TIDMTRIG
RNS Number : 4307V
Renewables Infrastructure Grp (The)
07 August 2020
Interim Report for the six months ended 30 June 2020 The
Renewables Infrastructure Group Limited
1.1 H1 2020 Highlights
-- 113.0p NAV per share(1) , decreased by 1.7% since 31 December 2019 (115.0p)
-- GBP2,009m Directors' portfolio valuation, up 15.1% since 31 December 2019 (GBP1,745m) 2
-- 9.4% : total shareholder return since IPO(3) vs. 5.0% for the FTSE 250
-- 6.76p : dividend target reaffirmed for the year to December 2020 (2019: 6.64p)
-- 1,502MW portfolio generation capacity 4 after disposals (31 December 2019 1,664MW)
-- 640,000 tonnes of CO(2) avoided 4,5 (H1 2019: 350,000)
-- GBP281m : invested in period (H1 2019: GBP347m)
-- GBP120m equity capital raised (H1 2019: GBP302m)
Helen Mahy, CBE, Chairman of the Company, said:
"The challenges during the first half of this year have been
significant for many companies, including TRIG. In light of this
backdrop, I am pleased to report that our financial performance has
remained resilient, sustained by strong operational performance. We
continue to maintain our dividend guidance.
TRIG's sustainability objectives have never been more relevant
as Europe seeks to recover from the Covid-19 pandemic. Climate
change remains a pressing concern, and the Company's investments
will continue to be instrumental in mitigating climate change and
preserving the natural environment. The Company also seeks to have
a positive effect on the communities we partner with and work in
and, to that end, the Company has committed a further half a
million pounds to support the communities around our assets in
their response to the pandemic.
Looking ahead, our robust and diversified portfolio and our
capable management team give me confidence that we will continue to
provide our shareholders with sustainable returns through
responsible investment."
Richard Crawford, Director, Infrastructure, InfraRed Capital
Partners said:
"The portfolio has performed well throughout the six months,
with good asset availability and favourable weather conditions
allowing us to mitigate the lower wholesale power prices caused by
the contraction in economic activity. Our diversified portfolio and
revenue visibility places us in a strong position for any ongoing
challenges.
Positive policy developments continue to provide long-term
drivers for the transition to a zero-carbon future and the
necessary investment to support this"
Webcast details
TRIG will be presenting its results for the first half of 2020
at 09:30 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. The link for the broadcast is:
https://www.lsegissuerservices.com/spark/RenewablesInfrastructureGroupLtdThe/events/02bd3889-383c-4771-be1d-117b82468952
1.2 Chairman's Statement
I am pleased to present TRIG's Interim Results for the six
months to 30 June 2020, in which we delivered a positive and
resilient performance despite the enormous uncertainties that now
surround all of us.
The Covid-19 pandemic and the global response required to combat
the virus has led to profound changes to the daily lives of so many
around the world and has required us to adapt rapidly to a new way
of working. Amidst this challenging backdrop, TRIG has still
performed resiliently, with the Company's diversified portfolio of
renewable energy assets continuing to provide essential clean power
without any significant interruption.
Generation from the portfolio was 9% above budget during the
half year; this is testament to the dedication of our operating
teams as well as the good wind and irradiation levels. Asset
availability has been solid despite the challenges of the
restrictions imposed as a result of Covid-19 in the countries in
which TRIG operates, remaining close to pre-pandemic levels. TRIG
benefits from having assets that are typically located away from
densely populated areas where infection rates are highest, and
which do not require full-time site attendance.
As announced in April, the considerably lower economic activity
due to the pandemic has reduced demand for electricity and other
commodities. This has impacted current and forecast wholesale power
prices, mostly in the near-term, which has fed through into asset
valuations. Asset valuations have also been impacted by the future
impact of forecast lower gas prices and increased renewable energy
generation build-out. These negative valuation drivers were
mitigated by both the high proportion of price fixes that the
Company had in place and the value enhancing portfolio initiatives
that the Managers implemented over the period. We alerted the
market in April that the NAV would be adversely affected by the
reduction in power prices arising principally as a result of the
Covid-19 crisis, indicating a possible reduction in NAV of 5p per
share before other factors were taken into account. I am pleased
that the overall adverse impact at June 30 2020 has been partially
offset, including a valuation uplift reflecting strong underlying
demand for the asset class together with portfolio enhancements,
such that the overall reduction in NAV over the 6 months is 2p
only. The Company's net asset value ("NAV") has reduced to 113.0p
at 30 June 2020 from 115.0p at 31 December 2019.
Despite trading through a period of significant market
volatility, we still have been able to reaffirm our 2020 dividend
and maintain positive cash coverage. TRIG is well placed; most of
our revenues are fixed through government subsidies, which provides
strong levels of visibility on cash flows in the near-to-medium
term. Over the next five years, approximately 74% of our revenue is
fixed through subsidies and power price fixes.
Recent events have drawn renewed attention to important global
issues, including climate change, air pollution, health
inequalities and social justice. Covid-19 has demonstrated how
health and environmental issues have significant social
implications and can bring material challenges for the way
businesses operate. As such, TRIG continues to focus on
environmental and financial sustainability, understanding long-term
investment risk profiles and maintaining strong governance
practices to support all stakeholders.
Production
The TRIG portfolio has had good performance in H1 2020, with
production above budget by 9%. The portfolio produced 2,141GWh
during the period, 50% higher than the comparable period in 2019
(1,429 GWh). This has been driven by growth in the portfolio and by
excellent energy resource in all regions in Q1, and good wind
resource in Scandinavia and solar resource in the UK and France in
Q2.
The total achieved price for the portfolio in H1 2020 was
GBP86.67/MWh, GBP2.50/MWh higher than the same period last year.
This has been driven by the acquisition of higher-priced generation
from offshore wind projects, partially offset by lower wholesale
electricity prices in GB, Ireland and Scandinavia. The total
achieved price has been further supported by improved commercial
terms on new Power Purchase Agreements ("PPAs"). The recent
investments in France and Germany with their fixed price
structures, further enhances the portfolio's resilience to
wholesale electricity price changes, with the added benefit of
geographical diversification.
Financial Results and Valuation
The Company's NAV per share was 113.0p at 30 June 2020, a
decrease of 1.7% to the NAV per share at 31 December 2019 of 115p.
At 30 June 2020, the portfolio was valued at GBP2,009m, an increase
of 15% on the valuation of the portfolio as at 31 December 2019 of
GBP1,745m, this increase was predominantly driven by investments
made in the period of GBP281m. TRIG's total NAV return from IPO to
30 June 2020 was 8.0%, including dividends paid.
After operating and finance costs, net cash flow covered the
cash dividend 1.25 times(6) , or 2.2 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.
Acquisitions and Capital Raising
TRIG successfully completed a significantly oversubscribed
capital raise in May, raising gross proceeds of GBP120m from new
and existing shareholders. We are grateful to our shareholders for
this support and believe that it is testament to the attraction of
TRIG's portfolio with its stable, largely contracted revenues
during challenging times.
Over the period, TRIG made investments of GBP281m in three
acquisitions(7) . Most significantly, we completed the acquisition
on an interest in Merkur, the 396MW operational German offshore
wind farm with fixed revenues for the next 13 years. Completion of
the acquisition followed the exchange of contracts to acquire the
project, which was announced in December 2019. TRIG will continue
its disciplined approach to investment, reducing risk through
diversification and seeking to balance our exposure to wholesale
power prices with fixed and subsidised revenues.
Responsible Investment
As a renewable electricity generator, TRIG has been a leader in
environmental and sustainable issues since its creation. However,
the impact of the Covid-19 crisis has also placed a renewed
emphasis on wider social considerations. This is one of your
Board's key priorities, especially in relation to the
responsibility we feel we have to the local communities where our
assets are located. This year, we have allocated an additional
GBP0.5m to help address the Covid-19 impact on the local
communities around our sites, which will bring the total community
contributions to over GBP1.4m in the year. Both of TRIG's Managers,
InfraRed and RES, have also significantly increased their
charitable support to alleviate the impact of Covid-19, whilst also
focusing on the health and wellbeing of their staff.
Both the TRIG Board and the Company's Managers believe that
strong performance on key sustainability metrics, is a crucial
element of our overall operational excellence and translates into
lower exposure to wider-risks over the longer term. Our
Sustainability Policy articulates how TRIG embraces its
responsibilities and mitigates risk to create a long-term, positive
impact beyond purely commercial objectives and includes other
Environmental, Social and Governance ("ESG") considerations.
Sustainability is embedded into our approach, from when an
investment is initially appraised before acquisition by InfraRed
(who has increased its resources focusing on sustainability due
diligence in its investment processes) and during operations by
RES. We continue to improve how we report and monitor the
sustainability of the portfolio, examples of which can be found in
Section 2.5 of this report along with further detail of TRIG's
Sustainability Goals.
Principal Risks and Uncertainties
As detailed in the Company's Annual Report to 31 December 2019,
the principal risks and uncertainties affecting the Company remain
as follows:
portfolio electricity production falling short of
expectations;
electricity prices falling or not increasing as expected;
and
government or regulatory support for renewables changing
adversely.
By maintaining geographical and technological diversity across
TRIG's portfolio, utilising the specialised expertise of both
Managers, TRIG is able to mitigate these risks. TRIG is resilient
to varying weather conditions and its exposure to different
regulatory and power price markets is diversified.
The short-to-medium term risks associated with power prices are
heightened by uncertainty over the depth and duration of the
Covid-19 pandemic and the current economic downturn. Power price
risks are mitigated through the use of hedges that fix power prices
and through subsidies available in different jurisdictions,
including France and Germany where revenues are fixed with
Feed-in-Tariffs or Contracts for Difference as well as Renewable
Obligation Certificates in the UK.
Outlook
The Board believes that it is imperative to decarbonise the
global economy, and this will continue to translate into attractive
investment opportunities for TRIG. This demand for renewables will
allow us to grow the portfolio and further improve diversification
and economies of scale as well as providing additional liquidity
for our investors. As economies begin to recover, we expect
investment into clean energy to play a prominent role. TRIG
continues to add to its portfolio where the Investment Manager
identifies opportunities with attractive risk adjusted returns and
which complement the portfolio's geographical and technical spread
and power price sensitivity. In particular, we expect to see an
increase of activity in offshore wind in the UK and Germany and we
also continue to see the French onshore wind market as an
attractive source of subsidised deals.
We believe that the Company's well-diversified portfolio is well
placed to continue its strong operational performance,
notwithstanding the current uncertain macro environment. As the
pandemic continues our key priorities remain the health and safety
of our people and maximising the performance of our operating
portfolio. As owners and operators of renewable energy generating
infrastructure, we operate in a sector of critical importance.
Through careful risk management and mitigation we are working
diligently with all of our stakeholders to ensure that our
portfolio continues to deliver sustainable income to our
shareholders.
Helen Mahy
Chairman
6 August 2020
1. The NAV per share at 30 June 2020 is calculated on the basis
of 1,739,324,523 ordinary shares in issue and to be issued at 30
June 2020 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 3.0 for an
explanation of the expanded basis.
3. On a share price plus dividends basis.
4. This is based on the portfolio on a committed basis with
construction assets, the disposal of Ersträsk and the partial sell
down of Merkur.
5. The committed portfolio is capable of powering a million
homes and saving around 1.1m tonnes of CO 2 annually based on
average household electricity
consumption figures and the IFI Approach to GHG Accounting for
Renewable Energy.
6. Dividend cover was 1.28 times after scrip take-up.
7. Post-period end TRIG sold down a share of Merkur to minority
co-investors managed by InfraRed.
2.1 Summary Information on TRIG
The Renewables Infrastructure Group ("TRIG") was one of the
first investment companies investing in renewable energy
infrastructure projects listed on the London Stock Exchange. TRIG
completed its IPO in 2013 raising GBP300 million and is a member of
the FTSE-250 index with a market capitalisation as at 30 June 2020
of approximately GBP2.2 billion. TRIG offers investors access to
the largest and most diverse renewables portfolio within the listed
investment company peer group, with its strategy of diversifying
risk by investing in multiple renewable energy technologies,
jurisdictions and climate systems.
TRIG has two experienced managers, InfraRed Capital Partners and
Renewable Energy Systems, working together to provide the Company's
shareholders with best-in-class investment management and
operational management .
InfraRed Capital Partners Limited ("InfraRed") is TRIG's
Investment Manager and advises the Group on financial management,
sourcing and executing on new investments and providing capital
raising and investor relations services.
InfraRed is a leading international investment manager
specialised in infrastructure and real estate. With over 190
employees and offices in London, New York, Hong Kong, Seoul and
Sydney, InfraRed has a track record of around 20 years in raising
and managing 17 infrastructure and real estate funds with over
US$12bn of equity under management. InfraRed is also Investment
Manager to HICL Infrastructure Company Limited, the largest
London-listed infrastructure investment company with a market
capitalisation of GBP3.2bn as at 30 June 2020. Further details can
be found on the website at www.ircp.com .
In July 2020 Sun Life Financial Inc. (together with its
subsidiaries and joint ventures, "Sun Life") purchased a majority
stake in InfraRed. InfraRed now operates as a distinct business
under SLC Management, Sun Life's alternative asset management
business. The Sun Life acquisition will provide further support to
InfraRed in its role as Investment Manager to TRIG over the coming
years and InfraRed's management resources for TRIG will be
unaffected. Sun Life is a leading international financial services
organization providing insurance, wealth and asset management
solutions to individual and corporate clients. As of 30 September
2019, Sun Life had total assets under management of C$1,063
billion. For more information please visit www.sunlife.com .
RES ("Renewable Energy Systems Limited ") is TRIG's Operations
Manager. RES is the world's largest independent renewable energy
company having developed and/or constructed over 18GW of projects,
with operations in 10 countries and over 2,500 employees globally.
RES is a pure-play renewables company with the expertise to
develop, construct and operate projects around the globe across a
range of technologies including onshore and offshore wind, solar,
energy storage and transmission.
A large, dedicated team of RES staff provide portfolio-level
operations management to the Company and its subsidiaries. RES also
draws on the experience and skills of a much wider pool of
expertise from within the company in order to fulfil its Operations
Manager role, utilising nearly four decades of renewables
experience to provide project-level services to TRIG and support
the evaluation of investment opportunities for the Group.
RES has been at the forefront of the renewable industry for over
35 years, with a strong focus on safety and sustainability. RES
provides a complete range of services for renewables projects -
from development and design, through construction and engineering,
to financing, power purchase agreements and support services.
Further details can be found on the website at www.res-group.com
.
2.2 Portfolio
As at 30 June 2020, the TRIG portfolio comprised 74 investments
in the UK, Republic of Ireland, France, Sweden and Germany,
including 45 wind projects, 28 solar photovoltaic projects and one
battery storage project. Net of a disposal made post -- period end,
the TRIG portfolio comprises 73 investments.
