REG - Renew Infra Grp Ld - Announcement of Interim Results
05/08/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220805:nRSE0136Va&default-theme=true
RNS Number : 0136V Renewables Infrastructure Grp (The) 05 August 2022
5 August 2022
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)
Interim Report for the six months ended 30 June 2022
H1 2022 Key Highlights
- 134.2p Net Asset Value (NAV) per share(1), increased by 12.5% since
31 Dec 2021 (119.3p)
- £3,236m Directors' portfolio valuation(2), up 18.7% since 31 Dec
2021 (£2,726m)
- 6.84p dividend target reaffirmed for the year to December 2022 (2021:
6.76p)
- 1.39x dividend cover(3) for the six months to 30 June 2022 (H1 2021:
1.28x)
- £442m invested year to date (H1 2021: £341m)
- 17.9p earnings per share (H1 2021: 1.8p)
Sustainability Key Highlights
- 960,000 tonnes of CO(2) avoided(4)
- Portfolio capable of powering 1.7m homes with clean energy(5)
- Supporting 36 community funds with £1.2m budgeted for community
contributions in 2021
- 0.52 reportable lost time accidents per 100,000 hours worked(6)
Helen Mahy, CBE, Chairman of the Company, said:
"In what will be my last set of results as Chairman, I am pleased to present a
strong set of results for the first half of 2022.
I am proud of what TRIG has achieved in the nine years since IPO, and we
continue to provide investors with resilient financial performance and access
to a portfolio of renewables that contributes to decarbonisation and towards
energy security in Europe."
Richard Crawford, of InfraRed Capital Partners said:
"Amidst a challenging wider market for investors, TRIG's portfolio continues
to perform well and is benefitting from its defensive positioning against
elevated levels of inflation and volatile commodity markets.
We have invested £442m in renewables year-to-date, with two thirds of this
invested in the UK. Our construction projects continue to progress well, with
the 35MW Blary Hill project being funded entirely from re-investment cash
flows.
TRIG's diversification across different power markets and technologies remains
a strength, as we make strategic acquisitions that enhance the resilience of
the portfolio."
Webcast details
TRIG will be presenting its results for the first half of 2022 at
09:00 UK time today. The presentation will be broadcast live and an archive
version of the presentation will be made available on the Group's website. To
register to attend please email Maitland/AMO
at trig-maitlandamo@maitland.co.uk (mailto:trig-maitlandamo@maitland.co.uk)
Highlights Footnotes:
1. The Net Asset Value (NAV) per share as at 30 June 2022 is calculated on
the basis of 2,481,751,778 ordinary shares in issue and to be issued as at 30
June 2022 including issues of ordinary shares under the scrip dividend
scheme and managers' shares (in part payment of the management fee).
2. On an Expanded Basis. Please refer to Section 3 for an explanation of the
Expanded Basis.
3. Dividend cover reported on an expanded basis, being net operational cash
over dividends during the period. Please refer to Section 3.0 for an
explanation of the Expanded Basis. Figure of 1.39x (H1 2021: 1.28x) is on the
basis of dividends paid, excluding scrip.
4. Actual values calculated in accordance with the IFI Approach to GHG
Accounting for Renewable Energy. Portfolio at 30 June 2022 is capable of
mitigating 2m tonnes of carbon emissions p.a.
5. Based on the IFI Approach to GHG Accounting.
6. A safety at work metric which measures the number of personnel injured
and unable to perform their normal duties for seven days or more, for each
hundred thousand hours worked. H1 figures are presented on a year-to-date
basis, the 12-month rolling average figure for June 2022 is 0.36.
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
Notes
The Company
The Renewables Infrastructure Group ("TRIG" or the "Company") is a leading
London-listed renewable energy infrastructure investment company. The Company
seeks to provide shareholders with an attractive long-term, income-based
return with a positive correlation to inflation by focusing on strong cash
generation across a diversified portfolio of predominantly operating projects.
TRIG is invested in a portfolio of wind, solar and battery storage projects
across six countries in Europe with aggregate net generating capacity of over
2.4GW; enough renewable power for 1.7 million homes and to avoid over 2
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
TRIG's Investment Manager is InfraRed Capital Partners Limited ("InfraRed")
which has successfully invested in infrastructure projects since 1997.
InfraRed is a leading international investment manager, operating worldwide
from offices in London, Hong Kong, New York, Seoul and Sydney, and managing
equity capital in multiple private and listed funds, primarily for
institutional investors across the globe. InfraRed is authorised and regulated
by the Financial Conduct Authority.
The infrastructure investment team at InfraRed consists of over 100 investment
professionals, all with an infrastructure investment background and a broad
range of relevant skills, including private equity, structured finance,
construction, renewable energy and facilities management.
InfraRed implements best-in-class practices to underpin asset management and
investment decisions, promotes ethical behaviour and has established community
engagement initiatives to support good causes in the wider community. InfraRed
is a signatory of the Principles of Responsible Investment.
Further details can be found on InfraRed's website at www.ircp.com
(http://www.ircp.com/) .
Operations Manager
TRIG's Operations Manager is RES ("Renewable Energy Systems"), the world's
largest independent renewable energy company.
RES has been at the forefront of wind energy development for over 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 22GW in capacity. RES supports over 9.5GW 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/) .
01 Chairman's Statement
I am pleased to present the 2022 Interim Report for The Renewables
Infrastructure Group Limited ("TRIG" or "the Company"). The NAV as at 30 June
2022 was 134.2p per share, an increase in the first half of 2022 by 14.9p per
share.
These strong results have been underpinned by increases in wholesale power
prices and inflation feeding through into the Company's revenues and portfolio
valuation, providing investors with a counter to the adverse impact of these
factors on investment portfolios generally. European energy supplies are being
severely impacted as a result of the conflict in Ukraine. This has added to
gas supply constraints which were already visible at the start of 2022 as we
came out of the pandemic-induced economic contraction.
Our portfolio, which has been carefully constructed to provide
diversification, and is being diligently managed by InfraRed (our Investment
Manager) and RES (our Operations Manager), is contributing to the energy
security and decarbonisation agenda with energy generation capacity now 2GW
with a further 463MW new capacity in construction. We continue to invest
substantial amounts into renewables whilst maintaining pricing discipline,
averaging in excess of £500m per year since 2018 and £300m per year since
IPO in 2013.
The portfolio is well correlated with inflation, with half of TRIG's revenues
forecast over the next ten years directly linked to inflation through subsidy
support mechanisms. The substantial majority of remaining revenues are from
the sale of electricity into the wholesale market which has a relationship
with inflation due to the inclusion of energy costs in inflation indices. This
combination of defensive exposure to elevated commodity markets and
inflationary pressure underpins the resilience of TRIG's diversified
portfolio.
Acquisitions made in the first half of 2022 continue TRIG's strategy of
portfolio diversification, which was a key theme of our recent Capital Markets
Seminar in April 2022, in particular by geography and revenue sources. The
Company committed to invest in Hornsea One, the world's largest operational
offshore wind farm, providing further inflation-linked, subsidised income to
the portfolio. This was complemented by the Company's investment in the
Valdesolar solar park in Spain, which does not receive government subsidies.
Both projects are operational and yielding cash for the portfolio. We also
continued our investments into the Ranasjö & Salsjö (Twin Peaks) and
Grönhult wind farms which we are building in Sweden, and the Cadiz solar
projects under construction in Spain. As with the construction of Blary Hill,
the Twin Peaks projects are being funded organically through re‑investment
cash flows.
In May 2022, we published our annual Sustainability Report, which highlights
the progress made in 2021 in key areas such as emissions data with enhanced
disclosure on sustainability metrics and regulations.
Your Board of Directors remains grateful for the continued support of TRIG's
shareholders in the Company's successful fundraise of £277m in March 2022,
the maximum available to the Company under its "tap" facility. This was open
to existing and new, institutional and retail investors. In volatile equity
and energy market conditions, we continue to see renewables as well positioned
due to their critical importance to energy security and achieving net zero
targets.
Financial Results
The Company's NAV per share was 134.2p at 30 June 2022, an increase of 12.5%
to the NAV per share at 31 December 2021 of 119.3p. TRIG's annualised NAV
total return (which takes into account dividends paid) from IPO to 30 June
2022 has been 9.3%.
After operating and finance costs, net cash flow covered the cash dividend
1.39 times1, or 2.4 times before the impact of repaying project-level debt.
TRIG has maintained its loan amortisation profile, continuing to repay project
level debt over the remaining subsidy periods. Interest rate exposure within
the portfolio is substantially fixed and the Company has no structural
short-to-medium term debt, and therefore has little exposure to rising costs
from interest rate increases.
The high dividend cover in the first half of 2022 reflects strong achieved
power prices and generation performance consistent with budgeted levels and
does not take into account payments due to TRIG, which predominately relate to
the warranty settlement in respect of the Merkur offshore wind farm in
Germany. These payments are due to be received in 2022/23. We continue to
expect no material impact on the carrying value of the project nor the
financial performance of the Company.
Investment Activity
Portfolio construction and the generation of attractive risk-adjusted returns
are key to InfraRed's assessment of opportunities. The offshore wind farms in
TRIG's portfolio are less sensitive to changes in power price levels than the
portfolio average due to the subsidies they receive. The addition of these
lower risk projects enables the Investment Manager to add unsubsidised higher
returning projects into the portfolio while maintaining the portfolio's
overall power price sensitivity. This approach has been demonstrated in the
two investment commitments made so far this year in the Hornsea One offshore
wind farm and the Valdesolar solar park.
TRIG's investment focus remains unchanged, targeting renewables and related
infrastructure investments, with benefits in risk diversification from
flexible generation such as battery storage and hydroelectricity, as
identified in April's Capital Markets Seminar. Our focus includes onshore
wind, offshore wind, solar PV and flexible capacity technologies in the UK and
Europe, including France, Germany, Ireland, and the Iberian and Nordic
regions. Increasingly, as was also discussed at the Capital Markets Seminar,
we see a trend of projects finding their long-term owners earlier in their
lives - particularly projects in flexible capacity, Nordic onshore wind and
Iberian solar market segments. In addition, some of TRIG's older portfolio
assets are starting to offer opportunities to be repowered over the coming
years. This market and portfolio evolution was the rationale for the increase
from 15% to 25% in TRIG's construction and development investment limit under
the Company's Investment Policy, which was approved by shareholders at the AGM
in May 2022.
The Managers continue to monitor technologies whose financial performance is
driven by intermittency of renewables and power price volatility, which
therefore have low or negative correlation to power price forecasts. Such
flexible capacity investments include technologies such as batteries,
hydroelectricity and, in the longer term, green hydrogen.
Portfolio Performance
The electricity generation of TRIG's portfolio during the period was close to
budget, with strong performance in the Nordics offsetting weaker wind resource
in France and grid constraints offshore in the UK and Germany. The Managers'
focus on diversification continues to reduce risk in the portfolio as a whole.
Where the portfolio has exposure to market power prices, we have seen the
pressure from supply constraints within the energy market feed through into
both actual and forecast revenues. Recognising the ongoing volatility in the
power markets, further UK asset-level power price fixes extending into 2026
are being placed. Approximately 62% of portfolio revenues up to 2032 are
subsidised or benefit from power price fixes.
TRIG's construction assets are progressing well. The construction of Blary
Hill (35MW new capacity) was completed on-time and on-budget in February,
whilst Vannier, Grönhult, Ranasjö & Salsjö (Twin Peaks) and the Cadiz
solar projects (together 463MW of new capacity) are all on course for
successful completion.
Corporate Governance
After nine years as Chairman of TRIG, I will step down in October 2022 in
accordance with the Board's succession plan. Richard Morse will succeed me as
Chairman of TRIG, and I firmly believe the Company has the Board and the
management team it needs to continue its successful journey in providing
sustainable returns to shareholders and supporting the energy transition
across Europe.
I am pleased to welcome Richard to the Board of Directors. Richard joined the
Board on 18 July 2022 and brings extensive experience in sustainable and
regulated infrastructure investment, with a particular focus on the energy
sector. He is a partner at Opus Corporate Finance, and was previously a
partner at Greenhill & Co, a managing director at Goldman Sachs and Deputy
Director General at Ofgem. He also brings a wealth of experience in investment
company governance, having been Chairman of JLEN Environmental Assets Group
from its IPO in 2014 until July 2022. His appointment was the result of an
extensive process led by the Nomination Committee and supported by a
third-party search firm.
The Board is mindful of the AIC Code2, and the Hampton-Alexander and Parker
Reviews. A process is underway, again using the services of a third-party
search firm, to recruit a further Non-executive Director to the Company's
Board, in particular recognising the importance of the recommendations of the
Parker Review.
Responsible Investment and Sustainability
TRIG's 2022 Sustainability Report, available on the Company's website
alongside the Managers' own sustainability reports, sets out progress made
against our four sustainability goals with several key developments:
Publication of Scope 1, 2 and 3 carbon emissions for the entire portfolio, in
line with TRIG's commitment to the Science Based Targets initiative (SBTi);
Further developed our clearly defined sustainability key performance
indicators, informed by the Managers' annual portfolio-wide ESG Survey which
provides the basis for regular monitoring of the portfolio;
Confirmation of TRIG's SFDR categorisation as an Article 8 fund, and the
results of our EU Taxonomy assessment;
Several case studies to highlight activities of the Managers and in the
portfolio; and
Having met the relevant ESG targets, savings of circa £150,000 will be made
under the Company's ESG-linked revolving credit facility in respect of the
year ending 31 March 2023. These funds will be used to establish new local
electricity discount schemes in the vicinity of our projects, recognising the
current challenges on household budgets.
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 have not changed from those
set out in the Company's 2021 Annual Report, these continue to be:
Regulation: government or regulatory support for renewables changing
adversely;
Power prices: electricity prices falling below market expectations or not
increasing as expected; and
Production performance: portfolio electricity production falling short of
expectations, including as a result of unfavourable weather and asset
unavailability.
These risks are considered in the Portfolio Construction and Value Enhancement
sections above and are expanded on in Section 2.10 - Risks and Risk Management
of the Company's 2021 Annual Report.
