outset to minimise financial risks where possible, and the
Investment Manager primarily focuses their risk management on the direct
financial risks of acquiring and holding the portfolio but continues to
monitor the indirect financial risks of the underlying projects through
representation, where appropriate, on the Boards of the project companies, and
the receipt of regular financial and operational performance reports.
The Company has a diversified portfolio of assets which include investments
with both higher and lower risks and returns. These risks and return
differences relate, but are not limited to, qualification to receive
government subsidies, exposure to fluctuations in future energy prices and
levels of project finance debt.
Interest rate risk
The Group invests in subordinated loan stock of project companies, usually
with fixed interest rate coupons. The portfolio's cash flows are continually
monitored and reforecast, both over the near future and the long-term, to
analyse the cash flow returns from investments. The Group may use borrowings
to finance the acquisition of investments and the forecasts are used to
monitor the impact of changes in borrowing rates against cash flow returns
from investments as increases in borrowing rates will reduce net interest
margins.
The Group's policy is to ensure that interest rates are sufficiently hedged to
protect the Group's net interest margins from significant fluctuations when
entering into material medium-long-term borrowings. This includes engaging in
interest rate swaps or other interest rate derivative contracts.
The Company has an indirect exposure to changes in interest rates through its
investment in project companies, many of which are financed by senior debt.
Senior debt financing of project companies is generally either through
floating rate debt, fixed rate bonds or index-linked bonds. Where senior debt
is floating rate, the projects typically have similar length hedging
arrangements in place, which are monitored by the project companies' managers,
finance parties and boards of directors.
The revolving credit facility is ESG-linked, resulting in a possible increase
or reduction to future interest payments based on the Group's performance
against KPIs relating to ESG targets over time. More details can be found in
part 11 of Section 3.6 of this annual report.
Inflation risk
The Group's project companies are generally structured so that contractual
income and costs are either wholly or partially linked to specific inflation,
where possible, to minimise the risks of mismatch between income and costs due
to movements in inflation indexes. The Group's overall cash flows vary with
inflation, although they are not directly correlated as not all flows are
indexed. The effects of these inflation changes do not always immediately flow
through to the Group's cash flows, particularly where a project's loan stock
debt carries a fixed coupon and the inflation changes flow through by way of
changes to dividends in future years. Inflation is managed through the use of
inflation-linked swaps where the Group deems it to be appropriate. The
sensitivity of the portfolio valuation is shown further on in Note 4.
Market risk
Returns from the Group's investments are affected by the price at which the
investments are acquired. The value of these investments will be a function of
the discounted value of their expected future cash flows, and as such will
vary with, inter alia, movements in interest rates, market prices and the
competition for such assets. The Investment Manager carries out a full
valuation semi-annually and this valuation exercise considers changes
described above.
Currency risk
The projects in which the Group invests all conduct their business and pay
interest, dividends and principal in sterling, with the exception of the
euro-denominated investments which at 31 December 2022 comprised 41% (2021:
37%) of the portfolio by value on an invested basis and 41% (2021: 42%) of the
portfolio by value on a committed basis. The sensitivity of the portfolio
valuation is shown in this note.
The Group monitors its foreign exchange exposures using its near-term and
long-term cash flow forecasts. Its policy is to use foreign exchange hedging
to provide protection to the level of sterling distributions that the Company
aims to pay over the medium term, where considered appropriate. This may
involve the use of forward exchange.
Credit risk
Credit risk is the risk that a counterparty of the Group will be unable or
unwilling to meet a commitment that it has entered into with the Group. Key
credit ratings for the Company's counterparties are detailed in Note 18.
The credit standing of subcontractors is reviewed, and the risk of default
estimated for each significant counterparty position. Monitoring is ongoing,
and year-end positions are reported to the Board on a quarterly basis. The
Group's largest credit risk exposure to a project at 31 December 2022 was to
the Hornsea One project, representing 9% (2021: Beatrice project, representing
10%) of the invested portfolio value.
The largest subcontractor counterparty risk exposure (O&M or OEM whereby
the maintenance provider is not always the original equipment manufacturer)
was to Vestas who provided turbine maintenance services in respect of 21%
(2021: Vestas 24%) of the invested portfolio by value. The largest exposure to
any equipment manufacturer was to Siemens who provided turbines in respect of
46% of the invested portfolio value (2021: Siemens 46%).
The Group's investments enter into Power Price Agreements ("PPA") with a range
of providers through which electricity is sold; the PPAs are priced into the
fair value of the investments. The largest PPA provider to the portfolio at 31
December 2022 was Statkraft, who provided PPAs to projects in respect of 17%
(2021: Statkraft 19%) of the invested portfolio value.
At 31 December 2022, there were no loans and other receivables considered
impaired for the Group.
The Group's maximum exposure to credit risk over financial assets is the
carrying value of those assets in the balance sheet. The Group does not hold
any collateral as security.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group's approach to managing
liquidity is to ensure, as far as possible, that it will have sufficient
financial resources and liquidity to meet its liabilities when due. The Group
ensures it maintains adequate reserves, banking facilities and reserve
borrowing facilities by continuously monitoring forecast and actual cash flows
and matching the maturity profiles of financial assets and liabilities. The
Group's investments are predominantly funded by share capital and medium-term
debt funding.
The Group's investments are generally in private companies, in which there is
no listed market and therefore such investment would take time to realise, and
there is no assurance that the valuations placed on the investments would be
achieved from any such sale process.
The Group's investments have borrowings which rank senior and have priority
over the Group's own investments into the companies. This senior debt is
structured such that, under normal operating conditions, it will be repaid
within the expected life of the projects. Debt raised by the investment
companies from third parties is without recourse to the Group.
The Group's revolving credit facility, which was £398.5m drawn at 31 December
2022 (31 December 2021: £72.8m), is held by TRIG UK and TRIG UK I, and is
guaranteed by the Company. The renewed facility is in place until December
2025 and contains an option to extend.
Capital management
At the date of this report, the Group has a £750m revolving credit facility
with Royal Bank of Scotland International Limited, National Australia Bank
Limited, ING Bank N.V, Barclays Bank PLC, Sumitomo Mitsui Banking Corporation,
Lloyds Bank PLC, SanPaolo S.P.A., BNP Paribas, Skandinaviska Enskilda Banken
AB and ABN Amro. The facility was sized at £600m as at 31 December 2022, it
has been renewed and extended to £750m since then and expires on 31 December
2025. The facility was £398.5m drawn as at 31 December 2022 and has been
included in the fair value of investments.
The Group makes prudent use of its leverage. Under the investment policy,
borrowings, including any financial guarantees to support outstanding
subscription obligations but excluding internal Group borrowings of the
Group's underlying investments, are limited to 30% of the portfolio value.
From time to time, the Company issues its own shares to the market; the timing
of these purchases depends on market prices.
In order to assist in the narrowing of any discount to the Net Asset Value at
which the Ordinary Shares may trade, from time to time the Company may, at the
sole discretion of the Directors:
▲ make market purchases of up to 14.99% per annum of its issued
Ordinary Shares; and
▲ make tender offers for the Ordinary Shares.
There were no changes in the Group's approach to capital management during the
year.
Fair value estimation
The following summarises the significant methods and assumptions used in
estimating the fair values of financial instruments:
Non-derivative financial instruments
The fair value of financial instruments traded in active markets is based on
quoted market prices at the balance sheet date.
The fair value of financial instruments that are not traded in an active
market is determined by using valuation techniques. The Group uses the income
approach, which discounts the expected cash flows attributable to each asset
at an appropriate rate to arrive at fair values. In determining the discount
rate, relevant long-term government bond yields, the specific risks of each
investment and the evidence of recent transactions are taken into account.
Derivative financial instruments
The fair value of financial instrument inputs other than quoted prices traded
in active markets is based on quoted market prices at the balance sheet date.
The quoted market price used for financial assets held by the Group is the
current bid price. Note 2 discloses the methods used in determining fair
values on a specific asset/liability basis. Where applicable, further
information about the assumptions used in determining fair value is disclosed
in the notes specific to that asset or liability.
Classification of financial instruments
31 December 31 December
2022
2021
£'000s
£'000s
Financial assets
Designated at fair value through profit or loss:
Investments 3,322,611 2,636,785
FX forward contracts 2,718 27,293
Financial assets at fair value 3,325,329 2,160,946
At amortised cost:
Other receivables 12,913 14,232
Cash and cash equivalents 24,469 28,229
Financial assets at amortised cost 37,382 42,461
Financial liabilities
Designated at fair value through profit or loss:
FX forward contracts 19,533 -
Financial liabilities at fair value 19,533 -
At amortised cost:
Other payables 440 362
Financial liabilities at amortised cost 440 362
The Directors believe that the carrying values of all financial instruments
are not materially different to their fair values.
The fair value of FX forward contracts is discussed in more detail in Note 18
of these financial statements.