TRIG's
Equity Net Capacity
Market (Region)1 Interest2 (MW) Year Commissioned3
Onshore wind Farms
Roos GB (England) 100% 17.1 2013
Grange GB (England) 100% 14.0 2013
Tallentire GB (England) 100% 12.0 2013
Garreg Lwyd GB (Wales) 100% 34.0 2017
Crystal Rig 2 GB (Scotland) 49% 67.6 2010
Hill of Towie GB (Scotland) 100% 48.3 2012
Mid Hill GB (Scotland) 49% 37.2 2014
Blary Hill(4) 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(4) GB (Scotland) 100% 30.0 2020
Green Hill GB (Scotland) 100% 28.0 2012
Little Raith GB (Scotland) 100% 24.8 2012
Rothes 1 GB (Scotland) 49% 24.8 2005
Freasdail GB (Scotland) 100% 22.6 2017
Rothes 2 GB (Scotland) 49% 20.3 2013
Earlseat GB (Scotland) 100% 16.0 2014
Meikle Carewe GB (Scotland) 100% 10.2 2013
Neilston GB (Scotland) 100% 10.0 2017
Forss GB (Scotland) 100% 7.5 2003
Altahullion SEM (N. Ireland) 100% 37.7 2003
Lendrum's Bridge SEM (N. Ireland) 100% 13.2 2000
Lough Hill SEM (N. Ireland) 100% 7.8 2007
Pallas SEM (Rep. of Ireland) 100% 55.0 2008
Taurbeg SEM (Rep. of Ireland) 100% 25.3 2006
Milane Hill SEM (Rep. of Ireland) 100% 5.9 2000
Beennageeha SEM (Rep. of Ireland) 100% 4.0 2000
Venelle4 France (North) 100% 40.0 2020
Epine France (North) 100% 36.0 2019
Haut Languedoc France (South) 100% 29.9 2006
Haut Cabardes France (South) 100% 20.8 2006
Rosières France (North) 100% 17.6 2018
Montigny France (North) 100% 14.2 2018
Cuxac Cabardes France (South) 100% 12.0 2006
Energie du Porcien France (North) 42% 16.3 2012
Roussas-Claves France (South) 100% 10.5 2006
Fontaine-Mâcon France (North) 42% 5.1 2011
Les Vignes France (North) 42% 5.2 2009
Rully France (North) 42% 5.0 2010
Val de Gronde France (North) 37% 4.5 2011
Jädraås Sweden 100% 212.9 2013
Ersträsk5 Sweden 75% 45.8 2019/2020
Total onshore wind at
30 June 2020 1,146.3
Offshore Wind Farms
Merkur5 Germany 36% 141.4 2019
Gode Wind 1 Germany 25% 82.5 2017
Sheringham Shoal GB (England) 14.70% 46.6 2012
Total offshore wind
at 30 June 2020 270.4
Solar Photovoltaic Parks
Parley Court GB (England) 100% 24.2 2014
Egmere Airfield GB (England) 100% 21.2 2014
Stour Fields GB (England) 100% 18.7 2014
Tamar Heights GB (England) 100% 11.8 2014
Penare Farm GB (England) 100% 11.1 2014
Four Burrows GB (England) 100% 7.2 2015
Parsonage GB (England) 100% 7.0 2013
Churchtown GB (England) 100% 5.0 2011
East Langford GB (England) 100% 5.0 2011
Manor Farm GB (England) 100% 5.0 2011
Marvel Farms GB (England) 100% 5.0 2011
Midi France (South) 51% 6.1 2012
Plateau France (South) 49% 5.9 2012
Puits Castan France (South) 100% 5.0 2011
Chateau France (South) 49% 1.9 2012
Broussan France (South) 49% 1.0 2012
Pascialone France (Corsica) 49% 2.2 2011
Olmo 2 France (Corsica) 49% 2.1 2011
Santa Lucia France (Corsica) 49% 1.7 2011
Borgo France (Corsica) 49% 0.9 2011
Agrinergie 1 & 3 France (Réunion) 49% 1.4 2011
Chemin Canal France (Réunion) 49% 1.3 2011
Ligne des 400 France (Réunion) 49% 1.3 2011
Agrisol France (Réunion) 49% 0.8 2011
Agrinergie 5 France (Réunion) 49% 0.7 2011
Logistisud France (Réunion) 49% 0.6 2010
Sainte Marguerite France (Guadeloupe) 49% 1.2 2011
Marie Galante France (Guadeloupe) 49% 1.0 2010
Total Solar at 30 June
2020 156.2
Battery Storage
Broxburn GB (Scotland) 100% 20 2018
Total Portfolio at 30 1,592.9
June 2020 (74 assets) MW
1,487.9
Operating assets MW
105.0
Construction assets(4) MW
(89.8)
Contracted to sell(5) MW
Total Portfolio as at
30 June 2020 on a committed 1,502.2
basis (73 assets)(6) MW
1. SEM refers to the Irish Single Electricity Market.
2. This is TRIG's equity share of the nominal capacity of the
asset.
3. Where a project has been commissioned in stages, this refers
to the earliest commissioning date.
4. Solwaybank, Venelle and Blary Hill are under
construction.
5. Post-period end, TRIG sold down a share of Merkur to minority
co-investors managed by InfraRed, leaving TRIG with an approximate
25% equity interest in the Project and Ersträsk. Further details
can be found under Acquisitions in Section 2.4.
6. Following the completed investments in Merkur, Fujin, Blary
Hill, the sell down of Merkur in July 2020 and the disposal of
Ersträsk Phase 1 during Q3 2020.
Portfolio Diversification
The TRIG portfolio benefits from being diversified across
multiple jurisdictions, power markets and generating technologies
providing multiple revenue sources, as well as a variety of
geographic areas with differing meteorological conditions
(affecting wind speeds and solar irradiation applicable to each of
TRIG's projects). This is illustrated in the segmentation analysis
tables below, which is presented by project value as at 30 June
2020 plus subsequent planned disposals and committed investments at
their expected cost.(1)
By Country/ Power Market(1,2)
England and Wales (GB) 24%
Scotland (GB) 28%
----
Northern Ireland (SEM) 4%
----
Republic of Ireland
(SEM) 4%
----
France 13%
----
Sweden 10%
----
Germany 17%
----
By Technology(1)
Onshore wind 65%
Offshore wind 21%
----
Solar PV 13%
----
Battery 1%
----
1 On a committed basis. Segmentation tables includes
construction assets (including construction costs), Solwaybank,
Venelle and Blary Hill, the sell down of Merkur and the disposal of
Ersträsk Phase 1 which is now complete.
2 Northern Ireland and the Republic of Ireland form a Single
Electricity Market, distinct from that operating in Great
Britain.
Revenue Profile
TRIG has the benefit of being diversified across five separate
power markets: Great Britain, the integrated Single Electricity
Market (of The Republic of Ireland and Northern Ireland), France,
Sweden (which sits in the Nordic electricity market) and
Germany.
The TRIG portfolio has substantial near-term protection in cash
revenues from movements in wholesale power prices as the portfolio
receives a high proportion of its revenue from selling electricity
generated via Power Purchase Agreements ("PPAs") with fixed prices
and from government subsidies such as Feed-in-Tariffs ("FiTs"),
Contract for Difference ("CfDs"), Renewable Obligation Certificates
("ROCs") or other hedges.
In the longer term, based on its current portfolio, TRIG is
expected to have greater exposure to wholesale electricity prices
as subsidies and contracts with pre-determined pricing run-off.
Over the next five years, 74%(1) of electricity sales will be
conducted at a fixed price and 67% over the next 10 years. As
existing fixed-price contracts expire, the replacement contracts
may also have fixed-price elements, decreasing the merchant
proportion.
1 Based on nominal revenue projections. Fixed revenues include
all subsidised and fixed or hedged revenues.
2.3 Market Developments and Opportunities
The period has been dominated by the unfolding Covid-19 global
pandemic. Severe restrictions on movement have had adverse impacts
on economic output and demand for power. Governments and central
banks are enacting significant measures to support economies and as
restrictions are eased in TRIG's key markets, there has been slight
improvement in demand for power.
Power demand
Power demand fell across TRIG's key markets during the period.
Reflecting the mild winter and the severity and timing of Covid-19
measures, power demand was significantly reduced at the peak of
movement restrictions across TRIG's key markets, and are now
averaging approximately 7% below demand levels that would be
expected without the impact of Covid-19.(1)
In the UK, TRIG's largest market, average demand is running
approximate 10% below 2019 levels. However, power demand has been
increasing as lockdown measures have eased.
Such an unanticipated and prolonged reduction in demand has
consequences for how the energy system is managed. In particular,
balancing the grid during times where generation exceeds demand has
been challenging for system operators, increasing the likelihood of
grid curtailment or constraints. These challenges have raised
awareness of the need for greater grid infrastructure investment
across the markets.
In GB, National Grid have introduced the Optional Downward
Flexibility Management (ODFM) service, in addition to its
established Balancing Mechanism (BM). This scheme allows embedded
generators to be compensated when asked by National Grid to stop
generating to help match electricity supply and demand and to
support network resilience. Seven of TRIG's GB wind projects have
been registered within the ODFM, of which five have been called
upon to reduce output, in addition to the seven already
participating in the BM. Four solar projects are also registered
within ODFM.
Power prices
As a consequence of the fall in demand for electricity and other
commodities, particularly gas and lignite, power prices have
fallen. These commodities are important as they set the market for
power prices in the UK and Germany respectively, with the German
market in turn a price-setting country for European interconnected
power flows. Across TRIG's key markets, season ahead power prices
have fallen c.10% over the last six months. TRIG benefits from
diversification across the markets in which the Company has assets,
with a number of different primary power price drivers in each
market.
Power price and economic forecasts show increasing demand for
electricity over the coming years, however the timing will be
dependent on the pace of economic recovery in TRIG's key markets
and therefore sensitive to further pandemic-induced disruption.
Within TRIG's portfolio, 80% of revenues generated in the year
are expected to be at a fixed price as a result of a significant
portion of portfolio revenues arising from subsidies and other
fixed revenues, including hedges put in place before the onset of
the pandemic. Further ahead, over the next 10 years 67% of forecast
revenues arise from fixed pricing and 60% over the next 15 years,
giving strong revenue visibility over the coming years. Typically,
forward power markets offer best value in the 1-3 year time
horizon, which together with subsidies reaching their expiry,
results in a reduced proportion fixed revenues over the longer
period. New short-term electricity price fixes are anticipated to
continue to be placed on an on-going basis, which will increase the
percentages shown below over time, consistent with our prudent
approach to electricity price hedging.
1. BNEF: Historical electricity demand/ Covid-19: compare regions
TRIG's estimated power prices and subsidy receipts based on the
current portfolio
Next 5 years (till 2024): 74% fixed
Next 10 years (till 2029): 67% fixed
Next 15 years (till 2034): 60% fixed
The Green Recovery Opportunity
One of the few beneficial consequences of the reduction in
activity caused by the Covid-19 pandemic has been the short-term
reduction in carbon emissions globally and improved air quality.
Global daily CO2 emissions reduced by 17%1 by early April 2020
compared with average emissions from 2019 and, at their peak,
emissions in individual countries fell by 26% on average. With a
clear and pressing need for economic stimulus to drive economic
recovery, there is broad political support in the EU and the UK to
use recovery funds as a means to drive forward the energy
transition to a future without greenhouse gas emissions.
The European Green Deal, announced prior to the widespread
outbreak of Covid-19, is now central to the European Commission's
economic recovery plans. These plans include investing in various
policy areas including EUR25bn into renewable energy between 2021
and 2027. Many of the Green Deal initiatives will not only
necessitate renewable energy to displace fossil fuel demand but
will increase the overall demand for renewable electricity, for
example through the electrification of transport.
The UK government is now holding Presidency of the UN COP26
Climate Conference, has announced an urgent drive to start projects
that are ready for construction, including renewable energy
infrastructure, to increase investment and economic activity. In
addition, in March the UK government set out details of the next
Contract for Difference (CfD) round for 2021. Importantly, the
government announced that this will be open for "established"
technologies including solar and onshore wind.
TRIG is well placed in all of its key markets to participate in
the green recovery plans of governments. The Company's Managers,
InfraRed and RES, have strong capabilities in these markets and
have a disciplined approach to portfolio construction with a strong
track record.
Political Risk - Brexit
The UK left the EU on the 31st January 2020 and then entered
into the transition period. The period during which an extension
could be requested to the transition period for the UK exiting the
EU expired at the end of June, in accordance with the Withdrawal
Agreement, suggesting that both parties now must agree a trade deal
by December 2020. With the UK officially leaving the EU's internal
energy market at the end of the year, both the UK Government and
European Commission have stated that they are keen on maintaining a
strong co-operation on energy policy and will establish a new
energy trade.
One of the advantages of having a geographically diversified
portfolio is that the Company is less exposed to any single,
localised risk factor. Political and regulatory risks are spread
across our portfolio and although the UK is (and is likely to
remain) our largest individual market, it now represents 56% of our
portfolio compared to 72% at 31 December 2018.
1. University of East Anglia research published in the Nature journal May 2020
2.4 Portfolio Performance
Capital Raising and Acquisitions
During the period, the Company raised gross proceeds of GBP120m
by way of a non-pre-emptive tap issue in May. The net proceeds of
the Issue was applied in repaying amounts drawn under the Company's
revolving credit facility (RCF).
Out of its GBP281m invested in H1 2020, TRIG invested GBP263m
into new projects (Merkur offshore wind farm in Germany, Blary Hill
and Fujin) and GBP18m to fund construction expenditure at
Solwaybank.
Location
Date Investment Year Equity Net Capacity Revenue and subsidy
Acquired Project type commissioned Share (MW)(1) Type(2) type
January Blary Hill New Due Q1 2022 100% 35MW Wholesale UK
2020 onshore investment (currently market
wind farm under
construction)
May 2020 Merkur New June 2019 25% (36% 141MW Feed-in-Tariff Germany
offshore investment prior to
wind farm sell-down
in July
2020)
May 2020 Fujin Incremental 2009-2012 42% 36MW Feed-in-Tariff France
onshore investment
wind
portfolio
The ongoing Covid-19 pandemic has had a material impact on
TRIG's pipeline, with many transaction processes delayed. However,
we expect the second half of 2020 to see increased activity and the
Investment Manager continues to appraise an attractive pipeline
across multiple geographies and technologies.
Outstanding Commitments and Divestments
Delays in the construction of Phase 2 of the Ersträsk onshore
wind farm in Sweden resulted in the project missing key milestones
and, given the near-term prospects for its progression, the Company
chose not to proceed with the investment in Phase 2. Under the
terms of the sale and purchase agreement for Ersträsk, payment was
only due if the turbines became operational by the key
milestones.
The Company took no construction or delay risks and will suffer
no financial loss. TRIG had an option to sell Phase 1 back to
Enercon, the developer, in the event that Phase 2 does not
complete. This has been exercised given that Phase 1 was only
intended to be part of the larger project. The contractual terms
provide for the Company to recover its investment together with its
expected return over the period of its investment. The sale back to
Enercon completed in July 2020.
There are GBP41m of investment commitments for construction
projects due over the rest of 2020 and into 2021. Receipts from the
partial sell -- down of Merkur and the exercise of the put option
for Ersträsk Phase I are GBP119m.
Projects Under Construction
By acquiring assets at an earlier stage, TRIG has been able to
access improved returns and enhanced deal flow. Moreover, TRIG has
been able to seek value by capitalising on its Managers' expertise
in the construction process: InfraRed as greenfield investor across
its unlisted vehicles and RES as a developer and/or constructor of
over 18GW of renewable energy assets globally.
The three construction projects within the portfolio are
Venelle, Solwaybank and Blary Hill, representing 9% of Portfolio
Value. The Solwaybank and Blary Hill projects are being completed
under fixed price Engineering, Procurement & Construction (EPC)
contracts with the Operations Manager RES.
Operations
The TRIG portfolio has had very good operational performance in
H1 2020, with electricity production above budget by 9.3%, driven
by very good energy resource coupled with good availability.