We recognise that access to affordable clean energy is a priority, as
highlighted by the UN's Sustainable Development Goal 7. In the context of
higher wholesale energy prices impacting consumers, there is a potential
elevated risk of government and regulatory intervention in the power market.
In the UK, there have been suggestions of extending the "windfall tax" on the
oil and gas sector to electricity generation whilst the Department for
Business, Energy and Industrial Strategy has published a consultation on
Review of the Electricity Market Arrangements (REMA), to which we and the
Managers will be responding.
We believe that it is important that governments do not act in a way which
would be counterproductive to investment in decarbonisation and enhancing
energy security as well as lowering of costs associated with generation.
Currently, under the Contract-for-Difference mechanism many of our projects in
the UK are paying back to the public purse the difference between the agreed
subsidy level and current power prices. It must also be considered that whilst
power prices are currently high, investors in generating assets are
reinvesting to support portfolio resilience through periods when power prices
are low. We only have to look back to the power price fluctuations in 2020 and
early 2021 to illustrate this. TRIG has invested £442m in renewables projects
in the year to date.
When considering any market intervention, the underlying investors in
renewables infrastructure must be considered. TRIG's shareholders include
corporate and institutional pension funds as well as individual UK savers
through their private pensions, savings products and direct shareholdings. The
reasons these shareholders invest in TRIG include the Company's defensive
exposure to commodity prices and inflation, which can help offset investments
in other elements of the economy that suffer in such market conditions,
helping to maintain the value of savings.
As well as the UK, governments across Europe are considering reforms to the
electricity market, in particular to decouple the costs of gas and
electricity. There are a number of challenges that such reforms will need to
consider, including the move from a centralised to a distributed energy
generation system and the need to promote flexible capacity. It will also be
necessary to recognise that renewables infrastructure typically has a
significantly greater upfront capital cost relative to its ongoing operational
costs compared to traditional thermal generation, for example. As such, a
reasonable return must be achieved on this investment to promote further
deployment. Wider use of the proven Contract-for-Difference mechanism,
including for existing generation, may provide the basis of a solution
providing greater stability in prices for both consumers and investors. The
Managers are engaging with governments directly, and through industry bodies
and advisers, to contribute to their thinking on electricity market reform.
Ultimately, regulatory and government intervention that risks reducing the
attractiveness of renewables as an asset class may lead to an increase in the
cost of capital, leading to long-term and wide-ranging impacts on the costs to
consumers of the energy transition.
Outlook
The conflict in Ukraine has brought energy security sharply into focus. As the
UK and the EU revisit their approach to energy independence, this provides
further impetus to renewables investment in addition to the well-established
climate action imperative. TRIG continues to play an important role,
principally as a long-term owner of assets and therefore facilitating
utilities and developers in Europe to recycle capital into new projects. With
a significant portfolio of 2.4GW, including 463MW of new capacity in
construction, we remain an active participant in the drive to a more
sustainable future and greater energy security within the UK and western
Europe.
InfraRed and RES continue to excel in developing and delivering the Company's
business model of responsible investment practices, careful portfolio
construction and enhancing value for all stakeholders. With a strong Board of
Directors providing governance oversight, TRIG remains well placed to enable
investors to access sustainable returns whilst contributing towards the energy
transition.
This is my final set of results as Chairman of TRIG's Board of Directors. It
has been an honour to serve TRIG's shareholders, work with my fellow Board
Directors and the Company's Managers and contribute to climate action these
past nine years. Thank you to TRIG's shareholders for their continuing support
of the Company.
Helen Mahy CBE
Chairman
4 August 2022
1 Dividend cover was 1.32 times without the benefit of scrip take-up (which
was £3.6m in the period).
2 The AIC Code has been endorsed by the Financial Reporting Council (FRC) and
the Guernsey Financial Services Commission (GFSC).
2.2 Market Development
Power prices
Power prices remain elevated throughout Europe, particularly in markets where
gas generation is most often the marginal price-setting technology, with GB
and Iberia being the most exposed markets within TRIG's portfolio.
In addition, current and forward prices for gas and electricity remain highly
volatile as a result of supply constraints exacerbated by the conflict in
Ukraine. We have seen increases in the forward power price curves across
TRIG's key markets. Following a prudent revenue management approach, the
Managers have continued their programme of fixing prices through power
purchase agreements ("PPAs") and financial derivatives on a rolling basis
where appropriate. However, there have been few opportunities to fix prices at
the levels indicated by the forwards and greater discounts to the forwards are
being demanded by counterparties who are willing to fix. There remains limited
liquidity in the market for fixes at these elevated levels. During the period,
an additional 472GWh of generation has been fixed with these fixes securing
value over periods between 1 and 4 years. For the next 12 months these fixes
are equivalent to 7% of annual portfolio production. In total, over the next
12 months, 66% of TRIG's expected revenue is fixed.
TRIG has a balanced portfolio of assets across a range of geographies,
technologies and revenue types. Over the short term, the majority of TRIG's
current wholesale market exposure is through projects with ROC subsidies in
the UK where the total revenue of projects includes the wholesale power prices
as well as a subsidy element. As projects in construction come online, the
portfolio will increasingly diversify in power price exposure to the Nordic
and Iberian regions.
Over the next 12 months, 34% of expected revenues are exposed to wholesale
power markets. This exposure is broken down below by market:
Country Next 12 Months % of Revenues
Great Britain 63%
Northern Ireland 6%
Ireland 4%
France 1%
Germany 0%
Sweden 11%
Spain 15%
Total 100%
Natural gas and, to a lesser extent, carbon prices remain the principal
commodity drivers of elevated power prices.
The outlook for European gas supplies remains uncertain. The European
Parliament and member states agreed on a minimum gas storage level of 80% full
capacity by 1 November 2022, with this target rising to 90% by 1 November
2023. With Russian gas flows into Europe at serious risk, Europe is dependent
on liquified natural gas ("LNG") arriving by boat, principally from the USA
and Qatar. This supply line is complicated by outages at the Freeport LNG
Texas terminal and increased demand from Asian markets following economic
recovery after the pandemic. These factors point to a difficult winter ahead
for European gas supplies, which may have a further impact on forward power
prices depending on how long the mismatch between LNG supply and demand
persists.
The cost of electricity across Europe has also increased due to outages at a
number of French nuclear plants. According to analysis by Bloomberg, France's
nuclear reactors were operating at less than half their full capacity in
June 2022, as a result of both planned and unplanned outages, and have
produced the least electricity in the first five months of the year since
2008. This has resulted in France needing to import power from the UK - the
reverse of the predominant dynamic between the two markets.
In the longer run, on average across TRIG's key markets power price forecasts
have largely been flat. This has been broadly due to an increase in renewables
deployment forecasts along with an increase in electricity demand and flexible
capacity. There continues to be a risk that renewables capacity increases
faster than the expected growth in electricity demand, which could reduce
power prices over the longer term. The pace of the energy transition for both
the supply and demand for renewable electricity, and government policies
across Europe in relation to electricity market design, will be key to the
long-term power price outlook.
Policy & Regulation
United Kingdom
The principal policy response from the UK government to the energy supply
constraints arising from the Ukraine crisis has been the publication of the
British Energy Security Strategy, which significantly increases capacity
targets for nuclear, offshore wind and solar generation. Importantly, annual
Contract for Difference auctions from March 2023 were confirmed, while the
strategy also commits to reducing planning and consent time from approximately
four years to one year.
These policy responses are welcomed by the renewables industry, although the
extent to which supply chains can ramp up and investor confidence is
maintained in the sector will be crucial to the delivery of these stretching
targets.
The UK government has also directly intervened in the oil and gas market
during the period, through the announcement of the Energy Profits Levy to be
charged at 25% in addition to existing taxation of the sector. This measure
has not been extended into other sectors of the energy mix, such as
electricity generation. We believe that any extraordinary intervention in the
electricity markets that adversely impacts renewables will dampen investment
sentiment in the UK and be a drag on meeting commitments to energy
independence under its Energy Security Strategy. Performance of generators
should be considered in the context of an entire market cycle during which
there will be periods of relatively high and low power prices, as we have seen
in 2022 and 2020-2021, respectively. TRIG expects to invest over £300m into
UK renewables and related infrastructure during 2022 based on existing
commitments and pipeline.
We welcome studies into what the optimum structure may be to incentivise
renewables investment and reduce volatility in the wholesale power market,
which may include decoupling power prices from gas prices - which is an area
covered by the recently launched Review of Electricity Market Arrangements
(REMA) consultation. We believe any such moves should be taken in consultation
with the investors in renewable energy, who will be crucial to delivering the
targets envisioned by the Energy Security Strategy and acknowledge the period
of time provided to consider the full complexities inherent in any market
redesign. The Managers are engaging with government directly, and through
industry bodies and advisers, to contribute to their thinking on electricity
market reform.
In July, the UK announced its biggest ever round of the Contracts for
Difference auctions with capacity of almost 11GW of renewables secured, almost
double the capacity achieved in the previous round. The large majority of this
capacity (7GW) was awarded to offshore wind projects, where the auction strike
price achieved was the lowest to date.
European Union
In response to the crisis in Ukraine, the EU has committed to ending its
dependence on Russian imports by 2027, to be achieved through deploying
renewables faster, increasing energy efficiency and switching gas supplies to
other markets, notably LNG. Each of these aims is immensely challenging to
achieve and will require buy-in at EU and member country levels. This steps up
the challenge already set out in the EU's 'Fit for 55' strategy and Green Deal
package, both published in 2021. Through the Global Infrastructure Investor
Association, InfraRed is engaging in the Investors Dialogue on Energy hosted
by the European Commission, which is a platform for discussion of EU Financing
policies and instruments to support energy investments and progress towards
2030 and 2050 targets associated with the EU's 'Fit for 55' strategy and Green
Deal.
During the first half of 2022, the European Parliament was unable to secure
consensus around reforms to the EU Emissions Trading Scheme ("ETS"), with
disagreements principally relating to the pace at which surplus allowances
should be removed from the system. Nonetheless, industrial decarbonisation is
expected to accelerate during the 2030s, and so the EU ETS deadlock should not
have an impact on renewables deployment, which remain the cheapest form of new
electricity generation in Europe. The switch-back to coal to cover off some of
the gas shortage will add to demand for EU carbon credits.
The cost of gas has increased significantly across Europe, partly due to
supply constraints, and partly due to the higher costs of LNG (which requires
pressurisation, shipping and depressurisation and is exposed to world-wide
demand) compared with piped gas.
Germany is amongst the most exposed to Russian gas imports of EU states, but
has announced targets to reduce Russian gas imports from 55% of the total to
10% by the summer of 2024. This reduction, in the near term, will chiefly be
achieved through a shift of gas supplier from Russia to US LNG, and the German
government has announced plans for three new LNG terminals.
Spain also has a significant exposure to gas prices and has sought to protect
consumers from the most significant cost increases. This is principally being
achieved through a mechanism designed to cap gas prices, which then feeds into
the electricity markets with gas-fired electricity generation being the
marginal price setter for the Iberian power markets. This has not had any
impact on the valuation of the Spanish solar assets in TRIG's portfolio as
these investments were made incorporating the impact of the Spanish gas price
cap.
Both Spain and Germany remain attractive markets for TRIG. The German offshore
market will continue to provide opportunities for growth in subsidised
revenues, whilst the Iberian market continues to offer strong diversification
benefits and higher returns.
Portfolio construction, pipeline and investment outlook
The Investment Manager made two investments on behalf of the Company during
the period which both contributed to improving portfolio resilience and
diversification by being in different geographies and technologies, and with
differing levels of exposure to power markets. The investments were in Hornsea
One, a UK offshore wind farm located off the east coast of England, and
Valdesolar, a solar park in the south of Spain. The portfolio's overall power
price sensitivity remains broadly unchanged as a result of these acquisitions.
TRIG's construction projects continue to progress well in the period, with
Blary Hill commissioned in February 2022. TRIG's current Swedish, Spanish and
French construction projects will deliver an aggregate of 463MW new renewable
energy capacity by 2024, creating value for all stakeholders.
InfraRed continues to see construction and late-stage development projects as
attractive opportunities to leverage the depth of the combined expertise and
track record of both Managers for the benefit of TRIG and its shareholders. As
assets in more established markets such as flexible capacity, Nordic onshore
wind and Iberian solar begin to trade earlier in their life cycles, the
investment policy limit increase to 25% of portfolio value is a proportionate
response to the changing marketplace without materially changing the overall
risk profile of the Company.
There remains a strong pipeline of assets across geographies, technologies and
revenue types that would be additive to TRIG's portfolio. The Managers are
also closely following the evolution of business models in the flexible
capacity technologies and are actively reviewing opportunities to increase the
portfolio's exposure to such opportunities where revenues may be negatively or
uncorrelated to revenue from renewable generation.
The conflict in Ukraine has served as a stark reminder of the importance of
energy security. Coupled with the critical need for decarbonisation and
affordable energy, the renewables sector continues to increase in relevance to
society. TRIG continues to provide shareholders with sustainable returns
derived from a portfolio invested in assets critical to each of these key
themes. The Managers' strategy towards managing the Company's power price
exposure means that the portfolio is also defensively positioned in volatile
commodity markets. Revenue support mechanisms across the portfolio provide
protection in today's inflationary environment.
Benefiting from a differentiated, clear and robust strategy, TRIG's Managers
are well placed to continue delivering strong performance for our
shareholders.
2.3 Sustainability
Our approach
Our investments, many of which have asset lives of 30 years or more, require a
long-term view and the application of sustainable business practices.
TRIG has four sustainability goals which the Company seeks to fulfil with
every investment made and in day-to-day conduct:
- Mitigate adverse climate change
- Preserve our natural environment
- Positively impact the communities we work in
- Maintain ethics and integrity in governance
The TRIG Board and its Managers seek to incorporate sustainability throughout
the Company's activities. The Board has overall responsibility for TRIG's
Sustainability Policy and its application, whilst the day-to-day management of
the portfolio is delegated to both Managers.
Sustainability is integrated into each stage of InfraRed's investment process;
from negative screening against the firm and fund exclusion lists to deal
screening, due diligence and investment approval. InfraRed publishes its own
sustainability report and sustainability policy, including its approach to the
integration of sustainability considerations into the investment cycle, on its
website.