Fair value hierarchy
The fair value hierarchy is defined as follows:
▲ Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
▲ Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices)
▲ Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
As at 31 December 2022
Level 1 Level 2 Level 3 Total
£'000s
£'000s
£'000s
£'000s
Investments at fair value through profit or loss - - 3,322,611 3,322,611
- - 3,322,611 3,322,611
FX forward contracts - assets - 2,718 - 2,718
FX forward contracts - liabilities - (19,533) - (19,533)
- (16,815) - (16,815)
As at 31 December 2021
Level 1 Level 2 Level 3 Total
£'000s
£'000s
£'000s
£'000s
Investments at fair value through profit or loss - - 2,636,785 2,636,785
- - 2,636,785 2,636,785
FX forward contracts - assets - 27,293 - 27,293
- 27,293 - 27,293
Investments at fair value through profit or loss comprise the fair value of
the investment portfolio, on which the sensitivity analysis is calculated, and
the fair value of TRIG UK and TRIG UK I, the Company's subsidiaries, being its
cash, working capital and debt balances.
31 December 2022 31 December 2021
£'000s
£'000s
Portfolio value 3,737,045 2,725,805
TRIG UK and TRIG UK I
Cash 809 225
Working capital (18,342) (19,345)
Debt1 (396,901) (69,900)
(414,434) (89,020)
Investments at fair value through profit or loss 3,322,611 2,636,785
1 Debt arrangement costs of £1,602k (2021: £2,927k) have been netted off the
£398.5m (2021: £72.8m) debt drawn by TRIG UK and TRIG UK I.
The debt figure of £396.9m above is held in TRIG UK and TRIG UK I, the
Company's subsidiaries, and represents the revolving credit facility (less
debt arrangement costs). The revolving credit facility is included within the
fair value of the Company's subsidiaries.
Level 2
Valuation methodology
Fair value is based on price quotations from financial institutions active in
the relevant market. The key inputs to the discounted cash flow methodology
used to derive fair value include foreign currency exchange rates and foreign
currency forward curves. Valuations are performed on at least a six-monthly
basis every June and December for all financial assets and all financial
liabilities.
Level 3
Valuation methodology
The Investment Manager has carried out fair market valuations of the
investments as at 31 December 2022 and the Directors have satisfied themselves
as to the methodology used, the discount rates and key assumptions applied,
and the valuation. All investments are at fair value through profit or loss
and are valued using a discounted cash flow methodology.
The fair value of investments has been calculated using a bifurcated
methodology, whereby cash flows are discounted on the basis of the risk and
return profile of the underlying cash flows.
The following economic assumptions were used in the discounted cash flow
valuations as at:
31 December 2022 31 December 2021
Inflation assumed as measured by the UK Retail Prices Index (applies to UK ROC Actual inflation applied to Nov-22, 6.00% 3.75% (2022), 3.50% (2023), 2.75% until 2030, 2.00% thereafter
Income)*
(Dec-22), 5.00% (2023), 2.75% until 2030, 2.00% thereafter
Inflation assumed as measured by the UK Consumer Prices Index (applies to UK Actual inflation applied to Nov-22, 5.25% 3% (2022), 2.75% (2023), 2.00% thereafter
CfD Income)*
(Dec-22), 4.25% (2023), 2.00% thereafter
Inflation assumed to apply to UK Power Prices* Actual inflation applied to Nov-22, 6.00% 3.75% (2022), 3.50% (2023),
(Dec-22), 5.00% (2023),
2.75% thereafter
2.75% until 2030, 2.25% thereafter
Inflation assumed to apply in Ireland, France, Sweden, Germany and Spain* Actual inflation applied to Nov-22, 3.00% (2023), 2.00% thereafter 2.00%
UK deposit interest rates 3.00% to 2023, 2.50% thereafter 0.25% to 2025, 1.25% thereafter
Ireland, France, Sweden, Germany and Spain deposit interest rates 2.00% to 2023, 1.50% thereafter 0.0% to 2025, 0.25% thereafter
UK corporation tax rate 19% to April 2023, 25% thereafter 19% to April 2023, 25% thereafter
Ireland corporation tax rate 12.5% active rate, 25% passive rate 12.5% active rate, 25% passive rate
France corporation tax rate 25% 25%
Sweden corporation tax rate 20.6% 20.6%
Germany corporation tax rate 15.8% 15.8%
Spain corporation tax rate 25% 25%
Euro/sterling exchange rate 1.1304 1.1899
Energy yield assumptions P50 case P50 case
* The stated inflation assumptions apply the stated (annualised) rate on a
monthly basis to the previous month's index.
The table below highlights the power price averages for GB and the EU markets:
Region Average 2023-2027 Average 2028-2050 Average 2023-2050
GB (Real, £/MWh) Before EGL 121 41 56
After EGL 100 41 52
Average of 5 euro jurisdictions* (Real EUR/MWh) After intervention 89 48 55
A blended curve is provided in section 3.1.
As identified in Section 2.5, as of the balance sheet date legislation was
enacted or in the process of being enacted within each of the jurisdictions in
which the Group has invested, which would impact generating assets under
specific conditions in relation to the revenue received from the sale of
electricity at elevated prices.
Within the UK the Electricity Generator Levy ("EGL") (published as draft
legislation in December) is expected to be incorporated within the Spring
Finance Bill 2023. It will have effect from 1 January 2023 to 31 March 2028
and applies a levy of 45% (which is not deductible for corporation tax,
resulting in an effective tax rate (when considering levy and tax) of 70%) to
revenues received for the sale of wholesale above a threshold level. The
threshold level for revenues is £75 per MWh (indexed by the Consumer Prices
Index on 1 April each year from 2024) +£10m per annum per group allowance
(with the UK assets the Group holds considered one group). The EGL has been
reflected within the valuation and the valuation sensitivities for the
legislated period (beyond which the prices assumed would be below the
threshold level).
The European Union had introduced a legislative framework to apply
Inframarginal Caps, under which each of the national governments can introduce
legislation within specified parameters. This would seek to apply a tax in
respect of revenues received in excess of a threshold price (typically the
applicable tax rate is between 90% to 100%). The threshold price is determined
by the national governments and can vary by technology. In general, the
legislation as enacted or planned to be enacted is for a relatively limited
duration with an expectation that this would be extended as required - as such
the valuation and sensitivities assume that the legislation will apply until
the prices drop below the applicable threshold level, with the threshold level
expected to remain constant in real terms.
Within Iberia, specific legislation applies (which would have a more
significant impact than the inframarginal cap) to both cap the price of gas
used for electricity generation and to clawback prices received by generators
over a level based upon an assumed gas price where they do not incur the cost
of purchasing gas. The valuation and sensitivities assume these pieces of
legislation will be extended until the prices fall below the threshold level,
with the threshold level expected to remain constant in real terms.
A summary of the intervention measures is included within the table below:
Market Applies above Effective rate applicable Reliefs Legislated period
Electricity Generator Levy UK £75/MWh indexed by CPI 70% First £10m p.a. 1 Jan 2023 to
(45% levy + 25% corporate tax)
per group
31 Mar 2028
Inframarginal Revenue Cap Ireland EUR 120/MWh 100% None stated 1 Jan 2023 to
30 Jun 2023
France EUR 100/MWh 90% Excludes FiT's and CfD's 1 Jul 2022 to
31 Dec 2023
Germany Feed in Tariff 90% Allowance for PPA costs 1 Dec 2022 to
+ EUR 30/MWh
30 Jun 2023
Sweden EUR 180/MWh 90% None stated 1 Jan 2023 to
30 Jun 2023
Gas Clawback Spain and Portugal A calculated level based on assumed gas price 85% Formula includes an allowance to reflect some costs Enacted in 2021, applicable
to 31 Dec 2023
Valuation sensitivities
Sensitivity analysis is produced to show the impact of changes in key
assumptions adopted to arrive at the valuation. For each of the sensitivities,
it is assumed that potential changes occur independently of each other with no
effect on any other base case assumption, and that the number of investments
in the portfolio remains static throughout the modelled life.
The sensitivities assume the portfolio is fully invested and hence the
Portfolio Value for the sensitivity analysis is the sum of the Portfolio
Valuation at 31 December 2022 (£3,737m) and the outstanding investment
commitments (£204.5m), being £3,942m.
Accordingly, the NAV per share impacts shown below assume the issue of further
shares to fund these commitments.
The analysis below shows the sensitivity of the portfolio value (and its
impact on NAV) to changes in key assumptions as follows:
Discount rates
The discount rates used for valuing each investment are based on market
information and the current bidding experience of the Group and its Managers.
The weighted average valuation discount rate applied to calculate the
portfolio valuation is 7.2% at 31 December 2022 (2021: 6.6%). An increase or
decrease in this rate by 0.5% has the following effect on valuation.
Discount rate NAV/share impact -0.5% change Total Portfolio Value +0.5% change NAV/share impact
Directors' valuation - December 2022 +4.6p +£134.4m £3,941.6m (£125.4m) (4.3p)
Directors' valuation - December 2021 +4.4p +£111.7m £2,957.0m (£103.9m) (4.1p)
Power price
The sensitivity considers a flat 10% movement in power prices for all years,
i.e. the effect of adjusting the forecast electricity price assumptions in
each of the jurisdictions applicable to the portfolio down by 10% and up by
10% from the base case assumptions for each year throughout the operating life
of the portfolio.
