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Greencoat UK Wind PLC Final Results Announcement

28/02/2019 7:00am

UK Regulatory (RNS & others)


Greencoat (LSE:UKW)
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RNS Number : 3442R

Greencoat UK Wind PLC

28 February 2019

Greencoat UK Wind PLC (UKW)

28 February 2019

Greencoat UK Wind PLC reports results for the year ended 31 December 2018

Greencoat UK Wind Plc today announces the final results for the year to 31 December 2018 as below. These results were approved by the Board of Directors on 27 February 2019.

Greencoat UK Wind PLC is the leading listed renewable infrastructure fund, invested in UK wind farms. The Company's aim is to provide investors with an annual dividend that increases in line with RPI inflation while preserving the capital value of its investment portfolio in the long term on a real basis through reinvestment of excess cash flow and the prudent use of gearing.

2018 Highlights

Performance in line with expectations with cash generation on budget

-- The Group's investments generated 2,003GWh of electricity, 6 per cent. below budget owing to low wind resource.

   --     On budget cash generation (Group and wind farm SPVs) of GBP117.3 million. 

High quality acquisitions and oversubscribed equity raising

-- Acquisition of 3 further wind farms and an additional interest in Clyde increased the portfolio to 32 wind farm investments, net generating capacity to 836MW and GAV to GBP1,872.8 million as at 31 December 2018.

-- Agreement to acquire 75 per cent. of Tom nan Clach and 100 per cent. of Douglas West, the Group's first CFD and subsidy free investments respectively.

   --     Issuance of further shares raising GBP118.8 million in May 2018. 

Dividends, returns and balance sheet

-- The Company has declared total dividends of 6.76 pence per share with respect to the year and is targeting a dividend of 6.94 pence per share for 2019 (increased in line with December 2018 RPI).

   --     NAV growth of 11.8 pence per share (adjusting for dividends). 

-- GBP480 million outstanding borrowings at 31 December 2018, equivalent to 26 per cent. of GAV.

Key Metrics

 
 
   As at 31 December 2018 
-----------------------------------  ------------------- 
 
 Market capitalisation                GBP1,425.6 million 
 Share price                                 126.0 pence 
 Dividends with respect to the year      GBP74.8 million 
 Dividends with respect to the year           6.76 pence 
  per share 
 GAV                                  GBP1,872.8 million 
 NAV                                  GBP1,392.8 million 
 NAV per share                               123.1 pence 
 NAV growth per share (adjusting              11.8 pence 
  for dividends) 
 Total return (NAV)                       17.0 per cent. 
 TSR                                       8.3 per cent. 
-----------------------------------  ------------------- 
 

Subsequent events

-- On 1 February 2019, the Company announced a GBP452 million investment in the Stronelairg and Dunmaglass wind farms with SSE.

-- Completion to occur at the end of March 2019, increasing total number of investments to 34 operating UK wind farms with a net generating capacity of 950MW.

-- On 27 February 2019, the Company issued an additional 103 million new shares at a price of 127p per share, raising gross proceeds of GBP131 million in an oversubscribed share placing.

Commenting on today's results, Tim Ingram, Chairman of Greencoat UK Wind, said:

"Today's results represent another year of consistent delivery with performance in line with expectations, achieving strong NAV growth of 11.8p. With our continuing strong cashflow and robust dividend cover we confidently target a dividend of 6.94 pence per share with respect to 2019, again increased in line with RPI.

"2018 was another active investment year as we committed to invest over GBP500m across 6 wind farms. We also increased the number of vendors we have acquired from to 14 (including commitments), showing the breadth of our relationships.

"Our portfolio is now reducing carbon dioxide emissions by approximately 1 million tonnes per annum through displacing thermal generation.

"Our pipeline of acquisition opportunities remains very healthy and we continue to expect the majority of future investments to be made from the GBP50bn pool of UK Wind farms accredited under the ROC regime."

Annual report

A copy of the full annual report has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM. The full annual report will also shortly be available on the Company's website at www.greencoat-ukwind.com where all other statutory information on the Company can also be found.

Details of the conference call for analysts and investors:

A presentation for analysts and investors will take place at 9.30am at Headland, Cannon Green, 1 Suffolk Lane, London EC4R 0AX. To register for the event please notify Headland, either by email to ukwind@headlandconsultancy.com or by telephone on +44 (0)20 3805 4822.

For further information, please contact:

   Greencoat UK Wind PLC                                                             020 7832 9400 

Stephen Lilley

Laurence Fumagalli

Tom Rayner

   Headland Consultancy                                                                020 3805 4822 

Stephen Malthouse

Rob Walker

Charlie Twigg

Defining Characteristics

Greencoat UK Wind PLC was designed for investors from first principles to be simple, transparent and low risk.

   --     The Group is invested solely in UK wind farms. 
   --     Wind is the most mature and largest scale renewable technology. 

-- The UK has a long established regulatory regime, high wind resource and will have GBP75 billion of wind farms in operation by 2021.

-- The Group is wholly independent and thus avoids conflicts of interests in its investment decisions.

-- The UK-based, independent Board is actively involved in key investment decisions and in monitoring the efficient operation of the assets, and works in conjunction with the most experienced investment management team in the sector.

-- Low gearing (including no debt at wind farm level) is important to ensure a high level of cash flow stability and higher tolerance to downside sensitivities.

   --     The Group invests in sterling assets and thus does not incur material currency risk. 

All capitalised terms are defined in the list of defined terms below unless separately defined.

Chairman's Statement

I am pleased to present the Annual Report of Greencoat UK Wind PLC for the year ended 31 December 2018.

Performance

During the year, portfolio generation was 6 per cent. below budget at 2,003GWh. Although wind speed was below the long term mean, the Group benefitted from robust wholesale power prices, with net cash generated by the Group and wind farm SPVs being on budget at GBP117.3 million. Dividends paid in the year totalled GBP72.3 million, thus dividend cover was 1.6x.

By the end of 2018, the portfolio provides sufficient electricity to power over 750,000 homes and reduces carbon dioxide emissions by approximately 1 million tonnes per annum by displacing thermal generation.

Dividends and Returns

Declared dividends for the year total 6.76 pence per share, with the fourth and final quarterly dividend of 1.69 pence per share to be paid on 28 February 2019. With our continuing strong cashflow and robust dividend cover we can confidently target a dividend of 6.94 pence per share with respect to 2019, again increased in line with December's RPI.

NAV per share increased from 109.6 pence per share (ex dividend) on 31 December 2017 to 121.4 pence per share (ex dividend) on 31 December 2018, an increase of 11.8 pence (10.8 per cent.) during the year.

The chart in the Annual Report compares NAV per share with RPI, showing how, in addition to our policy of increasing the dividend by RPI, we have been meeting our objective of real capital preservation since listing.

At the end of 2018, we employed a leading technical consultancy firm to advise us on the expected life of our assets. Their report was provided to the Board in January 2019 and, as a result, we have increased our asset life assumption from 25 to 30 years, having made appropriate assumptions in relation to the continued good management of the assets, lease extensions and other factors.

The Total Shareholder Return for the year was 8.3 per cent., and since listing has been 71.5 per cent..

Acquisitions

2018 has been another active investment year for us. We completed the acquisition of interests in 3 new wind farms and further increased our interest in the Clyde wind farm. As a result, we invested a total of GBP364.4 million, with our net generating capacity increasing from 694MW to 836MW, and increased the number of sellers from whom we have acquired wind farms to 12, showing the breadth of our relationships.

In addition, in October we announced that we had committed to acquire 75 per cent. of the Tom nan Clach wind farm once it is constructed, which is expected to be in July 2019. This wind farm is being built under the Government's CFD regime, which will remove market electricity price risk in the first 15 years of life. Consequently, it will have a lower expected return, reflecting this lower risk.

As part of the same strategy, we also announced in December that we have agreed to acquire the Douglas West wind farm which is scheduled to come into operation in July 2021. As Douglas West is being constructed without Government support, it will be fully subject to market electricity prices and consequently has an enhanced expected return, reflecting this higher risk.

On 1 February 2019, we announced a GBP452 million investment in the Stronelairg and Dunmaglass wind farms with SSE, with completion occurring at the end of March 2019. These 2 new investments will increase our investments to 34 operating UK wind farms with a net generating capacity of 950MW.

Equity Issuance

In order to finance our continuing growth and pursue value creating opportunities, we issued 102 million new shares in May 2018 at a price of 117 pence per share, raising gross proceeds of GBP119 million in an oversubscribed share placing.

On 27 February 2019, we issued an additional 103 million new shares at a price of 127 pence per share, raising gross proceeds of GBP131 million in an oversubscribed share placing.

Although neither placings were pre-emptive, a strong preference was given to existing shareholders when allocating shares.

Gearing

In November we reported that we had arranged further long term fixed rate borrowing such that GBP400 million of our borrowings are now fixed rate with maturities stretching through to November 2026 at an average interest cost of 3.08 per cent. per annum. During the year the minimum and average gearing was 19 per cent. and 23 per cent. of GAV respectively, and we ended the year with GBP480 million of total external borrowings (26 per cent. of GAV).

After the completion of the investment in the Stronelairg and Dunmaglass wind farms, gearing will be GBP794 million (34 per cent. of GAV) at an average interest cost of 2.76 per cent. per annum.

Strategy and Outlook

In 2013, when the Company first listed, 7 per cent of the UK's electricity demand was supplied by wind energy. By 2018, this figure has increased to 17 percent.. Wind continues to be the most mature and widely deployed renewable energy technology in the UK.

Our financial strategy has remained unchanged over the last 6 years: to provide shareholders with an annual dividend that increases in line with RPI inflation while preserving the capital value of the investment portfolio in real terms. This is achieved through a focused strategy of investing only in wind farms and only in the UK. Our intention remains to adhere strictly to this core strategy.

Growth by acquisition brings benefits to shareholders as:

   --     a larger scale brings economies and enables better terms to be obtained from suppliers; 

-- equity placings following acquisitions provide additional opportunity for shareholders to increase their investment in the Company. Although not pre-emptive, a strong preference is given to existing shareholders when allocating shares in our equity placings;

-- these equity placings are priced at a premium to NAV per share thus enhancing overall NAV per share for existing shareholders; and

-- equity placings increase the liquidity of shares in the market. During 2018 on average 7.0 million of the Company's shares were traded weekly on the London Stock Exchange.

During 2018 we made investments and commitments totalling over GBP500 million, of which approximately 70 per cent. are in ROC accredited wind farms. Although we are starting to see attractive CFD and subsidy free assets, we expect that the majority of future investments will continue to be made from the approximately GBP50 billion pool of onshore and offshore UK wind farms accredited under the ROC regime. The Stronelairg and Dunmaglass investments are good examples of that.

The executive management continues to maintain a disciplined acquisition strategy: if a potential investment is not in line with the Company's investment objectives, or is otherwise not in the interests of shareholders, then we will not invest.

With our strong cashflow and robust dividend cover, coupled with our disciplined approach, we are confident in our ability to continue to meet the objectives of dividend growth in line with RPI and capital preservation in real terms.

The Board and Governance

The search firm Heidrick & Struggles has been engaged to assist the Board in relation to succession planning to secure the right skills and experience while also seeking to increase diversity on the Board. This search is now well advanced and we are hoping to be able to announce such a new appointment by the time of our forthcoming AGM.

The Company's governance is further described in the Corporate Governance Report.

Annual General Meeting

Our AGM will take place at 2.00 pm on Friday 26 April 2019 at the office of the Investment Manager. Details of the formal business of the meeting are set out in a separate circular which is sent to shareholders with the Annual Report. We look forward to meeting with shareholders on that occasion.

Tim Ingram

Chairman

27 February 2019

Strategic Report

Introduction

The Directors present their Strategic Report for the year ended 31 December 2018. Details of the Directors who held office during the year and as at the date of this report are given in this Annual Report.