RES leads management of project-level ESG policies and activities, whilst
keeping active management of ESG KPIs, community outreach activities and
health and safety standards. RES works together with InfraRed to ensure that
sustainability considerations are also prioritised in the ongoing management
and reporting of the assets throughout the ownership period. RES publishes its
own sustainability report and sustainability policy, on its website.
2022 Sustainability Report
TRIG's purpose is to generate sustainable returns from a diversified portfolio
of renewables infrastructure that contribute towards a zero-carbon future.
This purpose has been pivotal to TRIG since IPO in 2013, and efforts towards
this objective are detailed in TRIG's 2022 Sustainability Report.
The report highlights achievements within 2021 as well as future objectives
for TRIG. Key developments contained within the report include:
Publication of Scope 1, 2 and 3 carbon emissions for the entire portfolio, in
line with TRIG's commitment to the Science Based Targets initiative (SBTi).
New clearly defined sustainability key performance indicators, informed by the
Managers' annual portfolio-wide ESG Survey, which provides the basis for
regular monitoring of the portfolio.
Announcement of TRIG's SFDR categorisation as an Article 8 fund, and the
results of the EU Taxonomy assessment undertaken on the portfolio.
An overview of TRIG's biodiversity strategy and the approach taken across the
portfolio to acknowledge the importance of and to promote biodiversity.
2.4 Portfolio
Portfolio Diversification
The TRIG portfolio benefits from being diversified in a number of ways.
Through geographical diversification, the portfolio spans a number of
jurisdictions, power markets and weather systems, reducing exposure to
regulatory change or power price change in a certain market, as well as
reducing year-on-year production volatility. Technological diversification
further reduces production volatility, and furthermore a range of
counterparties within each technology spreads credit risk.
This is illustrated in the charts on p.22 of the H1 2022 Interim Report.
Revenue Profile
TRIG has the benefit of being diversified across five separate power markets:
Great Britain, the Republic of Ireland and Northern Ireland (Single
Electricity Market), France and Germany (which sit within the main continental
European power market), Sweden (which sits within the Nordic electricity
market) and Spain (Iberian power market).
The TRIG portfolio has substantial near-term protection of 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, other power price hedges such
as swaps or forwards, and from government subsidies, such as Feed-in Tariffs
("FiTs"), Contracts for Difference ("CfDs") and Renewable Obligation
Certificates ("ROCs").
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 expire. This may be managed by securing
replacement contracts that have fixed-price elements and making additions to
the portfolio that benefit from subsidies, each of which would decrease the
market revenue proportion of the forecast revenues.
Investment Portfolio
The TRIG portfolio as at 4 August 2022 includes 85 equity investments
in the UK, Republic of Ireland, France, Sweden, Germany and Spain, comprising
51 wind projects, 33 solar PV projects and one battery storage project.
Additionally, the portfolio includes one mezzanine debt investment in a mixed
wind, solar and battery portfolio.
Project Market (Region)(1) TRIG's Equity Interest(2) Net Capacity (MW)3 Year Commissioned(4)
Onshore wind Farms
Roos GB (England) 100% 17.1 2013
Grange GB (England) 100% 14.0 2013
Tallentire GB (England) 100% 12.0 2013
Garreg Lwyd GB (Wales) 100% 34.0 2017
Crystal Rig 2 GB (Scotland) 49% 67.6 2010
Hill of Towie GB (Scotland) 100% 48.3 2012
Mid Hill GB (Scotland) 49% 37.2 2014
Blary Hill GB (Scotland) 100% 35.0 2022
Paul's Hill GB (Scotland) 49% 31.6 2006
Crystal Rig 1 GB (Scotland) 49% 30.6 2003
Solwaybank(5) GB (Scotland) 100% 30.4 2020
Green Hill GB (Scotland) 100% 28.0 2012
Little Raith GB (Scotland) 100% 24.8 2012
Rothes 1 GB (Scotland) 49% 24.8 2005
Freasdail GB (Scotland) 100% 22.6 2017
Rothes 2 GB (Scotland) 49% 20.3 2013
Earlseat GB (Scotland) 100% 16.0 2014
Meikle Carewe GB (Scotland) 100% 10.2 2013
Neilston GB (Scotland) 100% 10.0 2017
Forss GB (Scotland) 100% 7.5 2003
Altahullion SEM (N. Ireland) 100% 37.7 2003
Lendrum's Bridge SEM (N. Ireland) 100% 13.2 2000
Lough Hill SEM (N. Ireland) 100% 7.8 2007
Pallas SEM (Rep. of Ireland) 100% 51.6 2008
Taurbeg SEM (Rep. of Ireland) 100% 25.3 2006
Milane Hill SEM (Rep. of Ireland) 100% 5.9 2000
Beennageeha SEM (Rep. of Ireland) 100% 4.0 2000
Haut Vannier4 France (North) 100% 43.0 2022
Venelle France (North) 100% 40.0 2020
Epine France (North) 100% 36.0 2019
Rosières France (North) 100% 17.6 2018
Energie du Porcien France (North) 42% 16.3 2012
Montigny France (North) 100% 14.2 2018
Les Vignes France (North) 42% 4.2 2009
Fontaine-Mâcon France (North) 42% 5.1 2011
Haut Languedoc France (South) 100% 29.9 2006
Haut Cabardes France (South) 100% 20.8 2006
Cuxac Cabardes France (South) 100% 12.0 2006
Roussas-Claves France (South) 100% 10.5 2006
Rully France (North) 42% 5.0 2010
Val de Gronde France (North) 37% 4.5 2011
Jädraås Sweden 100% 212.9 2013
Gronhult(5) Sweden 100% 67.0 2022
Twin Peaks - Ranasjö(5) Sweden 50% 43.4 2024
Twin Peaks - Salsjö(5) Sweden 50% 77.5 2024
Total onshore wind at 4 August 2022 1,331.8
Offshore Wind Farms
East Anglia 1 GB (England) 14.3% 102.1 2020
Hornsea One(8) GB (England) 10.2% 122.4 2020
Sheringham Shoal GB (England) 14.7% 46.6 2012
Beatrice GB (Scotland) 17.5% 102.9 2018
Merkur Germany 24.6% 99.0 2019
Gode Wind 1 Germany 25% 82.5 2017
Total offshore wind at 4 August 2022 555.5
Solar Photovoltaic Parks
Parley Court GB (England) 100% 24.2 2014
Egmere Airfield GB (England) 100% 21.2 2014
Stour Fields GB (England) 100% 18.7 2014
Tamar Heights GB (England) 100% 11.8 2014
Penare Farm GB (England) 100% 11.1 2014
Four Burrows GB (England) 100% 7.2 2015
Parsonage GB (England) 100% 7.0 2013
Churchtown GB (England) 100% 5.0 2011
East Langford GB (England) 100% 5.0 2011
Manor Farm GB (England) 100% 5.0 2011
Marvel Farms GB (England) 100% 5.0 2011
Midi France (South) 51% 6.1 2012
Plateau France (South) 49% 5.9 2012
Puits Castan France (South) 100% 5.0 2011
Chateau France (South) 49% 1.9 2012
Broussan France (South) 49% 1.0 2012
Pascialone France (Corsica) 49% 2.2 2011
Olmo 2 France (Corsica) 49% 2.1 2011
Santa Lucia France (Corsica) 49% 1.7 2011
Borgo France (Corsica) 49% 0.9 2011
Agrinergie 1 & 3 France (Réunion) 49% 1.4 2011
Chemin Canal France (Réunion) 49% 1.3 2011
Ligne des 400 France (Réunion) 49% 1.3 2011
Agrisol France (Réunion) 49% 0.8 2011
Agrinergie 5 France (Réunion) 49% 0.7 2011
Logistisud France (Réunion) 49% 0.6 2010
Sainte Marguerite France (Guadeloupe) 49% 1.2 2011
Marie Galante France (Guadeloupe) 49% 1.0 2010
Valdesolar Spain (Badajoz) 49% 129.0 2021
Arenosas(5) Spain (Cadiz) 100% 58.1 2022
El Yarte(5) Spain (Cadiz) 100% 58.1 2022
Guita(5) Spain (Cadiz) 100% 58.1 2022
Malabrigo(5) Spain (Cadiz) 100% 58.1 2022
Total solar at 4 August 2022 517.7
Battery Storage/ Mixed portfolio
Broxburn GB (Scotland) 100% 20.0 2018
Phoenix SAS(7) France 0% - 2015
Total Battery Storage / Mixed portfolio at 4 August 2022 20.0
Total Portfolio at 4 August 2022 2,425
Operating assets 1,961.7
Construction assets(5) 230.9
Contracted to acquire(6) 232.4
Total Portfolio at 4 August 2022 2,425
Footnotes
1 SEM refers to the Irish Single Electricity Market.
2 This is TRIG's equity share of the nominal capacity of the asset.
3 This is each project's generation capacity pro-rated for TRIG's share of
equity capital and subordinated debt.
4 Where a project has been commissioned in stages, this refers to the earliest
commissioning date. For construction assets, this refers to expected
completion date.
5 Ranasjö, Salsjö, Grönhult, Haut Vannier and the Cadiz solar projects
are under construction. Due to contractual measures in place, TRIG does not
retain any construction risk for the Cadiz solar projects, therefore they are
included in the table under 'Contracted to acquire'.
6 This is the investment commitment to acquire the Cadiz solar projects.
7 This investment is in the form of mezzanine level bonds where the Company
does not have an equity stake. The portfolio comprises five onshore wind farms
in Northern France with a combined capacity of 74MW and four operational solar
parks with battery storage located on the islands of Corsica and La Réunion
with a combined capacity of 29MW ("the Portfolio"). All the Portfolio assets
are backed by the French government's Feed-in Tariff subsidy and have an
average year of commission of 2015.
8 In March 2022 the company committed to invest in a 7.8% stake in Hornsea
One which completed in July 2022. In July 2022 the Company committed to invest
in a further 2.4% stake in Hornsea One. Upon completion of the second tranche
the Company will hold a 10.2% stake in Hornsea One.2.5 Portfolio Performance
Capital Raising and Acquisitions
During the period, the Company raised gross proceeds of £277m from an Initial
Issue by way of a tap issuance under the Company's general authority to
disapply pre-emption rights taken at the 2021 AGM.
From 1 January 2022 to 4 August 2022, TRIG has invested £442m relating to new
projects, shown in the table below.
Transaction Date Project Date Equity Share Net Capacity (MW)10 Revenue Type11 Location % of portfolio on a committed basis12
commissioned
March 2022 Hornsea One offshore wind farm February 2020 10.2%(13) 122 Contract for Difference GB 9%
March 2022 Valdesolar solar project December 2021 49% 129 Wholesale Market Spain 3%
Outstanding Commitments
As at 4 August 2022 the Company has outstanding commitments of £216m relating
to the second tranche of Hornsea One, the Swedish onshore wind farm
construction projects (Ranasjö, Salsjö and Grönhult), and the Cadiz solar
projects (Arenosas, Malabrigo, El Yarte and Guita), broken down in the table
below, by expected due date(14). The Company's acquisition facility was not
drawn as at 30 June 2022, and was £195m drawn on 4 August 2022 (the date of
this report).
As at 4 August 2022 H2 2022 2023 2024 Total
Outstanding Commitments (£m)* 127 64 24 216
*Table does not cast due to rounding
10 This is TRIG's equity share of the nominal capacity of the wind farm.
11 The main revenue type during the subsidy period. Thereafter all revenues
are wholesale power market.
12 The segmentation below is on a fully committed basis and includes assets
under construction at the time the investment was committed.
13 In March 2022 the company committed to invest in a 7.8% stake in Hornsea
One which completed in July 2022. In July 2022 the Company committed to invest
in a further 2.4% stake in Hornsea One. Upon completion of the second tranche
the Company will hold a 10.2% stake in Hornsea One.
14 More detail on the Company's outstanding commitments is provided in
section 2.6 - Valuation of the Portfolio.
Projects in construction
TRIG currently has four investments comprising eight projects under
construction that account for 12% of the portfolio, by value.(15)
Vannier (Construction partner: Envision) - Construction has significantly
progressed in the period, with all turbines erected. Completion of the wind
farm is scheduled for autumn 2022.
Cadiz solar projects (Arenosas, Malabrigo, El Yarte and Guita) (Construction
partner: Statkraft) - Construction progressing well. The panel traceability
study was completed in the period with no adverse findings. Module
installation is complete at three of the four sites and the main transformer
has been installed at the substation. The projects are on track to be
operational in winter 2022.
Grönhult (Construction partner: Vattenfall) - Civil works were completed on
schedule and turbine deliveries have commenced. They will be erected during
summer 2022, with progress on the first turbine underway. The project remains
on track to be operational in winter 2022.
Ranasjö & Salsjö (Twin Peaks) (Construction partner: Arise) - Progress
in line with programme. Foundation pours are nearly complete at the Salsjö
site, after which the on-site concrete batching plant will move to the
Ranasjö location. The planned grid connection date may be slightly delayed,
with potential solutions being investigated to minimise any delay to project
completion, expected in 2024.
During the period, the Blary Hill (RES) project was completed on time and on
budget, and it is now included in the GB onshore wind sub-portfolio. Its
construction was fully funded from re-investment proceeds.
Core to construction risk management is the appointment of an experienced
owner's engineer for each project to monitor construction quality, provide
independent assurance and to provide routine on-site presence. During the
period, project company directors of the Ranasjö, Salsjö, Vannier and Cadiz
projects conducted site visits alongside the owner's engineers to view
progress first-hand, engage with site personnel to further develop
relationships and share best practice on health & safety.
15 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. Investments where TRIG bears construction risk represent 8% of the
portfolio, by value.
Operations Summary
Portfolio production in the six months to 30 June 2022 was consistent with
budgeted levels, with strong winds in GB, Germany and Scandinavia in Q1 offset
by lower wind speeds in Q2 in addition to grid-related downtime at offshore
wind farms. Adjustments have been made to generation values where such losses
are compensated, whether under insurance claims for lost revenue, compensated
grid curtailments from grid companies, compensated construction delay from
contractors or availability warranties from service providers.
The portfolio has experienced high levels of power prices throughout the
period, meaning overall financial performance for H1 2022 was above budget.