The sensitivity incorporates the impact of the EGL and other similar
legislation across each jurisdiction, with the forecast power price for the
jurisdiction before the legislation is applied sensitised by 10% and the
resulting forecast price is then subject to the legislation. As such the
movement in the applied price (after the legislation is considered may differ
from +/- 10%.
A change in the forecast electricity price assumptions by plus or minus 10%
has the following effect.
Power price NAV/share impact -10% change Total Portfolio Value +10% change NAV/share impact
Directors' valuation - Dec 2022 (9.2p) (£270.9m) £3,941.6m +£258.2m 8.8p
Directors' valuation - Dec 2021 (8.1p) (£202.7m) £2,957.0m +£200.8m 8.0p
Energy yield
The base case assumes a "P50" level of output. The P50 output is the estimated
annual amount of electricity generation (in MWh) that has a 50% probability of
being exceeded - both in any single year and over the long term - and a 50%
probability of being underachieved. Hence the P50 is the expected level of
generation over the long term.
The sensitivity illustrates the effect of assuming "P90 10-year" (a downside
case) and "P10 10-year" (an upside case) energy production scenarios. A P90
10-year downside case assumes the average annual level of electricity
generation that has a 90% probability of being exceeded over a 10-year period.
A P10 10-year upside case assumes the average annual level of electricity
generation that has a 10% probability of being exceeded over a 10-year period.
This means that the portfolio aggregate production outcome for any given
10-year period would be expected to fall somewhere between these P90 and P10
levels with an 80% confidence level, with a 10% probability of it falling
below that range of outcomes and a 10% probability of it exceeding that range.
The sensitivity includes the portfolio effect which reduces the variability
because of the diversification of the portfolio. The sensitivity is applied
throughout the life of each asset in the portfolio (even where this exceeds 10
years).
The sensitivity incorporates the impact of the EGL and other similar
legislation across each jurisdiction.
The table below shows the sensitivity of the portfolio value to changes in the
energy yield applied to cash flows from project companies in the portfolio as
per the terms P90, P50 and P10 explained above.
Energy yield NAV/share impact P90 10 year exceedance Total Portfolio Value P10 10 year exceedance NAV/share impact
Directors' valuation - Dec 2022 (15.4p) (£451.7m) £3,941.6m +£490.5m 16.7p
Directors' valuation - Dec 2021 (13.9p) (£348.6m) £2,957.0m +£381.3m 15.2p
Inflation rates
The projects' income streams are principally a mix of subsidies, which are
amended each year with inflation, and power prices, which the sensitivity
assumes will move with inflation. The projects' management, maintenance and
tax expenses typically move with inflation, but the majority of the portfolio
debt payments are fixed, with a proportion of these fixed payments covered by
derivatives, either held at project level or in a holding company. This
results in the portfolio returns and valuation being positively correlated to
inflation.
The assumptions for inflation incorporated in the portfolio valuation are
stated below. The differences in forecast result from differences in market,
in the calculation methodology of the index or in the basket of goods
considered within the index, or specific good in the case of UK power prices.
The sensitivity is applied to all forecast inflation assumptions (actual
inflation assumptions remain unchanged).
31 December 2022 31 December 2021
Inflation assumed as measured by the UK Retail Prices Index (applies to UK ROC Actual inflation applied to Nov-22, 6.00% 3.75% (2022), 3.50% (2023), 2.75% until 2030, 2.00% thereafter
Income)
(Dec-22), 5.00% (2023), 2.75% until 2030, 2.00% thereafter
Inflation assumed as measured by the UK Consumer Prices Index (applies to UK Actual inflation applied to Nov-22, 5.25% 3% (2022), 2.75% (2023), 2.00% thereafter
CfD Income)
(Dec-22), 4.25% (2023), 2.00% thereafter
Inflation assumed to apply to UK power prices Actual inflation applied to Nov-22, 6.00% 3.75% (2022), 3.50% (2023),
(Dec-22), 5.00% (2023),
2.75% thereafter
2.75% until 2030, 2.25% thereafter
Inflation measured by national Consumer Price Indices assumed to apply in Actual inflation applied to Nov-22, 3.00% (2023), 2.00% thereafter 2.00%
Ireland, France, Sweden, Germany and Spain
The sensitivity illustrates the effect of a 0.5% decrease and a 0.5% increase
from all of the assumed annual inflation rates as stated above in the
financial model for each year throughout the operating life of the portfolio,
and including the impact upon inflation derivatives held at project or holding
company level.
The sensitivity incorporates the impact of the EGL and other similar
legislation as modelled across each jurisdiction.
Inflation assumption NAV/share impact -0.5% change Total Portfolio Value +0.5% change NAV/share impact
Directors' valuation - December 2022 (5.1p) (£149.8m) £3,941.6m +£177.7m 6.1p
Directors' valuation - December 2021 (4.3p) (£107.7m) £2,957.0m +£115.4m 4.6p
Operating costs
The sensitivity shows the effect of a 10% decrease and a 10% increase to the
base case for annual operating costs for the portfolio, in each case assuming
that the change to the base case for operating costs occurs with effect from 1
January 2023 and that change to the base case remains reflected consistently
thereafter during the life of the projects.
Operating costs NAV/share impact -10% change Total Portfolio Value +10% change NAV/share impact
Directors' valuation - December 2022 5.6p +£163.4m £3,941.6m (£162.6m) (5.5p)
Directors' valuation - December 2021 5.2p +£129.5m £2,957.0m (£130.7m) (5.2p)
Taxation rates
The profits of each project company are subject to corporation tax in their
home jurisdictions at the applicable rates (the tax rates adopted in the
valuation are set out in Note 4 to the financial statements). The tax
sensitivity looks at the effect on the Directors' valuation of changing the
tax rates by +/- 2% each year in each jurisdiction and is provided to show
that tax can be a material variable in the valuation of investments. The
sensitivities incorporate the impact of portfolio-level reliefs.
Taxation rates NAV/share impact -2% change Total Portfolio Value +2% change NAV/share impact
Directors' valuation - December 2022 2.3p +£66.9m £3,941.6m (£67.0m) (2.3p)
Directors' valuation - December 2021 1.7p +£43.5m £2,957.0m (£43.8m) (1.7p)
Interest rates
This shows the sensitivity of the portfolio valuation to the effects of a
reduction of 2% and an increase of 2% in interest rates. The change is assumed
with effect from 1 January 2023 and continues unchanged throughout the life of
the assets.
The portfolio is relatively insensitive to changes in interest rates. This is
an advantage of TRIG's approach of favouring long-term structured project
financing (over shorter-term corporate debt), which is secured with the
substantial majority of this debt having the benefit of long-term interest
rate swaps which fix the interest cost to the projects.
Interest rates NAV/share impact -2% change Total Portfolio Value +2% change NAV/share impact
Directors' valuation - December 2022 (0.0p) (£1.5m) £3,941.6m +£3.3m 0.1p
Directors' valuation - December 2021 (0.2p) (£5.0m) £2,957.0m +£0.8m 0.0p
Currency rates
The sensitivity shows the effect of a 10% decrease (euro weakens relative to
sterling) and a 10% increase (euro strengthens relative to sterling) in the
value of the euro relative to sterling used for the 31 December 2022 valuation
(based on a 31 December 2022 exchange rate of €1.1304 to £1). In each case
it is assumed that the change in exchange rate occurs from 1 January 2023 and
thereafter remains constant at the new level throughout the life of the
projects.
At the year end, 41% of the committed portfolio was located in Sweden,
France, Germany, Ireland and Spain comprising euro-denominated assets.
The Group has entered into forward hedging of the expected euro distributions
for up to 48 months ahead, and in addition placed further hedges to reach a
position where at least 60% of the valuation of euro-denominated assets is
hedged. The hedge reduces the sensitivity of the portfolio value to foreign
exchange movements and accordingly the impact is shown net of the benefit of
the foreign exchange hedge in place. The value of the outstanding commitments
on Grönhult, Ranasjö, Salsjö, the Cadiz solar projects (Arenosas, El Yarte,
La Guita and Malabrigo), Ryton and Drakelow are included in this sensitivity.
A 60% hedge is assumed for the sensitivity below and during 2022, typical
hedge levels have been between approximately 60-80%.
Currency rates NAV/share impact -10% change Total Portfolio Value +10% change NAV/share impact
Directors' valuation - December 2022 (1.7p) (£49.5m) £3,941.6m +£49.5m 1.7p
Directors' valuation - December 2021 (1.8p) (£44.0m) £2,957.0m +£44.0m 1.8p
The euro/sterling exchange rate sensitivity does not attempt to illustrate the
indirect influences of currencies on UK power prices which are interrelated
with other influences on power prices.