The impact of Covid-19 on operations was kept to a minimum
through the deployment of robust contingency plans and forward
investments in technology and capabilities over the preceding years
to enhance operational capabilities and provide resilience. For
example, supply chain disruption mitigated by the holding of
strategic spares and assets were able to continue to operate
without daily site attendance, with remote "re-sets" from
operational control centres with business continuity plans.
The underlying wind speeds were very strong across all regions
in Q1, but lower than expected in Q2, apart from Scandinavia which
also performed well in Q2. Solar irradiation has generally been
strong across the whole of H1, with a particularly good April and
May, being two of the more important months in the period.
Financial YTD (Jan to
June)
Production
-------------------------
Actual Budget Var.
----------------- -------- -------- -----
Portfolio GWh GWh %
----------------- -------- -------- -----
GB Wind 728 641 13%
-------- -------- -----
Offshore Wind 439 444 -1%
-------- -------- -----
Scandinavian
Wind 446 348 28%
-------- -------- -----
France Wind 250 254 -1%
-------- -------- -----
Irish Wind 182 183 0%
-------- -------- -----
Solar & Storage 95 90 6%
-------- -------- -----
Total 2,141 1,960 9.3%
-------- -------- -----
GB Wind
GB Wind generation was 13% above budget due to high wind
resource in January and February and continued strong operational
performance overall. Little Raith, which was acquired late 2019,
suffered some availability issues linked to pitch faults which turn
the blades. These are being addressed by a pitch upgrade during the
summer.
Offshore Wind
Output overall has been broadly on budget. Maintenance
activities were adapted due to Covid-19 to focus on the
operationally critical areas, with a gearbox exchange successfully
achieved at Gode, but delayed some months at Sheringham due to
challenges accessing a jack-up vessel. Merkur, included since
January this year, has been
impacted by offshore substation outages due to planned
maintenance being brought forward from later in the year, but
output since mid-March has been as expected.
1 This is TRIG's equity share of the nominal capacity of the windfarm
2 The main revenue type during the subsidy period, typically 15
or 20 years from start of operations. Thereafter all revenues are
wholesale power market. FiT refers to Feed-in-Tariffs and CfD
refers to Contract for Differences.
Scandinavian Wind
Scandinavian production was well above budget due to high wind
resource, particularly in January - April, coupled with good
availability.
French Wind
French wind had good availability from the newer sites in the
north which ensured the region benefited from the good wind
resource in Q1, though Q2 was notably down. The older sites in the
south faced some operational challenges with activities requiring
close proximity working causing some delays due to Covid-19.
Repowering preparations of these older projects is progressing.
More turbines were commissioned at the Venelle project, with site
takeover now expected in Q4 following minor Covid -- 19-related
delays.
Irish Wind
Irish wind production was in line with budget in H1. The
excellent wind resource and operational performance in Q1 was
offset by low wind resource and grid curtailments in Q2 due to low
electricity demand. Despite restricted movement across Ireland, all
Irish sites continued operations with consideration to health and
safety guidelines, benefitting from RES O&M stepping in for
essential major component work on some sites - for example a
gearbox exchange at Lendrum's Bridge - reducing down time.
Solar
Solar generation was 6% above budget due to high irradiation in
April and May, supported by continued strong operational
performance. A program of proactive inverter replacements across
two of the older and smaller sites with inverter technology known
to be less reliable is planned for this year, which will further
improve the operating resilience of the portfolio.
Enhancements
As Operations Manager, RES is dedicated to enhancing the value
of the portfolio through both commercial and technical initiatives.
RES' Benefits Mapping framework fosters a culture of innovation,
with opportunities regularly identified both at individual site
level and portfolio level.
In 2020, the following enhancements have been or are being
implemented:
Turbine performance upgrades, increasing annual energy yield and
revenue whilst using innovative pricing mechanisms to optimise the
commercial position.
Capacity Market contract secured for Blary Hill, an additional
15-year revenue stream for TRIG's first subsidy-free GB wind
project.
Fast response to National Grid's Optional Downward Flexibility
Management scheme enabling multiple projects to participate,
protecting revenue during periods of oversupply and removing the
risk of an emergency disconnection.
Grid settings improved at a recently acquired asset following
identification of high excess capacity charges, reducing annual
operating costs.
New O&M contracts put in place at three French projects,
designed to improve performance and reduce costs.
Bespoke CCTV solutions installed on a number of solar sites
following a security review, helping to protect the assets and keep
insurance costs down.
Preparatory work for life extensions and repowering are also
being progressed, utilising RES' expertise as a developer and
constructor, with specialist land, technical and commercial
personnel supporting the strategy and implementation.
Extended project life is considered as part of investment
decisions for upgrades, supported by detailed monitoring of site
performance.
HSQE (Health, safety, quality and environment)
Regrettably there have been four incidents where injuries to
subcontractors have occurred during H1, the most notable involving
a vessel servicing an offshore project colliding with a turbine
from another site. The other incidents included an O&M
technician trapping his hand in a door during strong winds, injury
to a fingertip whilst bolt torqueing within a turbine and a
construction worker slipping approximately half a metre whilst
dismounting from a vehicle. This is reflected in our LTAFR (Lost
Time Accident Frequency Rate) value in Section 2.5.
We continue to coordinate H&S activities across the group,
seeking to share learnings and best practice. A safety stand-down
day is scheduled for Q3 where time will be taken to share ideas and
focus on behaviours and factors influencing risk decision
making.
2.5 Sustainability
ESG Objective: to mitigate climate change
Our business is focussed on owning and operating renewable
energy assets. TRIG's primary sustainability goal is to mitigate
climate change, and all of the investments in the portfolio
contribute towards this. TRIG's Investment Policy only permits
investment in renewables and other forms of infrastructure that is
complementary to, or supports the roll-out of, renewable energy
generation.
By investing in renewables, TRIG is supporting the roll-out of
greater levels of clean energy by enabling developers to recycle
their capital into more projects.
2020 Interim Performance
-- 640,000 tonnes of carbon emissions avoided (H1 2019: 350,000)(1)
-- 1,050,000 homes powered by clean energy per year (H1 2019: 720,000)
-- 2,141 GWh of renewable electricity generated (H1 2019: 1,430GWh)
(--) 57% of UK portfolio sourcing electricity under Renewable
Energy Supply Contracts (H1 2019: 52%)(2)
1. H1 2019/20 actual values updated in accordance with the IFI
Approach to GHG Accounting for Renewables Energy. Portfolio at year
end is capable of mitigating 1.1m tonnes of carbon emissions
2. This relates to electricity used on site
ESG Objective: to preserve the natural environment
RES as Operations Manager works with asset managers to preserve
the natural environment by executing environmental management plans
agreed with the authorities during the project consenting process,
undertaking vegetation surveys, preventing biodiversity loss,
recycling where possible and careful usage of materials. Further
opportunities with landowners and other stakeholders are also
sought. These activities are carried out in accordance with site
specific Construction Method Statements and Habitat Management
plans where applicable.
Examples of portfolio level initiatives implemented that support
this goal include:
-- Farming crops and livestock between rows of solar panels;
-- Habitat management measures to protect species that are found at or near TRIG sites;
-- Monitoring of wildlife and species at or near TRIG sites;
-- Planting trees and shrubs not only to replace any removed for
asset construction and/or maintenance, but also to supplement those
already there; and
-- Thoughtful construction techniques to reduce lorry movements and/or materials usage.
2020 Interim Performance
-- 12 Active Environmental Projects
(Number of operational TRIG sites engaged in pro-active habitat
management plans that exceed standard environmental maintenance)
(H1 2019: 12)
ESG Objective: impact positively the communities in which TRIG
works
We are sensitive to the impact that a large renewables asset has
on a local community. It is important that not only do our assets
make a positive contribution overall, but they also make a positive
contribution to the local communities that host them. TRIG assets
are often in rural areas where communities may have unemployment,
fewer social facilities and limited access to health facilities.
Local initiatives can produce tangible local benefits.
Examples include:
-- Using local employment and sourcing materials locally where possible;
-- The Local Electricity Discount Scheme (LEDS), whereby
properties closest to certain wind farms are eligible for a
discount on their electricity bills;
-- Educating the next generation about sustainability and
renewable energy through school education days on TRIG sites;
and
-- Supporting local good causes, often via community funds, such
as donating to help fund social hubs, local healthcare, schools and
entertainment.
TRIG's Operations Manager RES and its asset managers proactively
engage with the community, meeting with the public on a regular
basis and has protocols in place to govern community benefit
arrangements which are administered by local organisations who are
best placed to understand local priorities.
ESG Objective: to maintain ethics and integrity in
governance
For TRIG to perform its fiduciary function for its shareholders
and to continue to operate over the longer-term, it is essential
that TRIG is run responsibly and that the highest standards of
ethics and integrity in governance are maintained.
All governance issues are taken seriously, examples include:
-- Maintaining market-leading health and safety performance;
-- Upholding the Investment Policy and Sustainability processes;
-- Ensuring employee wellbeing and a positive culture at the
workplace of both of TRIG's Managers;
-- Managing conflicts of interests;
-- Maintaining other governance policies, including those
relating to whistleblowing, anti-Modern Slavery and diversity;
and
-- Promoting charity and volunteering.
2020 Interim Performance
-- 0.81 Reportable Lost time accidends per 100,000 hours worked (H1 2019:0)(1)
-- A+ PRI score achieved by InfraRed Infrastructure for six consecutive years
-- 60% female Board from March 2020 (H1 2019: 50%)
1 The LTAFR is calculated on the basis of the number of
accidents which have occurred in the period divided by the number
of hours worked multiplied by 100,000 to give a rate for every
100,000 hour worked. Whilst all accidents are recorded by RES, only
accidents that have resulted in the incapacitation of a worker for
more than seven days are included in this calculation in line with
reportable accidents as defined UK HSE RIDDOR regulation.
2.6 Valuation of the Portfolio
The Investment Manager is responsible for carrying out a fair
market valuation of the Group's investment portfolio which is
presented to the Directors for their approval and adoption.
Valuations are carried out on a six-monthly basis as at 31 December
and 30 June each year.
For non-market traded investments (being all the investments in
the current portfolio), the valuation principles used are based on
a discounted cash flow methodology and adjusted in accordance with
the European Venture Capital Associations' 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 cashflows to give the
present value of those cash flows. The Investment Manager exercises
its judgement in assessing the expected future cashflows 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, equivalent to using an appropriate blended rate for the
investment.
The Directors' valuation of the portfolio of 74 ([1]) project
investments as at 30 June 2020 was GBP2,009.3m (31 December 2019:
GBP1,745.2m). From time to time the Board engages an independent
third-party expert to review the Manager's valuation, and
accordingly the Board commissioned an independent valuation from
the Accountants BDO as at 30 June 2020. 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 2020 valuation and the key underlying
assumptions.
Valuation Movement
A breakdown of the movement in the Directors' valuation of the
portfolio in the period is set out in the table below.
Valuation movement during the period to 30 June
2020 GBPm GBPm
Valuation of portfolio at 31 December 2019 1,745.2
Cash investments 281.3
Cash distributions from portfolio (78.2)
----------------------------------------------------- -------- --------
Rebased valuation of portfolio 1,948.3
----------------------------------------------------- -------- --------
Changes in forecast power prices (123.1)
Movement in discount rates 29.2
Foreign exchange movement (before effect of hedges) 56.0*
Balance of portfolio return 98.9
----------------------------------------------------- -------- --------
Valuation of portfolio at 30 June 2020 2,009.3
----------------------------------------------------- -------- --------
* A net gain of GBP22.4m after the impact of foreign exchange
hedges held at Company level.
The opening valuation at 31 December 2019 was GBP1,745.2m.
Allowing for cash investments of GBP281.3m and cash receipts from
investments of GBP78.2m, the rebased valuation as at 30 June 2020
was GBP1,948.3m.
% of Portfolio
Value at
Investment during H1 2020 30 June 2020
Incremental acquisition on Fujin <1%
Solwaybank construction funding 1%
Blary Hill 1%*
Merkur (including investment expected to be sold down) 12%**
-------------------------------------------------------- --------------
*Represents initial funding of the investment only, future
investment is expected to be made over next two years represents a
further 2%.
**Following the partial sell-down, Merkur will represent 9% of
Portfolio Value.
Each movement between the rebased valuation of GBP1,948.3m and
the 30 June 2020 valuation of GBP2,009.3m is considered in turn
below:
(i) Forecast power prices:
Movements in power price forecasts during the six-month period
had the impact of reducing the valuation of the portfolio by a net
GBP123.1m. The valuation uses updated power price forecasts for
each of the markets in which TRIG invests.
Power price forecasts have decreased markedly in the near term,
principally driven by significant reductions in current and
forecast electricity demand and also reductions in gas and carbon
prices brought about by the impact of Covid 19 and the associated
measures taken to combat its spread and the resultant impact on
large sectors of national economies. These impacts have compounded
an already well supplied gas market and have been further
exacerbated by particularly strong renewable generation during Q1
2020. Whilst over the medium and longer term forecasters expect
global gas demand to increase in excess of supply which they expect
to increase power prices, the current expectation is for the longer
term gas prices to revert to a slightly lower level than forecast
previously in December 2019. As a result the longer term forecast
power prices are somewhat reduced.
The weighted average power price inis comprised of the blend of
the forecasts for each of the power markets in which TRIG is
invested after applying expected PPA power sales discounts and
reflecting cannibalisation[2]. The equivalent power price curve
assumed at 31 December 2019 is also shown, as is the curve based
upon the 31 December 2019 portfolio as at 30 June 2020.
The significant reduction in near term forecast wholesale power
prices results in a higher gradient of the forecast power price
curve, but after the shorter term COVID-19 disruption, forecast
power prices remain essentially flat in real terms. The table below
separates prices average real in Great Britain and the average
across the other four Euro denominated markets (SEM, France Germany
and Sweden, weighted by value) for the period 2020-2024 and
beyond.
Region Average 2020-2024 Average 2025-2050
GB (Real GBP/MWh) 41 44
Average of four Euro jurisdictions*
(Real EUR/MWh) 37 48
------------------------------------- ----------------- -----------------
*France, Germany, SEM and Sweden SE3
(ii) Foreign exchange:
Over the half-year Sterling has depreciated 7% against the Euro
compared to the rate at December 2019 (30 June 2020: EUR 1.1039; 31
December 2019: EUR 1.1827). The investments in the period (which
were predominantly made in Euros) were on average made when
Sterling was between the opening and closing exchange rates,
resulting in an average movement from acquisition to 30 June 2020
of 3%. In aggregate this has led to a gain in the period of
GBP56.0m in the valuation of the Euro-denominated investments
located in France, the Republic of Ireland, Sweden[3] and Germany.
After the impact of forward currency hedges held at Company level
are taken into account, the foreign exchange gain reduces to
GBP22.4m.
Euro-denominated investments comprised 49% of the portfolio at
the period end[4].
Once the committed investments are fully subscribed and the
expected sell downs have taken place the proportion of Euro
denominated investments based on the current portfolio and
valuation reduces to 44%.
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 between 50%
and 80%. Hedging has also been effected when making investments
using the revolving acquisition facility by drawing in the local
currency of the acquisition.
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.
(iii) Movement in valuation discount rates:
During the period the pandemic and associated responses had a
disruptive impact on transactions, significantly reducing the
volume of transactions observed during the most impacted months,
compared to the same period in previous years however this had
materially reversed towards the end of the period with a
significant pickup in activity in the later months. In general,
observed pricing levels during the period remained strong,
particularly on assets viewed as safer (with less merchant power
price exposure).