Investment Objective

The Company's aim is to provide investors with an annual dividend that increases in line with RPI inflation while preserving the capital value of its investment portfolio in the long term on a real basis through reinvestment of excess cashflow and the prudent use of portfolio gearing. The target return to investors is an IRR net of fees and expenses of 8 per cent. to 9 per cent.. The 2018 dividend of 6.76 pence per annum is targeted to increase in line with December 2018 RPI to 6.94 pence for 2019. Progress on the objectives is measured by reference to the key metrics above.

Investment Policy

The Group invests in UK wind farms predominantly with a capacity of over 10MW, which sell the power produced and associated green benefits to creditworthy UK offtakers under route-to-market power purchase agreements.

As the Group has no borrowings at wind farm level, and only limited borrowing at the Group level, the annual dividend is sufficiently protected against lower power prices. At the same time, it has the ability to benefit from higher power prices as the Group is not required to be locked into long term fixed price contracts.

The Group has used debt facilities to make additional investments in the year. This has enhanced the Group's attractiveness to sellers since execution risk is greatly diminished, with the Group effectively being a cash buyer. The Group will continue to use debt facilities to make further investments.

The Group will look to repay its drawn debt facilities by refinancing them in the equity markets at appropriate times in order to refresh its debt capacity. While debt facilities are drawn, the Group benefits from an increase in investor returns because borrowing costs are below the underlying return on investments.

In the renewable infrastructure sector, links to developers are not important in sourcing new acquisitions as the assets are held by a large number of owners. Independence is of key importance for the Company to continue to make acquisitions at the best possible price. The Investment Manager's relationships across the sector are also important.

The Group invests in both onshore and offshore wind farms with the amount invested in offshore wind farms being capped at 40 per cent. of GAV at acquisition.

The Board believes that there is a significant market in which the Group can continue to grow over the next few years.

Structure

The Company is a UK registered investment company with a premium listing on the London Stock Exchange. The Group comprises the Company and Holdco. Holdco invests in SPVs which hold the underlying wind farm assets. The Group employs Greencoat Capital LLP as its Investment Manager.

Discount Control

The Articles of Association require a continuation vote by shareholders if the share price were to trade at an average discount to NAV of 10 per cent. or more over a 12 month period. Notwithstanding this, it is the intention of the Board for the Company to buy back its own shares in the market if the share price is trading at a material discount to NAV, providing of course that it is in the interests of shareholders to do so.

Review of Business and Future Outlook

A detailed discussion of individual asset performance and a review of the business in the year together with future outlook are covered in the Investment Manager's Report.

Key Performance Indicators

The Board believes that the key metrics detailed above, which are typical for investment entities, together with cash generation will provide shareholders with sufficient information to assess how effectively the Group is meeting its objectives.

Ongoing Charges

The ongoing charges ratio of the Company is 1.13 per cent. of the weighted average NAV for the year to 31 December 2018. This is made up as follows and has been calculated using the AIC recommended methodology.

 
                           31 December 2018     31 December 2017 
---------------------- 
                            GBP'000       %     GBP'000        % 
----------------------  -----------  ------  ----------  ------- 
 
 Total management fee        13,189   1.04%       9,668    1.11% 
 Directors' fees                233   0.02%         225    0.03% 
 Ongoing expenses (1)           955   0.07%         858    0.10% 
----------------------               ------              ------- 
 Total                       14,377   1.13%      10,751    1.24% 
----------------------  -----------  ------  ----------  ------- 
 

(1) Ongoing expenses do not include GBP743k (2017: GBP550k) of management and administration fees relating to the wind farm SPVs that is recharged to them, and GBP42k (2017: GBP89k) of broken deal costs.

Following the equity placing in February 2019 and assuming no further change in NAV, the 2019 ongoing charges ratio is expected to be 1.08 per cent..

The Investment Manager is not paid any performance or acquisition fees.

Corporate and Social Responsibility

Environmental, Social and Governance Matters

The Group invests in wind farms and the environmental benefits of renewable energy are widely known.

The Group relies on the Investment Manager to apply appropriate environmental, social and governance policies to the investments the Group makes. The Group's approach to responsible investing, including the environmental standards it aims to meet, are set out in the policies in place at the Investment Manager. Responsible investing principles have been applied to each of the investments made.

These policies require the Group to make reasonable endeavours to procure the ongoing compliance of its portfolio companies with its policies on responsible investment. Further details on these policies may be found on the Company's website: www.greencoat-ukwind.com.

The Investment Manager monitors compliance at the investment phase and reports on an ongoing basis to the Board.

Employees and Officers of the Company

The Company does not have any employees and therefore employee policies are not required. The Directors of the Company are listed in the Annual Report.

Diversity

The Group's policy on diversity is detailed in the Corporate Governance Report.

Principal Risks and Uncertainties

In the normal course of business, each investee company has a rigorous risk management framework with a comprehensive risk register that is reviewed and updated regularly and approved by its board. The key risks identified by the Board to the performance of the Group are detailed below.

The Board maintains a risk matrix setting out the risks affecting both the Group and the investee companies. This risk matrix is reviewed and updated at least annually to ensure that procedures are in place to identify, mitigate and minimise the impact of risks should they crystallise. This enables the Board to carry out a robust assessment of the risks facing the Group, including those principal risks that would threaten its business model, future performance, solvency or liquidity.

As it is not possible to eliminate risks completely, the purpose of the Group's risk management policies and procedures is not to eliminate risks, but to reduce them and to ensure that the Group is adequately prepared to respond to such risks and to minimise any impact if the risk develops.

The spread of assets within the portfolio ensures that the portfolio benefits from a diversified wind resource and spreads the exposure to a number of potential technical risks associated with grid connections and with local distribution and national transmission networks. In addition, the portfolio includes 6 different turbine manufacturers, which diversifies technology and maintenance risks. Finally, each site contains a number of individual turbines, the performance of which is largely independent of other turbines.

Risks Affecting the Group

Investment Manager

The ability of the Group to achieve its investment objective depends heavily on the experience of the management team within the Investment Manager and more generally on the Investment Manager's ability to attract and retain suitable staff. The sustained growth of the Group depends upon the ability of the Investment Manager to identify, select and execute further investments which offer the potential for satisfactory returns.

The Investment Management Agreement includes key man provisions which would require the Investment Manager to employ alternative staff with similar experience relating to investment, ownership, financing and management of wind farms should for any reason any key man cease to be employed by the Investment Manager. The Investment Management Agreement ensures that no investments are made following the loss of key men until suitable replacements are found and there are provisions for a reduction in the investment management fee during the loss period. It also outlines the process for their replacement with the Board's approval. In addition, the key men are shareholders in the Company.

Financing Risk

The Group will finance further investments either by borrowing or by issuing further shares. The ability of the Group to deliver expected real NAV growth is dependent on access to debt facilities and equity capital markets. There can be no assurance that the Group will be able to borrow additional amounts or refinance on reasonable terms or that there will be a market for further shares.

Investment Returns Become Unattractive

A significantly strengthening economy may lead to higher future interest rates which could make the listed infrastructure asset class relatively less attractive to investors. In such circumstances, it is likely that there will be an increase in inflation (to which the revenues and costs of the investee companies are either indexed or significantly correlated) or an increase in power prices (due to greater consumption of power) or both. Both would increase the investment return and thus would provide a degree of mitigation against higher future interest rates.

Risks Affecting Investee Companies

Regulation

If a change in Government renewable energy policy were applied retrospectively to current operating projects including those in the Group's portfolio, this could adversely impact the market price for renewable energy or the value of the green benefits earned from generating renewable energy. The Government has evolved the regulatory framework for new projects being developed but has consistently stood behind the framework that supports operating projects as it understands the need to ensure investors can trust regulation.

Electricity Prices

Other things being equal, a decline in the market price of electricity would reduce the portfolio companies' revenues. Approximately 50 per cent. of the Group's revenues are exposed to the floating power price.

The Group's dividend policy has been designed to withstand significant short term variability in power prices. A longer period of power price decline would materially affect the revenues of investee companies. In general, independent forecasters expect UK wholesale power prices to rise in real terms from current levels, driven by higher gas and carbon prices.

Wind Resource

The investee companies' revenues are dependent upon wind conditions, which will vary across seasons and years within statistical parameters. The standard deviation of energy production is 10 per cent. over a 12 month period (2 per cent. over 25 years). Since long term variability is low, there is no significant diversification benefit to be gained from geographical diversification across weather systems.

The Group does not have any control over the wind resource but has no debt at wind farm level and has designed its dividend policy such that it can withstand significant short term variability in production relating to wind. Before investment, the Group carries out extensive due diligence and relevant historical wind data is available over a substantial period of time. The other component of wind energy generation, a wind farm's ability to turn wind into energy, is mitigated by generally purchasing wind farms with a proven operating track record.

When acquiring wind farms that have only recently entered into operation, only limited operational data is available. In these instances, the acquisition agreements with the vendors of these wind farms will include a "wind energy true-up" or an appropriate discount.

Asset Life

In the event that the wind turbines do not operate for the period of time assumed by the Group or require higher than expected maintenance expenditure to do so, it could have a material adverse effect on investment returns.

The Group performs regular reviews and ensures that maintenance is performed on all wind turbines across the wind farm portfolio. Regular maintenance ensures the wind turbines are in good working order, consistent with their expected life-spans.

Health and Safety and the Environment

The physical location, operation and maintenance of wind farms may, if inappropriately assessed and managed, pose health and safety risks to those involved. Wind farm operation and maintenance may result in bodily injury, particularly if an individual were to fall from height, fall or be crushed in transit from a vessel to an offshore installation or be electrocuted. If an accident were to occur in relation to one or more of the Group's investments and if the Group were deemed to be at fault, the Group could be liable for damages or compensation to the extent such loss is not covered by insurance policies. In addition, adverse publicity or reputational damage could ensue.

The Board reviews health and safety at each of its scheduled Board meetings and Martin McAdam serves as the appointed Health and Safety Director. The Group engages an independent health and safety consultant to ensure the ongoing appropriateness of its health and safety policies.

The investee companies comply with all regulatory and planning conditions relating to the environment, including in relation to noise emissions, habitat management and waste disposal.

Going Concern

The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Investment Manager's Report. The Group faces a number of risks and uncertainties, as set out above. The financial risk management objectives and policies of the Group, including exposure to price risk, interest rate risk, credit risk and liquidity risk are discussed in note 18 to the financial statements.

The Group continues to meet day-to-day liquidity needs through its cash resources.

As at 31 December 2018, the Group had net current assets of GBP1.6 million (2017: GBP3.3 million) and had cash balances of GBP3.4 million (2017: GBP5.9 million) (excluding cash balances within investee companies), which are sufficient to meet current obligations as they fall due. The major cash outflows of the Group are the payment of dividends and costs relating to the acquisition of new assets, both of which are discretionary. The Group had GBP480 million (2017: GBP265 million) of outstanding debt as at 31 December 2018. The Group is expected to continue to comply with the covenants of its banking facilities going forward.

The Directors have reviewed Group forecasts and projections which cover a period of not less than 12 months from the date of this report, taking into account foreseeable changes in investment and trading performance, which show that the Group has sufficient financial resources.

On the basis of this review, and after making due enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Longer Term Viability

The Company is a member of the AIC and complies with the AIC Code. In accordance with the AIC Code, the Directors are required to assess the prospects of the Group over a period longer than the 12 months associated with going concern. The Directors conducted this review for a period of 10 years, which it deemed appropriate, given the long term nature of the Group's investments which are modelled over 30 years, coupled with its long term strategic planning horizon.

In considering the prospects of the Group, the Directors looked at the key risks facing both the Group and the investee companies, focusing on the likelihood and impact of each risk as well as any key contracts, future events or timescales that may be assigned to each key risk. The Directors also tested the Company's ability to remain viable under several robust downside scenarios.

As a sector-focused infrastructure fund, the Group aims to produce stable and inflating dividends while preserving the capital value of its investment portfolio on a real basis. The Directors believe that the Group is well placed to manage its business risks successfully over both the short and long term and accordingly, the Board has a reasonable expectation that the Group will be able to continue in operation and to meet its liabilities as they fall due for a period of at least 10 years.

While the Directors have no reason to believe that the Group will not be viable over a longer period, they are of the opinion that it would be difficult to foresee the economic viability of any company with any degree of certainty for a period of time greater than 10 years.