Asset lives
Assumptions adopted in the year-end valuation typically range from 25 to 40
years from the date of commissioning, with an average 31 years for the wind
portfolio and 39 years for the solar portfolio. The overall average across the
portfolio at 31 December 2022 is 31 years (31 December 2021: 30 years).
The sensitivity below shows the impact on the valuation of assuming all assets
within the portfolio have a year longer and a year shorter asset life assumed.
Asset Lives NAV/share impact -1 year change Total Portfolio Value +1 year change NAV/share impact
Directors' valuation - December 2022 (1.0p) (£28.7m) £3,941.6m +£25.8m 0.9p
Directors' valuation - December 2021 (1.0p) (£25.6m) £2,957.0m +£23.3m 0.9p
Additional sensitivities
Given the current macroeconomic environment, in addition to the sensitivities
representing the changes in the long-term assumptions impacting the portfolio
valuation, additional sensitivities representing short-term one-off reasonably
possible changes in assumptions have also been considered for two key
assumptions which have experienced significant changes in short-term forecasts
over the period.
For inflation, an increase of 3% in annual inflation applied over the next 12
months would be expected to increase the portfolio valuation by £86.9m
(equivalent to 3.5 pence per share); a 3% decrease over the next 12 months
would be expected to reduce the portfolio valuation by £87.6m (equivalent to
3.5 pence per share).
For power prices, a reduction of short-term pricing in GB to £120/MWh in 2023
and 2024 and to £100/MWh in 2025 (and the forecasters, curve thereafter) is
expected to result in a valuation reduction of £56.2m. This level represents
an average discount of 24% to the assumptions incorporated in the valuation
and an average discount of 10% to the forward prices as of 17 February 2023.
5. Segment reporting
The Chief Operating Decision Maker (the "CODM") is of the opinion that the
Group is engaged in a single segment of business, being investment in
renewable infrastructure to generate investment returns while preserving
capital. The financial information used by the CODM to allocate resources and
manage the Group presents the business as a single segment comprising a
homogeneous portfolio.
6. Total operating income
For year ended For year ended
31 December
31 December
2022
2021
£'000s
£'000s
Gain on investments 433,960 68,775
Dividend income - 4,900
Interest income from investments 121,247 101,121
Total operating income 555,207 174,796
Interest income from investments is the long-term loan stock interest owed to
the Company by TRIG UK and TRIG UK I; further details can be found in Note 19
of these financial statements.
7. Fund expenses
For year ended For year ended
31 December
31 December
2022
2021
£'000s
£'000s
Fees payable to the Company's Auditor:
For audit of the Company's financial statements 232 171
For the other audit-related assurance services 53 45
For additional fees in respect to the prior period - 15
Investment and management fees (Note 19) 200 200
Directors' fees (Note 19) 361 339
Acquisition costs 16 -
Other costs 1,428 1,134
Fund expenses 2,290 1,904
On the Expanded basis, fund expenses are £29,376k (2021: £23,759k); the
difference being the costs incurred within TRIG UK and TRIG UK I, the
Company's subsidiaries. A further £31k of audit fees relating to the 2021
audits of unconsolidated subsidiaries were also agreed in the current year.
The reconciliation from the IFRS basis to the Expanded basis is shown in
Section 2.8 of the Strategic Report on page 67.
The fees to the Company's Auditor include £53k (2021: £45k) payable in
relation to audit-related assurance services in respect of the interim review
of the half-yearly financial statements.
In addition to the above, £657k (2021: £508k) was paid to Deloitte LLP (the
Company's auditor) in respect of audit services provided for the 2022 audit to
unconsolidated subsidiaries. Please refer to the Independent Auditor's Report
on pages 129 to 137.
The Company had no employees during the current or prior year. The Company has
appointed the Investment Manager and the Operations Manager to manage the
portfolio, the Company and its subsidiaries, on its behalf.
8. Finance and other (expense)/income
For year ended For year ended
31 December
31 December
2022
2021
£'000s
£'000s
Interest income:
Interest on bank deposits 120 1
Total finance income 120 1
Gain on foreign exchange:
Realised gains on settlement of FX forwards 9,689 7,643
Fair value (loss)/gain of FX forward contracts (44,107) 28,693
Other foreign exchange gains 2,091 1,233
Total (loss)/gain on foreign exchange (32,327) 37,569
Finance and other (expense)/income (32,207) 37,570
On the Expanded basis, finance income is £120k (2021: £1k) and finance costs
are £9,584k (2021: £5,793k); the difference being the Group's credit
facility costs which are incurred within TRIG UK and TRIG UK I, the Company's
subsidiaries. These costs are shown in Section 3.2 of the Strategic Report on
page 68.
9. Income tax
Under the current system of taxation in Guernsey, the Company is exempt from
paying taxes on income, profits or capital gains. Therefore, income from
investments is not subject to any further tax in Guernsey, although these
investments will bear tax in the individual jurisdictions in which they
operate.
10. Earnings per share
Earnings per share is calculated by dividing the profit attributable to equity
shareholders of the Company by the weighted average number of Ordinary Shares
in issue during the year.
31 December 31 December
2022
2021
Profit attributable to equity holders of the Company ('000) £520,710 £210,462
Weighted average number of Ordinary Shares in issue ('000) 2,424,010 2,103,869
Earnings per Ordinary Share (pence) 21.5p 10.0p
There are no shares in issue that have a dilutive effect and therefore the
diluted EPS is the same as the basic EPS disclosed. Further details of shares
issued in the year are set out in Note 17.
11. Dividends
31 December 31 December
2022
2021
£'000s
£'000s
Amounts recognised as distributions to equity holders during the year:
Interim dividend for the quarter ended 31 December 2020 of 1.69p 32,167
Interim dividend for the quarter ended 31 March 2021 of 1.69p 35,508
Interim dividend for the quarter ended 30 June 2021 of 1.69p 35,548
Interim dividend for the quarter ended 30 September 2021 of 1.69p 38,293
Interim dividend for the quarter ended 31 December 2021 of 1.69p 38,316
Interim dividend for the quarter ended 31 March 2022 of 1.71p 42,407
Interim dividend for the quarter ended 30 June 2022 of 1.71p 42,425
Interim dividend for the quarter ended 30 September 2022 of 1.71p 42,456
165,6041 141,516
Dividends settled as a scrip dividend alternative 5,151 7,458
Dividends settled in cash 160,454 134,058
165,6051 141,516
(1) Balances do not reconcile due to rounding.
On 2 February 2023, the Company declared an interim dividend of 1.71 pence per
share for the period 1 October 2022 to 31 December 2022. The total dividend,
£42,456,300, payable on 31 March 2023, is based on a record date of 10
February 2023 and the number of shares in issue at that time being
2,482,824,562.
31 December 31 December
2022
2021
Pence
Pence
Amounts recognised as distributions to equity holders during the year:
Interim dividend for the quarter ended December 2020 1.69
Interim dividend for the quarter ended March 2021 1.69
Interim dividend for the quarter ended June 2021 1.69
Interim dividend for the quarter ended September 2021 1.69
Interim dividend for the quarter ended December 2021 1.69
Interim dividend for the quarter ended March 2022 1.71
Interim dividend for the quarter ended June 2022 1.71
Interim dividend for the quarter ended September 2022 1.71
Total dividend per share 6.82 6.76
12. Net assets per Ordinary Share
31 December 31 December
2022
2021
Shareholders' equity at balance sheet date ('000) £3,342,738 £2,706,177
Number of shares at balance sheet date, including management shares accrued 2,483,583 2,268,104
but not yet issued ('000)
Net Assets per Ordinary Share at balance sheet date (pence) 134.6p 119.3p
In line with the Investment Management Agreement and the Operations Management
Agreement, 20 per cent of the Management Fees are to be settled in ordinary
Shares up to an Adjusted Portfolio Value of £1 billion.
Shares are issued to the Investment Manager and the Operations Manager twice a
year in arrears, usually in March and September for the half year ending
December and June, respectively.
As at 31 December 2022, 758,686 shares equating to £1,008,219, based on a Net
Asset Value ex dividend of 132.89 pence per share (the Net Asset Value at 31
December 2022 of 134.6 pence per share less the interim dividend of 1.71 pence
per share) were due but had not been issued. The Company intends to issue
these shares around 31 March 2023.
In view of this, the denominator in the above Net assets per Ordinary Share
calculation is as follows:
31 December 31 December
2022
2021
'000s
'000s
Ordinary Shares in issue at balance sheet date 2,482,825 2,267,246
Number of shares to be issued in lieu of management fees 759 857
Total number of shares used in Net assets per Ordinary Share calculation 2,483,5831 2,268,1041
(1) Balance does not cast due to rounding
13. Investments at fair value through profit or loss
Investments at fair value through profit or loss is the sum of the portfolio
valuation and the carrying amount of TRIG UK and TRIG UK I, the Company's
subsidiaries.