Overall, the Investment Manager, based on transaction and
bidding experience in the secondary market for renewable
infrastructure assets, has applied an average reduction of slightly
less than 0.2% change to discount rates. This change in assumption
has led to an increase in the valuation of the investments of
GBP29.2m.
The weighted average portfolio valuation discount rate as at 30
June 2020 was 7.00% (31 December 2019: 7.25%). The reduction
reflects the market discount rate observations described above, the
reduction in risk associated with the reduction in forecast
merchant power prices across the portfolio and the impact of
acquisitions in the year (the mix of investments made in the period
left the discount rate broadly unchanged).
The Company's independent valuation exercise conducted as at 30
June 2020 included a review of the valuation discount rates adopted
which confirmed the rates used were appropriate.
The discount rate used for valuing each investment represents an
assessment of the rate of return at which infrastructure
investments with similar risk profiles would trade on the open
market.
Balance of portfolio returns:
(This refers to the balance of valuation movements in the period
(excluding (i) to (iii) above) and represents an uplift of GBP98.9m
and a 5.1% 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 cashflows brought forward by six months at the
prevailing portfolio discount rate (7.25% per annum before
acquisitions and the period end reduction in the discount rate).
Notwithstanding the sharp fall in power prices in Q2 due to the
lock-downs, the very favourable weather in Q1 led to overall
generation being above budget), and the return also benefitted from
positive valuation movements from reduced maintenance costs on
renewal O&M of contracts and improved power purchase agreement
terms.
Investment Obligations
Name Acquired Net MW Status Completion Outstanding Value (fully
Date Commitment* committed)*
Solwaybank Jun-18 30.0 Construction Q4 2020 1% 5%
Blary Hill Jan-20 35.0 Construction Q1 2022 2% 3%
------------ ---------- ------- ------------ ----------- ------------ -------------
*Expressed as a percentage of portfolio valuation once fully
invested which takes into account expenditure on the above
construction projects and the disposal of Ersträsk and the sell
down of part of the investment in Merkur .
At 30 June 2020, the Company had outstanding investment
commitments on two projects (Solwaybank and Blary Hill) with both
projects in construction. The outstanding commitments are expected
to be invested during the remainder of 2020 and 2021.
During the six months to 30 June 2020, GBP281.3m was invested in
projects of which GBP18.0m related to commitments made in 2018
(Solwaybank).
The investments made in the period are set out on Section 2.4
and are the following wind farms: an incremental stake in Fujin
(France), Blary Hill (UK) and Murkur (Germany).
Outstanding commitments in relation to the Solwaybank and Blary
Hill projects are shown below:
H2 2020 2021 Total
Outstanding Commitments
(GBPm) 21 20 41
------------------------- ------- ---- -----
TRIG's Construction Windfarms
At the period-end TRIG had three projects in construction as
follows, representing 9% of the portfolio valuation once fully
invested.
Expected
Capacity Completion
Name of Asset Location (MW) Date
Solwaybank GB (Scotland) 30 Q4 2020
-------------- -------------- -------- -----------
Venelle France (North) 40 Q4 2020
-------------- -------------- -------- -----------
Blary Hill GB (Scotland) 35 Q1 2022
-------------- -------------- -------- -----------
Fully Invested Portfolio Valuation
The valuation of the portfolio on a fully invested basis can be
derived by adding the valuation at 30 June 2020 and the expected
outstanding commitments as follows:
Portfolio valuation 30 June 2020 GBP2,009.3m
---------------------------------------- -----------
Portfolio valuation at 30 June 2020 GBP2,009.3m
Future investment commitments GBP40.7m
Post -- period end sell downs ([5]) GBP(118.7)m
Portfolio valuation once fully invested GBP1,931.3m
---------------------------------------- -----------
2.7 Valuation Sensitivities
Section 5, Note 3, also illustrates in detail the sensitivity of
TRIG's NAV per share to changes in key input assumptions in full
detail.
% Change in Portfolio Value due to impact of sensitivity
Discount rate +/- 0.5% -3.6% 3.9%
------
Output P90 / P10 (10
year) -11.4% 10.2%
------ -----
Power price -/+ 10% -6.6% 6.8%
------ -----
Inflation -/+ 0.5% -4.1% 4.4%
------ -----
Operating costs +/-
10% -4.6% 4.5%
------ -----
Exchange rate -/+ 10% -1.5% 1.5%
------ -----
Interest rate + 2%
/ - 1% 0.4% 0.1%
------ -----
Tax +/- 2% -1.0% 1.0%
------ -----
Asset Life -/+ 1yrs -1.1% 1.0%
------ -----
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
assumes the partial sell down of Merkur and sale of Ersträsk Phase
I. As such the Portfolio Value for the sensitivity analysis is the
sum of the Portfolio Valuation at 30 June 2020 (GBP2,009.3m) and
the outstanding investment commitments as set out above, i.e.
GBP1,931.3m.
2.8 Financing
The Group has a GBP340m revolving acquisition facility (which
includes a GBP20m working capital element) with the Royal Bank of
Scotland, National Australia Bank and ING Bank NV to fund new
acquisitions. The facility expires on 31 December 2021 with the
option to extend for a further 12 months. This type of short-term
financing is limited to 30% of the Portfolio Value. It is intended
that any facility used to finance acquisitions is likely to be
repaid, in normal market conditions, within a year through equity
fundraisings.
The acquisition facility was drawn c GBP50m as at 30 June 2020
and was repaid in full shortly after the period end having applied
the receipt from the partial sell down of the Merkur
investment.
The investments in the period (GBP281m) were funded by cash
brought forward from the prior year (c GBP100m), an equity fund
raise in May of GBP120m before costs, reinvestment of surplus
cashflows and drawings under the revolving capital facility.
The majority of the projects within the Company's investment
portfolio have underlying long term debt (by value, 60% of the
Group's investments have project finance raised against them and
40% are ungeared). 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 project-level gearing across the portfolio was 38% as at 30
June 2020 which is slightly above the level at 31 December 2019
which was 36%. This reflects the impact of the acquisitions in the
period that had on average higher gearing than the portfolio. The
main addition is Merkur Offshore wind farm which has project
financing in place to be fully repaid within the subsidy
period.
The vast majority of the debt is fixed and has an average cost
of 3.8% (including margin) reflecting the terms available on
interest rate swaps when the project debt was initially put in
place.
As at 30 June 2020, the Group had cash balances of GBP24.4m,
excluding cash held in investment project companies as working
capital or otherwise. Post-period end the Group received GBP118m
following the disposals of Ersträsk and Merkur and repaid the
acquisition facility.
3.0 Analysis of Financial Results
At 30 June 2020 the Group had investments in 74 ([6]) projects.
As an investment entity for IFRS reporting purposes, the Company
carries these 74 investments at fair value. The results below are
shown on a statutory and on an "expanded" basis as we have done in
previous years. See the box below for further explanation.
Basis of preparation
In accordance with IFRS 10 the Group carries investments at fair value
as the Company meets the conditions of being an Investment Entity.
In addition IFRS 10 states that investment entities should measure
their subsidiaries that are themselves investment entities at fair
value. Being investment entities, The Renewables Infrastructure Group
(UK) Limited ("TRIG UK") and The Renewables Infrastructure Group (UK)
Investments Limited ("TRIG UK I"), the Company's subsidiaries, through
which investments are purchased, are measured at fair value as opposed
to being consolidated on a line-by-line basis, meaning their cash,
debt and working capital balances are included as an aggregate number
in the fair value of investments rather than the Group's current assets.
In order to provide shareholders with more transparency into the Group's
capacity for investment, ability to make distributions, operating
costs and gearing levels, adjusted results have been reported in the
pro forma tables below.
The pro forma tables that follow show the Group's results for the
six months ended 30 June 2020 and the comparative period on a non-statutory
"Expanded basis", where TRIG UK and TRIG UK I are consolidated on
a line-by-line basis, compared to the Statutory IFRS financial statements
(the "Statutory IFRS basis").
The Directors consider the non-statutory Expanded basis to be a more
helpful basis for users of the accounts to understand the performance
and position of the Company because key balances of the Group including
cash and debt balances carried in TRIG UK and TRIG UK I and expenses
incurred in TRIG UK and TRIG UK I are shown in full rather than being
netted off.
The necessary adjustments to get from the Statutory IFRS basis to
the non-statutory Expanded basis are shown for the primary financial
statements. The commentary provided on the primary statements of TRIG
is on the Expanded Basis.
Income Statement Balance Sheet Cash Flow Statement
The Statutory IFRS basis The Statutory IFRS basis The Statutory basis shows
nets off TRIG UK and TRIG includes TRIG UK and TRIG cash movements for the
UK I's costs, including UK I's cash, debt and top company only (TRIG
overheads, management working capital balances Limited). The Expanded
fees and acquisition costs as part of Portfolio Value. basis shows the consolidated
against income. The Expanded The Expanded basis shows cash movements above the
basis includes the expenses these balances gross. investment portfolio which
incurred within TRIG UK There is no difference are relevant to users
and TRIG UK I to enable in net assets between of the accounts. Differences
users of the accounts the Statutory IFRS basis include income received
to fully understand the and the Expanded basis. by TRIG UK and TRIG UK
Group's costs. There is The majority of cash generated I applied to reinvestment
no difference in profit from investments had been and expenses incurred
before tax or earnings passed up from TRIG UK by TRIG UK and TRIG UK
per share between the and TRIG UK I to the Company I that are excluded under
two bases. at both 30 June 2020 and the Statutory IFRS basis.
31 December 2019.
At 30 June 2020, TRIG
UK I was GBP49.8m drawn
on its revolving acquisition
facility (Dec 2019: GBPnil
drawn).
================================ ==============================
Income statement
Six months to 30 June 2020 Six months to 30 June 2019
Summary income statement GBP'million GBP'million
Statutory Expanded Statutory Expanded
IFRS Basis Adjustments(1) Basis IFRS Basis Adjustments(1) Basis
Operating income 46.8 14.3 61.1 129.0 4.4 133.4
Acquisition costs - (0.2) (0.2) - (0.4) (0.4)
----------- -------------- -------- ----------- -------------- --------
Net operating income 46.8 14.1 60.9 129.0 4.0 133.0
Fund expenses (0.9) (8.5) (9.4) (0.7) (6.4) (7.1)
Foreign exchange
losses(2) (29.6) (4.0) (33.6) (6.1) 4.0 (2.1)
Finance costs - (1.6) (1.6) - (1.6) (1.6)
----------- -------------- -------- ----------- -------------- --------
Profit before tax 16.3 - 16.3 122.2 - 122.2
----------- -------------- -------- ----------- -------------- --------
EPS(3) 1.0p 1.0p 9.3p 9.3p
========================== =========== ============== ======== =========== ============== ========
1. The following were incurred within TRIG UK and TRIG UK I;
acquisition costs, some foreign exchange exposure, the majority of
expenses and acquisition facility fees and interest. The income
adjustment offsets these cost adjustments.
2. GBP56.0m of foreign exchange gain have been recognised in the
valuation and this gain is included within Operating Income.
Accordingly the net gain for the Company arising from foreign
exchange movements is GBP22.4m. The Company holds foreign exchange
hedges at Company level outside of the Investment Portfolio to
reduce the impact of foreign exchange movements.
3. Calculated based on the weighted average number of shares
during the period being approximately 1,659.0 million shares.
Analysis of Expanded Basis financial results
Profit before tax for the six months to 30 June 2020 was GBP16.3
million, generating earnings per share of 1.0p, which compares to
GBP122.2 million and earnings per share of 9.3p for the six months
to 30 June 2019.
The EPS of 1.0p reflects a small level of overall valuation
growth in the period versus a particularly strong period of
valuation growth in the comparative period. The valuation movement
in the period to 30 June 2020 has most significantly been affected
by a significant reduction in power price forecasts across all
geographies mostly attributable to the fall in demand and near to
medium term forecast demand for electricity and the primary
commodities that support wholesale electricity prices (gas, carbon
and to some extent coal) caused by the worldwide Covid-19
crisis.
The significant adverse impact of reductions in power price
forecasts were partially offset by favourable foreign exchange
movements, a valuation discount rate reduction, and other valuation
enhancements.
Operating Income reflects the Portfolio Value movement in the
six months and are fully described in Section 2.6 of this
report.
Increase in fund expenses in the six months to 30 June 2020 as
compared to the six months to 30 June 2019 reflect the increase in
the size of the portfolio.
Acquisition costs relate to the investments in the period, being
Blary Hill, Merkur and the incremental acquisition within the Fujin
JV.
Fund expenses of GBP9.4 million (H1 2019: GBP7.1 million)
includes all operating expenses and GBP8.2 million (H1 2019: GBP6.5
million) fees paid to the Investment and Operations Managers.
Management fees are charged at 1% of Adjusted Portfolio Value up to
GBP1 billion, 0.8% in excess of GBP1 billion and 0.75% in excess of
GBP2 billion as set out in more detail in the Related Party and Key
Advisor Transactions note, Note 13 to the financial statements.
During the period sterling weakened against the Euro resulting
in foreign exchange valuation movements for the Euro denominated
assets leading to a valuation gain of GBP56.0million (2019: GBP6.8
million gain) within the portfolio, partially offset by losses on
foreign exchange hedges and cash and debt balances held at Company
level of GBP33.6 million (2019: GBP2.1 million loss) recorded in
the Income Statement. The net foreign exchange gain in the period
is hence GBP22.4 million (2019: GBP4.7 million gain).
Finance costs relate to the interest and fees incurred relating
to the Group's revolving acquisition facility. The finance costs in
the period are in line with the comparative period reflecting a
similar average level of drawings on the revolving acquisition
facility during each period.
Ongoing charges
Six months Six months
to to
30 June 30 June
2020 2019
Ongoing Charges (Expanded Basis) GBP'000s GBP'000s
Investment and Operations Management fees 8,236 6,455
Audit fees 100 79
Directors' fees and expenses 140 116
Other ongoing expenses 715 509
---------- ----------
Total expenses(1) 9,192 7,160
---------- ----------
Annualised equivalent 18,485 14,439
Average net asset value 1,924,571 1,473,849
Ongoing Charges Percentage (OCP) 0.96% 0.98%
------------------------------------------- ---------- ----------
1. Total expenses exclude GBP0.2 million (2019: GBPnil) of lost
bid costs incurred during the period.
The Ongoing Charges Percentage for the period is 0.96% (FY 2019:
0.98%). The ongoing charges have been calculated in accordance with
AIC guidance and are defined as annualised ongoing charges (i.e.
excluding acquisition costs and other non-recurring items) divided
by the average published undiluted net asset value in the period.
The Ongoing Charges Percentage has been calculated on the Expanded
Basis and therefore takes into consideration the expenses of TRIG
UK and TRIG UK I as well as the Company's.
The reduction in OCP level reflects both the fixed costs of the
company being spread over a larger capital base and the reduction
in Manager fees charged on incremental acquisitions as the
portfolio has become larger. Managers' fees for incremental assets
are charged at a lower rate of 0.8% and now 0.75% as the Portfolio
Valuation of the Company has expanded past GBP2 billion. There is
no performance fee paid to any service provider.