'Budget' is the Managers' expected P50 production as applied in the valuation.
Production:
Production
Actual Variance
MWh
%
GB Wind 774,436 6%
Ireland Wind 166,959 -5%
GB Offshore 678,500 -6%
Germany Offshore 338,481 -6%
France Wind 261,852 -9%
Scandinavia 313,382 14%
Solar & Storage 213,272 -2%
Total 2,746,882 (0.7%)
GB onshore wind
GB onshore wind generation was 6% above budget due to strong winds in Q1.
Improvement works at Crystal Rig 1 are progressing, with one upgrade package
complete and showing positive availability impact.
Operational challenges at Little Raith are being addressed through an
improvement plan agreed between the O&M contractor and the RES asset
manager, with some revenue protection through an availability warranty.
Blade enhancements and foundation rectification works are underway at Hill of
Towie.
Production at Solwaybank has been boosted by reduced radar curtailments in
discussion with the Ministry of Defence.
All-island Ireland (Northern Ireland & Republic of Ireland) wind
Ireland production was 5% below budget, driven by downtime for major component
works at multiple sites, most notably Altahullion and Taurbeg.
Control systems upgrades have been completed at Lendrum's Bridge to improve
data analysis and proactive maintenance activities.
GB offshore wind
GB offshore generation was 6% below budget, largely driven by grid challenges.
East Anglia One grid connection was curtailed to enable offshore substation
snagging works. The adverse impact of this was partly offset by an
above-budget increase in revenues resulting from its inflation-linked UK
Contract-for-Difference ("CfD"). Hornsea One also has a UK CfD, which received
an inflation uplift in excess of the investment case.
Sheringham Shoal's financial performance was lifted by elevated power prices
in the period. The impact of this was dampened by a temporary grid export
restriction.
Hornsea One, of which the Company was committed to invest in the first tranche
in March, has been performing in line with its generation budget.
Germany offshore wind
Generation was 6% below budget, primarily linked to planned grid maintenance
in addition to component replacement works. Planned grid development in the
region could reduce grid downtime in future.
Repair and retrofit works associated with the Merkur rear frame defect are
progressing well. The settlement payment calculation under the availability
warranty for the year ended 31 March 2022 has been agreed with the turbine and
O&M provider, with payment to follow in due course and no financial impact
on the carrying value for the project.
France onshore wind
French production was 9% below budget for the year, largely due to poor wind
resource in January and May, in addition to some downtime at the older sites
due to major component maintenance activities.
Repowering development activities for the four older sites are progressing
well. In addition to Cuxac, Claves has now also secured a new
Contract-for-Difference.
A sub-portfolio of five projects managed by Akuo secured higher pricing under
fixed-price market power purchase agreements from September 2022 to December
2026.
Scandinavia onshore wind
Jädraås has continued to outperform budget in terms of both generation and
availability, achieving production 14% above budget in the period. A scheduled
blade repair campaign is underway and expected to be completed in August 2022.
Solar
Valdesolar achieved excellent availability and secured good power prices in
the period, though this was partly offset by production having been 6% below
budget due to low irradiance and some grid curtailment.
GB solar outperformed budgets due to good irradiance in the period.
Construction rectification works at several solar sites are now nearing
completion, with final works and snagging due to be closed out Q3 2022.
Biodiversity activities at Marvel and Parsonage solar farms have been
progressed during the period, with placement of local beehives and wildflower
planting.
Enhancements
RES, as Operations Manager for the portfolio, is committed to enhancing the
value of the portfolio using both commercial and technical initiatives.
Through collaboration with TRIG's asset managers, enhancements are identified,
assessed and implemented. The following examples are from the first half of
2022:
Blade enhancements are being rolled out at a Scottish onshore wind site
following yield uplift demonstrated during trial.
Phase 1 of the wake steering trial at Altahullion wind farm has progressed.
Analysis shows the retrofitted controllers have achieved a reduction in
loading, with a positive impact on expected life of the turbines, and the
adaptive yaw and pitch optimisation has identified a potential 1% yield
increase.
Tests have completed to enable Pallas onshore wind farm in Ireland to provide
grid services under DS3, providing an additional revenue stream expected to
generate circa £200k per year.
Icing parameters at Epine onshore wind farm in France have been optimised to
reduce generation losses in future winters.
Turbine pitch and yaw analysis is underway at Gode offshore wind farm in
Germany to optimise yield.
Solar maintenance schedules were adjusted in a cost-effective manner in
response to higher electricity pricing across the GB portfolio, with
night-time working also considered.
Health and Safety
Health and safety ("H&S") continues to be at the forefront of all TRIG's
operations. The following provides an update on notable H&S items during
the first half of 2022.
There were nine Lost Time Accidents resulting in the injured person being off
work for seven days or more ("7-day LTAs") during the period. This resulted in
a higher 7-day Lost Time Accident Frequency Rate ("LTAFR") than seen in
previous periods (0.52 H1 2022 compared to 0.27 H1 2021 and 0.21 H2 2021).
This increase is partly driven by 7-day LTAs across the Cadiz portfolio
construction activities, which included back strains and knocks to arms and
legs associated with non-specialised work. Two 7-day LTAs occurred at a French
onshore wind construction site during tower laydown and assembly. TRIG's
Operations Manager is engaging with the site management teams to reduce
occurrences, with follow-up action taken for each incident.
Aiming to reduce the risk of similar incidents, the Operations Manager shares
details of incidents amongst the partners on the TRIG portfolio in line with
best practice sharing of information. An increased focus is now being placed
on leading indicators such as safety audits, "good catches" and safety
observations. Positively, we are seeing a large number of hazard
identifications raised on many of the construction assets.
A number of TRIG's operational partners have held company-wide safety days
during the period. A strong health and safety culture is core to both
Managers; for example, RES, the Operations Manager, held an offsite Safety
Focus Event where there was an opportunity for all staff to discuss why people
might take risks and consider the consequences.
Safety audits are performed annually by the service providers on all assets
and these are supported further by independent audits on representative assets
across the portfolio. In the period, third-party audits have been undertaken
across five sites.
Cybersecurity
TRIG recognises that globally there has been an increased level of
cybersecurity activity, including both targeted attacks and viruses. TRIG
continues to engage with its Managers and project company asset managers to
ensure proportionate protections are in place and awareness is maintained.
2.6 Valuation of the Portfolio
The Investment Manager is responsible for carrying out a fair market valuation
of the Group's investment portfolio which is presented to the Directors for
their approval and adoption. Valuations are carried out on a six-monthly basis
at 31 December and 30 June each year.
For non-market traded investments (being all the investments in the current
portfolio), the valuation principles used are based on a discounted cash flow
methodology and adjusted in accordance with the European Venture Capital
Association's valuation guidelines where appropriate to comply with IFRS 13
and IFRS 9, given the special nature of infrastructure investments. Where an
investment is traded, a market quote is used.
The valuation for each investment in the portfolio is derived from the
application of an appropriate discount rate to reflect the perceived risk to
the investment's future cash flows to give the present value of those cash
flows. The Investment Manager exercises its judgement in assessing the
expected future cash flows from each investment based on the project's
expected life and the financial model produced by each project entity. In
determining the appropriate discount rate to apply to a given investment the
Investment Manager takes into account the relative risks associated with the
revenues, which include fixed price per MWh income (lower risk) or merchant
power sales income (higher risk). As a refinement to the process of
determining the appropriate discount rate, in view of the increasing variation
of project ages and revenue mixes within the portfolio, 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, to
determine the appropriate blended rate for the investment.
The Directors' valuation(16) of the portfolio of 85(17) project investments as
at 30 June 2022 was £3,235.6m (31 December 2021: £2,725.8m for 84 projects).
The Board regularly engages an independent third-party expert to review the
Manager's valuation, and accordingly the Board commissioned an independent
valuation from the accountants BDO as at 30 June 2022. BDO's work included a
review of the key valuation assumptions including discount rates, power price
and cannibalisation, inflation and other macroeconomic assumptions, operating
costs and asset lives. BDO's work corroborated the TRIG June 2022 valuation
and the key underlying assumptions as adopted by the Board and used within the
preparation of these accounts.
Valuation Movement
A breakdown of the movement in the Directors' valuation of the portfolio in
the period is set out in the table below.
* Foreign Exchange movements in the bridge are stated before the offset of
currency hedges which are held at the Company and its subsidiaries TRIG UK and
TRIG UK I. The valuation addition reduces to £13.8m after netting off
hedges.
16 Directors' Valuation is an Alternative Performance Measure ("APM"). See
page 77 of the H1 2022 Interim Report for details of APMs. Further, the
reconciliation from the expanded basis financial results is provided in
Section 3.0 - Analysis of Financial Results, and a reconciliation of the
Directors' Portfolio Value (APM) to Investments at Fair Value is providedin
Note 10 to the Financial Statements.
17 Hornsea One is not included as whilst the commitment to invest was made in
March 2022, completion and investment occurred in July 2022 which was after
the valuation date.
Valuation movement during the period to 30 June 2022 £m £m
Valuation of portfolio at 31 December 2021 2,725.8
Cash investments 168.6
Cash distributions from portfolio (119.1)
Rebased valuation of portfolio 2,775.4
Change in power price forecast 212.0
Change from inflation assumption / deposit rate 124.4
Foreign exchange movement* 31.5
Balance of portfolio return 92.3
Valuation of portfolio at 30 June 2022 3,235.6**
* A net gain of £13.8m after the impact of foreign exchange hedges held at
Company level.
** Table does not cast due to rounding.
The opening valuation at 31 December 2021 was £2,725.8m. Allowing for cash
investments of £168.6m and cash receipts from investments of £119.1m, the
rebased valuation as at 30 June 2022 was £2,775.4m.
During H1 2022, investments were made in the four projects set out in the
table below:
H1 2022 investments: % of Portfolio Value including commitment at 30 June 2022
% of Portfolio Value at 30 June 2022 Invested at Invested in Invested at 30 June 2022 Value once fully invested
31 December 2021
H1 2022
Valdesolar 0% 3% 3% 3%
Cadiz solar 3% 1% 4% 5%
Twin Peaks 1% 1% 1% 3%
Grönhult 1% 0%(18) 1% 3%
Each movement between the rebased valuation of £2,775.4m and the 30 June 2022
valuation of £3,235.6m is considered in turn below:
(i) Forecast power prices:
The valuation of the portfolio has increased by a net £212.0m as a result of
the movements in power price forecasts during the six-month period including
the change in power curve inflation (see (ii) movement in actual and forecast
inflation). The valuation uses updated power price forecasts for each of the
markets in which TRIG invests.
Over the period 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
contracting the supply and pushing up the cost of natural gas in many European
countries. Many of the affected 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
utilise other energy sources. This includes the potential use of coal as a
stopgap measure (notwithstanding its high carbon tax). This transition has
resulted in price forecasts remaining elevated across the 2020s before
reverting to the levels similar to those forecast at the year end, as
additional demand and supply are broadly expected to balance. Over the longer
term this also includes electrifying sources of gas demand, accelerating the
use of hydrogen and including more intermittent renewable generation and/or
nuclear generation.
18 Corresponding to 0.1%
Prior to the Ukraine conflict near-term power prices across Europe were
already elevated, mainly caused by increasing gas prices during 2021 and early
2022 with supply of gas not keeping up with increasing demand. Gas storage
levels were low over the last winter period, as electricity demand increased
during 2021 as economies came out of lock-down and electricity generated from
other sources, such as wind and nuclear was lower than usual (unusually low
wind levels and outages respectively), meaning that European gas prices and
hence electricity prices were more sensitive to reduced supply and/or
increased demand.
The weighted average power price forecast used to determine the Portfolio
Valuation 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(19).
The significant increase in near-term forecast wholesale power prices
discussed above results in a higher near-term forecast, but after the shorter
to medium-term constraints in energy supply work through, forecast power
prices return to similar levels to the previous December 2021 forecasts. The
table below separates average real forecast power prices in Great Britain and
the average across the other five euro-denominated markets (SEM(21), France,
Spain, Germany and Sweden) weighted by value for the period 2022-2026 and
beyond.
Prices by Region (real) Average 2022-2026 Average 2027-2050 Average
2022-2050
Great Britain (GBP per MWh) 125 40 55
Average of 5 euro-denominated markets (EUR per MWh) 95 48 56
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.
19 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.
20 Power price forecasts used in the Directors' valuation for each of GB, SEM
(Northern Ireland & Republic of Ireland), France, Germany, Sweden and
Spain are based on analysis by the Investment Manager using data from forward
prices available in the market and leading power market advisers. In the
illustrative blended price curve, the power price forecasts are weighted by
P50 estimates of production for each of the projects in the Company's
portfolio as at 30 June 2022.
21 SEM refers to the Irish Single Electricity Market.
(ii) Movement in actual and forecast inflation:
Throughout H1 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.
The most significant increase in the UK resulted from the step-up in the
retail consumer energy price cap in April (with the next change in energy
price cap expected in October), 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 remains
within the headline figure (e.g. for the April 2022 uplift, until the April
2023 inflation figure is released).
Inflation applied to cashflows has been uplifted for actual inflation in all
geographies for the 5 months to May 2022. For the remaining 7 months of 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. Actual inflation for the 5 months on an
annualised basis has been above these levels but is expected to revert to more
normal levels by December 2023.
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 Full-Year Equivalent*
(Jun to Dec)
UK RPI 6.00% 10.3% (was 3.75% previously) 3.50% 2.75% 2.00%
UK CPI 5.25% 8.4% (was 3.00% previously) 2.75% 2.00% 2.00%
UK Power Price 6.00% 10.3% (was 3.75% previously) 3.50% 2.75% 2.25% (was 2.75% previously)
Eurozone 3.00% 6.5% (was 2.00% previously) 2.00% 2.00% 2.00%
* This represents the average inflation across the year 2022 measured against
the prior 12 months.
Consequently, the inflation review had the impact of increasing the valuation
by £124.4m. Note that this number was mainly driven by inflation actuals
accounting for approximately 80% of the total.