On behalf of the Board

Tim Ingram

Chairman

27 February 2019

Investment Manager's Report

The Investment Manager

The investment management team's experience covers wind farm investment, ownership, finance and operation. All the skills and experience required to manage the Group's investments lie within a single investment manager. The Investment Manager is authorised and regulated by the Financial Conduct Authority and is a full scope UK AIFM.

Since listing in March 2013, the team has been led by Stephen Lilley and Laurence Fumagalli.

Stephen has 22 years of investment management and financing experience in addition to 6 years in the nuclear industry. Prior to joining the Investment Manager in March 2012, Stephen led the renewable energy infrastructure team at Climate Change Capital (CCC) from May 2010. Prior to CCC, he was a senior director of Infracapital Partners LP, M&G's European Infrastructure fund. During this time, Stephen led over GBP400 million of investments, including the acquisition of stakes in Kelda Group (Yorkshire Water), Zephyr (wind farms) and Meter Fit (gas/electricity metering). He also sat on the boards of these companies after acquisition. Prior to this, he was a director at Financial Security Assurance, where he led over GBP2 billion of underwritings in the infrastructure and utility sectors. He also worked for the investment companies of the Serco and Kvaerner Groups.

Laurence also has 22 years of investment management and financing experience. Prior to joining the Investment Manager in March 2012, Laurence held a number of senior roles within CCC from 2006 to 2011. Initially he co-headed CCC's advisory team before transferring in 2007 to the carbon finance team. Laurence joined Stephen in the renewable energy infrastructure team in early 2011. From 2003-2006, Laurence headed the Bank of Tokyo-Mitsubishi's London-based renewables team, where he financed and advised on over 1GW of UK wind. Prior to the Bank of Tokyo-Mitsubishi, Laurence worked in the power project finance team at NatWest.

Investment Portfolio

Portfolio as at 31 December 2018:

 
 
 Wind Farm         Turbines    Operator         PPA            Total   Ownership     Net 
                                                                  MW       Stake      MW 
----------------  ----------  ---------------  -------------  ------  ----------  ------ 
 Bicker Fen        Senvion     EDF              EDF             26.7         80%    21.3 
 Bin Mountain      GE          SSE              SSE              9.0        100%     9.0 
 Bishopthorpe      Senvion     BayWa            Axpo            16.4        100%    16.4 
 Braes of Doune    Vestas      DNV-GL           Centrica        72.0         50%    36.0 
 Brockaghboy       Nordex      SSE              SSE             47.5        100%    47.5 
 Carcant           Siemens     DNV-GL           SSE              6.0        100%     6.0 
 Church Hill       Enercon     Energia          Energia         18.4        100%    18.4 
 Clyde             Siemens     SSE              SSE            522.4       28.2%   147.3 
 Corriegarth       Enercon     Wind Prospect    Centrica        69.5        100%    69.5 
 Cotton Farm       Senvion     BayWa            Sainsbury's     16.4        100%    16.4 
 Crighshane        Enercon     Energia          Energia         32.2        100%    32.2 
 Deeping St. 
  Nicholas         Senvion     EDF              EDF             16.4         80%    13.1 
 Drone Hill        Nordex      BayWa            Statkraft       28.6       51.6%    14.8 
 Earl's Hall 
  Farm             Senvion     BayWa            Sainsbury's     10.3        100%    10.3 
 Glass Moor        Senvion     EDF              EDF             16.4         80%    13.1 
 Kildrummy         Enercon     BayWa            Sainsbury's     18.4        100%    18.4 
                               Natural 
 Langhope Rig      GE           Power           Centrica        16.0        100%    16.0 
 Lindhurst         Vestas      RWE              RWE              9.0         49%     4.4 
 Little Cheyne 
  Court            Nordex      RWE              RWE             59.8         41%    24.5 
 Maerdy            Siemens     DNV-GL           Statkraft       24.0        100%    24.0 
 Middlemoor        Vestas      RWE              RWE             54.0         49%    26.5 
 North Hoyle       Vestas      RWE              RWE             60.0        100%    60.0 
 North Rhins       Vestas      DNV-GL           E.ON            22.0       51.6%    11.4 
 Red House         Senvion     EDF              EDF             12.3         80%     9.8 
 Red Tile          Senvion     EDF              EDF             24.6         80%    19.7 
 Rhyl Flats        Siemens     RWE              RWE             90.0      24.95%    22.5 
 Screggagh         Nordex      SSE              Energia         20.0        100%    20.0 
 Sixpenny Wood     Senvion     BayWa            Statkraft       20.5       51.6%    10.6 
 Slieve Divena     Nordex      SSE              SSE             30.0        100%    30.0 
 Stroupster        Enercon     BayWa            BT              29.9        100%    29.9 
 Tappaghan         GE          SSE              SSE             28.5        100%    28.5 
 Yelvertoft        Senvion     BayWa            Statkraft       16.4       51.6%     8.5 
 
 Total (1)                                                                         835.8 
------------------------------------------------------------  ------  ----------  ------ 
 

(1) Numbers do not cast owing to rounding of (0.2)MW.

Portfolio Performance

Portfolio generation for the year was 2,003GWh, 6 per cent. below budget owing to low wind resource over the summer.

The following table shows wind speed and portfolio generation relative to budget since listing:

 
                                  Wind speed               Generation 
                     (variation to long term    (variation to budget) 
                                       mean) 
 2013 (adjusted)                         +3%                      +8% 
                   -------------------------  ----------------------- 
 2014                                    -2%                      -3% 
                   -------------------------  ----------------------- 
 2015                                    +5%                      +8% 
                   -------------------------  ----------------------- 
 2016                                    -6%                      -6% 
                   -------------------------  ----------------------- 
 2017                                    -1%                       0% 
                   -------------------------  ----------------------- 
 2018                                    -4%                      -6% 
                   -------------------------  ----------------------- 
 

Variation to budget lies within reasonable statistical parameters. The annual standard deviation of wind speed is 6 per cent. and the annual standard deviation of generation is 10 per cent. (2 per cent. over 25 years).

The following table provides a breakdown of generation by wind farm:

 
                                                        2018 Budget 
 Wind Farm           Ownership Stake    Period                (GWh)   2018 Actual (GWh)   Variance   2019 Budget (GWh) 
------------------  ----------------  ----------  -----------------  ------------------  ---------  ------------------ 
 Bicker Fen                      80%   Jan - Dec               44.0                40.4        -8%                44.0 
 Bin Mountain                   100%   Jan - Dec               25.2                22.9        -9%                26.3 
 Bishopthorpe                   100%   Jan - Dec               51.1                48.3        -5%                51.1 
 Braes of Doune                  50%   Jan - Dec               86.1                83.4        -3%                85.2 
 Brockaghboy                    100%   Mar - Dec              135.0               106.3       -21%               175.8 
 Carcant                        100%   Jan - Dec               17.4                16.8        -3%                17.4 
 Church Hill                    100%      Dec                   4.2                 3.9        -8%                42.1 
 Clyde                      28.2%(1)   Jan - Dec              391.9            384.2(2)        -2%               454.1 
 Corriegarth                    100%   Jan - Dec              214.6            213.1(2)        -1%               214.6 
 Cotton Farm                    100%   Jan - Dec               51.3                45.8       -11%                51.7 
 Crighshane                     100%      Dec                   6.8                 6.0       -12%                67.8 
 Deeping St. 
  Nicholas                       80%   Jan - Dec               29.8                28.3        -5%                29.8 
 Drone Hill                    51.6%   Jan - Dec               31.0                29.6        -4%                31.0 
 Earl's Hall Farm               100%   Jan - Dec               32.4                29.7        -8%                32.4 
 Glass Moor                      80%   Jan - Dec               29.4                26.4       -10%                29.4 
 Kildrummy                      100%   Jan - Dec               56.7                49.7       -12%                56.7 
 Langhope Rig                   100%   Jan - Dec               46.2                46.5         0%                46.2 
 Lindhurst                       49%   Jan - Dec               11.6                10.8        -7%                11.6 
 Little Cheyne 
  Court                          41%   Jan - Dec               59.2                56.2        -5%                59.2 
 Maerdy                         100%   Jan - Dec               64.4                52.8       -18%                64.4 
 Middlemoor                      49%   Jan - Dec               69.7                57.1       -18%                69.7 
 North Hoyle                    100%   Jan - Dec              180.4               175.1        -3%               180.4 
 North Rhins                   51.6%   Jan - Dec               37.8             36.6(2)        -3%                37.8 
 Red House                       80%   Jan - Dec               22.3                21.6        -3%                22.3 
 Red Tile                        80%   Jan - Dec               42.9                37.5       -13%                42.5 
 Rhyl Flats                   24.95%   Jan - Dec               70.3                66.9        -5%                70.3 
 Screggagh                      100%   Jan - Dec               48.2                44.3        -8%                50.2 
 Sixpenny Wood                 51.6%   Jan - Dec               28.8                25.7       -11%                28.8 
 Slieve Divena                  100%   Jan - Dec               59.2                53.0       -11%                61.7 
 Stroupster                     100%   Jan - Dec               97.8                92.3        -6%                96.8 
 Tappaghan                      100%   Jan - Dec               73.3                71.8        -2%                77.1 
 Yelvertoft                    51.6%   Jan - Dec               21.3                20.0        -6%                21.3 
 
 Total                                                      2,140.3             2,003.0                        2,349.6 
------------------  ----------------  ----------  -----------------  ------------------  ---------  ------------------ 
 

(1) Ownership in Clyde was 19.775% until 30 May 2018 when the Group exercised its option to make further investment in Clyde.

(2) Includes curtailed generation.

Notable issues affecting portfolio availability were:

-- blade repairs at Maerdy as a result of a Siemens worldwide serial defect affecting 3 out of 8 turbines;

   --     background noise monitoring at Cotton Farm (completed); and 
   --     ongoing blade bolt replacements at Little Cheyne Court. 

During the year, various turbine operation and maintenance contracts and operational management agreements were renewed or replaced at lower than budgeted cost. In addition, Corriegarth and North Rhins entered into agreements to provide grid services, and Corriegarth and Braes of Doune initiated participation in the Balancing Mechanism, providing sources of additional revenue.

Health and Safety

There were no major incidents in the year to 31 December 2018. A health and safety audit was conducted across 7 sites by an independent consultant. No material areas of concern were identified.

Acquisitions

During the year, the Investment Manager priced 63 wind farms totalling 2,185MW. Of the 63 wind farms priced, 6 investments were made by the Group (including exercise of the Clyde option, Tom nan Clach and Douglas West), 26 were acquired by other buyers, 14 are no longer being pursued by the Group, and 17 are subject to continuing discussions. In total, secondary market transactions comprising 47 UK wind farms were completed in 2018.

The following table lists investments in the year (including acquisition costs, excluding acquired cash):

 
                              GBPm 
 Brockaghboy                 163.9 
                            ------ 
 Clyde option                113.1 
                            ------ 
 Church Hill + Crighshane     87.4 
                            ------ 
 Total                       364.4 
                            ------ 
 

In the year, the Group paid GBP0.4 million to EDF as a post completion working capital adjustment in relation to investments made in 2017. Total investments in the year thus amounted to GBP364.8 million.

In addition to the completed investments listed above:

-- on 4 October 2018, the Group entered into an agreement to acquire Belltown Power's 75 per cent. stake in Tom nan Clach wind farm for a headline consideration of GBP126 million, with the investment scheduled to complete in July 2019 once the wind farm is operational;

-- on 19 December 2018, the Group entered into an agreement to acquire Blue Energy's Douglas West project, with the investment scheduled to complete in March 2019 - the Group will then construct the wind farm, with operations scheduled to commence in July 2021 - total investment in the region of GBP45 million; and

-- on 1 February 2019, the Group entered into an agreement to acquire a 35.5 per cent. interest in the Stronelairg and Dunmaglass operating wind farms from SSE for a headline consideration of GBP452 million, with the investment scheduled to complete at the end of March 2019.