31 December 31 December
2022
2021
£'000s
£'000s
Brought forward 2,636,785 2,160,946
Investments in the year 314,059 452,289
Distributions paid to the Company (184,763) (149,522)
Dividend income - 4,900
Interest income from investments 122,570 99,397
Gain on valuation 433,960 68,775
Carried forward 3,322,611 2,636,785
The following information in this note is non-statutory. It provides
additional information to users of the financial statements, splitting the
fair value movements between the investment portfolio and TRIG UK and TRIG UK
I, the Company's subsidiaries.
31 December 31 December
2022
2021
£'000s
£'000s
Fair value of investment portfolio
Brought forward value of investment portfolio 2,725,805 2,213,030
Investments in the year 693,810 478,928
Distributions paid to TRIG UK & TRIG UK I (280,497) (169,447)
Interest income 85,020 75,167
Dividend income 57,785 33,928
Gain on valuation 455,122 94,199
Carried forward value of investment portfolio 3,737,045 2,725,805
Fair value of TRIG UK & TRIG UK I
Brought forward value of TRIG UK & TRIG UK I (89,020) (52,083)
Cash movement 583 (512)
Working capital movement 1,005 (2,135)
Debt movement1 (327,002) (34,290)
Carried forward value of TRIG UK & TRIG UK I (414,434) (89,020)
Total investments at fair value through profit or loss 3,322,611 2,636,785
(1) Debt arrangement costs of £1,602k (2021: £2,927k) have been netted off
the £398.5m (2021: £72.8m) debt drawn by TRIG UK and TRIG UK I.
The gains on investment valuation are unrealised.
The SPVs (project companies) in which the company invests are generally
restricted on their ability to transfer funds to the Company under the terms
of their individual senior funding arrangements. Significant restrictions
include:
− Historic and projected debt service and loan life cover ratios exceed
a given threshold;
− Required cash reserve account levels are met;
− Senior lenders have agreed the current financial model that forecasts
the economic performance of the project company;
− The project company is in compliance with the terms of its senior
funding arrangements; and
− Senior lenders have approved the annual budget for the company.
Details of investments recognised at fair value through profit or loss were as
follows:
31 December 2022 31 December 2021
Investments (project name) Country Equity Subordinated loan stock Equity Subordinated loan stock
TRIG UK UK 100% 100% 100% 100%
TRIG UK I UK 100% 100% 100% 100%
Roos UK 100% 100% 100% 100%
The Grange UK 100% 100% 100% 100%
Hill of Towie UK 100% 100% 100% 100%
Green Hill UK 100% 100% 100% 100%
Forss UK 100% 100% 100% 100%
Altahullion UK 100% 100% 100% 100%
Lendrums Bridge UK 100% 100% 100% 100%
Lough Hill UK 100% 100% 100% 100%
Milane Hill Republic of Ireland 100% 100% 100% 100%
Beennageeha Republic of Ireland 100% 100% 100% 100%
Haut Languedoc France 100% 100% 100% 100%
Haut Cabardes France 100% 100% 100% 100%
Cuxac Cabardes France 100% 100% 100% 100%
Roussas-Claves France 100% 100% 100% 100%
Puits Castan France 100% 100% 100% 100%
Churchtown UK 100% 100% 100% 100%
East Langford UK 100% 100% 100% 100%
Manor Farm UK 100% 100% 100% 100%
Parsonage UK 100% 100% 100% 100%
Marvel Farms UK 100% 100% 100% 100%
Tamar Heights UK 100% 100% 100% 100%
Stour Fields UK 100% 100% 100% 100%
Meikle Carewe UK 100% 100% 100% 100%
Tallentire UK 100% 100% 100% 100%
Parley UK 100% 100% 100% 100%
Egmere UK 100% 100% 100% 100%
Penare UK 100% 100% 100% 100%
Earlseat UK 100% 100% 100% 100%
Taurbeg Republic of Ireland 100% 100% 100% 100%
Four Burrows UK 100% 100% 100% 100%
Rothes 2 UK 49% 49% 49% 49%
Mid Hill UK 49% 49% 49% 49%
Paul's Hill UK 49% 49% 49% 49%
Rothes 1 UK 49% 49% 49% 49%
Crystal Rig 1 UK 49% 49% 49% 49%
Crystal Rig 2 UK 49% 49% 49% 49%
Broussan France 48.9% 100% 48.9% 100%
Plateau France 48.9% 100% 48.9% 100%
Borgo France 48.9% 100% 48.9% 100%
Olmo 2 France 48.9% 100% 48.9% 100%
Chateau France 48.9% 100% 48.9% 100%
Pascialone France 48.9% 100% 48.9% 100%
Santa Lucia France 48.9% 100% 48.9% 100%
Agrinergie 1&3 France 48.9% 100% 48.9% 100%
Agrinergie 5 France 48.9% 100% 48.9% 100%
Agrisol France 48.9% 100% 48.9% 100%
Chemin Canal France 48.9% 100% 48.9% 100%
Ligne des 400 France 48.9% 100% 48.9% 100%
Logistisud France 48.9% 100% 48.9% 100%
Marie Galante France 48.9% 100% 48.9% 100%
Sainte Marguerite France 48.9% 100% 48.9% 100%
Freasdail UK 100% 100% 100% 100%
FVP du Midi France 51.0% 100% 51.0% 100%
Neilston UK 100% 100% 100% 100%
Garreg Lwyd UK 100% 100% 100% 100%
Broxburn UK 100% 100% 100% 100%
Sheringham Shoal UK 14.7% 14.7% 14.7% 14.7%
Pallas Republic of Ireland 100% 100% 100% 100%
Solwaybank UK 100% 100% 100% 100%
Montigny France 100% 100% 100% 100%
Rosieres France 100% 100% 100% 100%
Jadraas Sweden 100% 100% 100% 100%
Venelle France 100% 100% 100% 100%
Fujin France 41.9% 100% 34.6% 100%
Epine France 100% 100% 100% 100%
Little Raith UK 100% 100% 100% 100%
Gode Wind 1 Germany 25% 25% 25% 25%
Blary Hill UK 100% 100% 100% 100%
Merkur Germany 35.7% 35.7% 24.6% 24.6%
Haut Vannier France 100% 100% 100% 100%
East Anglia 1 UK 14.3% 14.3% 14.3% 14.3%
Beatrice UK 17.5% 17.5% 17.5% 17.5%
Grönhult Sweden 100% 100% 100% 100%
Ranasjö Sweden 50% 50% 50% 50%
Salsjö Sweden 50% 50% 50% 50%
Arenosas Spain 100% 100% 100% 100%
El Yarte Spain 100% 100% 100% 100%
Guita Spain 100% 100% 100% 100%
Malabrigo Spain 100% 100% 100% 100%
Arcos Spain 100% 100% - -
Valdesolar Spain 100% 100% - -
Hornsea One UK 10.2% 10.2% - -
Ryton UK 100% 100% - -
Drakelow UK 100% 100% - -
Drax UK 100% 100% - -
Spennymoor UK 100% 100% - -
31 December 2022 31 December 2021
Investments (project name) Country Ownership Mezzanine debt Ownership Mezzanine debt
Phoenix France - 100% - 100%
In March 2022, the Company exchanged contracts to acquire a 7.8% equity
interest in the Hornsea One offshore wind farm in the UK from Global
Infrastructure Partners. The transaction subsequently completed on 21 July
2022.
On 19 July 2022, the Company exchanged contracts to acquire a further 2.4%
equity interest in the Hornsea One offshore wind farm from Global
Infrastructure Partners (from whom the Company announced the acquisition of
its original stake on 17 March 2022). The incremental acquisition brings the
total stake to 10.2% and was completed on 27 October 2022.
Also, in March 2022, the Company acquired a 49% equity interest in Project
Valdesolar, an operating solar park in the province of Badajoz, Spain from
Repsol, a Spanish-listed global energy company. Together with the Cadiz solar
projects, this acquisition further enhances TRIG's technological and
geographical diversification.
On 8 September 2022, the Company exchanged contracts to acquire the rights to
develop three battery storage sites (Ryton, Drakelow and Draw) in the North of
England. Two of the projects (Ryton and Drakelow), when built are scheduled
for grid connection and commencement of operations in 2024 and 2025. The third
site (Drax) will be built later in line with its grid connection date, which
is in 2029, although it may be possible to bring this date forward. The
transaction subsequently completed on 9 September 2022 and is in line with
TRIG's strategy to complement the renewable generation assets in the portfolio
with flexible capacity.
On 19 December 2022, the Company exchanged contracts to acquire a further
11.1% equity interest in the Merkur offshore wind farm, located in the German
North Sea. This incremental investment is approximately 2% of TRIG's portfolio
value. The project completed shortly before year end and brings TRIG's total
equity interest in Merkur to 35.7%.
During December 2022, the Company also acquired 100% equity interest in
Project Spennymoor, a battery storage development project which will have a
total capacity of 100MW / 200MWh when completed, from RES. The project is
located in County Durham, and is in the late-stage development stage.
In the year, TRIG made additional investments in the Cadiz solar projects and
Grönhult, Ranasjö and Salsjö wind farms to fund their respective
construction programmes, in line with outstanding commitments.
Further detail of acquisitions made in the year can be found in Section 2.5 of
the Strategic Report.