(iii) Foreign exchange:
Over the half-year sterling has depreciated 2% against the euro compared to
the rate at December 2021 (31 December 2021: EUR 1.1899; 30 June 2022: EUR
1.1613). In aggregate this has led to a gain in the period of £31.5m in the
valuation of the euro-denominated investments located in France, the Republic
of Ireland, Sweden(22), Spain and Germany. After the impact of forward
currency hedges held at Company level are taken into account, the foreign
exchange gain reduces to £13.8m.
Euro-denominated investments comprised 40% of the portfolio at the period end.
Once the committed investments are fully subscribed, the proportion of
euro-denominated investments based on the current portfolio and valuation
remains at 40% (including Hornsea One).
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.
22 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.
(iv) Balance of portfolio returns and discount rate unwind:
This refers to the balance of valuation movements in the period (excluding (i)
to (iii) above) and represents an uplift of £92.3m and a 3.3% increase over
the half-year in the rebased value of the portfolio. The balance of portfolio
return mostly reflects the net present value of the cash flows brought forward
by six months at the prevailing portfolio discount rate (6.6%).
In addition to the unwinding of the discount rate:
- Actuals have been greater than forecast with higher than forecast
power prices being partially offset by overall generation for the period being
marginally below budget with low wind speeds in Q2.
- 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 remains
relatively insensitive to the changes in interest rates, which is an advantage
to TRIG's approach of favouring long-term structured project financing, rather
than short-term corporate debt. Structured project financing is secured
against the underlying assets, with the substantial majority benefitting from
long-term interest rate swaps which fix the interest costs to the projects. As
such, the overall impact of interest rate changes is not material.
- 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 revenues security.
- Minor movements that in aggregate slightly dampen performance.
Over the period no changes have been made to the discount rates applied to the
assets in the portfolio (and consequently no associated movement appears
within the valuation bridge).
We have observed over the period the approximately 1% increase in long-term
risk-free rates across the jurisdictions we invest in, such that the blended
long-term risk-free rate across those jurisdictions is a little over 2% at the
balance sheet date. However, we have not observed movement in valuation
discount rates, noting that the strong inflation linkage of returns for
renewables projects continues to be one of the key factors making renewables
investments attractive to investors. A significant risk buffer between the
circa 2% long-term risk-free rate and the 6.7% portfolio discount rate
remains. We continue to observe strong competition for new investment
opportunities and continue to be outbid on transactions for the majority of
processes in which we are involved.
The Weighted Average Discount Rate of the portfolio has moved from 6.6% to
6.7% as a result of additions to the portfolio and changes in the balance
between forecast merchant and protected (fixed) flows which have different
discount rates.
Investment Obligations
Name Acquired Net MW Status Completion Date Outstanding Commitment* Value once fully invested*
Cadiz solar Sept 21 232.0 Construction Q4 2022 1% 5%
Grönhult Feb 21 67.0 Construction Q4 2022 2% 2%
Twin Peaks Jul 21 120.9 Construction 2024 2% 4%
*Expressed as a percentage of portfolio valuation once fully invested, which
takes into account expenditure on construction projects.
At 30 June 2022, the Company had outstanding investment commitments on seven
projects (Grönhult, Twin Peaks (Ranasjö and Salsjö) and Cadiz solar
(Arenosas, El Yarte, Guita and Malabrigo)) with projects in construction. The
outstanding commitments are expected to be invested between 2022 and 2024.
Following 30th June, the Company completed the acquisition of a 7.8% stake in
Hornsea One wind farm and has further committed to acquire an additional 2.4%
stake.
Name Expected completion date Net MW Status Outstanding Commitment* Value once fully invested*
Hornsea One tranche 1 July 22 95 Operation 7% 9%
Hornsea One tranche 2 Q3 22 29 Operation 2%
*Expressed as a percentage of portfolio valuation once fully invested, which
takes into account expenditure on construction projects.
Outstanding commitments in relation to Grönhult, Twin Peaks, Cadiz solar and
Hornsea:
H2 2022 2023 2024 Total
Outstanding Commitments at 30 June 2022 (£m) 324 64 24 412
Investments commitments entered into between 1 July and 4 August 2022 76
Investments made between 1 July and 4 August 2022 (273)
Outstanding commitments at 4 August 2022 127 64 24 216*
*Table does not cast due to rounding.
TRIG's Construction Assets
At the period-end TRIG had four investments comprising eight projects in
construction as follows, representing 12% of the portfolio valuation once
fully invested. The Company does not bear any construction risk in relation to
the Cadiz solar assets and consequently, these are excluded from the
construction limit.
The Company bears the construction risk on five of these projects which
account for 8% of portfolio value against the construction limit of 25%.
Name of Asset Location Capacity (MW) Expected Completion Date
Vannier France (North) 40 Q3 2022
Cadiz solar - Arenosas Spain (South) 58 Q4 2022
Cadiz solar - El Yarte Spain (South) 58 Q4 2022
Cadiz solar - Guita Spain (South) 58 Q4 2022
Cadiz solar - Malabrigo Spain (South) 58 Q4 2022
Grönhult Sweden (SE3) 67 Q4 2022
Twin Peaks - Ranasjö Sweden (SE2) 43 2024
Twin Peaks - Salsjö Sweden (SE2) 78 2024
The valuation of the portfolio on a fully invested basis can be derived by
adding the valuation at 30 June 2022 and the expected outstanding commitments
as follows:
Portfolio valuation at 30 June 2022 £3,235.6m
Investments made in July 2022* £273.3m
Portfolio valuation at 30 June 22 + July 2022 investments £3,508.9m
Future investment commitments** £215.5m
Portfolio valuation once fully invested £3,724.5m
* Including completion of the Hornsea One Tranche 1, further construction
spend at Cadiz solar projects and Grönhult wind farm
** Including Hornsea One Tranche 2, further construction spend at Cadiz solar
projects, Grönhult, Ranasjö and Salsjö wind farms
2.7 Valuation Sensitivities
For each of the sensitivities (as shown below in Note 2), it is assumed that
potential changes occur independently of each other with no effect on any
other base case assumption, and that the number of investments in the
portfolio remains static throughout the modelled life.
The sensitivities assume the portfolio is fully invested. As such the
Portfolio Value for the sensitivity analysis is the sum of the Portfolio
Valuation at 30 June 2022 (£3,235.6m) and the outstanding investment
commitments as set out above, i.e. £3,724.5m.
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 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 £78m
(equivalent to 2.8 pence per share), a 3% decrease for the next 12 months
would be expected to reduce the portfolio valuation by £78m.
For power prices an increase of 10% applied to the applicable forecast curve
for each market in which TRIG invests, applied for the next 5 years, is
expected to increase the valuation by £99m (equivalent to 4.0 pence per
share), a 10% decrease is expected to reduce the portfolio valuation by £99m.
As noted on page 35 of the H1 2022 Interim Report, the average GB power price
applicable over the period is £125/MWh and the average across the other
European markets is EUR95/MWh.
2.8 Financing
The Group has a £600m ESG-linked revolving credit facility (which includes a
£30m working capital element) with the Royal Bank of Scotland International,
National Australia Bank, ING Bank NV, Sumitomo Mitsui Banking Corporation,
Santander and Barclays. The acquisition facility is used to fund acquisitions.
The Group expanded the facility from £500m to £600m in March 2022. The
facility expires on 31 December 2023 with the option to extend for up to an
additional 24 months. This type of short-term financing is limited to 30% of
the Portfolio Value. It is intended that any facility used to finance
acquisitions is likely to be repaid, in normal market conditions, within a
year through equity fundraisings and/or retained earnings.
The acquisition facility was undrawn at 30 June 2022 and £195m drawn as at
the date of this report. This follows investing £273m during July 2022 with
the majority of this investment being into the initial 7.8% stake in the
Hornsea One offshore wind farm (other sources of funding the £273m July
investment include remaining cash balances from the March equity fund raise
and reinvestment of earnings from projects).
The acquisition facility was used to fund investments made in the period
before being fully repaid following the equity fund raise in March and drawn
again in July as explained above.
The majority of the projects within the Company's investment portfolio have
underlying long-term debt (by value 61% of the Group's investments have
project finance raised against them and 39% are ungeared (including
construction commitments)).
The project-level gearing (aggregate project debt over aggregate enterprise
value) across the portfolio was 40% as at 30 June 2022 on an invested basis
and adjusted to include the investment into Hornsea One during Q3 2022 (and
39% on a fully committed investment basis). This is the same as the level as
at 31 December 2021 (40%). Repayments of project-level debt and the valuation
uplift in the period have reduced gearing, with acquisitions in the period
offsetting the reduction. The largest addition in the period is the investment
in the Hornsea One offshore wind farm which has project financing in place, to
be fully repaid within the subsidy period.
There is a gearing limit in respect of such project finance debt, which is
non-recourse to TRIG, of 50% of the Gross Portfolio Value (being the total
enterprise value of the Group's portfolio companies), measured at the time the
debt is drawn down or acquired as part of an investment. The Company may, in
order to secure advantageous borrowing terms, secure a project finance
facility over a group of portfolio companies.
The vast majority of the debt is fixed and has an average cost of 3.5%
(including margin) reflecting the terms available on interest rate swaps when
the project debt was initially put in place.
As at 30 June 2022, the Company had cash balances of £93m, excluding cash
held in investment project companies as working capital or otherwise. This
level has reduced to more usual levels of period end cash (£20m - £30m being
more typical) as surplus cash is invested, as was the case during July.
03 Analysis of Financial Results
At 30 June 2022 the Group had investments in 85 projects(23). As an investment
entity for IFRS reporting purposes, detailed in Section 5, the Company carries
these 85 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 2021 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 Balance Sheet Cash Flow Statement
The Statutory IFRS basis nets off TRIG UK and TRIG UK I's costs, including The Statutory IFRS basis includes TRIG UK and TRIG UK I's cash, debt and The Statutory basis shows cash movements for the top company only (TRIG
overheads, management fees and acquisition costs against income. The Expanded working capital balances as part of portfolio value. The Expanded basis shows Limited). The Expanded basis shows the consolidated cash movements above the
basis includes the expenses incurred within TRIG UK and TRIG UK I to enable these balances gross. There is no difference in net assets between the investment portfolio. Differences include income received by TRIG UK and TRIG
users of the accounts to fully understand the Group's costs. There is no Statutory IFRS basis and the Expanded basis. UK I applied to reinvestment and expenses incurred by TRIG UK and TRIG UK I
difference in profit before tax or earnings per share between the two bases.
that are excluded under the Statutory IFRS basis.
The majority of cash generated from investments had been passed up from TRIG
UK and TRIG UK I to the Company at both 30 June 2022 and 31 December 2021.
At 30 June 2022, TRIG UK I was undrawn on its revolving credit facility (Dec
2021: £72.8m drawn).
23 Hornsea One is not included as whilst the commitment to invest was made in
March 2022, completion and investment occurred in July 2022 which was after
the valuation date. As at 4th August following the completion of Hornsea One
the Company had 86 investments.
Summary Income statement
Six months to 30 June 2022 Six months to 30 June 2021
£'million £'million
Statutory IFRS Basis Adjustments(1) Expanded Basis Statutory IFRS Basis Adjustments(1) Expanded Basis
Operating income 444.1 16.6 460.7 10.5 14.7 25.2
Acquisition costs - (1.2) (1.2) - (1.1) (1.1)
Net operating income 444.1 15.4 459.5 10.5 13.6 24.1
Fund expenses (1.1) (12.1) (13.2) (0.9) (11.0) (11.8)
Foreign exchange gains/(losses) (17.3) (0.4) (17.7) 27.2 0.4 27.6
Finance costs - (2.9) (2.9) - (3.1) (3.1)
Profit before tax 425.7 - 425.7 36.8 - 36.8
EPS(2) 17.9p 17.9p 1.8p 1.8p
1. The following were incurred within TRIG UK and TRIG UK I; acquisition
costs, the majority of expenses and acquisition facility fees and interest.
The income adjustment offsets these cost adjustments.
2. Calculated based on the weighted average number of shares during the period
being approximately 2,378.9 million shares.
Analysis of Expanded Basis financial results
Profit before tax for the six months to 30 June 2022 was £425.7 million,
generating earnings per share of 17.9p, which compares to £36.8 million and
earnings per share of 1.8p for the six months to 30 June 2021.
The EPS of 17.9p reflects significant valuation growth in the period. The
valuation movement in the period to 30 June 2022 is mainly attributable to
increases in power price forecasts and increases in the level of inflation
adopted. In addition there has been small positive valuation growth from
foreign exchange movements as sterling depreciated during the period. The
valuation gain in the comparative period was small, largely as a result of the
increase in UK corporation tax enacted in the Finance Act 2021, which
adversely affected profit and valuation by £67.6m.
No reductions or increases to valuation discount rates were recognised in the
period.
Operating Income reflects the portfolio value movement in the six months and
is fully described in Section 2.6.
Acquisition costs relate to investments made in the period, being Valdesolar
and Hornsea One. Whilst Hornsea One completed after the period, costs were
incurred in the six months to 30 June 2022.
The increase in fund expenses as compared to H1 2021 reflects the increase in
the size of the portfolio.
Fund expenses of £13.2 million (2021: £11.8 million) includes all operating
expenses and £11.9 million (2021: £10.4 million) of fees paid to the
Investment and Operations Managers. Management fees on additions are now
levied at the lowest rate of 0.7% p.a. Management fees p.a. are charged 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 as
set out in more detail in the Related Party and Key Advisor Transactions note,
Note 14 to the financial statements.
During the period sterling weakened, resulting in a foreign exchange valuation
gain for non-UK assets of £31.5 million (2021: £39.4 million loss),
partially offset by losses on foreign exchange hedges and cash and debt
balances held at Company level of £17.7 million (2021: £27.6 million gain).
Finance costs relate to the interest and fees incurred relating to the Group's
revolving credit facility. The finance costs in the period are similar to the
comparative period.
Ongoing charges
Ongoing Charges (Expanded Basis) Six months to 30 June 2022 Six months to 30 June 2021
£'000s £'000s
Investment and Operations Management fees 11,861 10,419
Audit fees 192 139
Directors' fees and expenses 191 156
Other ongoing expenses 953 819
Total expenses(1) 13,198 11,535
Annualised equivalent 26,615 23,261
Average net asset value 3,018,107 2,300,487
Ongoing Charges Percentage (OCP) 0.88% 1.01%
1. Total expenses exclude £nil (2021: £0.3 million) of lost bid costs
incurred during the period.