Equity Issuance

The Company issued 102 million new shares in May 2018 at a price of 117 pence per share, raising gross proceeds of GBP119 million in an oversubscribed share placing.

In February 2019, the Company issued an additional 103 million new shares at a price of 127 pence per share, raising gross proceeds of GBP131 million in an oversubscribed share placing.

Gearing

As at 31 December 2018, the Group had GBP480 million of debt outstanding, equating to 26 per cent. of GAV (limit 40 per cent.). Average gearing in the year was 23 per cent. of GAV (guidance 20-30 per cent.).

Debt outstanding comprised term debt of GBP400 million (together with associated interest rate swaps) and GBP80 million drawn under the Group's revolving credit facility.

All borrowing is at the Company level (no debt at wind farm level).

Financial Performance

Power prices during the year were above budget. The average N2EX Day Ahead auction price was GBP57.44/MWh.

Below budget portfolio generation and above budget power prices contributed to on budget net cash generation.

Dividend cover for the year was 1.6x (versus target of 1.7x, reflecting below average gearing).

Cash balances (Group and wind farm SPVs) increased by GBP9.1 million from GBP41.7 million to GBP50.8 million over the year.

 
 
                                                    For the year ended 
 Group and wind farm SPV cashflows                    31 December 2018 
-------------------------------------------------  ------------------- 
                                                               GBP'000 
 
 Net cash generation                                           117,267 
 Dividends paid                                               (72,325) 
 
 Acquisitions (1)                                            (362,963) 
 Acquisition costs                                             (1,647) 
 
 Equity issuance                                               118,845 
 Equity issuance costs                                         (1,950) 
 
 Net drawdown under debt facilities                            215,000 
 Upfront finance costs                                         (3,141) 
 
 Movement in cash (Group and wind farm SPVs)                     9,086 
 Opening cash balance (Group and wind farm SPVs)                41,696 
-------------------------------------------------  ------------------- 
 Closing cash balance (Group and wind farm SPVs)                50,782 
 
 Net cash generation                                           117,267 
 Dividends                                                      72,325 
 Dividend cover                                                    1.6   x 
-------------------------------------------------  ------------------- 
 

(1) Excludes acquired cash, includes GBP0.4 million EDF working capital adjustment.

The following 2 tables provide further detail in relation to net cash generation of GBP117.3 million:

 
                                    For the year ended 
 Net Cash Generation - Breakdown      31 December 2018 
---------------------------------  ------------------- 
                                               GBP'000 
 Revenue                                       205,505 
 Operating expenses                           (54,943) 
 Tax                                           (5,391) 
 Other                                         (5,821) 
---------------------------------  ------------------- 
 Wind farm cashflow                            139,350 
 
 Management fee                               (11,878) 
 Operating expenses                            (1,348) 
 Ongoing finance costs                        (10,319) 
 Other                                           1,255 
---------------------------------  ------------------- 
 Group cashflow                               (22,290) 
 
 VAT (Group and wind farm SPVs)                    207 
 
 Net cash generation                           117,267 
 
 
                                                                                     For the year ended 
 Net Cash Generation - Reconciliation to Net Cash Flows from Operating Activities      31 December 2018 
----------------------------------------------------------------------------------  ------------------- 
                                                                                                GBP'000 
 Net cash flows from operating activities (1)                                                   101,829 
 Movement in cash balances of wind farm SPVs (2)                                                  9,912 
 Repayment of shareholder loan investment (1)                                                    15,845 
 Finance costs (1)                                                                             (13,460) 
 Upfront finance costs (cash) (3)                                                                 3,141 
----------------------------------------------------------------------------------  ------------------- 
 Net cash generation                                                                            117,267 
----------------------------------------------------------------------------------  ------------------- 
 

(1) Consolidated Statement of Cash Flows.

(2) Note 9 to the Financial Statements (excludes acquired cash).

(3) GBP3,050k facility arrangement fees plus GBP109k professional fees (note 13 to the Financial Statements) less GBP18k other finance costs payable (note 12 to the Financial Statements).

Investment Performance

 
 Opening NAV 31 December 2017        GBP1,144.0m 
 Investments in new assets            +GBP364.8m 
 Movement in DCF valuation             +GBP89.1m 
 Movement in cash (Group and wind 
  farm SPVs)                            +GBP9.1m 
 Movement in other relevant assets 
  / liabilities                         +GBP0.8m 
 Movement in Aggregate Group Debt     -GBP215.0m 
 Closing NAV 31 December 2018        GBP1,392.8m 
 

The NAV at 31 December 2018 was GBP1,392.8 million (123.1 pence per share):

   --     NAV at 31 December 2017 was GBP1,144.0 million (111.2 pence per share); 

-- GBP364.8 million of investments were made in the year as further described under Acquisitions above;

-- the portfolio DCF valuation increased by GBP89.1 million or approximately 8 pence per share (7 pence from increased asset life plus 2 pence from increased RPI plus 1 pence from other assumption changes less 2 pence depreciation);

   --     cash balances increased by GBP9.1 million as noted above; 
   --     net liabilities at Group level decreased by GBP0.8 million; and 
   --     Aggregate Group Debt increased by GBP215 million. 

Total dividends of GBP72.3 million were paid in 2018. Total dividends of GBP74.8 million have been paid or declared with respect to 2018 (6.76 pence per share). The target dividend with respect to 2019 is 6.94 pence per share (increased in line with December 2018 RPI).

 
 
                                          pence per share   per cent. 
---------------------------------------  ----------------  ---------- 
 
 NAV at 31 December 2017                            111.2 
 Less February 2018 dividend                        (1.6) 
 NAV at 31 December 2017 (ex dividend)              109.6 
 
 NAV at 31 December 2018                            123.1 
 Less February 2019 dividend                        (1.7) 
 NAV at 31 December 2018 (ex dividend)              121.4 
 
 Movement in NAV (ex dividend)                       11.8        10.8 
 Dividends with respect to the year                   6.8         6.2 
---------------------------------------  ----------------  ---------- 
 Total return on NAV                                 18.6        17.0 
---------------------------------------  ----------------  ---------- 
 

The share price as at 31 December 2018 was 126.0 pence, representing a 2.4 per cent. premium to NAV. TSR for 2018 was 8.3 per cent. (71.5 per cent. since listing).

Reconciliation of Statutory Net Assets to Reported NAV

 
 
                                           As at               As at 
                                31 December 2018    31 December 2017 
----------------------------  ------------------  ------------------ 
                                         GBP'000             GBP'000 
 
 DCF valuation                         1,823,852           1,369,950 
 Cash (wind farm SPVs)                    47,355              35,774 
----------------------------  ------------------  ------------------ 
 Fair value of investments             1,871,207           1,405,724 
 Cash (Group)                              3,427               5,922 
 Other relevant liabilities              (1,824)             (2,606) 
----------------------------  ------------------  ------------------ 
 GAV                                   1,872,810           1,409,040 
 Aggregate Group Debt                  (480,000)           (265,000) 
----------------------------  ------------------  ------------------ 
 NAV                                   1,392,810           1,144,040 
 Reconciling items                             -                   - 
----------------------------  ------------------  ------------------ 
 Statutory net assets                  1,392,810           1,144,040 
 
 Shares in issue                   1,131,449,780       1,028,514,652 
 NAV per share (pence)                     123.1               111.2 
----------------------------  ------------------  ------------------ 
 

NAV Sensitivities

NAV is equal to GAV less Aggregate Group Debt.

GAV is the sum of:

   --     DCF valuations of the Group's investments; 
   --     cash (at Group and wind farm SPV level); and 
   --     other relevant assets and liabilities of the Group. 

The DCF valuation of the Group's investments represents the largest component of GAV and the key sensitivities are considered to be the discount rate used in the DCF valuation and assumptions in relation to inflation, energy yield, power price and asset life.

As there is no debt at wind farm level, the DCF valuation is produced by discounting the individual wind farm cashflows on an unlevered basis. The equivalent levered discount rate would be approximately 2 per cent. higher than the blended portfolio discount rate.

For the year end DCF valuation, we have applied an upgraded discounting methodology. Previously, each wind farm's cashflows were discounted at a single discount rate, irrespective of their nature. We now apply different discount rates, tailored to the nature of the underlying cashflows; for example, one discount rate for fixed ROC cashflows and a higher discount rate for merchant power cashflows. The blended portfolio discount rate, assuming a 25 year asset life (see below), remains unchanged from 31 December 2017 at 7.7 per cent..

In addition to (but separate from) the upgraded discounting methodology, we have increased the asset life assumption used in the year end DCF valuation from 25 to 30 years, following a third party technical assessment of the portfolio. The technical asset life for many wind farms significantly exceeds 30 years and we have made appropriate assumptions in relation to the continued good management of the assets, lease extensions and other factors. We consider that the 30 year asset life assumption is a more appropriate assumption to be used to determine the fair value of the portfolio.

Amending the asset life and associated assumptions increased NAV per share by 6.7 pence. It also means that the blended portfolio discount rate has increased from 7.7 per cent. to 8.1 per cent. as a result of including a higher proportion of higher discount rate merchant power cashflows in years 26-30.

A variance of +/- 0.5 per cent. is considered to be a reasonable range of alternative assumptions for discount rate.

The base case long term RPI assumption is 3.0 per cent. (1.0 per cent. above the long term 2.0 per cent. CPI target). The assumption was increased from 2.75 per cent. during the year.

Base case energy yield assumptions are P50 (50 per cent. probability of exceedance) forecasts produced by expert consultants based on long term wind data and operational history. The P90 (90 per cent. probability of exceedance over a 10 year period) and P10 (10 per cent. probability of exceedance over a 10 year period) sensitivities reflect the future variability of wind and the uncertainty associated with the long term data source being representative of the long term mean. Given their basis on long term operating data, it is not anticipated that base case energy yield assumptions will be adjusted (other than any wind energy true-ups with compensating purchase price adjustments).

Long term power price forecasts are provided by a leading market consultant, updated quarterly and may be adjusted by the Investment Manager where more conservative assumptions are considered appropriate. Base case real power prices increase from approximately GBP48/MWh (2020) to approximately GBP58/MWh (2040). The sensitivity below assumes a 10 per cent. increase or decrease in power prices relative to the base case for every year of the asset life, which is relatively extreme (a 10 per cent. variation in short term power prices, as reflected by the forward curve, would have a much lesser effect).

Outlook

There are currently 21GW of operating UK wind farms (13GW onshore plus 8GW offshore). Installed capacity is set to grow to 14GW onshore plus 12GW offshore by 2021. In monetary terms, the secondary market for operating UK wind farms is approximately GBP50 billion, increasing to GBP75 billion by 2021. The Group currently has a market share of approximately 4 per cent.. The average age of the portfolio is 5.7 years (versus 5 years at listing in March 2013).

In the year, the Group entered into agreements to acquire Tom nan Clach, its first CFD wind farm and Douglas West, its first subsidy free wind farm. While it is anticipated that the majority of the Group's future investments will continue to be ROC wind farms, CFD and subsidy free wind farms provide diversified further pipeline opportunities. At all times, the Group will maintain a balanced portfolio, in line with the Company's investment objective.

The key value driver affecting operating UK wind farms is the wholesale power price. In general, independent forecasters expect the UK wholesale power price to rise in real terms, driven by higher gas and carbon prices. The long term power price forecast is updated each quarter and reflected in the reported NAV.

The Company does not expect any material change to its business as a result of the UK exiting the European Union. Being solely UK focused and deliberately low risk, all of the Group's assets and liabilities are within the UK and sterling denominated. In addition, the regulatory regime under which the assets operate is robust, longstanding and rooted in UK legislation.

In general, the outlook for the Group is very encouraging, with proven operational and financial performance from the existing portfolio combined with a healthy pipeline of attractive further investment opportunities.

Board of Directors

The Board comprises individuals from relevant and complementary backgrounds and the Directors are of the opinion that the Board as a whole comprises an appropriate balance of skills, experience and diversity.

Tim Ingram, Chairman (appointed 4 December 2012)

Tim Ingram (Chairman), aged 71, is an experienced chairman and chief executive, with a long executive career in financial services and a non-executive portfolio spanning a variety of sectors, including business management software and services, real estate, manufacturing, investment trusts, insurance and commercial and investment banking.