14. Other receivables
31 December 31 December
2022
2021
£'000s
£'000s
Other receivables 12,913 14,232
Total other receivables 12,913 14,232
15. Cash and cash equivalents
31 December 31 December
2022
2021
£'000s
£'000s
Bank balances 24,469 28,229
Cash and cash equivalents 24,469 28,229
On the Expanded basis, which includes balances carried in TRIG UK and TRIG UK
I, cash is £25,278k (2021: £28,454k). The reconciliation from the IFRS basis
to the Expanded basis is shown in Section 3.2 of the Strategic Report on page
67.
As at the year end, cash and cash equivalents on the Expanded basis consisted
of £20,000k held with Sumitomo Mitsui Banking Corporation Europe Limited and
£5,278k held with Royal Bank of Scotland International Limited. At 31
December 2022 Sumitomo Mitsui Banking Corporation Europe Limited had an
S&P credit rating of A-/Stable and Royal Bank of Scotland International
Limited had an S&P credit rating of A-/Stable.
16. Other payables
31 December 31 December
2022
2021
£'000s
£'000s
Management fees1 50 50
Other payables 390 312
Total current payables 440 362
(1) For related party and key advisor transactions see Note 19.
17. Share capital and reserves
Ordinary shares Ordinary shares
31 December
31 December
2022
2021
'000s
'000s
Opening balance 2,267,246 1,903,403
Issued for cash 210,105 356,289
Issued as a scrip dividend alternative 3,868 5,788
Issued in lieu of management fees 1,606 1,766
Issued at 31 December - fully paid 2,482,8241 2,267,246
(1) Balance may not cast due to rounding
On 28 March 2022, the Company issued 210,104,535 shares, raising £277,337,986
before costs.
The Company used the funds to repay the revolving credit facility and to fund
the acquisition of Hornsea One.
The Company issued 3,867,789 shares in relation to scrip take-up as an
alternative to dividend payments in relation to the dividends paid in the
year.
The holders of the 2,482,824,562 (2021: 2,267,246,415) Ordinary Shares are
entitled to receive dividends as declared from time to time and are entitled
to one vote per share at meetings of the Company. The Company shares are
issued at nil par value.
Share capital and share premium
31 December 31 December
2022
2021
£'000s
£'000s
Opening balance 2,488,594 2,046,237
Ordinary Shares issued 284,489 449,305
Cost of Ordinary Shares issued (3,033) (6,948)
Closing balance 2,770,050 2,488,594
Other reserves
31 December 31 December
2022
2021
£'000s
£'000s
Opening balance 1,008 1,005
Shares to be issued in lieu of management fees incurred in H1 2021 (Note 19) - 992
Shares to be issued in lieu of management fees incurred in H2 2021 (Note 19) - 1,008
Shares to be issued in lieu of management fees incurred in H1 2022 (Note 19) 992
Shares to be issued in lieu of management fees incurred in H2 2022 (Note 19) 1,008
Shares issued in the year, transferred to share premium (2,000) (1,997)
Closing balance 1,008 1,008
Retained reserves
Retained reserves comprise retained earnings, as detailed in the statement of
changes in shareholders' equity.
18. Foreign exchange forward contracts
The Company has entered into forward foreign currency contracts to hedge the
expected euro distributions up to a maximum of 48 months. In addition, the
Company has placed further hedges and aims to reach a position where 60%-80%
of the valuation of euro denominated assets is hedged, providing a partial
offset to foreign exchange movements in the portfolio value relating to such
assets.
The following table details the forward foreign currency contracts outstanding
as at 31 December 2022. The total euro balance hedged at 31 December 2022 was
€1,056.9m (2021: €747.5m).
31 December 2022
Average exchange rate (GBP:EUR) Foreign currency Notional value Fair value
€'000s
£'000s
£'000s
Less than 3 months - - - -
3 to 6 months 1.1447 95,600 83,515 (1,754)
6 to 12 months 1.1119 73,000 65,652 97
12 to 24 months 1.1094 269,400 242,835 (1,194)
Greater than 24 months 1.1164 618,900 554,374 (13,965)
1.1168 1,056,900 946,377 (16,815)
As at the year end, the valuation on the foreign exchange derivatives
consisted of:
Bank Payable amount (£'000) S&P credit rating at 31 December 2022
NatWest Markets Plc 4,675 A-/Stable
National Australia Bank Limited 5,714 AA-/Negative
Santander UK Plc 4,482 A+/Stable
Barclays Bank Plc 1,944 A/Stable
Total fair value of FX forward hedges 16,815
The fair value of the derivative trades have been split in the following
table. At year end, the Company was in a net payable position of £16.8m
(£2.7m receivable netted off with £19.5m payable).
31 December 31 December
2022
2021
£'000s
£'000s
Assets
FX forward contracts expiring within 12 months 1,096 14,074
FX forward contracts expiring after 12 months 1,622 13,219
Total assets 2,718 27,293
Liabilities
FX forward contracts expiring within 12 months (2,753) -
FX forward contracts expiring after 12 months (16,780) -
Total liabilities (19,533) -
19. Related party and key advisor transactions
Loans to related parties:
31 December 31 December
2022
2021
£'000s
£'000s
Short-term balance outstanding on accrued interest receivable1 11,826 13,147
Short-term balance outstanding from TRIG UK, in relation to management fees to 1,008 1,008
be settled in shares1
Long-term loan stock to TRIG UK and TRIG UK I2 1,853,493 1,671,894
1,866,327 1,686,049
(1) Included within Other receivables on the Balance Sheet
(2) Included within Investments at fair value through profit or loss
on the Balance Sheet
During the year, interest totalling £121,247k (2021: £101,121k) was earned
in respect of the long-term interest-bearing loan between the Company and its
subsidiaries TRIG UK and TRIG UK I, of which £11,826k (2021: £13,147k) was
receivable at the balance sheet date.
Key advisor transactions
The Group's Investment Manager (InfraRed Capital Partners Limited) and
Operations Manager (Renewable Energy Systems Limited) are entitled to 65 per
cent and 35 per cent, respectively, of the aggregate management fee (see
below), payable quarterly in arrears.
The aggregate management fee payable to the Investment Manager and the
Operations Manager is 1 per cent of the Adjusted Portfolio Value in respect of
the first £1 billion of the Adjusted Portfolio Value, 0.8 per cent in respect
of the Adjusted Portfolio Value between £1 billion and £2 billion, 0.75 per
cent in respect of the Adjusted Portfolio Value between £2 billion and £3
billion and 0.70 per cent in respect of the Adjusted Portfolio Value in excess
of £3 billion. These fees are payable by TRIG UK, less the proportion that
relates solely to the Company (the advisory fees) which are payable by the
Company.
The advisory fees payable to the Investment Manager and the Operations Manager
in respect of the advisory services they provide to the Company are £130k per
annum and £70k per annum, respectively. The advisory fees charged to the
Company are included within the total fee amount charged to the Company and
its subsidiary, TRIG UK, as set out above. The Investment Manager advisory fee
charged to the income statement for the year was £130k (2021: £130k), of
which £33k (2021: £33k) remained payable in cash at the balance sheet date.
The Operations Manager advisory fee charged to the income statement for the
year was £70k (2021: £70k), of which £18k (2021: £18k) remained payable in
cash at the balance sheet date.
The Investment Manager management fee charged to TRIG UK for the year was
£17,183k (2021: £13,858k), of which £4,538k (2021: £3,290k) remained
payable in cash at the balance sheet date. The Operations Manager management
fee charged to TRIG UK for the year was £9,257k (2021: £7,462k), of which
£2,444k (2021: £1,772k) remained payable in cash at the balance sheet date.
In addition, the Operations Manager received £12,493k (2021: £13,070k) for
services in relation to Asset Management, Operation and Maintenance and other
services provided to project companies within the investment portfolio, and
£25k (2021: £79k) for additional advisory services provided to TRIG UK,
neither of which are consolidated in these financial statements.
In line with the Investment Management Agreement and the Operations Management
Agreement, 20 per cent of the Group's aggregate management fees up to an
Adjusted Portfolio Value of £1 billion are to be settled in Ordinary Shares.
The shares issued to the Managers by the Company relate to amounts due to the
Managers by TRIG UK. Accordingly, TRIG UK reimburses the Company for the
shares issued.
As at 31 December 2021, 857,254 shares equating to £1,008,219, based on a Net
Asset Value ex dividend of 117.61 pence per share (the Net Asset Value at 31
December 2021 of 119.3 pence per share less the interim dividend of 1.69 pence
per share) were due, in respect of management fees earned in H2 2021, but had
not been issued. The Company issued these shares on 31 March 2022.
On 30 September 2022, the Company issued 748,569 shares, equating to
£991,779, based on a Net Asset Value ex dividend of 132.49 pence per share
(the Net Asset Value at 30 June 2022 of 134.2 pence per share less the interim
dividend of 1.71 pence per share), in respect of management fees earned in H1
2022.