Balance sheet
Summary balance As at 30 June 2020 As at 31 December 2019
sheet GBP'million GBP'million
Statutory Expanded Statutory Expanded
IFRS Basis Adjustments Basis IFRS Basis Adjustments Basis
Portfolio Value 1,956.6 52.7 2,009.3 1,741.5 3.7 1,745.2
Working capital 0.8 (3.2) (2.4) 1.7 (3.8) (2.2)
Hedging Liability (15.8) - (15.8) 12.6 - 12.6
Debt - (49.8) (49.8) - - -
Cash 24.1 0.3 24.4 127.6 0.2 127.8
----------- ----------- -------- ----------- ----------- --------
Net assets 1,965.7 - 1,965.7 1,883.4 0.1 1,883.4
----------- ----------- -------- ----------- ----------- --------
Net asset value
per share 113.0p 113.0p 115.0p - 115.0p
----------- ----------- -------- ----------- ----------- --------
Analysis of Expanded Basis financial results
Portfolio Value grew by GBP264.1 million in the six months to
GBP2,009.3 million, primarily as a result of the investments made
in the six months to 30 June 2020 as described more fully in the
"Valuation Movements" section of this Strategic Report.
Cash at 30 June 2020 was GBP24.4 million (2019: GBP127.8
million) and acquisition facility debt drawings were GBP49.8m
(2019: GBPnil). The acquisition facility was repaid following the
planned partial sell-down of Merkur on 3rd July 2020.
Net assets grew by GBP82.3 million in the period to GBP1,965.7
million. The Company raised GBP118.7 million (after issue expenses)
of new equity during the period and produced a GBP16.3 million
profit in the period, with net assets being stated after accounting
for dividends paid in the period (net of scrip take up) of GBP53.7
million. Other movements in net assets totalled GBP1.0 million,
being Managers' shares accruing in H1 2020 and to be issued on or
around 30 September 2020.
Net asset value ("NAV") per share as at 30 June 2020 was 113.0p
compared to 115.0p at 31 December 2019.
Net asset value ("NAV") and Earnings per share ("EPS")
reconciliation
Shares in Net assets
NAV per share issue (million) (GBP'million)
Net assets at 31 December 2019 115.0p 1,637.5 1,883.4
Dividends paid in H1 2020(2) (3.35)p (54.8)
Profit/EPS to 30 June 2020(1) 1.0p 16.3
Scrip dividend take-up(3) - 1.0 1.2
Shares issued (net of costs) 0.3p 100.0 118.7
H2 2020 Managers' shares to
be issued - 0.9 1.0
-------------------------------- ------------- ---------------- --------------
Net assets at 30 June 2020(4) 113.0p 1,739.4 1,965.7
-------------------------------- ------------- ---------------- --------------
1. Calculated based on the weighted average number of shares
during the period being 1,659.0 million shares
2. 1.66p dividend paid 31 March 2020 related to Q4 2019 (GBP27.2
million) and 1.69p dividend paid 30 June 2020 related to Q1 2020
(GBP27.7 million).
3. Scrip dividend take-up comprises 1.0 million shares, equating
to GBP1.2 million, issued in lieu of the dividends paid June
2020.
4. Balance does not sum as a result of rounding differences.
Cash flow statement
Summary cash Six months to 30 June 2020 Six months to 30 June 2019
flow statement GBP'million GBP'million
Statutory Expanded Statutory Expanded
IFRS Basis Adjustments Basis IFRS Basis Adjustments Basis
Cash received
from investments 54.3 23.8 78.1 28.8 34.4 63.2
Operating and
finance costs (0.9) (8.6) (9.5) (0.4) (6.7) (7.1)
------------------------- ----------- ----------- -------- ----------- ----------- --------
Cash flow from
operations 53.4 15.2 68.6 28.4 27.7 56.1
Debt arrangement
costs - - - - - -
Foreign exchange
gains/ (losses) (1.3) (3.8) (5.1) 1.1 4.3 5.4
Issue of share
capital (net
of costs) 119.6 (0.9) 118.7 298.5 (0.9) 297.6
Acquisition facility
drawn - 49.8 49.8 - - -
Portfolio refinancing
proceeds - - - - 64.6 64.6
Purchase of new
investments (including
acquisition costs) (221.6) (60.2) (281.8) (251.7) (95.6) (347.3)
Distributions
paid (53.6) - (53.6) (40.7) - (40.7)
------------------------- ----------- ----------- -------- ----------- ----------- --------
Cash movement
in period (103.5) 0.1 (103.4) 35.6 0.1 35.7
Opening cash
balance 127.6 0.2 127.8 16.8 0.1 16.9
------------------------- ----------- ----------- -------- ----------- ----------- --------
Net cash at
end of period 24.1 0.3 24.4 52.4 0.2 52.6
------------------------- ----------- ----------- -------- ----------- ----------- --------
Analysis of Expanded Basis financial results
Cash received from investments in the period was GBP78.1 million
(2019: GBP63.2 million). The increase in cash received compared
with the previous period reflects the increase in the size of the
portfolio.
Dividends paid in the period totalled GBP53.7 million (net of
GBP1.2m scrip dividends) and reflect dividends paid for the quarter
ended 31 March 2020 (GBP27.2 million, net of GBPnil million scrip
dividends) and the quarter ended 30 June 2020 (GBP26.4 million, net
of GBP1.2 million scrip dividends). Dividends paid in the
comparative period totalled GBP40.7 million (net of GBP2.4 million
scrip dividends).
Cash flow from operations in the period was GBP68.6 million
(2019: GBP56.1 million) and covers dividends paid of GBP53.6
million in the period by 1.28 times (or 1.25 times without the
benefit of scrip take up), or 2.2 times before factoring in amounts
invested in the repayment in project-level debt. The Group repaid
GBP49.8million of project-level debt (pro-rata to the Company's
equity interest) in the period.
Share issue proceeds (net of costs) totalling GBP118.7 million
(2019: GBP297.6 million) resulting from the issue of 100 million
shares issued at 120p in May 2020.
The Company's acquisition facility was drawn in Euro in the
period to fund the investment in Merkur and then partially repaid
in May and June following fund raising and distributions received
from projects. The facility was fully repaid following the period
end as the Company sold down part of the Merkur investment.
In the period, GBP281.3 million was invested in acquisitions.
These were funded through the remaining surplus cash at 31 December
2020, the May 2020 equity issue, reinvestment of investment
cashflows and drawings from the acquisition facility.
Cash balances decreased in the period by GBP103.4 million
reflecting the capital deployed in new investments in H1 2020.
Going Concern
The Group has the necessary financial resources to meet its
obligations. The Group benefits from a range of long-term contracts
with various major UK and European utilities and well-established
suppliers across a range of infrastructure projects. In addition,
it maintains a working capital component of GBP20m as part of its
revolving acquisition facility (currently sized at GBP340m and
limited to 30% of Portfolio Value). The Group's project-level
external debt is non-recourse to the Company and is limited to 50%
of Gross Portfolio Value. As a consequence, the Directors believe
that the Group is well placed to manage its business risks
successfully. The directors do not believe that there is a
significant risk to the business as a result of the COVID-19
pandemic but will continue to monitor any future developments. Thus
they continue to adopt the going concern basis of accounting in
preparing the interim financial statements.
Related Parties
Related party transactions are disclosed in note 13 to the
condensed set of financial statements.
There have been no material changes in related party
transactions described in the last annual report.
4.0 Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
1. The condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting; and
2. The Chairman's Statement and the Managers' Report 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
6 August 2020
5.0 Financial Statements
Condensed Income Statement
For the six-month period 1 January 2020 to 30 June 2020
Six months Six months
ended ended
30 June 30 June
2020 2019
(unaudited) (unaudited)
Note GBP'000s GBP'000s
Net gains on investments 4 9,743 99,665
Investment income from investments 4 37,091 29,346
-------------------------------------------- ---- ------------ ------------
Total operating income 46,834 129,011
Fund expenses 5 (924) (709)
-------------------------------------------- ---- ------------ ------------
Operating profit for the period 45,910 128,302
Finance and other income/(expense) 6 (29,647) (6,147)
-------------------------------------------- ---- ------------ ------------
Profit before tax 16,263 122,155
Income tax 7 - -
-------------------------------------------- ---- ------------ ------------
Profit for the period 8 16,263 122,155
-------------------------------------------- ---- ------------ ------------
Attributable to:
Equity holders of the parent 8 16,263 122,155
-------------------------------------------- ---- ------------ ------------
8 16,263 122,155
-------------------------------------------- ---- ------------ ------------
Ordinary shares earnings per share (pence) 8 1.0p 9.3p
-------------------------------------------- ---- ------------ ------------
All results are derived from continuing operations.
There is no other comprehensive income or expense apart from
those disclosed above and consequently a statement of comprehensive
income has not been prepared.
Condensed Balance Sheet
For the six month period 1 January 2020 to 30 June 2020
As at
30 June As at
31 December
2020 2019
(unaudited) (audited)
Note GBP'000s GBP'000s
Non-current assets
Investments at fair value through profit or
loss 11 1,956,576 1,741,457
--------------------------------------------- ---- ------------- --------------
Total non-current assets 11 1,956,576 1,741,457
--------------------------------------------- ---- ------------- --------------
Current assets
Other receivables 1,059 14,730
Cash and cash equivalents 24,105 127,589
--------------------------------------------- ---- ------------- --------------
Total current assets 25,164 142,319
--------------------------------------------- ---- ------------- --------------
Total assets 1,981,740 1,883,776
--------------------------------------------- ---- ------------- --------------
Current liabilities
Other payables (16,034) (339)
--------------------------------------------- ---- ------------- --------------
Total current liabilities (16,034) (339)
--------------------------------------------- ---- ------------- --------------
Total liabilities (16,034) (339)
--------------------------------------------- ---- ------------- --------------
Net assets 10 1,965,706 1,883,437
--------------------------------------------- ---- ------------- --------------
Equity
Share capital and premium 12 1,842,168 1,721,309
Other reserves 12 995 1,008
Retained reserves 122,543 161,120
--------------------------------------------- ---- ------------- --------------
Total equity attributable to owners of the
parent 10 1,965,706 1,883,437
--------------------------------------------- ---- ------------- --------------
Net assets per Ordinary Share (pence) 10 113.0p 115.0p
--------------------------------------------- ---- ------------- --------------
The accompanying Notes are an integral part of these interim
financial statements.
The interim financial statements were approved and authorised
for issue by the Board of Directors on 6 August 2020, and signed on
its behalf by:
Jon Bridel Helen Mahy
Director Director
Condensed Statement of Changes in Equity
For the six month period 1 January 2020 to 30 June 2020
Share Other Retained Total
premium reserves reserves equity
(unaudited) (unaudited) (unaudited) (unaudited)
GBP'000s GBP'000s GBP'000s GBP'000s
Shareholders' equity at beginning of
period 1,721,309 1,008 161,120 1,883,437
----------------------------------------- ------------- ------------- ------------- -------------
Profit for the period - - 16,263 16,263
Dividends paid - - (53,614) (53,614)
Scrip shares issued in lieu of dividend 1,226 - (1,226) -
Ordinary Shares issued 120,000 - - 120,000
Costs of Ordinary Shares issued (1,375) - - (1,375)
Ordinary Shares issued in period in
lieu of Management Fees, earned in
H2 20191 1,008 (1,008) - -
Ordinary Shares to be issued in lieu
of Management Fees, earned in H1 20202 - 995 - 995
----------------------------------------- ------------- ------------- ------------- -------------
Shareholders' equity at end of period 1,842,168 995 122,543 1,965,706
----------------------------------------- ------------- ------------- ------------- -------------
For the year ended 31 December 2019
Share Other Retained Total
premium reserves reserves equity
(audited) (audited) (audited) (audited)
GBP'000s GBP'000s GBP'000s GBP'000s
Shareholders' equity at beginning of
year 1,189,542 1,008 93,352 1,283,902
----------------------------------------- ----------- ----------- ----------- -----------
Profit for the year - - 162,029 162,029
Dividends paid - - (86,285) (86,285)
Scrip shares issued in lieu of dividend 7,976 - (7,976) -
Ordinary Shares issued 529,650 - - 529,650
Costs of Ordinary Shares issued (7,859) - - (7,859)
Ordinary Shares issued in period in
lieu of Management Fees, earned in
H2 20183 1,008 (1,008) - -
Ordinary Shares to be issued in lieu
of Management Fees, earned in H1 20194 992 - - 992
Ordinary Shares to be issued in lieu
of Management Fees, earned in H2 20191 - 1,008 - 1,008
----------------------------------------- ----------- ----------- ----------- -----------
Shareholders' equity at end of year 1,721,309 1,008 161,120 1,883,437
----------------------------------------- ----------- ----------- ----------- -----------
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent. of
the management fees (up to an Adjusted Portfolio Value of GBP1
billion) are settled in Ordinary Shares.
1 The GBP1,008,216 transfer between reserves represents the
889,550 shares that relate to management fees earned in the six
months to 31 December 2019 and were recognised in other reserves at
31 December 2019, and were issued to the Managers during the
period, with the balance being transferred to share premium
reserves, on 31 March 2020.
2 As at 30 June 2020, 893,480 shares equating to GBP994,536,
based on a Net Asset Value ex dividend of 111.31 pence per share
(the Net Asset Value at 30 June 2020 of 113 pence per share less
the interim dividend of 1.69 pence per share) were due but had not
been issued. The Company intends to issue these shares to the
Managers on or around 30 September 2020.
3 The GBP1,008,218 transfer between reserves represents the
939,844 shares that relate to management fees earned in the six
months to 31 December 2018 and were recognised in other reserves at
31 December 2018, and were issued to the Managers during the
period, with the balance being transferred to share premium
reserves, on 31 March 2019.
4 The GBP991,778 addition to the share premium reserve
represents the 875,047 shares that relate to management fees earned
in the six months to 30 June 2019 and were issued to the Managers
on 30 September 2019.
Condensed Cash Flow Statement
For the six month period 1 January 2020 to 30 June 2020
Six months Six months
ended ended
30 June 30 June
2020 2019
(unaudited) (unaudited)
Note GBP'000s GBP'000s
Cash flows from operating activities
Profit before tax 8 16,263 122,155
Adjustments for:
Gain on investments 4 (9,743) (99,665)
Interest income from investments 4 (37,091) (29,346)
Movement in Other reserves relating to Managers
shares (13) (16)
Finance and similar expenses 6 29,647 6,147
------------------------------------------------------ ---- ------------ ------------
Operating cash flow before changes in working
capital (937) (725)
Changes in working capital:
Decrease in receivables 2 65
(Decrease)/increase in payables (104) 86
------------------------------------------------------ ---- ------------ ------------
Cash flow from operations (1,039) (573)
Interest received from investments 35,547 28,776
Loan stock and equity repayments received 18,779 -
Interest income from cash on deposit 151 200
------------------------------------------------------ ---- ------------ ------------
Net cash from operating activities 53,438 28,403
------------------------------------------------------ ---- ------------ ------------
Cash flows from investing activities
Purchases of investments 11 (221,616) (251,676)
------------------------------------------------------ ---- ------------ ------------
Net cash used in investing activities (221,616) (251,676)
------------------------------------------------------ ---- ------------ ------------
Cash flows from financing activities
Proceeds from issue of share capital during
period 121,008 303,108
Costs in relation to issue of shares (1,375) (4,632)
Dividends paid to shareholders 9 (53,614) (40,723)
------------------------------------------------------ ---- ------------ ------------
Net cash from financing activities 66,019 257,753
------------------------------------------------------ ---- ------------ ------------
Net (decrease)/increase in cash and cash equivalents (102,159) 34,480
------------------------------------------------------ ---- ------------ ------------
Cash and cash equivalents at beginning of period 127,589 16,760
Exchange (losses)/gains on cash (1,325) 1,141
------------------------------------------------------ ---- ------------ ------------
Cash and cash equivalents at end of period 24,105 52,381
------------------------------------------------------ ---- ------------ ------------
The accompanying Notes are an integral part of these interim
financial statements.