Tim's early executive career was in international banking with Grindlays Bank and ANZ Banking Group. He was an executive Director of Abbey National plc (now part of Santander) from 1996 to 2002. After leaving Abbey National, he became Chief Executive of Caledonia Investments plc from 2002 until his retirement in July 2010.

He was Chairman of Collins Stewart Hawkpoint plc from 2010 until it was acquired by Canaccord Financial Inc. in March 2012. From October 2012 until July 2017 he was Chairman of the Wealth Management Association and from April 2011 to September 2017 he was Chairman of Fulham Palace Trust. He was Chairman of RSM Tenon plc from May 2012 to August 2013. He was a non-executive Director, and later Senior Independent Director, of Sage plc from 2002 to 2011, a non-executive Director, and later Senior Independent Director, of Savills plc from 2002 to 2012, a non-executive Director of Alliance Trust plc from 2010 to 2012, a non-executive Director of Alok Industries Ltd, an Indian quoted company, from 2005 to 2015 and a non-executive Director of Fastjet plc from September 2015 to March 2016. He has also been a non-executive Director of the board of the European subsidiaries of QBE Insurance Group Ltd since March 2014 and is now its Chairman. He has been a trustee of the London Community Foundation since September 2017.

Shonaid Jemmett-Page, Chairman of the Audit Committee (appointed 5 December 2012)

Shonaid Jemmett-Page, FCA, aged 58, is an experienced non-executive director in the energy and financial sectors. Shonaid spent the first 20 years of her career at KPMG in London and Tokyo, rising to the position of Partner, Financial Services. In 2001, she moved to Unilever, where she was Senior Vice President, Finance and Information for Asia, based in Singapore, before returning to the UK as Finance Director for Unilever's global non-food business. In 2009, Shonaid joined CDC Group as Chief Operating Officer, a position she held until 2012.

Since then, Shonaid has focused on non-executive appointments and is currently a non-executive Director of Caledonia Investments plc and a member of the governance, nomination and remuneration committees, non-executive Chairman of MS Amlin plc and Chairman of the remuneration and nominations committees and a member of the risk and solvency committee, Senior Independent Director and Chairman of the audit and remuneration committees and a member of the nomination and risk committees at ClearBank Ltd. Until October 2017, she was non-executive Chairman of Origo Partners plc and until April 2018 was non-executive Director of GKN plc where she served as Chairman of the audit committee and was a member of the remuneration and nominations committees. She is also the examiner of the UK branch of an Indian children's cancer charity.

William Rickett C.B., Senior Independent Director (appointed 4 December 2012)

William Rickett C.B., aged 66, is a former Director General of the Department of Energy & Climate Change within the UK Government (2006-2009) with considerable experience as non-executive director of private sector companies. William is Chairman of Cambridge Economic Policy Associates Ltd, an economic, financial and public policy consultancy with a strong energy practice and was Chairman of the governing board of the International Energy Agency from 2007 to 2009. He is currently a non-executive Director of Impax Environmental Markets plc, a listed investment trust specialising in the alternative energy, waste and water sectors and Smart DCC Ltd, the company procuring the shared infrastructure needed for the roll out of smart gas and electricity meters across the country. William was previously a non-executive Director of Eggborough Power Ltd, an electricity generating company, Helius Energy plc, an AIM listed developer of new dedicated biomass power stations, and the National Renewable Energy Centre Limited, which helps to develop renewable energy technologies.

William's Whitehall career included 15 years of board-level experience in 5 government departments focusing on energy and transport. In the late 1980s he led the privatisation of the electricity industry creating the first competitive electricity market in the world. Later as Director General of Energy he drove the transformation of the UK energy policy to re-establish a nuclear power programme as well as developing strategies for the deployment of renewable energy.

Dan Badger (appointed 1 July 2013)

Dan Badger, aged 72, has had a long career in the energy sector and has significant experience in wind farm transactions. He is currently a consultant to Hideal Partners, a renewables advisory firm, and was previously a member of the UK/European renewables M&A team at Babcock & Brown.

Dan worked for 10 years at the U.S. Department of Energy and the International Energy Agency in economic and policy development roles before moving onto project development within the gas-fired generation and then renewables sectors. Whilst at Babcock & Brown, Dan was involved with and led a number of significant renewables acquisitions across Europe of both development pipeline and operational capacity, a number of these through innovative framework agreements. Dan also led the 200MW development of the Robin Rigg offshore wind farm, in the Solway Firth, now owned by E.ON.

Martin McAdam (appointed 1 March 2015)

Martin McAdam, aged 57, is an accomplished executive with significant experience in the energy and renewables sector. He was formerly Chief Executive Officer of Aquamarine Power. Prior to that, Martin was President and Chief Executive Officer of the US subsidiary of Airtricity, a role in which he constructed over 400MW of wind farm capacity.

Martin spent his early career at ESB, the Irish utility, involved in a number of activities including power station construction and generation planning. After a number of years in information services, he returned to the power industry and joined Airtricity, a significant developer and constructor of wind farms throughout the UK and Ireland, managing construction of new wind farms. Martin's role expanded into operations and ultimately to take responsibility for the growing US business. He led the integration of the Airtricity generation business unit into the SSE Renewables Division after its sale.

Martin is a Chartered Engineer and a Fellow of Engineers Ireland and a Fellow of the Royal Society for the Encouragement of Arts, Manufactures and Commerce.

Other UK Public Company Directorships

In addition to their directorships of the Company, the below Directors currently hold the following UK listed public company directorships:

 
 Shonaid Jemmett-Page        William Rickett C.B. 
 Caledonia Investments plc   Impax Environmental Markets plc 
 
 
 

The Directors have all offered themselves for re-election and resolutions concerning this will be proposed at the AGM.

Conflicts of Interest

The Directors have declared any conflicts or potential conflicts of interest to the Board of Directors which has the authority to approve such situations. The Company Secretary maintains the Register of Directors' Conflicts of Interests which is reviewed quarterly by the Board and when changes are notified. The Directors advise the Company Secretary and the Board as soon as they become aware of any conflicts of interest. Directors who have conflicts of interest do not take part in discussions which relate to any of their conflicts.

Report of the Directors

The Directors present their Annual Report, together with the consolidated financial statements of Greencoat UK Wind PLC for the year to 31 December 2018. The Corporate Governance Report forms part of this report.

Details of the Directors who held office during the year and as at the date of this report are given above.

Capital Structure

The Company has one class of ordinary shares which carry no rights to fixed income. Shareholders are entitled to all dividends paid by the Company and, on a winding up, provided the Company has satisfied all of its liabilities, the shareholders are entitled to all of the surplus assets of the Company.

Shareholders will be entitled to attend and vote at all general meetings of the Company and, on a poll, to one vote for each ordinary share held.

Authority to Purchase Own Shares

The current authority of the Company to make market purchases of up to 14.99 per cent. of its issued share capital expires at the conclusion of the 2019 AGM. Special resolution 14 will be proposed at the forthcoming AGM seeking renewal of such authority until the next AGM (or 30 June 2020, whichever is earlier). The price paid for the shares will not be less than the nominal value or more than the maximum amount permitted to be paid in accordance with the rules of the UK Listing Authority in force at the date of purchase. This power will be exercised only if, in the opinion of the Directors, a repurchase would be in the best interests of shareholders as a whole. Any shares repurchased under this authority will either be cancelled or held in treasury at the discretion of the Board for future resale in appropriate market conditions.

The Directors believe that the renewal of the Company's authority to purchase shares, as detailed above, is in the best interests of shareholders as a whole and therefore recommend shareholders to vote in favour of special resolution 14.

The Directors also recommend shareholders to vote in favour of resolutions 12 and 13, which renew their authority to allot equity securities for the purpose of satisfying the Company's obligations to pay the equity element of the Investment Manager's fee, and also their authority to allot equity securities for cash either pursuant to the authority conferred by resolution 12 or by way of a sale of treasury shares.

Major Interests in Shares

Significant shareholdings as at 15 February 2019 are detailed below.

 
 Shareholder                              Ordinary shares held % 
--------------------------------------- 
                                                15 February 2019 
---------------------------------------  ----------------------- 
 Newton Investment Management                               8.88 
 Investec Wealth & Investment                               5.96 
 Legal & General Investment Management                      4.91 
 FIL Investment International                               4.70 
 Insight Investment Management                              4.01 
 Rathbones Investment Management                            3.77 
 Baillie Gifford & Co                                       3.47 
 Aviva Investors                                            3.44 
---------------------------------------  ----------------------- 
 

Significant shareholdings as at 31 December 2018 are detailed below.

 
 Shareholder                              Ordinary shares held % 
--------------------------------------- 
                                                31 December 2018 
---------------------------------------  ----------------------- 
 Newton Investment Management                               9.19 
 Investec Wealth & Investment                               5.90 
 Legal & General Investment Management                      4.90 
 FIL Investment International                               4.48 
 Insight Investment Management                              4.01 
 Rathbones Investment Management                            3.63 
 Baillie Gifford & Co                                       3.44 
 Aviva Investors                                            3.14 
---------------------------------------  ----------------------- 
 

Companies Act 2006 Disclosures

In accordance with Schedule 7 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008 the Directors disclose the following information:

-- the Company's capital structure is detailed in note 15 to the financial statements and all shareholders have the same voting rights in respect of the share capital of the Company. There are no restrictions on voting rights that the Company is aware of, nor any agreement between holders of securities that result in restrictions on the transfer of securities or on voting rights;

   --     there exist no securities carrying special rights with regard to the control of the Company; 
   --     the Company does not have an employees' share scheme; 

-- the rules concerning the appointment and replacement of Directors are contained in the Company's Articles of Association and the Companies Act 2006;

-- there exist no agreements to which the Company is party that may affect its control following a takeover bid; and

-- there exist no agreements between the Company and its Directors providing for compensation for loss of office that may occur because of a takeover bid.

Investment Trust Status

The Company has been approved as an investment trust under sections 1158 and 1159 of the Corporation Taxes Act 2010. As an investment trust, the Company is required to meet relevant eligibility conditions and ongoing requirements. In particular, the Company must not retain more than 15 per cent. of its eligible investment income. The Company has conducted and monitored its affairs so as to enable it to comply with these requirements.

Diversity and Business Review

A business review is detailed in the Investment Manager's Report and the Group's policy on diversity is detailed in the Corporate Governance Report.

Directors' Indemnity

Directors' and Officers' liability insurance cover is in place in respect of the Directors. The Company's Articles of Association provide, subject to the provisions of UK legislation, an indemnity for Directors in respect of costs which they may incur relating to the defence of any proceedings brought against them arising out of their positions as Directors, in which they are acquitted or judgement is given in their favour by the Court.

Except for such indemnity provisions in the Company's Articles of Association and in the Directors' letters of appointment, there are no qualifying third party indemnity provisions in force.

Global Greenhouse Gas Emissions

As the Group has outsourced operations to third parties, there are no significant greenhouse gas emissions to report from the operations of the Group.

In relation to the Group's investee companies, the level of greenhouse gas emissions arising from the low volume of electricity imports and from operation and maintenance activity is not considered material for disclosure purposes. Further, as the assets are renewable energy generators, they reduce carbon dioxide emissions on a net basis (at a rate of approximately 0.4t CO(2) per MWh).

Risks and Risk Management

The Group is exposed to financial risks such as price risk, interest rate risk, credit risk and liquidity risk and the management and monitoring of these risks are detailed in note 18 to the financial statements.

Independent Auditor

The Directors will propose the reappointment of BDO LLP as the Company's Auditor and resolutions concerning this and the remuneration of the Company's Auditor will be proposed at the AGM.

So far as each of the Directors at the time that this report was approved are aware:

   --     there is no relevant audit information of which the Auditor is unaware; and 

-- they have taken all the steps they ought to have taken to make themselves aware of any audit information and to establish that the Auditor is aware of that information.

Annual Accounts

The Board is of the opinion that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the performance, strategy and business model of the Company.