As at 31 December 2022, 760,976 shares equating to £1,008,219, based on a Net
Asset Value ex dividend of 132.89 pence per share (the Net Asset Value at 31
December 2022 of 134.6 pence per share less the interim dividend of 1.71 pence
per share) were due, in respect of management fees earned in H2 2022, but had
not been issued. The Company intends to issue these shares on 31 March 2023.
The Company is governed by a Board of Directors (the "Board"), all of whom are
independent and non-executive. During the year, the Board received fees for
their services. Further details are provided in the Directors' Remuneration
Report on page 121. Total fees for the Directors for the year were £361,044
(2021: £338,500). Directors' expenses of £11,477 (2021: £3,510) were also
paid in the year. There are no other Key Management personnel within the
Company.
All of the above transactions were undertaken on an arm's length basis.
20. Guarantees and other commitments
As at 31 December 2022, the Company and its subsidiaries had provided £164.0m
(2021: £177.0m) in guarantees in relation to projects in the TRIG portfolio.
The Company also guarantees the revolving credit facility, entered into by
TRIG UK and TRIG UK I, which it may use to acquire further investments.
As at 31 December 2022 the Company has £204.5m of future investment
obligations (2021: £231.2m).
More details on timing and amounts can be found in Section 2.2 of the
Strategic Report.
The Company and its subsidiaries have issued decommissioning and other similar
guarantee bonds with a total value of £44.4m (2021: £22.8m).
21. Contingent consideration
The Group has performance-related contingent consideration obligations of up
to £0.4m (2021: £1.8m) relating to acquisitions completed prior to 31
December 2022. These payments depend on the performance of certain wind farms
and other contracted enhancements. The valuation of the investments in the
portfolio does not assume that these enhancements are achieved. If further
payments do become due, they would be expected to be offset by an improvement
in investment. The arrangements are generally two‑way in that if performance
is below base case levels some refund of consideration may become due.
22. Events after the balance sheet date
On 2 February 2023, the Company declared an interim dividend of 1.71 pence per
share for the period 1 October 2022 to 31 December 2022. The total dividend,
£42,456,300, payable on 31 March 2023, is based on a record date of 10
February 2023 and the number of shares in issue at that time being
2,482,824,562.
On 3 February 2023, the Company renewed and increased its revolving credit
facility from £600m to £750m with a £45m working capital element.
23. Subsidiaries, joint ventures and associates
As a result of applying Investment Entities (Amendments to IFRS 10, IFRS 12
and IAS 27) and Investment Entities: Applying the Consolidation Exception
(Amendments to IFRS 10, IFRS 12 and IAS 28), all subsidiaries (including
Associates and Joint Ventures) are held at fair value based on the Company's
ownership interest as opposed to being consolidated on a line-by-line basis.
The following entities have not been consolidated in these Financial
Statements:
Name Country Ownership
interest
The Renewables Infrastructure Group (UK) Limited UK 100%
The Renewables Infrastructure Group (UK) Investments Limited UK 100%
Roos Energy Limited UK 100%
Grange Renewable Energy Limited UK 100%
Hill of Towie Limited UK 100%
Green Hill Energy Limited UK 100%
Wind Farm Holdings Limited UK 100%
Forss Wind Farm Limited UK 100%
Altahullion Wind Farm Limited UK 100%
Lendrum's Bridge Wind Farm Limited UK 100%
Lendrum's Bridge (Holdings) Limited UK 100%
Lough Hill Wind Farm Limited UK 100%
European Investments (SCEL) Limited UK 100%
European Investments (Cornwall) Limited UK 100%
European Investments (Cornwall) Holdings Limited UK 100%
Churchtown Farm Solar Limited UK 100%
East Langford Solar Limited UK 100%
Manor Farm Solar Limited UK 100%
European Investments Solar Holdings Limited UK 100%
Sunsave 12 (Derriton Fields) Limited UK 100%
Sunsave 25 (Wix Lodge Farm) Limited UK 100%
Parley Court Solar Park Limited UK 100%
Egmere Airfield Solar Park Limited UK 100%
Penare Farm Solar Park Limited UK 100%
European Investments (Earlseat) Limited UK 100%
Earlseat Wind Farm Limited UK 100%
European Investments Solar Holdings 2 Limited UK 100%
BKS Energy Limited UK 100%
Hazel Renewables Limited UK 100%
Kenwyn Solar Limited UK 100%
MC Power Limited UK 100%
Tallentire Energy Limited UK 100%
Freasdail Energy Limited UK 100%
Neilston Community Wind Farm LLP UK 100%
Carbon Free Limited UK 100%
NDT Trading Limited UK 100%
Carbon Free Neilston Limited UK 100%
Garreg Lwyd Energy Limited UK 100%
UK Energy Storage Services Limited UK 100%
Solwaybank Energy Limited UK 100%
European Wind Investments Group Limited UK 100%
European Wind Investments Group 2 Limited UK 100%
Irish Wind Investments Group Limited UK 100%
Offshore Wind Investments Group Limited UK 100%
Scandinavian Wind Investments Group Limited UK 100%
European Storage Investments Group Limited UK 100%
Trafalgar Wind Holdings Limited UK 100%
European Investments Tulip Limited UK 100%
Little Raith Wind Farm Limited UK 100%
Blary Hill Energy Limited UK 100%
Offshore Wind Investments Group 2 Limited UK 100%
Offshore Wind Investments Group 3 Limited UK 100%
Offshore Wind Investments Group 4 Limited UK 100%
Offshore Wind Investments Group 5 Limited UK 100%
Offshore Wind Investments Group 6 Limited UK 100%
Offshore Wind Investments Group 7 Limited UK 100%
Offshore Wind Investments Group 8 Limited UK 100%
Scandinavian Wind Investments Group 2 Limited UK 100%
Iberian Solar Investment Group Limited UK 100%
Iberian Solar Investment Group 2 Limited UK 100%
European Storage Investments Group 2 Limited UK 100%
Verneuil Holdings Limited UK 72%
Merkur Offshore Wind Farm Holdings Limited UK 69%
Fred. Olsen Wind Limited UK 49%
Fred. Olsen Wind Holdings Limited UK 49%
Fred Olsen Wind 2 Limited UK 49%
Crystal Rig Windfarm Limited UK 49%
Rothes Wind Limited UK 49%
Paul's Hill Wind Limited UK 49%
Crystal Rig II Limited UK 49%
Rothes II Limited UK 49%
Mid Hill Wind Limited UK 49%
Equitix Offshore 3 Limited (MidCo 1) UK 37%
Equitix Offshore 4 Limited (MidCo 2) UK 37%
Equitix Offshore 5 Limited (BidCo) UK 37%
Bilbao Offshore Investment Limited UK 36%
Bilbao Offshore Holding Limited UK 36%
Beatrice Offshore Windfarm holdco Ltd UK 18%
Beatrice Offshore Windfarm Ltd (ProjectCo) UK 18%
Scira Offshore Energy Limited UK 15%
East Anglia One Limited UK 14%
Horizon Offshore Wind Limited UK 40.6%
Jupiter Investor TopCo Limited UK 20.3%
Jupiter Investor MidCo Limited UK 20.3%
Jupiter Investor HoldCo Limited UK 20.3%
Jupiter Offshore Wind Limited UK 20.3%
Hornsea 1 Holdings Limited UK 10.2%
Hornsea 1 Limited UK 10.2%
European Storage Investments Holdings 1 Limited UK 100%
European Storage Investments Holdings 2 Limited UK 100%
European Storage Investments Holdings 3 Limited UK 100%
Capella BESS Limited UK 100%
Aludra BESS Limited UK 100%
Botein BESS Limited UK 100%
Spennymoor Energy Storage Limited UK 100%
The Renewables Infrastructure Group (France) SAS France 100%
CEPE de Haut Languedoc SARL France 100%
CEPE du Haut Cabardes SARL France 100%
CEPE de Cuxac SARL France 100%
CEPE des Claves SARL France 100%
CEPE de Puits Castan SARL France 100%
Verrerie Photovoltaique SAS France 100%
Parc Eollen Nordex XXI SAS France 100%
CEPE Rosieres France 100%
CEPE Montigny La Cour SARL France 100%
Energies TIlle et Venelle Holdings SAS France 100%
Energies Entre Tille et Venelle SAS France 100%
Haut Vannier Holding SAS France 100%
Haut Vannier SAS France 100%
FPV du Midi France 51%
FPV Chateau France 49.1%
FPV du Plateau France 49.1%
SECP Bongo France 49.1%
SECP Olmo 2 France 49.1%
FPV Pascialone France 49.1%
FPV Santa Lucia France 49.1%
FPV Agrinergie France 49.1%
FPV d'Export France 49.1%
Agrisol 1A Services France 49.1%
SECP Chemin Canal France 49.1%
FPV Ligne des Quatre Cents France 49.1%
FPV Ligne des Bambous France 49.1%
Heliade Bellevue France 49.1%
SECP Creuilly France 49.1%
Akuo Tulip Assets SAS France 49.1%
FPV Broussan France 49.1%
Fujin SAS France 41.9%
Eolienne de Rully France 41.9%
Parc Eollen de Fontaine Macon France 41.9%
Parc Eollen de Vignes France 41.9%
Val De Gronde France 37.3%
Energie du Porcin France 33.5%
German Offshore Wind Investments Group (Holdings) Limited Germany 100%
German Offshore Wind Investments Group Limited Germany 100%
Gode Wind 1 Investor Holding GmbH Germany 50%
Gode Wind 1 Offshore Wind Farm GmbH Germany 25%
Merkur Offshore GP GmbH Germany 35.7%
Merkur Offshore Investment Holdings GmbH & Co KG Germany 35.7%
Merkur Offshore Holdings GmbH Germany 35.7%
PG Merkur Holding GmbH Germany 35.7%
Merkur Offshore GmbH Germany 35.7%
Merkur Offshore Service GmbH Germany 35.7%
Malabrigo Solar SLU Spain 100%
Arenosas Solar SLU Spain 100%
El Yarte Solar SLU Spain 100%
Pisa Solar Holdings SL Spain 100%
Evacuacion Solar Arcos SL Spain 100%
Valdesolar SL Spain 49%
MHB Wind Farms Limited Republic of Ireland 100%
MHB Wind Farms (Holdings) Limited Republic of Ireland 100%
Taurbeg Limited Republic of Ireland 100%
Pallas Energy Supply Limited Republic of Ireland 100%
Pallas Windfarm Limited Republic of Ireland 100%
Sirocco Wind Holding AB Sweden 100%
Jadraas Vindkraft AB Sweden 100%
Gronhult Wind AB Sweden 100%
Hallasen Kraft AB Sweden 100%
Krange Wind AB Sweden 50%
GOW01 Investor LuxCo SARL Luxembourg 50%
Alternative Performance Measures ("APMs")
We assess our performance using a variety of measures that are not
specifically defined under IFRS. These alternative performance measures are
termed "APMs". The APMs that we use may not be directly comparable with those
used by other companies.