The Ongoing Charges Percentage ("OCP") for the period is 0.88% (FY 2021:
1.01%). The ongoing charges have been calculated in accordance with AIC
guidance and are defined as annualised ongoing charges (i.e. excluding
acquisition costs and other non-recurring items) divided by the average
published undiluted net asset value in the period. The OCP has been calculated
on the Expanded Basis and therefore takes into consideration the expenses of
TRIG UK and TRIG UK I as well as the Company's.
The decrease in OCP level reflects lower amounts being drawn on the Revolving
Credit Facility (RCF) in the period versus the comparative period, the growth
of the Company in the period meaning the Company's expenses are spread over a
larger capital base and also the tiered Manager Fees that reduce as Portfolio
Value grows and the increase in NAV recognised at 30 June 2022. There is no
performance fee paid to any service provider.
Summary Balance sheet
As at 30 June 2022 As at 31 December 2021
£'million £'million
Statutory IFRS Basis Adjustments Expanded Basis Statutory IFRS Basis Adjustments Expanded Basis
Portfolio value 3,227.3 8.3 3,235.6 2,636.8 89.0 2,725.8
Working capital 3.8 (7.3) (3.5) 13.9 (15.9) (2.0)
Hedging Asset/(Liability) 6.3 (1.3) 5.0 27.3 (0.6) 26.7
Debt - - - - (72.8) (72.8)
Cash 92.6 0.3 92.9 28.2 0.3 28.5
Net assets 3,330.0 - 3,330.0 2,706.2 - 2,706.2
Net asset value per share 134.2p - 134.2p 119.3p - 119.3p
Analysis of Expanded Basis financial results
Portfolio value grew by £509.8 million in the six months to £3,235.6
million, as a result of the investments made in the six months to 30 June 2022
and valuation gains as described more fully in the "Valuation of Portfolio"
section of this Report.
Cash at 30 June 2022 was £92.9 million (Dec 2021: £28.5 million) and
acquisition facility debt drawings were £nil (Dec 2021: £72.8m). Shortly
after the period end, the surplus cash balance was deployed in investment
activity.
Net assets grew by £623.8 million in the period to £3,330.0 million. The
Company raised £274.3 million (after issue expenses) of new equity during the
period and produced a £425.6 million profit in the period, with net assets
being stated after accounting for dividends paid in the period (net of scrip
take up) of £77.1 million. Other movements in net assets totalled £1.0
million, being Managers' shares accruing in H1 2022 and to be issued on or
around 30 September 2022.
Net asset value ("NAV") per share as at 30 June 2022 was 134.2p compared to
119.3p at 31 December 2021.
Net asset value ("NAV") and Earnings per share ("EPS") reconciliation
NAV per share Shares in issue (million) Net assets (£'million)
Net assets at 31 December 2021 119.3p 2,268.1 2,706.2
Dividends paid in H1 2022(2) (3.4)p - (80.7)
Profit/EPS to 30 June 2022(1) 17.9p - 425.6
Scrip dividend take-up(3) - 2.8 3.6
Shares issued (net of costs) 0.4p 210.2 274.3
H1 2022 Managers' shares to be issued(5) - 0.7 1.0
Net assets at 30 June 2022(4) 134.2p 2,481.8 3,330.0
1. Calculated based on the weighted average number of shares during the
period being 2,378.9 million shares
2. 1.69p dividend paid 31 March 2022 related to Q4 2021 (£38.3 million) and
1.71p dividend paid 30 June 2022 related to Q1 2022 (£42.4 million).
3. Scrip dividend take-up comprises 1.8 million shares, equating to £2.2
million issued in lieu of dividends paid in March 2022 and 1.0 million shares,
equating to £1.4 million issued in lieu of dividends paid in June 2022.
4. Balance may not sum as a result of rounding differences.
5. The 0.7m shares represent the 748,569 shares that relate to management
fees earned in the six months to 30 June 2022 and are to be issued to the
Managers on 30 September 2022.
Summary Cash flow statement
Six months to 30 June 2022 Six months to 30 June 2021
£'million £'million
Statutory IFRS Basis Adjustments Expanded Basis Statutory IFRS Basis Adjustments Expanded Basis
Cash received from investments 103.5 17.1 120.6 64.9 27.7 92.6
Operating and finance costs (0.8) (12.9) (13.7) (0.8) (11.9) (12.7)
Cash flow from operations 102.7 4.2 106.9 64.1 15.8 79.9
Debt arrangement costs - (0.3) (0.3) - (0.1) (0.1)
Foreign exchange gains/(losses) 4.2 (1.7) 2.5 5.7 (3.9) 1.8
Issue of share capital (net of costs) 275.3 (0.9) 274.4 236.9 (1.0) 235.9
Acquisition facility drawn - (72.8) (72.8) - 90.0 90.0
Purchase of new investments (including acquisition costs) (240.7) 71.5 (169.2) (245.0) (97.9) (342.9)
Distributions paid (77.1) - (77.1) (62.4) - (62.4)
Cash movement in period 64.4 - 64.4 (0.7) 2.9 2.2
Opening cash balance 28.2 0.3 28.5 23.1 0.8 23.9
Net cash at end of period 92.6 0.3 92.9 22.4 3.7 26.1
Analysis of Expanded Basis financial results
Cash received from investments in the period was £120.6 million (June 2021:
£92.6 million). The increase in cash received compared with the previous
period reflects the increase in the size of the portfolio and stronger
generation in the period versus the comparative period.
Dividends paid in the period totalled £77.1 million (net of £3.6m scrip
dividends) and reflect dividends paid in the quarter ended 31 March 2022
(£36.1 million, net of £2.2 million scrip dividends) and the quarter ended
30 June 2022 (£41.0 million, net of £1.4 million scrip dividends). Dividends
paid in the comparative period totalled £62.4million (net of £5.3 million
scrip dividends).
Cash flow from operations in the period was £106.9 million (June 2021: £79.9
million) and covers dividends paid of £77.1 million in the period by 1.39
times (or 1.32 times without the benefit of scrip take-up), or 2.4 times
before factoring in amounts invested in the repayment in project-level debt.
The Group repaid £83.5 million of project-level debt (pro-rata to the
Company's equity interest) in the period.
Share issue proceeds (net of costs) totalling £274.4 million (June 2021:
£235.9 million) resulting from the issue of 210.1 million shares issued at
132p in March 2022.
The Company's acquisition facility was repaid in the period as a result of the
March 2022 share raise, resulting in an undrawn Tranche 1 position at the
reporting date. The acquisition facility was drawn shortly after the period to
fund the completion of Hornsea One Tranche 1, and ongoing funding for assets
under construction. £273.3m was invested in July which was funded by the
acquisition facility and surplus cash, resulting in an acquisition facility
balance at the reporting date of £195m.
In the period, £169.2 million was invested in acquisitions. These were funded
through the March share raise.
Cash balances increased in the period by £64.4 million, reflecting cashflows
generated that exceeded distributions paid as well as some remaining cash from
the March 2022 fund raise not fully deployed that was invested in July 2022.
Going Concern
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. In addition, it maintains a working
capital component of £30m as part of its revolving credit facility (recently
increased to £600m and limited to 30% of Portfolio Value). The Group's
project-level external debt is non-recourse to the Company and is limited to
50% of Gross Portfolio Value.
As a consequence, the Directors believe that the Group is well placed to
manage its business risks successfully. The directors do not believe that
there is a significant risk to the business as a result of the Covid-19
pandemic or current high rate of inflation but will continue to monitor any
future developments. Thus, they continue to adopt the going concern basis of
accounting in preparing the interim financial statements.
For further information on going concern see note 2 in the Condensed Financial
Statements.
Related Parties
Related party transactions are disclosed in note 15 to the condensed set of
financial statements.
There have been no material changes in related party transactions described in
the last annual report.
04 Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
1. The condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting; and
2. The Chairman's Statement and the Managers' Report meets the requirements
of an Interim Managers' Report, and includes a fair review of the information
required by
a. DTR 4.2.7R, being an indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year; and
b. DTR 4.2.8R, being the disclosure of related parties'
transactions and changes therein.
By order of the Board
Helen Mahy
Chairman
4 August 2022
05 Condensed Financial Statements
5.0 Income Statement
Total operating income
Note Six months ended Six months ended
30 June 2022 (unaudited)
30 June 2021
£'000s
(unaudited)
£'000s
Net gains/(losses) o investments 3 385,953 (39,862)
Dividend income 3 - 3,200
Interest income from investments 3 58,138 47,202
Total operating income 444,091 10,540
Fund expenses 4 (1,144) (906)
Operating profit 442,947 9,634
Finance and other (expense)/income 5 (17,315) 27,176
Profit before tax 425,632 36,810
Income tax 6 - -
Profit after tax 7 425,632 36,810
Attributable to:
Equity holders of the parent 425,632 36,810
425,632 36,810
Earnings per share (pence) 7 17.9p 1.8p
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.
5.0 Balance Sheet
Note As at As at
30 June 2022
31 December 2021
(unaudited)
(audited)
£'000s
£'000s
Non-current assets
Investments at fair value through profit or loss 10 3,227,256 2,636,785
Trade and other receivables 11 602 13,219
Total non-current assets 3,227,858 2,650,004
Current assets
Trade and other receivables 11 10,098 28,306
Cash and cash equivalents 12 92,623 28,229
Total current assets 102,721 56,535
Total assets 3,330,579 2,706,539
Current liabilities
Trade and other payables 13 (542) (362)
Total current liabilities (542) (362)
Total liabilities (542) (362)
Net assets 9 3,330,037 2,706,177
Equity
Share capital and share premium 14 2,767,562 2,488,594
Other reserves 14 992 1,008
Retained reserves 14 561,483 216,575
Total equity attributable to owners of the parent 9 3,330,037 2,706,177
Net assets per Ordinary Share (pence) 9 134.2 119.3
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 04 August 2022, and signed
on its behalf by:
Director: Director:
5.0 Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2022
Share capital and share premium Other Retained reserves Total equity
(unaudited)
reserves
(unaudited)
(unaudited)
(unaudited)
£'000s
£'000s £'000s
£'000s
Shareholders' equity at beginning of period 2,488,594 1,008 216,575 2,706,177
Profit for the period - - 425,633 425,633
Dividends paid - - (77,106) (77,106)
Scrip shares issued in lieu of dividend 3,618 - (3,618) -
Ordinary Shares issued 277,338 - - 277,338
Costs of Ordinary Shares issued (2,995) - - (2,995)
Ordinary Shares issued in year in lieu of Management Fees, earned in H2 20211 1,008 (1,008) - -
Ordinary Shares to be issued in lieu of Management Fees, earned in H1 20222 - 992 - 992
Shareholders' equity at 30 June 2022 2,767,5623 992 561,4833 3,330,0373
For the year ended 31 December 2021
Share capital and share premium Other reserves Retained reserves Total equity
(audited)
(audited)
(audited)
(audited)
£'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 20216 - 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
reserves on 31 March 2022.
2 The £991,781 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 are to be issued to the Managers on 30 September 2022.
3 Amount may not cast due to rounding.
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 as at 31 December 2020, and were issued to
the Managers during the prior year, with the balance being transferred to
share premium reserve 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.
5.0 Cash Flow Statement
Note Six months ended Six months ended
30 June 2022
30 June 2021
(unaudited)
(unaudited)
£'000s
£'000s
Cash flows from operating activities
Profit before tax 7 425,632 36,810
Adjustments for:
(Gain)/loss on investments 3 (385,953) 39,862
Dividend income from investments 3 - (3,200)
Interest income from investments 3 (58,138) (47,202)
Movement in other reserves relating to Managers' shares (16) (13)
Movement in accrued share issue costs - 15
Finance and other income/(expense) 5 17,315 (27,176)
Operating cash flow before changes in working capital (1,160) (904)
Changes in working capital:
Decrease/(increase) in receivables 25 (14)
Increase in payables 180 176
Cash flow from changes in working capital (955) (742)
Interest received from investments 67,525 29,808
Loan stock and equity repayments received 34,488 31,897
Dividends received from investments - 3,200
Interest income from cash on deposit 76 1
Net cash from operating activities 101,134 64,164
Cash flows from investing activities
Purchases of investments 10 (240,709) (245,000)
Net cash used in investing activities (240,709) (245,000)
Cash flows from financing activities
Proceeds from issue of share capital during period 278,346 240,855
Costs in relation to issue of shares (2,996) (3,996)
Dividends paid to shareholders 8 (77,106) (62,423)
Net cash from financing activities 198,244 174,436
Net increase/(decrease) in cash and cash equivalents 58,669 (6,400)
Cash and cash equivalents at beginning of period 28,229 23,116
Exchange gains on cash 5,725 5,709
Cash and cash equivalents at end of period 92,623 22,424
The accompanying notes are an integral part of these financial statements.
5.0 Notes to the Condensed 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 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".
The interim condensed unaudited financial statements of the Company (the
"interim financial statements") as at and for the six months ended 30 June
2022 comprise only the results of the Company, as all of its subsidiaries are
measured at fair value following the amendment to IFRS 10 as explained below
in Note 2.
The condensed interim financial information has been prepared on the basis of
the accounting policies, significant judgements, key assumptions and estimates
as set out in the notes to the Group's annual financial statements for the
year ended 31 December 2021.
The annual financial statements of the Company for the year ended 31 December
2021 were approved by the Directors on 17 February 2022 and are available from
the Company's Administrator and on the Company's website http://trig-ltd.com/.
2. Key accounting policies
Basis of preparation
The interim financial statements were approved and authorised for issue by the
Board of Directors on 4 August 2022.
The condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International Accounting
Standard 34 Interim Financial Reporting ("IAS 34"), as adopted by the European
Union ("EU") and in compliance with the Companies (Guernsey) Law, 2008. They
should be read in conjunction with the annual financial statements of the
Company for the year ended 31 December 2021, which are prepared in accordance
with International Financial Reporting Standards ("IFRSs") as adopted by the
EU and using the historical cost basis, except that the financial instruments
classified at fair value through profit or loss are stated at their fair
values and that the Company has applied the amendment to IFRS 10, as adopted
by the EU and as described below.