The Board recommends that the Annual Report, the Report of the Directors and the Independent Auditor's Report for the year ended 31 December 2018 are received and adopted by the shareholders and a resolution concerning this will be proposed at the AGM.

Dividend

The Board recommended an interim dividend of GBP19,126,100, equivalent to 1.69 pence per share with respect to the 3 month period ended 31 December 2018, bringing total dividends with respect to the year to GBP74,757,381, equivalent to 6.76 pence per share as disclosed in note 8 to the financial statements.

Subsequent Events

Significant subsequent events have been disclosed in note 21 to the financial statements.

Strategic Report

A review of the business and future outlook, going concern statement and the principal risks and uncertainties of the Group have not been included in this report as they are disclosed in the Strategic Report.

On behalf of the Board

Tim Ingram

Chairman

27 February 2019

Directors' Remuneration Report

This report has been prepared by the Directors in accordance with the requirements of the Companies Act 2006 and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. A resolution to approve the Directors' Remuneration Report will be proposed at the AGM. At the AGM on 30 April 2018, shareholders voted 99.89 per cent. in favour to approve the Directors' Remuneration Report for the year ended 31 December 2017.

The Company's Auditor is required to give their opinion on the information provided on Directors' remuneration on page 29 of the Annual Report and this is explained further in its report to shareholders. The remainder of this report is outside the scope of the external audit.

Annual Statement from the Chairman of the Board

The Board consists solely of non-executive Directors and is considered to be entirely independent. The Board considers at least annually the level of the Board's fees, in accordance with the AIC Code.

Remuneration Policy

As at the date of this report, the Board comprised 5 Directors, all of whom are non-executive. The Board does not have a separate Remuneration Committee as, being wholly comprised of non-executive Directors, the whole Board considers these matters.

Each Director receives a fixed fee per annum based on their roles and responsibility within the Company and the time commitment required. It is not considered appropriate that Directors' remuneration should be performance related and none of the Directors are eligible for pension benefits, share options, long term incentive schemes or other benefits in respect of their services as non-executive Directors of the Company.

The maximum annual limit of aggregate fees payable to the Directors was set at the time of its incorporation on 4 December 2012 at GBP300,000 per annum. Although the Company has grown very considerably since its listing in March 2013, there has been no increase to this annual limit. Accordingly the Directors are seeking shareholder approval as an Ordinary Resolution at the AGM that the aggregate remuneration cap on fees payable to Directors be increased to GBP400,000 per annum.

The Company's Articles of Association empower the Board to award a discretionary bonus where any Director has been engaged in exceptional work on a time spent basis to compensate for the additional time spent over their expected time commitment.

The Articles of Association provide that Directors retire and offer themselves for re-election at the first AGM after their appointment and at least every 3 years thereafter. In accordance with corporate governance best practice the Company expects Directors to be re-elected annually.

All of the Directors have been provided with letters of appointment for a term of 3 years, subject to re-election.

A Director's appointment may at any time be terminated by and at the discretion of either party upon 6 months' written notice. A Director's appointment will automatically end without any right to compensation whatsoever if they are not re-elected by the shareholders. A Director's appointment may also be terminated with immediate effect and without compensation in certain other circumstances. Being non-executive Directors, none of the Directors have a service contract with the Company.

The terms and conditions of appointment of non-executive Directors are available for inspection from the Company's registered office.

Annual Report on Remuneration

The table below (audited information) shows all remuneration earned by each individual Director during the year:

 
                                           Paid in the year to 31 December 2018   Paid in the year to 31 December 2017 
----------------------------------------  -------------------------------------  ------------------------------------- 
 Tim Ingram (Chairman)                                                GBP70,000                              GBP70,000 
 Shonaid Jemmett-Page (Audit Committee                                GBP47,000                              GBP45,000 
 Chairman) 
 William Rickett C.B. (Senior                                         GBP42,000                              GBP40,000 
 Independent Director) 
 Dan Badger                                                           GBP37,000                              GBP35,000 
 Martin McAdam                                                        GBP37,000                              GBP35,000 
----------------------------------------  -------------------------------------  ------------------------------------- 
 Total                                                               GBP233,000                             GBP225,000 
----------------------------------------  -------------------------------------  ------------------------------------- 
 

None of the Directors received any other remuneration or additional discretionary payments during the year from the Company (2017: GBPnil).

As mentioned in the Chairman's Statement, the search firm Heidrick & Struggles has been engaged to assist the Board in relation to succession planning to secure the right skills and experience while also seeking to increase diversity on the Board. As part of this work, views were sought from this firm on appropriate levels of fees for non-executive Directors of the Company. In light of this, it has been decided, as from 1 January 2019, to increase the basic fee of non-executive Directors by GBP3,000 per annum from GBP37,000 to GBP40,000 per annum. No change is planned to the Chairman's basic fee of GBP70,000 per annum, nor to the supplements paid to the Senior Independent Director and to the Audit Committee Chair (of GBP5,000 and GBP10,000 per annum respectively). In addition, and in line with the practice of some other companies in the sector, it has been decided that in future where significant additional work and responsibility is incurred by Directors in the raising of further equity, appropriate additional fees of no more than GBP10,000 per annum per Director will be paid.

Directors' Interests (audited information)

Directors who held office during the year and had interests in the shares of the Company as at 31 December 2018 are given in the table below. There were no changes to the interests of each Director as at the date of this report.

 
 
                                  Ordinary shares of 1p each held at 31        Ordinary shares of 1p each held at 31 
                                                          December 2018                                December 2017 
--------------------------  -------------------------------------------  ------------------------------------------- 
 
 Tim Ingram (1)                              409,636                                    376,803 
 Shonaid Jemmett-Page (2)                      55,842                                     55,842 
 William Rickett C.B. (3)                      37,500                                     37,500 
 Dan Badger                                    12,010                                     25,425 
 Martin McAdam                                 78,670                                     75,270 
--------------------------  -------------------------------------------  ------------------------------------------- 
 

(1) includes 82,106 ordinary shares legally and beneficially owned by his spouse and 177,827 ordinary shares which are held in trust arrangements with Lloyd's of London in respect of security for certain underwriting activities.

(2) includes 29,381 ordinary shares legally and beneficially owned by her spouse.

(3) includes 30,000 ordinary shares legally and beneficially owned by members of his family.

Relative Importance of Spend on Pay

The remuneration of the Directors with respect to the year totalled GBP233,000 (2017: GBP225,000) in comparison to dividends paid or declared to shareholders with respect to the year of GBP74,757,381 (2017: GBP57,312,248).

Company Performance

Due to the positioning of the Company in the market as a sector-focused infrastructure fund investing in UK wind farms to produce stable and inflating dividends for investors while aiming to preserve capital value, the Directors consider that a listed infrastructure fund has characteristics of both an equity index and a bond index. As the Company listed on 27 March 2013, historical data for the past 10 years is not yet available.

On behalf of the Board

Tim Ingram

Chairman

27 February 2019

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements, and have elected to prepare the Company financial statements, in accordance with IFRS as adopted by the EU. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss for the Group for that period.

In preparing these financial statements, the Directors are required to:

   --     select suitable accounting policies and then apply them consistently; 
   --     make judgements and accounting estimates that are reasonable and prudent; 

-- state whether they have been prepared in accordance with IFRS as adopted by the EU, subject to any material departures disclosed and explained in the financial statements;

-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

-- prepare a Report of the Directors, a Strategic Report and Directors' Remuneration Report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's performance, business model and strategy.

Website Publication

The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the UK governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibilities also extend to the ongoing integrity of the financial statements contained therein.

Directors' Responsibilities Pursuant to DTR4

The Directors confirm to the best of their knowledge that:

-- the Group financial statements have been prepared in accordance with IFRS as adopted by the EU and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group; and

-- the Annual Report includes a fair review of the development and performance of the business and the financial position of the Group and the parent company, together with a description of the principal risks and uncertainties that they face.

On behalf of the Board

Tim Ingram

Chairman

27 February 2019

Corporate Governance Report

This Corporate Governance Report forms part of the Report of the Directors. The Board operates under a framework for corporate governance which is appropriate for an investment company. All companies with a premium listing of equity shares in the UK are required under the UK Listing Rules to report on how they have applied the UK Code in their Annual Report and financial statements.

The Company became a member of the AIC with effect from 27 March 2013 and has therefore put in place arrangements to comply with the AIC Code and, in accordance with the AIC Code, complies with the UK Code.

The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to investment companies such as the Company.

The AIC Code and the AIC Guide are available on the AIC's website, www.theaic.co.uk. The UK Code is available on the FRC's website, www.frc.org.uk.

The Company has complied with the recommendations of the AIC Code throughout the year.

The Board

As at the date of this report, the Board consists of 5 non-executive Directors and represents a range of investment, financial and business skills and experience. The Chairman of the Board is Tim Ingram. In considering the independence of the Chairman, the Board took note of the provisions of the AIC Code relating to independence, and has determined that Mr Ingram is an independent Director. The Senior Independent Director is William Rickett C.B.. The Company has no employees and therefore there is no requirement for a chief executive.

The Articles of Association provide that Directors shall retire and offer themselves for re-election at the first AGM after their appointment and at least every 3 years thereafter. However, the AIC Code requires the Directors of FTSE 250 companies to be subject to an annual election by shareholders, and the Directors comply with this requirement. All of the Directors shall offer themselves for re-election at the forthcoming AGM. Having considered their effectiveness, demonstration of commitment to the role, length of service, attendance at meetings and contribution to the Board's deliberations, the Board approves the nomination for re-election of all of the Directors.

Any Director, who has held office with the Company for a continuous period of 9 years or more at the date of the AGM, shall retire from office but may offer themselves for re-appointment. This will allow for phased Board appointments and retirements and enable the Board to consider whether there is any risk that such Director might reasonably be deemed to have lost independence through such long service.

The terms and conditions of appointment of non-executive Directors are available for inspection from the Company's registered office.

Diversity Policy

The Board has a policy to base appointments on merit and against objective criteria, with due regard for the benefits of diversity, including gender diversity. Its objective is to attract and maintain a Board that, as a whole, comprises an appropriate balance of skills and experience.

The Board consists of individuals from relevant and complementary backgrounds offering experience in the investment management of listed funds, as well as in the energy sector from both a public policy and a commercial perspective. As at the date of this report, the Board comprised 4 men and 1 woman, all non-executive Directors who are considered to be independent of the Investment Manager and free from any business or other relationship that could materially interfere with the exercise of their independent judgement. There were no changes to the Board members during the year.

The search firm Heidrick & Struggles has been engaged to assist the Board in relation to succession planning to secure the right skills and experience while also seeking to increase diversity on the Board. This process is now at an advanced stage.

The Investment Manager operates an equal opportunities policy and its partners and employees comprise 29 men and 10 women.

Performance and Evaluation

Pursuant to Principle 7 of the AIC Code, the Board undertakes a formal and rigorous evaluation of its performance each financial year. As a FTSE 250 company, in keeping with the provisions of the AIC Code, it is the Company's policy that every 3 years an external consultant, who has no connection with the Company, carries out a formal review of the Board's performance. This was conducted in late 2016.

Since then, internal evaluations of the Board, the Audit Committee and individual Directors have been conducted in the form of annual performance appraisals, questionnaires and discussions to determine effectiveness and performance in various areas, as well as the Directors' continued independence and tenure. This process was facilitated by the Company Secretary. The reviews concluded that the overall performance of the Board and Audit Committee was satisfactory and the Board was confident in its ability to continue to govern the Company.

The next full external review will commence during 2019 and the results of this review will be reported in the next Annual Report. This will enable the necessary rigour of evaluation, and consideration thereafter, as anticipated by the Code.

Each individual Directors' training and development needs are reviewed annually. All new Directors receive an induction from the Investment Manager, which includes the provision of information about the Company and their responsibilities. In addition, each Director visits portfolio wind farms and specific Board training days are arranged involving presentations on relevant topics.