Notes to the Unaudited Financial Statements
For the six month period 1 January 2020 to 30 June 2020
1. General information
The Renewables Infrastructure Group Limited ("TRIG" or the
"Company") is a closed ended investment company incorporated in
Guernsey under Section 20 of the Companies (Guernsey) Law, 2008.
The shares are publicly traded on the London Stock Exchange under a
premium listing. Through its subsidiaries, The Renewables
Infrastructure Group (UK) Limited ("TRIG UK") and The Renewables
Infrastructure Group (UK) Investments Limited ("TRIG UK I"), TRIG
invests in operational renewable energy generation projects,
predominantly in onshore and offshore wind and solar PV segments,
across the United Kingdom and Northern 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 2020 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 annual financial statements of the Company for the year
ended 31 December 2019 were approved by the Directors on 17
February 2020 and are available from the Company's Administrator
and on the Company's website http://trig-ltd.com/ .
Since the start of 2020 an outbreak of coronavirus (which causes
COVID-19) has spread to become a global pandemic, which in
conjunction with the public health responses of various
governments, has led to uncertainty in the market. The directors of
the Company continue to follow advice given by the national and
international agencies (including the World Health Organisation and
Public Health England) to ensure best practices are followed.
To date there has not been a material impact on the ability of
the Company's to carry out its operations. Restrictions imposed by
governments on public health grounds have impacted the consumption
of electricity, and consequently electricity prices, however these
measures are currently expected to be transitory and in place for
the shortest period practicable, ultimately with a recovery to
previous levels expected at this time. Consequently, the directors
do not believe that there is a significant risk to the value of the
Company's investments, operations or its overall business as a
result of the COVID-19 pandemic but will continue to monitor any
future developments.
2. Key accounting policies
Basis of preparation
The interim financial statements were approved and authorised
for issue by the Board of Directors on 6 August 2020.
The annual financial statements of the Company are prepared in
accordance with IFRS as adopted by the European Union ("EU") using
the historical cost basis, except that the financial instruments
classified at fair value through profit or loss are stated at their
fair values and that the Company has applied the amendment to IFRS
10, as adopted by the EU and as described below. The condensed set
of financial statements included in this half-yearly financial
report has been prepared in accordance with IAS 34 'Interim
Financial Reporting', as adopted by the EU and in compliance with
the Companies (Guernsey) Law, 2008.
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 infrastructure to generate investment
returns while preserving capital. The financial information used by
the CODM to allocate resources and manage the Group presents the
business as a single segment comprising a homogeneous portfolio.
The CODM has been identified as the Board of Directors of the
Company acting collectively.
The Group has the necessary financial resources to meet its
obligations. The Group benefits from a range of long-term contracts
with various major UK and European utilities and well-established
suppliers across a range of infrastructure projects. In addition,
it maintains a working capital component of GBP20m as part of its
revolving acquisition facility (currently sized at GBP340m 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.
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. The Company and its
direct subsidiaries have a number of Guarantees, detailed in Note
14. These guarantees relate to certain obligations that may become
due by the underlying investments over their useful economic lives.
We do not anticipate these guarantees to be called in the next 12
months and in many cases the potential obligations are insured by
the underlying investments.
A cash balance of GBP24.1m at 30 June 2020 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 GBP20m.
In addition GBP118m was received in July as part of the Company's
planned exit from Ersträsk and partial sell-down of Merkur. Some of
these proceeds were used to repay the revolving acquisition
facility in full, which was GBP49.8m drawn at 30 June 2020. Further
to the above the Company has commitments of GBP41m due over the
next two years as construction milestones are achieved.
As a consequence, the Directors believe that the Group is well
placed to manage its business risks successfully. The directors do
not believe that there is a significant risk to the business as a
result of the COVID-19 pandemic but will continue to monitor any
future developments. Thus they continue to adopt the going concern
basis of accounting in preparing the interim financial
statements.
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
2019.
The same accounting policies, presentation and methods of
computation are followed in these interim financial statements as
were applied in the preparation of the Company's financial
statements for the year ended 31 December 2019.
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 2020 and the year ended 31
December 2019, 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 2020 and 31 December 2019.
3. Financial instrument
30 June 31 December
2020 2019
GBP'000s GBP'000s
Financial assets
Designated at fair value through profit or loss:
Investments 1,956,576 1,741,457
Other financial assets - 12,621
-------------------------------------------------- --------- -----------
Financial assets at fair value 1,956,576 1,754,078
-------------------------------------------------- --------- -----------
At amortised cost:
Other receivables 1,059 2,109
Cash and cash equivalents 24,105 127,589
-------------------------------------------------- --------- -----------
Financial assets at amortised cost 25,164 129,698
-------------------------------------------------- --------- -----------
Financial liabilities
Designated at fair value through profit or loss:
Other financial liabilities 15,799 -
-------------------------------------------------- --------- -----------
Financial liabilities at fair value 15,799 -
-------------------------------------------------- --------- -----------
At amortised cost:
Other payables 235 339
-------------------------------------------------- --------- -----------
Financial liabilities at amortised cost 235 339
-------------------------------------------------- --------- -----------
The Directors believe that the carrying values of all financial
instruments are not materially different to their fair values.
Other financial assets/liabilities represent the fair value of
foreign exchange forward agreements in place at the period end. In
the period, the net fair value of foreign exchange forward
agreements changed from being held as an asset to that of a
liability.
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 2020
------------------------------------------
Level 1 Level 2 Level 3 Total
GBP'000s GBP'000s GBP'000s GBP'000s
Investments at fair value through profit
or loss - - 1,956,576 1,956,576
------------------------------------------ --------- --------- --------- ---------
- - 1,956,576 1,956,576
------------------------------------------ --------- --------- --------- ---------
Other financial liabilities - 15,799 - 15,799
------------------------------------------ --------- --------- --------- ---------
- 15,799 - 15,799
------------------------------------------ --------- --------- --------- ---------
As at 31 December 2019
------------------------------------------
Level 1 Level 2 Level 3 Total
GBP'000s GBP'000s GBP'000s GBP'000s
Investments at fair value through profit
or loss - - 1,741,457 1,741,457
------------------------------------------ --------- --------- --------- ---------
- - 1,741,457 1,741,457
------------------------------------------ --------- --------- --------- ---------
Other financial assets - 12,621 - 12,621
------------------------------------------ --------- --------- --------- ---------
- 12,621 - 12,621
------------------------------------------ --------- --------- --------- ---------
Investments at fair value through profit or loss comprise the
fair value of the investment portfolio, on which the sensitivity
analysis is calculated, and the fair values of TRIG UK and TRIG UK
I, the Company's subsidiaries, being its cash, working capital and
debt balances.
30 June 31 December
2020 2019
GBP'000s GBP'000s
Portfolio value 2,009,347 1,745,186
TRIG UK and TRIG UK I
Cash 268 216
Working capital (4,419) (5,550)
Debt(1) (48,620) 1,605
---------------------------------------------- --------- -----------
(52,771) (3,729)
Investments at fair value through profit or
loss 1,956,576 1,267,255
---------------------------------------------- --------- -----------
1 Debt arrangement costs of GBP1,206k (Dec 2019: GBP1,605k) have
been netted off the GBP49,826k (Dec 2019: GBPnil) 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 valuations of the
investments as at 30 June 2020 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. Section 2.6 of this report outlines the valuation
methodology in greater detail.
The following economic assumptions were used in the discounted
cash flow valuations at:
30 June 2020 31 December 2019
UK inflation rates (other
than ROC's) 2.75% 2.75%
Inflation applied to UK 3.00% 2020 and 2.75% 3.00% 2020 and 2.75%
ROC Income thereafter thereafter
Rest of Europe inflation
rates 1.75% 2020, 2.00% thereafter 1.75% 2020, 2.00% thereafter
------------------------------- ----------------------------- -----------------------------
0.5% to 31 December 2022, 1.00% to 31 December
UK deposit interest rates 1.50% thereafter 2021, 2.00% thereafter
------------------------------- ----------------------------- -----------------------------
0.00% to 31 December
2022,
Ireland, France, Sweden
and Germany deposit interest 1.00% to 31 December
rates 1.0% thereafter 2021, 2.00% thereafter
------------------------------- ----------------------------- -----------------------------
UK corporation tax rate 19.00% 19.00%
------------------------------- ----------------------------- -----------------------------
33.3% + 1.1% above EUR763,000 33.3% + 1.1% above EUR763,000
France corporation tax threshold, reducing to threshold, reducing to
rate 25% by 2022 25% by 2022
------------------------------- ----------------------------- -----------------------------
Ireland corporation tax 12.5% active rate, 25% 12.5% active rate, 25%
rate passive rate passive rate
------------------------------- ----------------------------- -----------------------------
Swedish corporation tax 21.4% for 2020, 20.6% 21.4% for 2020, 20.6%
rate thereafter thereafter
------------------------------- ----------------------------- -----------------------------
German corporation tax
rate 15.8% 15.8%
------------------------------- ----------------------------- -----------------------------
Euro/sterling exchange
rate 1.1039 1.1827
------------------------------- ----------------------------- -----------------------------
Energy yield assumptions P50 case P50 case
------------------------------- ----------------------------- -----------------------------
Valuation Sensitivities
Sensitivity analysis is produced to show the impact of changes
in key assumptions adopted to arrive at the valuation. For each of
the sensitivities, it is assumed that potential changes occur
independently of each other with no effect on any other base case
assumption, and that the number of investments in the portfolio
remains static throughout the modelled life.
The sensitivities assume the portfolio is fully invested and
assumes the partial sell-down of Merkur and sale of Erstrask Phase
1. As such the Portfolio Value for the sensitivity analysis is the
sum of the Portfolio Value as 30 June 2020 (GBP2,009.3m) and the
outstanding investment commitments as set out above, i.e.
GBP1,931.3m.
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 portfolio valuation discount rate applied to calculate the
portfolio valuation is 7.0% at 30 June 2020 (December 2019: 7.25%).
An increase or decrease in this rate by 0.5% and has the following
effect on valuation.
Total
NAV/ share Portfolio NAV/ share
Discount rate impact -0.5% change Value(1) +0.5% change impact
Directors' valuation - June
2020 +4.3p +GBP74.8m GBP1,931.3m (GBP70.1m) (4.0p)
--------------------------------- ---------- ------------ ----------- ------------ ----------
Directors' valuation - December
2019 ([7]) +4.4p +GBP81.1m GBP2,095.6m (GBP75.9m) (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.
Total
NAV/ share Portfolio NAV/ share
Power Price impact -10% change Value(1) +10% change impact
Directors' valuation - June
2020 (7.4p) (GBP128.4m) GBP1,931.3m +GBP132.3m 7.6p
--------------------------------- ---------- ----------- ----------- ----------- ----------
Directors' valuation - December
2019 (8.5p) (GBP156.0m) GBP2,095.6m +GBP156.4m 8.5p
--------------------------------- ---------- ----------- ----------- ----------- ----------
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 under
achieved. Hence the P50 is the expected level of generation over
the long term.
The sensitivity illustrates the effect of assuming "P90 10-year"
(a downside case) and "P10 10-year" (an upside case) energy
production scenarios. A P90 10-year downside case assumes the
average annual level of electricity generation that has a 90%
probability of being exceeded over a 10-year period. A P10 10-year
upside case assumes the average annual level of electricity
generation that has a 10% probability of being exceeded over a
10-year period. This means that the portfolio aggregate production
outcome for any given 10-year period would be expected to fall
somewhere between these P90 and P10 levels with an 80% confidence
level, with a 10% probability of it falling below that range of
outcomes and a 10% probability of it exceeding that range. The
sensitivity includes the portfolio effect which reduces the
variability because of the diversification of the portfolio. The
sensitivity is applied throughout the life of each asset in the
portfolio (even where this exceeds 10 years).
The table below shows the sensitivity of the portfolio value to
changes in the energy yield applied to cash flows from project
companies in the portfolio as per the terms P90, P50 and P10
explained above.
Total
NAV/ share P90 10 Portfolio P10 10 NAV/ share
Energy Yield impact year exceedance Value(1) year exceedance impact
Directors' valuation - June
2020 (12.6p) (GBP219.2m) GBP1,931.3m +GBP196.1m 11.3p
--------------------------------- ---------- ---------------- ----------- ---------------- ----------
Directors' valuation - December
2019 (11.5p) (GBP211.3m) GBP2,095.6m +GBP195.4m 10.7p
--------------------------------- ---------- ---------------- ----------- ---------------- ----------
Inflation rates
The projects' income streams are principally a mix of subsidies,
which are typically amended each year with inflation, and power
prices, which the sensitivity assumes will move with inflation. The
projects' management, maintenance and tax expenses typically move
with inflation, but debt payments are fixed. This results in the
portfolio returns and valuation being positively correlated to
inflation.
The portfolio valuation assumes 2.75% p.a. inflation for the UK
and 2.0% p.a. for each of Germany, Sweden, France and Ireland over
the long term.
The sensitivity illustrates the effect of a 0.5% decrease and a
0.5% increase from the assumed annual inflation rates in the
financial model for each year throughout the operating life of the
portfolio.
Total
NAV/ share -0.5% Portfolio NAV/ share
Inflation assumption impact change Value(1) +0.5% change impact
Directors' valuation - June
2020 (4.5p) (GBP78.5m) GBP1,931.3m +GBP85.3m 4.9p
--------------------------------- ---------- ---------- ----------- ------------ ----------
Directors' valuation - December
2019 (4.7p) (GBP85.4m) GBP2,095.6m +GBP92.6m 5.1p
--------------------------------- ---------- ---------- ----------- ------------ ----------
Operating costs
The sensitivity shows the effect of a 10% decrease and a 10%
increase to the base case for annual operating costs for the
portfolio, in each case assuming that the change to the base case
for operating costs occurs with effect from 1 July 2020 and that
change to the base case remains reflected consistently thereafter
during the life of the projects.
Total
NAV/ share Portfolio NAV/ share
Operating costs impact -10% change Value(1) +10% change impact
Directors' valuation - June
2020 5.0p +GBP87.5m GBP1,931.3m (GBP88.3m) (5.1p)
--------------------------------- ---------- ----------- ----------- ----------- ----------
Directors' valuation - December
2019 4.5p +GBP83.2m GBP2,095.6m (GBP82.8m) (4.5p)
--------------------------------- ---------- ----------- ----------- ----------- ----------
Taxation rates
The profits of each project company are subject to corporation
tax in their home jurisdictions at the applicable rates (the tax
rates adopted in the valuation are set out in Note 3 to the
financial statements). The tax sensitivity looks at the effect on
the Directors' valuation of changing the tax rates by +/- 2% each
year in each jurisdiction and is provided to show that tax can be a
material variable in the valuation of investments.
Total
NAV/ share Portfolio NAV/ share
Taxation rates impact -2% change Value(1) +2% change impact
Directors' valuation - June
2020 1.1p +GBP19.6m GBP1,931.3m (GBP19.6m) (1.1p)
--------------------------------- ---------- ---------- ----------- ---------- ----------
Directors' valuation - December
2019 1.1p +GBP19.4m GBP2,095.6m (GBP18.9m) (1.0p)
--------------------------------- ---------- ---------- ----------- ---------- ----------
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 2020 and
continues unchanged throughout the life of the assets.