These APMs are used to present an alternative view of how the Company has
performed over the year and are all financial measures of historical
performance.
The table below defines our APMs and how they relate to the Company's
subsidiaries, The Renewables Infrastructure Group UK Limited ("TRIG UK") and
The Renewables Infrastructure Group UK Investments Limited ("TRIG UK I").
Performance Measure Definition
Investments made This is a measure of amounts invested into the portfolio of investments less
any amounts relating to refinance proceeds or sell-downs.
The IFRS measure of investments made consists of funding into TRIG UK and TRIG
UK I, which is shown in more detail in Note 13 of these financial statements.
TRIG invests in its portfolio through its subsidiaries, TRIG UK and TRIG UK I.
This is a measure of the valuation of the portfolio of investments only. It is
exclusive of cash, working capital and debt balances in TRIG UK and TRIG UK I.
Directors' Portfolio Valuation TRIG invests in its portfolio through its subsidiaries, TRIG UK and TRIG UK I.
This is a measure of the valuation of the portfolio of investments only. It is
exclusive of cash, working capital and debt balances in TRIG UK and TRIG UK I.
The IFRS measure of investments at fair value through profit or loss is the
Directors' Portfolio Value plus the fair value of net assets including cash,
working capital and debt held in TRIG UK and TRIG UK I.
Directors' Portfolio Value (or Portfolio Value) is reconciled to investments
at fair value through profit or loss in Note 13 of these financial statements.
NAV per share This is a measure of Net Asset Value ("NAV") per ordinary share in the Company
and is calculated as the NAV divided by the total number of shares in issue at
the balance sheet date.
The calculation uses IFRS measures and is explained further in Note 12 of
these financial statements.
Total shareholders' return for the year (share price appreciation plus The Internal Rate of Return upon the share price at 31 December 2021 (134.4p)
dividends paid) of dividends (quarterly as paid totalling 6.82p as detailed in note 11 of
these financial statements) plus the share price at 31 December 2022 (130.0p).
Total NAV return for the year (NAV per share appreciation plus dividends paid) The Internal Rate of Return upon the NAV at 31 December 2021 (119.3p) of
dividends (quarterly as paid totalling 6.82p as detailed in note 11 of these
financial statements) plus the NAV at 31 December 2022 (134.6p).
Dividend Cover Dividend Cover is calculated as Cashflow from Operations (which is an Expanded
Basis measure explained in section 3.2 and reconciled to the IFRS measure)
divided by Dividends paid in the year.
Dividend Cover, when expressed on a cash basis, has cash dividends paid as the
denominator and is calculated as 1.55 times for 2022.
Dividend Cover, when expressed as being without the benefit of scrip
dividends, has the scrip dividends allocated to shareholders in lieu of cash
dividends added to the cash dividends paid for the calculation. This slightly
increases the denominator and hence this measure has a slightly smaller value,
which was 1.5 times for 2022.
Sustainability Terminology Glossary
Term Definition
Renewable electricity generated The amount of renewable electricity generated by the portfolio during the
year, net of the Company's ownership share.
Tonnes of CO2 avoided per annum The estimate of the portfolio's annual CO(2) emission reductions, based on the
portfolio's estimated generation as at the relevant reporting date prepared on
the International Financial Institution's ("IFI") approach to greenhouse gas
("GHG") Accounting.
Lost Time Accident Frequency Rate (LTAFR) A safety at work metric for every 100,000 hours worked. Calculated as the
number of accidents which occurred in the given period divided by number of
hours worked times 100,000.
Whilst all accidents are recorded, only accidents that have resulted in the
worker being unable to perform their normal duties for more than seven days
are included in this calculation, in line with reportable accidents as defined
by UK HSE RIDDOR.
UK HSE RIDDOR is defined as the UK Health and Safety Executive Reporting of
Injuries, Diseases and Dangerous Occurrences Regulation.
1 Based on NAV per share appreciation plus dividends paid during
the year ended 31 December 2022.
2 From 1 January 2022 to 21 February 2023. Including both Grönhult
and the Cadiz solar projects, which have started exporting electricity and are
in final commission during Q1 2023.
3 Pro-rated based on TRIG's percentage of ownership.
4 The RCF is held within TRIG UK and TRIG UK I, and guaranteed by
TRIG Limited.
5 Dividend cover was 1.55x with the benefit of scrip take-up (which
was £5.2m in the period).
6 The Company's dividend policy is to increase the dividend when the
Board considers it prudent to do so, considering forecast cash flows, expected
dividend cover, inflation across TRIG's key markets, the outlook for
electricity prices and the operational performance of the Company's portfolio.
7 Including onshore wind, offshore wind, solar PV and flexible
capacity technologies. Flexible capacity is generation technologies that can
store energy and respond to electricity demand levels and pricing signals,
such as batteries, pumped hydro storage and green hydrogen. Within flexible
capacity technologies, the Investment Manager's current principal focus is on
battery storage projects.
8 To date the Company has invested in the UK, France, Germany,
Ireland, Spain and Sweden.
9 On a committed basis at the date of this report. Based on average
regional household electricity consumption figures and the IFI Approach to GHG
Accounting for Renewable Energy.
10 As at 31 December 2022, including investment commitments.
11 On an Expanded Basis. Please refer to Section 3.2 for an explanation
of the Expanded Basis.
12 Construction and development exposure across the portfolio was 8% as
at 31 December 2022.
13 Directors' Valuation is an Alternative Performance Measure ("APM").
See page 175 for details of APMs. Further, the reconciliation from the
Expanded Basis financial results is provided in Section 3.2 - Analysis of
Financial Results, and a reconciliation of the Directors' Portfolio Value
(APM) to Investments at Fair Value is provided in Note 13 to the Financial
Statements.
14 % of Invested portfolio excluding commitments
15 Committed Portfolio Value is £3,942m and includes £205m of
investment commitments outstanding at the balance sheet date
16 Cannibalisation describes the effect that renewables (an intermittent
generator) can have on the overall power prices, whereby the marginal cost of
generation, which in turn drives the power prices, is lower than the average
which would be expected of a continuous base load generator as a result of the
additional supply when renewables are generating. Rates differ over time and
between markets but all are affected.
17 Power price forecasts used in the Directors' valuation for each
market are based on analysis by the Investment Manager using data from leading
power market advisers. In the illustrative blended price curve, the power
price forecasts are weighted by the P50 estimate of production for each of the
projects in the 31 December 2022 portfolio. Forecasts are shown net of
assumptions for PPA discounts and cannibalisation. The average level of
reduction to the baseload forecast power price assumed to renewable generation
across the portfolio is approximately 15%-20%.
18 The majority of the Swedish wind farm income is from wholesale power
sales which in the Nord Pool are denominated in euros, accordingly the
investment is treated as euro-denominated.
19 This column does not cast due to rounding differences.
20 The majority of the Swedish wind farms' income is from wholesale
power sales which in the Nord Pool are denominated in euros. Accordingly, the
investments in Sweden are treated as euro-denominated, notwithstanding that
the smaller subsidy element of the revenues and some operating costs are
denominated in Swedish krona.
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