Board Responsibilities

The Board will meet, on average, 4 times in each calendar year for scheduled Board meetings and on an ad hoc basis as and when necessary. At each meeting the Board follows a formal agenda that will cover the business to be discussed. Between meetings there is regular contact with the Investment Manager and the Administrator. The Board requires to be supplied with information by the Investment Manager, the Administrator and other advisers in a form appropriate to enable it to discharge its duties.

The Board has responsibility for ensuring that the Company keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and which enable it to ensure that the financial statements comply with applicable regulation. It is the Board's responsibility to present a fair, balanced and understandable Annual Report, which provides the information necessary for shareholders to assess the performance, strategy and business model of the Company. This responsibility extends to the half year and other price-sensitive public reports.

Committees of the Board

The Company's Audit Committee is chaired by Shonaid Jemmett-Page, and consists of a minimum of 3 members. In accordance with best practice, the Company's Chairman is not a member of the Audit Committee however he does attend Audit Committee meetings as and when deemed appropriate. The Audit Committee Report describes the work of the Audit Committee.

The Company has established a Communications and Disclosure Committee which is required to meet at least once a year. The committee has responsibility for, amongst other things, determining on a timely basis the disclosure treatment of material information, and assisting in the design, implementation and periodic evaluation of disclosure controls and procedures. The committee also has responsibility for the identification of inside information for the purpose of maintaining the Company's insider list.

Terms of reference for the Communications and Disclosure Committee have been approved by the Board and membership consists of Tim Ingram (or one other Director) and one of Stephen Lilley and Laurence Fumagalli. Additional members of the committee may be appointed and existing members removed by the committee. The membership of the committee is reviewed by the Board on a periodic basis and at least once a year.

The Company has established a Management Engagement Committee which comprises all of the Directors and is required to meet at least once per year. The chairman of the Management Engagement Committee is Tim Ingram and its main function is to keep under review the performance of the Investment Manager and make recommendations on any proposed amendment to the Investment Management Agreement. Terms of reference for the Management Engagement Committee have been approved by the Board.

The Company has established a Nominations Committee which comprises all of the Directors and is required to meet at least once per year. The chairman of the Nominations Committee is Tim Ingram and its main function is to plan for board succession and to review annually the structure, size and composition of the Board and make recommendation to the Board with regard to any changes that are deemed necessary. Terms of reference for the Nominations Committee have been approved by the Board.

The AIC Code recommends that companies appoint a Remuneration Committee, however the Board has not deemed this necessary, as being wholly comprised of non-executive Directors, the whole Board considers these matters.

The Investment Manager

The Board has entered into the Investment Management Agreement with the Investment Manager under which the Investment Manager is responsible for developing strategy and the day-to-day management of the Group's investment portfolio, in accordance with the Group's investment objective and policy, subject to the overall supervision of the Board. A summary of the fees paid to the Investment Manager are given in note 3 to the financial statements.

The Investment Manager's appointment is terminable by the Investment Manager or the Company on not less than 12 months' notice. The Investment Management Agreement may be terminated with immediate effect and without compensation, by either the Investment Manager or the Company if the other party has gone into liquidation, administration or receivership or has committed a material breach of the Investment Management Agreement.

The Board as a whole reviewed the Company's compliance with the UK Corporate Governance Code, the Listing Rules, the Disclosure Guidance and Transparency Rules and the AIC Code. In accordance with the Listing Rules, the Directors confirm that the continued appointment of the Investment Manager under the current terms of the Investment Management Agreement is in the interests of shareholders. The Board also reviewed the performance of other service providers and examined the effectiveness of the Company's internal control systems during the year.

Board Meetings, Committee Meetings and Directors' Attendance

The number of meetings of the full Board attended in the year to 31 December 2018 by each Director is set out below:

 
 
                         Scheduled Board Meetings (Total of 4)   Additional Board Meetings (Total of 8) 
----------------------  --------------------------------------  --------------------------------------- 
 
 Tim Ingram                                                  4                                        8 
 Shonaid Jemmett-Page                                        4                                        7 
 William Rickett C.B.                                        4                                        7 
 Dan Badger                                                  4                                        7 
 Martin McAdam                                               4                                        8 
----------------------  --------------------------------------  --------------------------------------- 
 

During the year, there were also 13 meetings of sub-committees of the Board.

The number of meetings of the Audit Committee attended in the year to 31 December 2018 by each Audit Committee member is set out below:

 
 
                          Audit Committee Meetings (Total of 4) 
----------------------   -------------------------------------- 
 
 Shonaid Jemmett-Page                                         4 
 William Rickett C.B.                                         4 
 Dan Badger                                                   4 
 Martin McAdam                                                4 
-----------------------  -------------------------------------- 
 

Internal Control

The Board is responsible for the Company's system of internal control and for reviewing its effectiveness. The Board confirms that it has an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. This process has been in place throughout the year and has continued since the year end.

The Company's principal risks and uncertainties are detailed in the Strategic Report. As further explained in the Audit Committee Report, the risks of the Company are outlined in a risk matrix which was reviewed and updated during the year. The Board continually reviews its policy setting and updates the risk matrix at least annually to ensure that procedures are in place with the intention of identifying, mitigating and minimising the impact of risks should they crystallise. The Board relies on reports periodically provided by the Investment Manager and the Administrator regarding risks that the Company faces. When required, experts are employed to gather information, including tax and legal advisers. The Board also regularly monitors the investment environment and the management of the Company's portfolio, and applies the principles detailed in the internal control guidance issued by the FRC.

The principal features of the internal control systems which the Investment Manager and the Administrator have in place in respect of the Group's financial reporting include:

   --     internal reviews of all financial reports; 
   --     review by the Board of financial information prior to its publication; 
   --     authorisation limits over expenditure incurred by the Group; 
   --     review of valuations; and 
   --     authorisation of investments. 

Whistleblowing

The Board has considered the AIC Code recommendations in respect of arrangements by which staff of the Investment Manager or Administrator may, in confidence, raise concerns within their respective organisations about possible improprieties in matters of financial reporting or other matters. It has concluded that adequate arrangements are in place for the proportionate and independent investigation of such matters and, where necessary, for appropriate follow-up action to be taken within their organisation.

Amendment of Articles of Association

The Company's Articles of Association may be amended by the members of the Company by special resolution (requiring a majority of at least 75 per cent. of the persons voting on the relevant resolution).

Relations with Shareholders

The Company welcomes the views of shareholders and places great importance on communication with its shareholders. The Investment Manager is available at all reasonable times to meet with principal shareholders and key sector analysts. The Chairman, the Senior Independent Director and other Directors are also available to meet with shareholders if required.

All shareholders have the opportunity to put questions to the Company at the registered address. The AGM of the Company will provide a forum for shareholders to meet and discuss issues with the Directors and Investment Manager.

The Board receives comprehensive shareholder reports from the Company's Registrar and regularly monitors the views of shareholders and the shareholder profile of the Company. The Board is also kept fully informed of all relevant market commentary on the Company by the Investment Manager.

Shareholders may also find Company information or contact the Company through its website: www.greencoat-ukwind.com.

On behalf of the Board

Tim Ingram

Chairman of the Board

27 February 2019

Audit Committee Report

During the year, the Audit Committee comprised Shonaid Jemmett-Page (Chairman), William Rickett C.B., Dan Badger and Martin McAdam. The AIC Code has a requirement that at least one member of the Audit Committee should have recent and relevant financial experience and the Audit Committee as a whole shall have competence relevant to the sector. The Board is satisfied that the Audit Committee is properly constituted in these respects. The qualifications and experience of all Audit Committee members are disclosed in this Annual Report.

The Audit Committee operates within clearly defined terms of reference which were reviewed during the financial year and approved by the Board, and include all matters indicated by Disclosure Guidance and Transparency Rule 7.1 and the AIC Code and are available for inspection on the Company's website: www.greencoat-ukwind.com.

Audit Committee meetings are scheduled at appropriate times in the reporting and auditing cycle. The Chairman, other Directors and third parties may be invited to attend meetings as and when deemed appropriate.

Summary of the Role and Responsibilities of the Audit Committee

The duties of the Audit Committee include reviewing the Company's quarterly NAV, half year report, Annual Report and financial statements and any formal announcements relating to the Company's financial performance.

The Audit Committee is the forum through which the external Auditor reports to the Board and is responsible for reviewing the terms of appointment of the Auditor, together with their remuneration. On an ongoing basis, the Audit Committee is responsible for reviewing the objectivity of the Auditor along with the effectiveness of the audit and the terms under which the Auditor is engaged to perform non-audit services (restricted to the limited scope review of the half year report and reporting accountant services in relation to equity raises). The Audit Committee is also responsible for reviewing the Company's corporate governance framework, system of internal controls and risk management, ensuring they are suitable for an investment company.

The Audit Committee reports its findings to the Board, identifying any matters on which it considers that action or improvement is needed, and make recommendations on the steps to be taken.

Overview

During the year, the Audit Committee's discussions have been broad ranging. In addition to the 4 formally convened Audit Committee meetings during the year, the Audit Committee has had regular contact and meetings with the Investment Manager, the Administrator and the Auditor. These meetings and discussions focused on, but were not limited to:

   --     a detailed analysis of the Company's quarterly NAVs; 
   --     reviewing the updated risk matrix of the Company; 
   --     reviewing the Company's corporate governance framework; 

-- reviewing the internal controls framework for the Company, the Administrator and the Investment Manager, considering the need for a separate internal audit function;

   --     considering any incidents of internal control failure or fraud and the Company's response; 
   --     considering the ongoing assessment of the Company as a going concern; 

-- considering the principal risks and period of assessment for the longer term viability of the Company;

-- monitoring the ongoing appropriateness of the Company's status as an investment entity under IFRS 10, in particular following an acquisition;

-- monitoring compliance with AIFMD, the AIC code and other regulatory and governance frameworks;

-- reviewing and approving the audit plan in relation to the audit of the Company's Annual Report and financial statements;

-- monitoring compliance with the Company's policy on the provision of non-audit services by the Auditor; and

   --     reviewing the effectiveness, resources, qualifications and independence of the Auditor. 

Financial Reporting

The primary role of the Audit Committee in relation to financial reporting is to review with the Investment Manager, the Administrator and the Auditor the appropriateness of the half year report and Annual Report and financial statements, concentrating on, amongst other matters:

   --     the quality and acceptability of accounting policies and practices; 

-- the clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements;

-- amendments to legislation and corporate governance reporting requirements and accounting treatment of new transactions in the year;

   --     the impact of new and amended accounting standards on the Company's financial statements; 

-- whether the Audit Committee believes that proper and appropriate processes and procedures have been followed in the preparation of the half year report and Annual Report and financial statements;

-- consideration and recommending to the Board for approval of the contents of the annual financial statements and reviewing the Auditors' report thereon including consideration of whether the financial statements are overall fair, balanced and understandable;

-- material areas in which significant judgements have been applied or there has been discussion with the Auditor; and

   --     any correspondence from regulators in relation to the Company's financial reporting. 

BDO LLP attended 2 of the 4 formal Audit Committee meetings held during the year. The Audit Committee has also held private meetings with the Auditor to provide additional opportunities for open dialogue and feedback. Matters typically discussed include the Auditor's assessment of the transparency and openness of interactions with the Investment Manager and the Administrator, confirmation that there has been no restriction in scope placed on them, the independence of their audit and how they have exercised professional scepticism.

Significant Issues

The Audit Committee discussed the planning, conduct and conclusions of the external audit as it proceeded. At the Audit Committee meeting in advance of the year end, the Audit Committee discussed and approved the Auditor's audit plan. The Audit Committee identified the carrying value of investments as a key area of risk of misstatement in the Company's financial statements.

FRC Letter

During the year, the Company received a letter from the FRC which raised questions on certain aspects of its Annual Report for the year ended 31 December 2017. The Company responded fully to the matters raised in the letter, enabling the FRC to conclude its enquiry. As a result of the FRC's enquiry, the Company has made improvements to the disclosures in this annual report, principally in respect of its judgement that the Company meets the IFRS 10 'Consolidated Financial Statements' definition of an investment entity. The FRC's enquiry did not result in any change to profit, net assets or net cashflow reported in respect of the 2017 financial year.