The interim financial statements are presented in sterling, which is the
Company's functional currency.
IFRS 10 states that investment entities should measure all of their
subsidiaries that are themselves investment entities at fair value. Being
investment entities, TRIG UK and TRIG UK I are measured at fair value as
opposed to being consolidated on a line-by-line basis, meaning their cash,
debt and working capital balances are included in the fair value of
investments rather than the Group's current assets.
The Chief Operating Decision Maker (the "CODM") is of the opinion that the
Group is engaged in a single segment of business, being investment in
renewable energy assets to generate investment returns while preserving
capital. The financial information used by the CODM to allocate resources and
manage the Group presents the business as a single segment comprising a
homogeneous portfolio. The CODM has been identified as the Board of Directors
of the Company acting collectively.
The Company's financial performance does not suffer materially from seasonal
fluctuations.
The initial difference between the transaction price and the fair value,
derived from using the discounted cash flows methodology at the date of
acquisition, is recognised only when observable market data indicates there is
a change in a factor that market participants would consider in setting the
price of that investment. For the period ended 30 June 2022 and the year ended
31 December 2021, there were no such differences. In addition, there was no
material change on applying fair values between the date of acquisition and
the reporting date for acquisitions in the period ended 30 June 2022 and 31
December 2021.
Going concern
The Group has the necessary financial resources to meet its obligations for at
least the next 12 months following the date of this report. The Group benefits
from a range of long-term contracts with various major UK and European
utilities and well-established suppliers across a range of infrastructure
projects. In addition, it maintains a working capital component of £30m as
part of its revolving acquisition facility (currently sized at £600m and
limited to 30% of Portfolio Value). The facility is available until 31
December 2023 with an option to extend. The facility was undrawn at 30 June
2022.
The Company has sufficient headroom on its revolving acquisition 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 16. 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 from the date of signing these financial statements and in
many cases the potential obligations are insured by the underlying
investments.
The project-level gearing (aggregate project debt over aggregate enterprise
value) across the portfolio was 40% as at 30 June 2022 on an invested basis
and adjusted to include the investment into Hornsea One during Q3 2022 (and
39% on a fully committed investment basis).
A cash balance of £92.6m at 30 June 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 revolving acquisition
facility of £30m.
Further to the above, the Company has a number of outstanding commitments.
These commitments can be fully covered by the Company's revolving credit
facility.
The company is affected by climate-related risks and the Board consider these
when they assess the company's ability to continue as a going concern. The
company continues to monitor these risks.
As a consequence, the Directors believe that the Group is well placed to
manage its business risks successfully. The directors do not believe that
there is a significant risk to the business as a result of the COVID-19
pandemic but will continue to monitor any future developments.
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.
Classification of financial instruments
30 June 31 December 2021
2022
£000s
£000s
Financial assets
Designated at fair value through profit or loss:
Investments 3,227,256 2,636,785
Other financial assets 6,291 27,293
Financial assets at fair value 3,233,547 2,664,078
At amortised cost:
Trade and other receivables 4,409 12,501
Cash and cash equivalents 92,623 23,116
Financial assets at amortised cost 97,032 35,617
Financial liabilities
At amortised cost:
Trade and other payables 542 293
Financial liabilities at amortised cost 542 293
The Directors believe that the carrying values of all financial instruments
are not materially different to their fair values.
Other financial assets represent the fair value of foreign exchange forward
agreements in place at the period end.
Fair value hierarchy
The fair value hierarchy is defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
As at 30 June 2022
Level 1 Level 2 Level 3 Total
£'000s
£'000s
£'000s
£'000s
Investments at fair value through profit or loss - - 3,227,256 3,227,256
- - 3,227,256 3,227,256
Other financial assets - 6,291 - 6,291
- 6,291 - 6,291
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
Other financial assets - 27,293 - 27,293
- 27,293 - 27,293
Other financial assets represent the fair value of foreign exchange forward
agreements in place at the period end.
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.
30 June 2022 31 December 2021
£'000s
£'000s
Portfolio value 3,235,634 2,725,805
TRIG UK and TRIG UK I
Cash 290 225
Working capital (11,076) (19,345)
Debt1 2,408 (69,900)
(8,378) (89,020)
Investments at fair value through profit or loss 3,227,256 2,636,785
1 Debt arrangement costs of £2,408k (2021: £2,927k) have been netted off the
£nil (2021: £72.8m) debt drawn by TRIG UK and TRIG UK I.
Level 2
Valuation methodology
Fair value is based on price quotations from financial institutions active in
the relevant market. The key inputs to the discounted cash flow methodology
used to derive fair value include foreign currency exchange rates and foreign
currency forward curves. Valuations are performed on 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 30 June 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 at:
30 June 2022 31 December 2021
Inflation applied to UK ROC Income Actual, 6% (2022), 3.50% (2023), 2.75% (to 2030), 2% thereafter 3.75% (2022), 3.50% (2023), 2.75% until 2030, 2.00% thereafter
Inflation applied to UK CfD Income Actual, 5.25% (2022), 2.75% (2023), 2% thereafter 3% (2022), 2.75% (2023), 2.00% thereafter
UK inflation rates (UK power prices)) Actual, 6% (2022), 3.50% (2023), 2.75% (to 2030), 2.25% thereafter 3.75% (2022), 3.50% (2023),
2.75% thereafter
Ireland, France, Sweden, Germany and Spain inflation rates Actual, 3% (2022), then 2% 2.00%
UK deposit interest rates 1.25% (to 2023), then 1.75% 0.25% to 2025, 1.25% thereafter
Ireland, France, Sweden, Germany and Spain deposit interest rates 1% (to 2024), then 1.25% 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 1.1613 1.1899
Energy yield assumptions P50 case P50 case
Valuation Sensitivities
Sensitivity analysis for key sources of estimation and uncertainty 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 30 June 2022 (£3,235.6m), the outstanding investment commitments
(£488.8m) including the investment in Hornsea One in July 2022 for the
initial 7.8% completed in July and the additional 2.4% the Company committed
to invest in July) bringing the portfolio value on a committed basis to
£3,724.5m. A breakdown of the Company's commitments can be found in section
2.6.
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 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 £78m
(equivalent to 2.8 pence per share), a 3% decrease for the next 12 months
would be expected to reduce the portfolio valuation by £78m.
For power prices an increase of 10% applied to the applicable forecast curve
for each market in which TRIG invests, applied for the next 5 years, is
expected to increase the valuation by £99m (equivalent to 4.0 pence per
share), a 10% decrease is expected to reduce the portfolio valuation by £99m.
As noted on page 35 of the H1 2022 Interim Report, the average GB power price
applicable over the period is £125/MWh and the average across the other
European markets is EUR95/MWh.
The analysis below shows the sensitivity of the portfolio value (and its
impact on NAV) to changes in key assumptions as follows:
Discount rates
The discount rates used for valuing each investment are based on market
information and the current bidding experience of the Group and its Managers.
The weighted average valuation discount rate applied to calculate the
portfolio valuation is 6.7% at 30 June 2022 (Dec 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 - June 2022 +4.7p +£131.9m £3,724.5m -£122.8m -4.4p
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.
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 - June 2022 -10.0p -£279.3m £3,724.5m +£284.4m 10.2p
Directors' valuation - December 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 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 - June 2022 -16.1p -£449.0m £3,724.5m +£495.0m 17.8p
Directors' valuation - December 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 debt payments are generally
fixed. This results in the portfolio returns and valuation being positively
correlated to inflation.
The portfolio valuation assumes 6.0% p.a. inflation for the UK in 2022, 3.5%
in 2023 and 2.75% thereafter and 3.0% in 2022 and 2.0% thereafter for each of
Sweden, France, Germany, Ireland and Spain.
The sensitivity illustrates the effect of a 0.5% decrease and a 0.5% increase
from the assumed annual inflation rates in the financial model for each year
throughout the operating life of the portfolio.
Inflation assumption NAV/share impact -0.5% change Total Portfolio Value +0.5% change NAV/share impact
Directors' valuation - June 2022 -4.8p -£134.0m £3,724.5m +£156.7m 5.6p
Directors' valuation - December 2021 -4.3p -£107.7m £2,957.0m +£115.4m 4.6p
Operating costs
The sensitivity shows the effect of an illustrative 10% decrease and a 10%
increase to the base case for annual operating costs for the portfolio, in
each case assuming that the change to the base case for operating costs occurs
with effect from 1 July 2022 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 - June 2022 +5.7p +£157.5m £3,724.5m -£157.7m -5.7p
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 2 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 - June 2022 +2.6p +£72.0m £3,724.5m -£61.5m -2.2p
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 1% and an increase of 2% in interest rates. The change is assumed
with effect from 1 July 2022 and continues unchanged throughout the life of
the assets.
The portfolio is relatively insensitive to changes in interest rates. This is
an advantage of TRIG's approach of favouring long-term structured project
financing (over shorter-term corporate debt) which is secured with the
substantial majority of this debt having the benefit of long-term interest
rate swaps which fix the interest cost to the projects.
The portfolio sensitivity to interest rates is assessed asymmetrically, noting
that there is limited capacity for further interest rate reductions.
Interest rates NAV/share impact -1% change Total Portfolio Value +2% change NAV/share impact
Directors' valuation - June 2022 -0.0p -£0.9m £3,724.5m +£2.1m 0.1p
Directors' valuation - December 2021 -0.1p -£2.5m £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 30 June 2022 valuation
(based on a 30 June 2022 exchange rate of €1.1613 to £1). In each case it
is assumed that the change in exchange rate occurs from 1 July 2022 and
thereafter remains constant at the new level throughout the life of the
projects.
At the period end, 40% of the committed portfolio was located in Sweden,
France, Germany, Ireland and Spain comprising euro-denominated assets.
The Group enters 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 and the Cadiz solar projects (Arenosas, El
Yarte, La Guita and Malabrigo) are included in this sensitivity. A 60% hedge
is assumed for the sensitivity below. Typical hedge levels for the Company
have been between approximately 60-80%.
Currency rates NAV/share impact -10% change Total Portfolio Value +10% change NAV/share impact
Directors' valuation - June 2022 -1.9p -£52.3m £3,724.5m +£52.3m 1.9p
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 of 30 years for the wind
portfolio and 38 years for the solar portfolio. The overall average across the
portfolio at 30 June 2022 is 30 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 - June 2022 -1.1p -£30.8m £3,724.5m +£29.5m 1.1p
Directors' valuation - December 2021 -1.0p -£25.6m £2,957.0m +£23.3m 0.9p
3. Total operating income
For period ended For period ended
30 June
30 June
2022
2021
£'000s £'000s
Gain/(loss) on investments 385,953 (39,862)
Dividend income - 3,200
Interest income from investments 58,138 47,202
Total operating income 444,091 10,540
4. Fund expenses
For period ended For period ended
30 June
30 June
2022
2021
£'000s
£'000s
Fees payable to the Company's auditor:
For the audit of the Company's financial statements 95 70
For audit-related assurance services 52 48
Investment and management fees 99 99
Directors' fees 184 156
Other costs 714 533
Fund expenses 1,144 906
On the Expanded basis, fund expenses are £13,194k (Jun 2021: £11,784k); the
difference being the costs incurred within TRIG UK and TRIG UK I, the
Company's subsidiaries. The reconciliation from the Statutory IFRS basis to
the Expanded basis is shown in the Analysis of Financial Results section on
page 43 of the H1 2022 Interim Report.
The Company had no employees during the current or prior period. The Company
has appointed the Investment Manager and the Operations Manager to advise on
the management of the portfolio, the Company and its subsidiaries, on its
behalf. Audit-related services are solely in relation to the interim review of
the half-yearly financial statements.
5. Finance and other (expense)/income
For period ended For period ended
30 June
30 June
2022
2021
£'000s
£'000s
Interest income:
Interest on bank deposits 76 1
Total finance income 76 1
(Loss)/gain on foreign exchange:
Realised gain on settlement of FX forwards 3,611 5,709
Fair value (loss)/gain of FX forward contracts (21,001) 21,468
Other foreign exchange losses (1) (2)
Total (loss)/gain foreign exchange (17,391) 27,175
Finance and other (expense)/income (17,315) 27,176
On the Expanded basis, finance income is £76k (Jun 2021: £1k) and finance
costs are £2,932k (Jun 2021: £3,131k); the difference being the Group's
acquisition facility costs which are incurred within TRIG UK and TRIG UK I,
the Company's subsidiaries.
The gain on foreign exchange on the Expanded basis is £17,698k (Jun 2021:
gain of £27,569k). The reconciliation from the Statutory IFRS basis to the
Expanded basis, which includes a large FX movement within TRIG UK and TRIG UK
I, the Company's subsidiaries, is shown in the Analysis of Financial Results
section on page 43 of the H1 2022 Interim Report.
6. 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.
7. Earnings per share
Earnings per share ("EPS") is calculated by dividing the profit attributable
to equity shareholders of the Company by the weighted average number of
Ordinary Shares in issue during the period.
30 June 30 June
2022
2021
Profit attributable to equity holders of the Company ('000) £425,632 £36,810
Weighted average number of Ordinary Shares in issue ('000) 2,378,853 2,009,262
Earnings per Ordinary Share (Pence) 17.9p 1.8p
Further details of shares issued in the period are set out in Note 14.
8. Dividends
30 June 31 December
2022
2021
£'000s
£'000s
Amounts recognised as distributions to equity holders during the period:
Interim dividend for the 3 months ended 31 December 2020 of 1.69p 32,167
Interim dividend for the 3 months ended 31 March 2021 of 1.69p 35,508
Interim dividend for the 3 months ended 30 June 2021 of 1.69p 35,548
Interim dividend for the 3 months ended 30 September 2021 of 1.69p 38,293
Interim dividend for the 3 months ended 31 December 2021 of 1.69p 38,316
Interim dividend for the 3 months ended 31 March 2022 of 1.71p 42,407
80,723 141,516
Dividends settled as a scrip dividend alternative 3,618 7,458
Dividends settled in cash 77,105 134,058
80,723 141,516
On 1 August 2022, the Company declared an interim dividend of 1.71 pence per
share for the three-month period ended 30 June 2022. The dividend, which is
payable on 30 September 2022, is expected to total £42,425,155, based on a
record date of 11 August 2022 and the number of shares in issue being
2,481,003,209.