The portfolio is relatively insensitive to changes in interest
rates. This is an advantage of TRIG's approach of favouring
long-term structured project financing (over shorter term corporate
debt) which is secured with the substantial majority of this debt
having the benefit of long-term interest rate swaps which fix the
interest cost to the projects.
The portfolio sensitivity to interest rates is assessed
asymmetrically, noting that there is limited capacity for further
interest rate reductions.
Total
NAV/ share Portfolio NAV/ share
Interest rates impact -1% change Value(1) +2% change impact
Directors' valuation - June
2020 (0.1p) (GBP2.4m) GBP1,931.3m +GBP8.4m 0.5p
--------------------------------- ---------- ---------- ----------- ---------- ----------
Directors' valuation - December
2019 (0.0p) (GBP0.0m) GBP2,095.6m +GBP0.6m 0.0p
--------------------------------- ---------- ---------- ----------- ---------- ----------
Currency rates
The sensitivity shows the effect of a 10% decrease and a 10%
increase in the value of the euro relative to sterling used for the
30 June 2020 valuation (based on a 30 June 2020 exchange rate of
EUR1.1039 to GBP1). In each case it is assumed that the change in
exchange rate occurs from 1 July 2020 and thereafter remains
constant at the new level throughout the life of the projects.
At the period-end , 44% of the committed portfolio was located
in Sweden, France, Germany and Ireland comprising euro-denominated
assets. The Group has entered into forward hedging of the expected
euro distributions for the next 36-48 months and in addition placed
further hedges to reach a position where up to 80% of the valuation
of euro-denominated assets is hedged. The hedge reduces the
sensitivity of the portfolio value to foreign exchange movements
and accordingly the impact is shown net of the benefit of the
foreign exchange hedges in place which is assumed to be 60% for the
sensitivity analysis. All committed investments are included in
this sensitivity.
Total
NAV/ share Portfolio NAV/ share
Currency rates impact -10% change Value ([8]) +10% change impact
Directors' valuation - June
2020 (1.7p) (GBP29.8m) (GBP1,931.3m) +GBP29.8m 1.7p
--------------------------------- ---------- ----------- ------------- ----------- ----------
Directors' valuation - December
2019 (1.8p) (GBP33.8m) GBP2,095.6m +GBP33.8m 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 valuation typically range from 25 to
30 years from the date of commissioning, with an average 29 years
for the wind portfolio and 30 years for solar portfolio. The
overall average across the portfolio at 30 June 2020 is 29 years
(31 December 2019: 29 years).
The sensitivity below shows the impact on the valuation of
assuming all assets within the portfolio have a year longer and a
year shorter asset life assumed.
Total
NAV/ share -1 year Portfolio +1 year NAV/ share
Asset Lives impact change Value(1) change impact
Directors' valuation - June
2020 (1.4p) (GBP21.8m) GBP1,931.3m +GBP19.9m 1.1p
--------------------------------- ---------- ---------- ----------- --------- ----------
Directors' valuation - December
2019 (1.8p) (GBP33.8m) GBP2,095.6m +GBP33.8m 1.8p
--------------------------------- ---------- ---------- ----------- --------- ----------
4. Total operating income
For six For six
months months
ended ended
30 June 30 June
2020 2019
Total Total
GBP'000s GBP'000s
Interest income from investments 37,091 29,346
Gain on investments 9,743 99,665
---------------------------------- ---------- ----------
46,834 129,011
---------------------------------- ---------- ----------
On the Expanded basis, which includes TRIG UK and TRIG UK I, the
Company's subsidiaries, that the Directors consider to be an
extension of the Company's investment activity, the total operating
income is GBP61,145k (Jun 2019: GBP133,406k). The reconciliation
from the Statutory IFRS basis to the Expanded basis is shown in
Analysis of Financial Results section in Section 3.0..
5. Fund expenses
For six For six
months months
ended ended
30 June 30 June
2020 2019
Total Total
GBP'000s GBP'000s
Fees payable to the Company's auditor for the audit
of the Company's accounts 62 45
Fees payable to the Company's auditor for audit-related
assurance services 30 29
Investment and management fees (Note 13) 99 99
Directors' fees (Note 13) 137 114
Other costs 596 422
--------------------------------------------------------- ---------- ----------
924 709
--------------------------------------------------------- ---------- ----------
On the Expanded basis, fund expenses are GBP9,446k (Jun 2019:
GBP7,159k); 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 41.
The Company had no employees during the current or prior period.
The Company has appointed the Investment Manager and the Operations
Manager to advise on the management of the portfolio, the Company
and its subsidiaries, on its behalf.
6. Finance and other income/ (expense)
For six For six
months months
ended ended
30 June 30 June
2020 2019
Total Total
GBP'000s GBP'000s
Interest income:
Interest on bank deposits 151 200
--------------------------------------------------- ---------- ----------
Total finance income 151 200
--------------------------------------------------- ---------- ----------
(Loss)/gain on foreign exchange:
Realised (loss)/gain on settlement of FX forwards (1,155) 1,157
Fair value loss of FX forward contracts (28,419) (7,489)
Other foreign exchange loss (224) (15)
--------------------------------------------------- ---------- ----------
Total loss on foreign exchange (29,404) (6,347)
--------------------------------------------------- ---------- ----------
Finance and similar expenses (29,647) (6,147)
--------------------------------------------------- ---------- ----------
On the Expanded basis, excluding foreign exchange movements,
finance income is GBP131k (Jun 2019: GBP200k) and
finance costs are GBP38,885k (June 2019: GBP1,760k); the
difference being the Group's acquisition facility costs which are
incurred within TRIG UK and TRIG UK I, the Company's subsidiaries.
These costs are detailed in the Analysis of Financial Results
section on page 41.
The loss on foreign exchange on the Expanded basis is GBP33,586k
(June 2019: loss of GBP2,108k). 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 in
Section 3.0.
7. Income tax
Under the current system of taxation in Guernsey, the Company is
exempt from tax in Guernsey other than on Guernsey source income
(excluding Guernsey bank interest). Therefore, income from
investments is not subject to any tax in Guernsey, although these
investments will bear tax in the individual jurisdictions in which
they operate.
8. Earnings per share
Earnings per share ("EPS") is calculated by dividing the profit
attributable to equity shareholders of the Company by the weighted
average number of Ordinary Shares in issue during the period.
30 June 30 June
2020 2019
Profit attributable to equity holders of the Company
(GBP'000s) 16,263 122,155
Weighted average number of Ordinary Shares in issue
('000s) 1,658,987 1,310,972
Basic and diluted EPS 1.0p 9.3p
------------------------------------------------------ --------- ---------
9. Dividends
30 June 31 December
2020 2019
GBP'000s GBP'000s
Amounts recognised as distributions to equity holders
during the period:
Interim dividend for the three months ended 31 December
2018 of 1.625p per share - 19,148
Interim dividend for the three months ended 31 March
2019 of 1.66p per share - 23,986
Interim dividend for the three months ended 30 June
2019 of 1.66p per share - 24,008
Interim dividend for the three months ended 30 September
2019 of 1.66p per share - 27,119
Interim dividend for the three months ended 31 December
2019 of 1.66p per share 27,167 -
Interim dividend for the three months ended 31 March
2020 of 1.69p per share 27,673 -
---------------------------------------------------------- --------- ------------
54,840 94,261
---------------------------------------------------------- --------- ------------
Dividends settled as a scrip dividend alternative 1,226 7,976
Dividends settled in cash 53,614 86,285
---------------------------------------------------------- --------- ------------
54,840 94,261
---------------------------------------------------------- --------- ------------
On 3 August 2020 (see Note 16), the Company declared an interim
dividend of 1.69 pence per share for the three-month period ended
30 June 2020. The dividend, which is payable on 30 September 2020,
is expected to total GBP29,379,485, based on a record date of 14
August 2020 and the number of shares in issue being
1,738,431,043.
10. Net assets per Ordinary Share
30 June 31 December
2020 2019
000's 000's
Shareholders' equity at balance sheet date (GBP'000s) 1,965,706 1,883,437
------------------------------------------------------- --------- -----------
Number of shares at balance sheet date, including
management shares accrued but not yet issued ('000s) 1,739,325 1,637,453
------------------------------------------------------- --------- -----------
Net Assets per Ordinary Share at balance sheet date 113.0p 115.0p
------------------------------------------------------- --------- -----------
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent of the Group's
management fees (up to an Adjusted Portfolio Value of GBP1 billion)
are to be settled in Ordinary Shares. Shares are issued to the
Investment Manager and the Operations Manager twice a year in
arrears, usually in March and September for the half year ending
December and June, respectively.
As at 30 June 2020, 893,480 shares equating to GBP994,536, based
on a Net Asset Value ex dividend of 111.31 pence per share (the Net
Asset Value at 30 June 2020 of 113.0 pence per share less the
interim dividend of 1.69 pence per share) were due but had not been
issued. The Company intends to issue these shares on or around 30
September 2020.
As at 31 December 2019, 889,550 shares equating to GBP1,008,216,
based on a Net Asset Value ex dividend of 113.34 pence per share
(the Net Asset Value at 31 December 2019 of 115.0 pence per share
less the interim dividend of 1.66 pence per share) were due but had
not been issued. The Company issued these shares on 31 March
2020.
In view of this, the denominator in the above Net assets per
Ordinary Share calculation is as follows;
30 June 31 December
2020 2019
000's 000's
Ordinary Shares in issue at balance sheet date 1,738,431 1,636,564
Number of shares to be issued in lieu of Management
fees 893 890
-------------------------------------------------------- --------- -----------
Total number of shares used in Net Assets per Ordinary
Share calculation 1,739,324 1,637,453
-------------------------------------------------------- --------- -----------
11. 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
2020 2019
GBP'000s GBP'000s
Brought forward 1,741,457 1,267,255
Investments purchased 221,616 413,844
Distributions received from investments (53,332) (84,757)
Interest income from investments 37,091 62,909
Gain on valuation 9,743 82,206
----------------------------------------- --------- ------------
Carried forward 1,956,576 1,741,457
----------------------------------------- --------- ------------
The following information is non-statutory. It provides
additional information to users of the interim financial
statements, splitting the fair value movements between the
investment portfolio and TRIG UK and TRIG UK I, the Company's
subsidiaries.
30 June 31 December
2020 2019
GBP'000s GBP'000s
Fair value of investment portfolio
Brought forward value of investment portfolio 1,745,185 1,268,681
Investments in the period 281,305 507,786
Refinance proceeds in the period - (64,577)
Distributions received from investments (78,159) (128,804)
Interest income 33,369 49,649
Dividend income 15,189 -
--------------------------------------------------- --------- ------------
Gain on valuation 12,458 112,449
--------------------------------------------------- --------- ------------
Carried forward value of investment portfolio 2,009,347 1,745,185
--------------------------------------------------- --------- ------------
Fair value of TRIG UK and TRIG UK I
Brought forward value of TRIG UK and TRIG UK I (3,728) (1,426)
Cash movement 53 72
Working capital movement 1,129 (1,572)
Debt movement(1) (50,225) (802)
--------------------------------------------------- --------- ------------
Carried forward value of TRIG UK and TRIG UK I (52,771) (3,728)
--------------------------------------------------- --------- ------------
Total investments at fair value through profit or
loss 1,956,576 1,741,457
--------------------------------------------------- --------- ------------
1 Debt arrangement costs of GBP1,206k (Dec 2019: GBP1,605k) have
been netted off the GBP49,826k (Dec 2019: GBPnil) debt drawn by
TRIG UK and TRIG UK I.
The gains on investment are unrealised.
Investments are generally restricted on their ability to
transfer funds to the Company under the terms of their senior
funding arrangements for that investment. Significant restrictions
include:
- Historic and projected debt service and loan life cover ratios exceed a given threshold;
- Required cash reserve account levels are met;
- Senior lenders have agreed the current financial model that
forecasts the economic performance of the project company;
- Project company is in compliance with the terms of its senior funding arrangements; and
- Senior lenders have approved the annual budget for the Company.
-
Details of investments recognised at fair value through profit
or loss were as follows:
30 June 2020 31 December 2019
Subordinated Subordinated
Investments (project name) Country Equity loan stock Equity loan stock
TRIG UK UK 100% 100% 100% 100%
TRIG UK I UK 100% 100% 100% 100%
Roos UK 100% 100% 100% 100%
The Grange UK 100% 100% 100% 100%
Hill of Towie UK 100% 100% 100% 100%
Green Hill UK 100% 100% 100% 100%
Forss UK 100% 100% 100% 100%
Altahullion UK 100% 100% 100% 100%
Lendrums Bridge UK 100% 100% 100% 100%
Lough Hill UK 100% 100% 100% 100%
Republic
Milane Hill of Ireland 100% 100% 100% 100%
Republic
Beennageeha of Ireland 100% 100% 100% 100%
Haut Languedoc France 100% 100% 100% 100%
Haut Cabardes France 100% 100% 100% 100%
Cuxac Cabardes France 100% 100% 100% 100%
Roussas-Claves France 100% 100% 100% 100%
Puits Castan France 100% 100% 100% 100%
Churchtown UK 100% 100% 100% 100%
East Langford UK 100% 100% 100% 100%
Manor Farm UK 100% 100% 100% 100%
Parsonage UK 100% 100% 100% 100%
Marvel Farms UK 100% 100% 100% 100%
Tamar Heights UK 100% 100% 100% 100%
Stour Fields UK 100% 100% 100% 100%
Meikle Carewe UK 100% 100% 100% 100%
Tallentire UK 100% 100% 100% 100%
Parley UK 100% 100% 100% 100%
Egmere UK 100% 100% 100% 100%
Penare UK 100% 100% 100% 100%
Earlseat UK 100% 100% 100% 100%
Republic
Taurbeg of Ireland 100% 100% 100% 100%
Four Burrows UK 100% 100% 100% 100%
Rothes 2 UK 49% 49% 49% 81%
Mid Hill UK 49% 49% 49% 81%
Paul's Hill UK 49% 49% 49% 81%
Rothes 1 UK 49% 49% 49% 81%
Crystal Rig 1 UK 49% 49% 49% 81%
Crystal Rig 2 UK 49% 49% 49% 81%
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% 39.2% 100%
Ste Marguerite France 48.9% 100% 48.9% 100%
Freasdail UK 100% 100% 100% 100%
FVP du Midi France 51.0% 100% 51.0% 100%
Neilston UK 100% 100% 100% 100%
Garreg Lwyd UK 100% 100% 100% 100%
Broxburn UK 100% 100% 100% 100%
Sheringham Shoal UK 14.7% 14.7% 14.7% 14.7%
Republic
Pallas of Ireland 100% 100% 100% 100%
Solwaybank UK 100% 100% 100% 100%
Montigny France 100% 100% 100% 100%
Rosieres France 100% 100% 100% 100%
Ersträsk Sweden 75% 75% 75% 75%
Jädraås Sweden 100% 100% 100% 100%
Venelle France 100% 100% 100% 100%
Fujin France 41.9% 100% 34.6% 100%
Epine France 100% 100% 100% 100%
Little Raith UK 100% 100% 100% 100%
Gode Germany 25% 25% 25% 25%
Blary Hill UK 100% 100% - -
Merkur Germany 35.7% 35.7% - -
On 8 April 2020, TRIG acquired 100% shareholder loan interest
and 100% equity interest in Blary Hill Energy Limited with the
rights to construct a 35MW wind farm in West Scotland. The project
was developed by RES and will be constructed by RES under a fixed
price EPC Contract.
On 24 April 2020, TRIG made an additional investment into Fujin
SAS, a holding company which owns a portfolio of five operational
windfarms in France. TRIG made the initial investment in June 2019,
the additional investment brings TRIG's holding from 34.6% to
41.9%.
On 12 May 2020, TRIG completed the acquisition of a 35.7%
shareholder loan interest and 35.7% equity interest in Merkur
following receipt of German foreign investment approvals and EU
merger clearances. TRIG partnered with the Dutch pension investor,
APG, who acquired the remaining 64.3% in the Project. This is
consistent with TRIG's strategy of partnering with aligned
co-investors on larger transactions.
Merkur was acquired from a consortium of Partners Group (on
behalf of its clients), DEME Concessions, GE Energy Financial
Services, ADEME and a private fund separately managed by InfraRed,
TRIG's Investment Manager. The transaction process included the
procedures set out in the Company's investment policy and recent
prospectuses, these include the conduct of independent due
diligence by a specially constituted buy-side committee and an
independent third-party valuation and approval by TRIG's Board of
Directors, all of whom are independent of the Investment
Manager.
On 3 July 2020 TRIG sold down a share of its investment in
Merkur to minority co-investors managed by InfraRed, leaving TRIG
with an 24.6% equity interest in the Project. The amount which was
owed by the co-investment party was recognised in the fair value of
investments at 30 June 2020, using a discounted cashflow
methodology. The amount is owed to a subsidiary of the Company.
In the period TRIG made an additional investment in Solwaybank
to fund its construction timetable, in line with outstanding
commitments.
Further detail of acquisitions made in the period can be found
in the Interim Management Report.
12. Share capital, share premium and reserves
Ordinary
Shares
Ordinary
Shares
30 June 31 December
2020 2019
000s 000s
Opening balance 1,636,564 1,178,373
---------------------------------------- ---------- --------------
Issued for cash 100,000 450,000
Issued as a scrip dividend alternative 978 6,376
Issued in lieu of management fees 890 1,815
---------------------------------------- ---------- --------------
Issued at end of period - fully paid 1,738,432 1,636,564
---------------------------------------- ---------- --------------
On 21 May 2020, the Company issued 100,000,000 shares at 1.20p
per share raising GBP120m before costs. The Company used the funds
to partially repay the debt facility.
The Company issued 977,776 shares in relation to scrip take-up
as an alternative to dividend payments in relation to the dividends
paid in the period.
The 889,550 shares issued on 31 March 2020 relate to
GBP1,008,216 of manager fees earned in the six months to 31
December 2019.
The holders of the 1,738,431,043 (Dec 2019: 1,636,563,717)
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 premium
30 June 31 December
2020 2019
GBP'000s GBP'000s
Opening balance 1,721,309 1,189,542
Ordinary Shares issued 122,234 539,627
Cost of Ordinary Shares issued (1,375) (7,859)
-------------------------------- --------- ------------
Closing balance 1,842,168 1,721,309
-------------------------------- --------- ------------
Other reserves
30 June 31 December
2020 2019
GBP'000s GBP'000s
Opening balance 1,008 1,008
Shares to be issued in lieu of management fees incurred
in H1 2019 - 992
Shares to be issued in lieu of management fees incurred
in H2 2019 (Note 13) - 1,008
Shares to be issued in lieu of management fees incurred
in H1 2020 (Note 13) 995 -
Shares issued in the period, transferred to share
premium (1,008) (2,000)
--------------------------------------------------------- --------- ------------
Closing balance 995 1,008
--------------------------------------------------------- --------- ------------
Retained reserves
Retained reserves comprise retained earnings, as detailed in the
statement of changes in shareholders' equity.
13. Related party and key advisor transactions
Loans to related parties:
30 June 31 December
2020 2019
GBP'000s GBP'000s
Short-term balance outstanding on accrued interest
receivable 2,722 1,050
Short-term balance outstanding from TRIG UK, in relation
to Management fees to be settled in share(s) 995 1,008
Long-term loan to TRIG UK (I) 1,211,035 997,255
---------------------------------------------------------- --------- ------------
1,214,752 999,314
---------------------------------------------------------- --------- ------------
During the period, interest totalling GBP37,091k (Jun 2019:
GBP29,346k) was earned, in respect of the long-term
interest-bearing loan between the Company and its subsidiaries,
TRIG UK and TRIG UK I. At the period end GBPnil of accrued interest
was receivable (Dec 19: GBP1,050k).
Key advisor transactions
The Investment Manager to the Group (InfraRed Capital Partners
Limited) is entitled to 65 per cent of the aggregate management fee
(see below), payable quarterly in arrears. The Operations Manager
to the Group (Renewable Energy Systems Limited) is entitled to 35
per cent of the aggregate management fee (see below), payable
quarterly in arrears.
The aggregate management fee payable to the Investment Manager
and the Operations Manager is 1 per cent of the Adjusted Portfolio
Value in respect of the first GBP1 billion of the Adjusted
Portfolio Value, 0.8 per cent in respect of the Adjusted Portfolio
Value in excess of GBP1 billion and 0.75 per cent in respected of
the Adjusted Portfolio Value in excess of GBP2 billion. These fees
are payable by TRIG UK, the Company's direct subsidiary, less the
proportion that relates solely to the Company, the advisory fees,
which are payable by the Company.
The advisory fees payable to the Investment Manager and the
Operations Manager in respect of the advisory services they provide
to the Company are GBP130k per annum and GBP70k per annum,
respectively. The advisory fees charged to the Company are included
within the total fee amount charged to the Company and its
subsidiary, TRIG UK. The Investment Manager advisory fee charged to
the income statement for the period was GBP64k (Jun 2019: GBP64k),
of which GBP32k (Jun 2019: GBP32k) remained payable in cash at the
balance sheet date. The Operations Manager advisory fee charged to
the income statement for the period was GBP35k (Jun 2018: GBP35k),
of which GBP17k (Jun 2018: GBP35k) remained payable in cash at the
balance sheet date.
The Investment Manager management fee charged to TRIG UK for the
period was GBP5,289k (Jun 2019: GBP4,131k), of which GBP2,419k (Jun
2019: GBP1,845k) remained payable in cash at the balance sheet
date. The Operations Manager management fee charged to TRIG UK for
the period was GBP2,847k (Jun 2019: GBP2,225k), of which GBP1,302k
(Jun 2019: GBP994k) remained payable in cash at the balance sheet
date.
In addition, the Operations Manager received GBP4,664k (Jun
2019: GBP3,393k) for services in relation to Asset Management.
These expenses are incurred in the project companies and are not
included in these interim financial statements.
In line with the Investment Management Agreement and the
Operations Management Agreement, 20 per cent of the Group's
aggregate management fees (up to an Adjusted Portfolio Value of
GBP1 billion) are to be settled in Ordinary Shares. The shares
issued to the Managers by the Company relate to amounts due to the
Managers by TRIG UK. Accordingly, TRIG UK reimburses the Company
for the shares issued.
On 31 March 2020, the Company issued 889,550 shares equating to
GBP1,008,216, based on a Net Asset Value ex dividend of 113.34
pence per share (the Net Asset Value at 31 December 2019 of 115.0
pence per share less the interim dividend of 1.66 pence per share)
in respect of management fees earned in H2 2019.
As at 30 June 2020, 893,480 shares equating to GBP994,536, based
on a Net Asset Value ex dividend of 111.31 pence per share (the Net
Asset Value at 30 June 2020 of 113.0 pence per share less the
interim dividend of 1.69 pence per share) were due, in respect of
management fees earned in H1 2020, but had not been issued. The
Company intends to issue these shares on or around 30 September
2020.
The Directors of the Company received fees for their services.
Total fees for the Directors for the period were GBP137,167 (Jun
2019: GBP153,850). Directors' expenses of GBP2,906 (Jun 2019:
GBP2,521) were also paid in the period.
On 8 April 2020, TRIG acquired from RES (the Operations
Manager), a 100% shareholder loan interest and a 100% equity
interest in Blary Hill, a UK onshore wind farm under construction,
for an initial consideration of GBP13.8m. The total consideration
for the project is expected to be GBP48.6m.
On 12 May 2020, TRIG acquired a 35.7% shareholder loan interest
and a 35.7% equity interest in Merkur, an operational German
offshore wind farm from a consortium of vendors which included a
private fund managed by InfraRed (the Investment Manager).
On 3 July 2020, TRIG sold down a share of its investment in
Merkur to minority co-investors, managed by InfraRed (the
Investment Manager), leaving TRIG with a 25% shareholder loan
interest and a 25% equity interest.
All of the above transactions were undertaken on an arm's length
basis.
14. Guarantees and other commitments
As at 30 June 2020, the Company and or TRIG UK and or TRIG UK I
and its subsidiaries, had provided GBP57.5m (Dec 2019: GBP26.4m) in
guarantees to the projects in the TRIG portfolio.
As at 30 June 2020, the Company, through its subsidiaries, had
net commitments of GBP40.6m (2019: GBP273.6m) in relation to future
investments. These commitments, in the form of deferred
consideration, are due as investment completion obligations are met
and when construction milestones are achieved.
The Company also guarantees the revolving acquisition facility,
entered into by TRIG UK and TRIG UK I, to enable it to acquire
further investments.
15. Contingent consideration
The Group has performance-related contingent consideration
obligations of up to GBP0.8m (Dec 2019: GBP32.3m) relating to
acquisitions completed prior to 30 June 2020. These payments depend
on the performance of certain wind farms and other contracted
enhancements. The payments, if triggered, would be due up to 2023.
The valuation of the investments in the portfolio does not assume
that these enhancements are achieved. If further payments do become
due they would be expected to be offset by an increase in fair
value of the investment due to increased assumed revenues. The
arrangements are generally two way in that if performance is below
base case levels some refund of consideration may become due.
16. Events after the balance sheet date
On 3 July 2020, the Company sold down a share of its investment
in Merkur to minority co-investors managed by InfraRed, leaving the
Company with an approximate 24.6% equity interest in the
Project.
On 29 July 2020, the Company exercised its put option to sell
back its 75% interest in Ersträsk to its developer, Enercon, due to
construction delays. On this date the exit was completed and
transferred. TRIG has not suffered any financial loss. Under the
terms of the sale and purchase agreement for Ersträsk, the Company
was protected. Payment would only have been due if the turbines
became operational by the key milestones. The Company did not take
construction or delay risks.
On 3 August 2020, the Company declared an interim dividend of
1.69 pence per share for the three-month period ended 30 June 2020.
The dividend, which is payable on 30 September 2020, is expected to
total GBP29,379,485, based on a record date of 14 August 2020 and
the number of shares in issue being 1,738,431,043.
There are no other events after the balance sheet date, which
are required to be disclosed.
Directors and Advisers
DIRECTORS
Helen Mahy (Chairman)
Jonathan (Jon) Bridel
Shelagh Mason
Klaus Hammer
Tove Feld
REGISTRAR
Link Market Services (Guernsey) Limited
PO Box 627
St Peter Port
Guernsey
GY1 4PP
ADMINISTRATOR TO COMPANY, DESIGNATED MANAGER, COMPANY SECRETARY
AND REGISTERED OFFICE
Aztec Financial Services (Guernsey) Limited
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3PP
+44 1481 748 831
INVESTMENT MANAGER
InfraRed Capital Partners Limited
Level 7, One Bartholomew Close
Barts Square
London EC1A 7BL
OPERATIONS MANAGER
Renewable Energy Systems Limited
Beaufort Court
Egg Farm Lane
Kings Langley
Hertfordshire WD4 8LR
FINANCIAL PR
Maitland/AMO
3 Pancras Square
London
N1C 4AG
UK TRANSFER AGENT
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Helpline: 0871 664 0300
AUDITOR
Deloitte LLP
Regency Court
Esplanade
St Peter Port
Guernsey GY1 3HW
BROKERS
Investec Bank Plc
30 Gresham Street
London EC2V 7QP
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Key Company Data
Company name The Renewables Infrastructure Group Limited
---------------------- ------------------------------------------------------
Registered address East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey
---------------------- ------------------------------------------------------
Listing London Stock Exchange - Premium Listing (TRIG)
---------------------- ------------------------------------------------------
Ticker symbol TRIG
---------------------- ------------------------------------------------------
SEDOL BBHX2H9
---------------------- ------------------------------------------------------
Index inclusion FTSE All-Share, FTSE 250, FTSE 350 and FTSE
350 High Yield indices
---------------------- ------------------------------------------------------
Company year end 31 December
---------------------- ------------------------------------------------------
Dividend payments Quarterly (March, June, September, December)
---------------------- ------------------------------------------------------
Investment Manager InfraRed Capital Partners Limited
("IM")
---------------------- ------------------------------------------------------
Operations Manager Renewable Energy Systems Limited
("OM")
---------------------- ------------------------------------------------------
Company Secretary Aztec Financial Services (Guernsey) Limited
and Administrator
---------------------- ------------------------------------------------------
Net assets GBP1,966m as at 30 June 2020
---------------------- ------------------------------------------------------
Market capitalisation GBP2,207m as at 30 June 2020
---------------------- ------------------------------------------------------
Management Fees 1.0% per annum of the Adjusted Portfolio Value(1)
of the investments up to GBP1.0bn (with 0.2%
of this paid in shares), falling to (with no
further elements paid in shares) 0.8% per annum
for the Adjusted Portfolio Value above GBP1.0bn,
0.75% per annum for the Adjusted Portfolio Value
above GBP2.0bn and 0.7% per annum the Adjusted
Portfolio Value above GBP3.0bn. Fees are split
between the IM (65%) and the OM (35%).
No performance or acquisition fees
---------------------- ------------------------------------------------------
ISA, PEP and SIPP The ordinary shares are eligible for inclusion
status in PEPs and ISAs (subject to applicable subscription
limits) provided that they have been acquired
by purchase in the market, and they are permissible
assets for SIPPs
---------------------- ------------------------------------------------------
FATCA The Company has registered for FATCA and has
a GIIN number J0L1NL.99999.SL.831
---------------------- ------------------------------------------------------
KID The Company issues a KID in line with EU PRIIPs
regulation and this can be found on the Company's
website
---------------------- ------------------------------------------------------
Investment policy The Company's investment policy can be found
on the Company's website
---------------------- ------------------------------------------------------
Website www.TRIG-Ltd.com
---------------------- ------------------------------------------------------
Notes:
1 Adjusted Portfolio Value means fair market value, without
deductions for borrowed money or other liabilities or accruals, and
including outstanding subscription obligations.
[1] The sell down of the Ersträsk investment completed in Q3.
[2] 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.
[3] 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.
[4] This includes Euro denominated investments sold down following the period end
[5] Includes the partial sell down of Merkur in July 2020 and
disposal of Ersträsk Phase 1 which both occurred post-period
end.
[6] After the disposal of Ersträsk post-period end, the Group
had investments in 73 projects. The proceeds were recognised in the
fair value of investments at 30 June 2020
[7] The Portfolio Valuation at 31 December 2019 (GBP2,095.6m)
included outstanding commitments of GBP273.6m, the majority of
which have now been invested or cancelled.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EAEPKEEDEEAA
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August 07, 2020 02:00 ET (06:00 GMT)
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