9. Net assets per Ordinary Share
30 June 31 December
2022
2021
Shareholders' equity at balance sheet date ('000) £3,330,037 £2,706,177
Number of shares at balance sheet date, including management shares accrued 2,481,752 2,268,104
but not yet issued ('000)
Net Assets per Ordinary Share at balance sheet date (Pence) 134.2p 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 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 but had not been issued. The Company issued these shares
on 31 March 2022.
As at 30 June 2022, 748,569 shares equating to £991,781, 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) were due but had not been issued. The Company intends to issue these
shares around 30 September 2022.
In view of this, the denominator in the above Net assets per Ordinary Share
calculation is as follows:
30 June 31 December
2022
2021
000s 000s
Ordinary Shares in issue at balance sheet date 2,481,003 2,267,246
Number of shares to be issued in lieu of Management fees 749 857
Total number of shares used in Net Assets per Ordinary Share calculation1 2,481,752 2,268,104
1 Balance may not cast due to rounding
10. Investments at fair value through profit or loss
Investments at fair value through profit or loss is the sum of the portfolio
valuation and the carrying amount of TRIG UK and TRIG UK I, the Company's
subsidiaries.
30 June 31 December
2022
2021
£'000s £'000s
Brought forward 2,636,785 2,160,946
Investments in the period 240,709 452,289
Distributions paid to the Company (102,013) (149,522)
Dividend income - 4,900
Interest income from investments 65,822 99,397
Gain on valuation 385,953 68,775
Carried forward 3,227,256 2,636,785
The following information 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.
30 June 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 168,635 478,928
Distributions paid to the Company (119,082) (169,447)
Interest income 42,020 75,167
Dividend income 13,720 33,928
Gain on valuation 404,536 94,199
Carried forward value of investment portfolio 3,235,634 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 65 (512)
Working capital movement 8,269 (2,135)
Debt movement1 72,308 (34,290)
Carried forward value of TRIG UK & TRIG UK I (8,378) (89,020)
Total investments at fair value through profit or loss 3,227,256 2,636,785
1 Debt arrangement costs of £2,408k (Dec 2021: £2,927k) have been netted off
the £0nil (Dec 2021: £72.8m) debt drawn by TRIG UK and TRIG UK I.
The gains on investment 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:
30 June 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% 41.9% 100%
Epine France 100% 100% 100% 100%
Little Raith UK 100% 100% 100% 100%
Gode Wind 1 Germany 25% 25% 25% 25%
Blary Hill UK 100% 100% 100% 100%
Merkur Germany 24.6% 24.6% 24.6% 24.6%
Haut Vannier France 100% 100% 100% 100%
East Anglia 1 UK 14.3% 14.3% 14.3% 14.3%
Beatrice UK 17.5% 17.5% 17.5% 17.5%
Grönhult Sweden 100% 100% 100% 100%
Ranasjö Sweden 50% 50% 50% 50%
Salsjö Sweden 50% 50% 50% 50%
Krange 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% - -
30 June 2022 31 December 2021
Investments (project name) Country Ownership Mezzanine Ownership Mezzanine
debt 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 acquisition was not completed within the period
to 30 June 2022 and has therefore not been included in the valuation. The
acquisition was 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).
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. Valdesolar represents
approximately 3% of TRIG's portfolio, by value. Together with the Cadiz solar
projects, this acquisition further enhances TRIG's technological and
geographical diversification.
In the period TRIG made additional investments in Pisa and Twin Peaks to fund
their respective construction programmes, in line with outstanding
commitments.
11. Trade and other receivables
30 June 31 December
2022
2021
£'000s £'000s
Trade and other receivables 4,409 14,232
Fair value of FX forward contracts expiring within 12 months 5,689 14,074
Total current receivables 10,098 28,306
Fair value of FX forward contracts expiring after 12 months 602 13,219
10,700 41,525
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 places 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 30 June 2022. The total euro balance hedged at
30 June 2022 was €1,096.9m (Dec 2021: €747.5m).
Average Foreign currency Notional value Fair value
exchange
€'000s
£'000s
£'000s
rate
Less than 3 months 1.1153 80,000 71,703 2,580
3 to 6 months 1.1262 150,100 133,533 3,384
6 to 12 months 1.1285 315,000 281,440 3,225
Greater than 24 months 1.1279 551,800 490,945 (2,898)
1.1220 1,096,900 977,622 6,291
As at the period end, the valuation on the foreign exchange derivatives
consisted of a receivable from Natwest Markets Plc and National Australia Bank
Limited and a payable to Santander UK PLC and to Barclays PLC. At 30 June 2022
Natwest Markets Plc had an S&P credit rating of A/Stable, National
Australia Bank Limited had an S&P credit rating of AA-/Stable, Santander
UK PLC had an S&P credit rating of A/Stable and Barclays Bank PLC had an
S&P credit rating of A/Positive.
12. Cash and cash equivalents
30 June 31 December
2022
2021
£'000s £'000s
Bank balances 92,623 28,229
Cash and cash equivalents 92,623 28,229
On the Expanded basis, which includes balances carried in TRIG UK and TRIG UK
I, cash is £92,913k (2021: £28,454k). The reconciliation from the IFRS basis
to the Expanded basis is shown in section 3.
As at the period end, cash and cash equivalents on the Expanded basis
consisted of £42,500k held with Sumitomo Mitsui Banking Corporation Europe
Limited, £42,500k with ING Bank NV and £7,913k held with Royal Bank of
Scotland International Limited. At 30 June 2022 Sumitomo Mitsui Banking
Corporation Europe Limited had an S&P credit rating of A/Stable, ING Bank
NV 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.
13. Trade and other payables
30 June 31 December
2022
2021
£'000s £'000s
Management fees1 50 50
Trade and other payables 492 312
542 362
1 For related party and key advisor transactions see note
15.
14. Share capital and reserves
Ordinary Shares Ordinary Shares
30 June
31 December
2022
2021
'000s
'000s
Opening balance 2,267,247 1,903,403
Issued for cash 210,105 356,290
Issued as a scrip dividend alternative 2,795 5,788
Issued in lieu of management fees 857 1,766
Total issued - fully paid(1) 2,481,003 2,267,247
1. Figures may not cast due to rounding.
On 24 March 2022, the Company issued 210,104,535 shares raising £277,337,986
before costs.
The Company issued 2,795,005 shares in relation to scrip take-up as an
alternative to dividend payments in relation to the dividends paid in the
period.
The holders of the 2,481,003,209 (Dec 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
30 June 31 December
2022
2021
£'000s £'000s
Opening balance 2,488,594 2,046,237
Ordinary Shares issued 281,963 449,305
Cost of Ordinary Shares issued (2,995) (6,948)
Closing balance 2,767,562 2,488,594
Other reserves
30 June 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 16) - 992
Shares to be issued in lieu of management fees incurred in H2 2021 (Note 16) - 1,008
Shares to be issued in lieu of management fees incurred in H1 2022 (Note 16) 992
Shares issued in the period, transferred to share premium (1,008) (1,997)
Closing balance 992 1,008
Retained reserves
Retained reserves comprise retained earnings, as detailed in the statement of
changes in shareholders' equity.
15. Related party and key advisor transactions
Loans to related parties:
30 June 31 December
2022
2021
£'000s £'000s
Short-term balance outstanding on accrued interest receivable 3,349 13,147
Short-term balance outstanding from TRIG UK, in relation to Management fees to 992 1,008
be settled in shares2
Long-term loan stock to TRIG UK and TRIG UK I1 1,860,653 1,671,894
1,864,994 1,686,049
1 Included within Investments at fair value through profit or loss on the
Balance Sheet
2 Included within Trade and other receivables on the Balance Sheet
During the period, interest totalling £58,138k (Jun 2021: £47,202k) 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 £3,349k (2021:
£28,602k) 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 period was £64k (Jun 2021: £64k), of
which £32k (Jun 2021: £32k) remained payable in cash at the balance sheet
date. The Operations Manager advisory fee charged to the income statement for
the year was £35k (Jun 2021: £35k), of which £18k (Jun 2021: £18k)
remained payable in cash at the balance sheet date.
The Investment Manager management fee charged to TRIG UK for the period was
£7,645k (Jun 2021: £6,708k), of which £3,615k (Dec 2021: £2,484k) remained
payable in cash at the balance sheet date. The Operations Manager management
fee charged to TRIG UK for the period was £4,117k (2021: £3,612k), of which
£1,946k (2021: £2,069k) remained payable in cash at the balance sheet date.
In addition, the Operations Manager received £5,580k (Jun 2021: £6,708k) for
services in relation to Asset Management, Operation and Maintenance and other
services provided to project companies within the investment portfolio, and
£nil (June 2021: £65k) 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.
On 31 March 2022, the Company issued 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 as at 31 December 2021 of 119.3
pence per share less the interim dividend of 1.69 pence per share), in respect
of management fees earned in H2 2021.
As at 30 June 2022, 748,569 shares equating to £991,781, based on a Net Asset
Value ex dividend of 132.49 pence per share (the Net Asset Value as at 30 June
2022 of 134.2 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 30 September 2022.
The Directors of the Company received fees for their services. Total fees for
the Directors for the period were £183,740 (Jun 2021: £156,000). Directors'
expenses of £7,019 (Jun 2021: £nil) were also paid in the period.
All of the above transactions were undertaken on an arm's length basis.
16. Guarantees and other commitments
As at 30 June 2022, the Company and its subsidiaries had provided £163.4m
(Dec 2021: £177.0m) in guarantees in relation to projects in the TRIG
portfolio.
The Company also guarantees the revolving acquisition facility, entered into
by TRIG UK and TRIG UK I, which it may use to acquire further investments.
As at 30 June 2022 the Company has £412.8m of future investment obligations
(Dec 2021: £231.2m). Following investments made in July, outstanding
commitments at 4 August 2022 have reduced to £216m.
The Company and its subsidiaries have issued decommissioning and other similar
guarantee bonds with a total value of £22.8m (Dec 2021: £22.8m).
17. Contingent consideration
The Group has performance-related contingent consideration obligations of up
to £0.5m (Dec 2021: £1.8m) relating to acquisitions completed prior to 30
June 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.
18. Events after the balance sheet date
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). Upon completion of the second tranche of
Hornsea One the Company will own 10.2% of the asset.
On 1 August 2022, the Company declared an interim dividend of 1.71 pence per
share for the three-month period ended 30 June 2022. The dividend, which is
payable on 30 September 2022, is expected to total £42,425,155, based on a
record date of 11 August 2022 and the number of shares in issue being
2,481,003,209.
The Revolving Credit Facility ("RCF") was utilised to finance acquisitions
after the balance sheet date. At the date of signing these accounts the RCF
was £195m drawn.
Alternative Performance Measures ("APM")
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.
Performance Measure Definition
NAV per share The Net Asset Value per ordinary share
Annualised total return on a NAV per share plus dividends basis since IPO The movement in the NAV per ordinary share, plus dividend per ordinary share
declared or paid to shareholders since IPO
Invested year to date Investments made is the sum of investments made and committed to in the year
to date (which net off small amounts relating to any refinance proceeds or
sell downs) and does not include movements in the balance sheet items in TRIG
UK Limited and TRIG UK Investments Limited. The IFRS measure of investments
made (see note 10 to the accounts) also includes movements in TRIG UK Limited
and TRIG UK Investments Limited
Directors' Portfolio Valuation The Valuation of the investments only and excluding the cash, working capital
and debt balances in TRIG UK Limited and TRIG UK Investments Limited, which
are the companies owned by TRIG Limited through which investments are made.
The IFRS measure of Investments at fair value through profit or loss is the
Directors Portfolio Value plus the consolidation of the balance sheets of TRIG
UK Limited and TRIG UK Investments Limited. Portfolio Value or Directors
Portfolio Value is reconciled to Investments at fair value through profit or
loss in note 10 to the accounts
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 CO2 emission reductions, based on
current electricity generation mix within each of TRIG's regions
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 regulation
Homes powered per annum The estimate of the number of homes powered by electricity generated by the
portfolio, based on the portfolio's estimated generation as at the relevant
reporting date prepared using the IFI approach to GHG Accounting
06 Directors and Advisers
DIRECTORS
Helen Mahy (Chairman)
John Whittle
Tove Feld
Klaus Hammer
Erna-Maria Trixl (appointed 1 March 2022)
Richard Morse (appointed 18 July 2022)
Shelagh Mason (resigned 28 February 2022)
Jonathan (Jon) Bridel (resigned 27 May 2022)
REGISTRAR
Link Market Services (Guernsey) Limited
PO Box 627
St Peter Port
Guernsey
GY1 4PP
ADMINISTRATOR TO COMPANY, DESIGNATED MANAGER, COMPANY SECRETARY AND REGISTERED
OFFICE
Aztec Financial Services (Guernsey) Limited
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3PP
+44 1481 748 831
INVESTMENT MANAGER
InfraRed Capital Partners Limited
Level 7, One Bartholomew Close
Barts Square
London EC1A 7BL
OPERATIONS MANAGER
Renewable Energy Systems Limited
Beaufort Court
Egg Farm Lane
Kings Langley
Hertfordshire WD4 8LR
FINANCIAL PR
Maitland/AMO
3 Pancras Square
Kings Cross
London N1C 4AG
UK TRANSFER AGENT
Link Asset Services
Central Square
29 Wellington Street
Leeds
LS1 4DL
Helpline: 0871 664 0300
AUDITOR
Deloitte LLP
Regency Court
Esplanade
St Peter Port
Guernsey GY1 3HW
BROKERS
Investec Wealth & Investment Limited
30 Gresham Street
London EC2V 7QP
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR EAEPLESNAEAARecent news on Renewables Infrastructure
See all newsREG - Renew Infra Grp Ld - Net Asset Value - Q1 2024
AnnouncementREG - Renew Infra Grp Ld - Director/PDMR Shareholding
AnnouncementREG - Renew Infra Grp Ld - Director/PDMR Shareholding
AnnouncementREG - Renew Infra Grp Ld - Director/PDMR Shareholding
AnnouncementREG - Renew Infra Grp Ld - Director/PDMR Shareholding
Announcement