Scope and limitations of the FRC's review

The Audit Committee recognises that the FRC's review was based on a review of the Company's Annual Report for the year ended 31 December 2017 and did not benefit from detailed knowledge of the Group's business or an understanding of the underlying transactions entered into but that it was conducted by staff of the FRC who have an understanding of the relevant legal and accounting framework. The conclusion of the FRC's review does not provide any assurance that the Company's Annual Report is correct in all material respects; the FRC's role is not to verify the information provided but to consider compliance with reporting requirements. The FRC's letters are written on the basis that it (and its officers, employees and agents) accepts no liability for reliance on them by the Company or any third party, including but not limited to investors and shareholders.

Assessment of the Carrying Value of Investments

The Group's accounting policy is to designate investments at fair value through profit or loss. Therefore, the most significant risk in the Group's financial statements is whether its investments are fairly valued due to the uncertainty involved in determining the investment valuations. There is also an inherent risk of management override as the Investment Manager's fee is calculated based on NAV as disclosed in note 3 to the financial statements. The Investment Manager is responsible for calculating the NAV with the assistance of the Administrator, prior to approval by the Board.

On a quarterly basis, the Investment Manager provides a detailed analysis of the NAV highlighting any movements and assumption changes from the previous quarter's NAV. This analysis and the rationale for any changes made is considered and challenged by the Chairman of the Audit Committee and subsequently approved by the Board. The Audit Committee has satisfied itself that the key estimates and assumptions used in the valuation model are appropriate and that the investments have been fairly valued.

The key estimates and assumptions include the useful life of the assets, the discount factors, the level of wind resource, the rate of inflation, the price at which the power and associated benefits can be sold and the amount of electricity the assets are expected to produce. In particular, the Audit Committee carefully considered external technical advice in relation to the change in the asset life assumption from 25 years to 30 years and associated assumptions in relation to the continued good management of the assets, lease extensions and other factors, that has been included in the 31 December 2018 valuation.

Internal Control

The Audit Committee has established a set of ongoing processes designed to meet the particular needs of the Company in managing the risks to which it is exposed.

The process is one whereby the Investment Manager has identified the key risks to which the Company is exposed, and recorded them on a risk matrix together with the controls employed to mitigate these risks. A residual risk rating has been applied to each risk. The Audit Committee is responsible for reviewing the risk matrix and associated controls before recommending to the Board for consideration and approval, challenging the Investment Manager's assumptions to ensure a robust internal risk management process.

The Audit Committee formally reviewed the updated risk matrix in Q1 2019 and will continue to do so at least annually. By their nature, these procedures provide a reasonable, but not absolute, assurance against material misstatement or loss. Regular reports will be provided to the Audit Committee highlighting material changes to risk ratings.

The Audit Committee reviewed the Group's principal risks and uncertainties as at 30 June 2018, to determine that these were unchanged from those disclosed in the Company's 2017 Annual Report and remained the most likely to affect the Group in the second half of the year.

During the year, the Audit Committee discussed and reviewed in depth the internal controls frameworks in place at the Investment Manager and the Administrator. Discussions were centred around 3 lines of defence: assurances at operational level; internal oversight; and independent objective assurance. The Administrator holds the International Standard on Assurance Engagements (ISAE) 3402 Type 2 certification. This entails an independent rigorous examination and testing of their controls and processes.

The Audit Committee concluded that these frameworks were appropriate for the identification, assessment, management and monitoring of financial, regulatory and other risks, with particular regard to the protection of the interests of the Company's shareholders.

Internal Audit

The Audit Committee continues to review the need for an internal audit function and has decided that the systems, processes and procedures employed by the Company, Investment Manager and Administrator, including their own internal controls and procedures, provide sufficient assurance that an appropriate level of risk management and internal control is maintained. In addition to this, the Company's external Depositary provides cash monitoring, asset verification and oversight services to the Company.

The Audit Committee has therefore concluded that shareholders' investments and the Company's assets are adequately safeguarded and an internal audit function specific to the Company is considered unnecessary.

The Audit Committee is available on request to meet investors in relation to the Company's financial reporting and internal controls.

External Auditor

Effectiveness of the Audit Process

The Audit Committee assessed the effectiveness of the audit process by considering BDO LLP's fulfilment of the agreed audit plan through the reporting presented to the Audit Committee by BDO LLP and the discussions at the Audit Committee meeting, which highlighted the major issues that arose during the course of the audit. In addition, the Audit Committee also sought feedback from the Investment Manager and the Administrator on the effectiveness of the audit process. For this financial year, the Audit Committee was satisfied that there had been appropriate focus and challenge on the primary areas of audit risk and assessed the quality of the audit process to be good.

Non-Audit Services

Details of fees paid to BDO LLP during the year are disclosed in note 5 to the financial statements. The Audit Committee approved these fees after a review of the level and nature of work to be performed, and are satisfied that they are appropriate for the scope of the work required. The Audit Committee seeks to ensure that any non-audit services provided by the external Auditor do not conflict with their statutory and regulatory responsibilities, as well as their independence, before giving written approval prior to their engagement. The Audit Committee was satisfied that BDO LLP had adequate safeguards in place and that provision of these non-audit services did not provide threats to the Auditor's independence.

The Audit Committee has a policy regarding the provision of non-audit services by the external Auditor which precludes the external Auditor from providing any of the prohibited non-audit services as listed in Article 5 of the EU Directive Regulation (EU) No 537/2014. The Audit Committee monitors the Group's expenditure on non-audit services provided by the Company's Auditor who should only be engaged for non-audit services where they are deemed to be the most commercially viable supplier and prior approval of the Audit Committee has been sought.

Independence

The Audit Committee is required to consider the independence of the external Auditor. In fulfilling this requirement, the Audit Committee has considered a report from BDO LLP describing its arrangements to identify, report and manage any conflict of interest and the extent of non-audit services provided by them.

The Audit Committee has concluded that it considers BDO LLP to be independent of the Company and that the provision of the non-audit services described above is not a threat to the objectivity and independence of the conduct of the audit.

Re-appointment

BDO LLP has been the Company's Auditor from its incorporation on 4 December 2012. The Auditor is required to rotate the audit partner responsible for the Group audit every 5 years. A new lead partner was appointed in 2015 and therefore the lead partner will be required to rotate after the completion of the 2019 year end audit.

The external audit contract is required to be put to tender at least every 10 years. The Audit Committee shall give advance notice of any retendering plans within the Annual Report. The Audit Committee has considered the re-appointment of the Auditor and decided not to put the provision of the external audit out to tender at this time. As described above, the Audit Committee reviewed the effectiveness and independence of the Auditor and remains satisfied that the Auditor provides effective independent challenge to the Board, the Investment Manager and the Administrator. The Audit Committee will continue to monitor the performance of the Auditor on an annual basis and will consider their independence and objectivity, taking account of appropriate guidelines.

The Audit Committee has therefore recommended to the Board that BDO LLP be proposed for re-appointment as the Company's Auditor at the AGM of the Company.

Annual General Meeting

The Chairman of the Audit Committee will be present at the Company's AGM to answer questions on the Audit Committee's activity and matters within the scope of the Audit Committee's responsibilities.

Shonaid Jemmett-Page

Chairman of the Audit Committee

27 February 2019

Non-Statutory Accounts

The financial information set out below does not constitute the Company's statutory accounts for the years ended 31 December 2018 or 31 December 2017 but is derived from those accounts. Statutory accounts for the year ended 31 December 2017 have been delivered to the Registrar of Companies and statutory accounts for the year ended 31 December 2018 will be delivered to the Registrar of Companies in due course. The Auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor's reports can be found in the Company's full Annual Report and Accounts at www.greencoat-ukwind.com.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2018

 
                                                                               For the year ended   For the year ended 
                                                                        Note     31 December 2018     31 December 2017 
                                                                                          GBP'000              GBP'000 
---------------------------------------------------------------------  -----  -------------------  ------------------- 
 
 Return on investments                                                   4                231,461               81,137 
 Other income                                                                                 775                  607 
---------------------------------------------------------------------  -----  -------------------  ------------------- 
 Total income and gains                                                                   232,236               81,744 
 
 Operating expenses                                                      5               (15,162)             (11,390) 
 Investment acquisition costs                                                             (1,910)              (2,672) 
---------------------------------------------------------------------  -----  -------------------  ------------------- 
 Operating profit                                                                         215,164               67,682 
 
 Finance expense                                                         13              (14,486)              (9,196) 
---------------------------------------------------------------------  -----  -------------------  ------------------- 
 
 Profit for the year before tax                                                           200,678               58,486 
 Tax credit                                                              6                  1,703                1,382 
---------------------------------------------------------------------  -----  -------------------  ------------------- 
 
 Profit for the year after tax                                                            202,381               59,868 
 
 Profit and total comprehensive income attributable to: 
 Equity holders of the Company                                                            202,381               59,868 
 
 Earnings per share 
---------------------------------------------------------------------  -----  -------------------  ------------------- 
 Basic and diluted earnings from continuing operations in the year 
  (pence)                                                                7                  18.54                 7.59 
---------------------------------------------------------------------  -----  -------------------  ------------------- 
 

The accompanying notes form an integral part of the financial statements.

Consolidated Statement of Financial Position

As at 31 December 2018

 
                                                     Note   31 December 2018   31 December 2017 
                                                                     GBP'000            GBP'000 
--------------------------------------------------  -----  -----------------  ----------------- 
 
 Non current assets 
 Investments at fair value through profit or loss     9            1,871,207          1,405,724 
--------------------------------------------------  -----  -----------------  ----------------- 
                                                                   1,871,207          1,405,724 
 Current assets 
 Receivables                                          11               1,615              1,482 
 Cash and cash equivalents                                             3,427              5,922 
--------------------------------------------------  -----  -----------------  ----------------- 
                                                                       5,042              7,404 
 Current liabilities 
 Payables                                             12             (3,439)            (4,088) 
--------------------------------------------------  -----  -----------------  ----------------- 
 Net current assets                                                    1,603              3,316 
 
 Non current liabilities 
 Loans and borrowings                                 13           (480,000)          (265,000) 
 
 Net assets                                                        1,392,810          1,144,040 
--------------------------------------------------  -----  -----------------  ----------------- 
 
 Capital and reserves 
 Called up share capital                              15              11,314             10,285 
 Share premium account                                15             946,211            828,526 
 Other distributable reserves                                         32,386            104,711 
 Retained earnings                                                   402,899            200,518 
--------------------------------------------------  -----  -----------------  ----------------- 
 Total shareholders' funds                                         1,392,810          1,144,040 
--------------------------------------------------  -----  -----------------  ----------------- 
 Net assets per share (pence)                         16               123.1              111.2 
--------------------------------------------------  -----  -----------------  ----------------- 
 

Authorised for issue by the Board on 27 February 2019 and signed on its behalf by:

   Tim Ingram                                                      Shonaid Jemmett-Page 
   Chairman                                                       Director 

The accompanying notes form an integral part of the financial statements.

Statement of Financial Position - Company

As at 31 December 2018

 
                                                     Note   31 December 2018   31 December 2017 
                                                                     GBP'000            GBP'000 
--------------------------------------------------  -----  -----------------  ----------------- 
 
 Non current assets 
 Investments at fair value through profit or loss     9            1,875,709          1,411,378 
--------------------------------------------------  -----  -----------------  ----------------- 
                                                                   1,875,709          1,411,378 
 Current assets 
 Receivables                                          11                 100                 85 
 Cash and cash equivalents                                                36                 79 
--------------------------------------------------  -----  -----------------  ----------------- 
                                                                         136                164 
 Current liabilities 
 Payables                                             12             (3,035)            (2,502) 
--------------------------------------------------  -----  -----------------  ----------------- 
 Net current liabilities                                             (2,899)            (2,338) 
 
 Non current liabilities 
 Loans and borrowings                                 13           (480,000)          (265,000) 
 Net assets                                                        1,392,810          1,144,040 
--------------------------------------------------  -----  -----------------  ----------------- 
 
 Capital and reserves 
 Called up share capital                              15              11,314             10,285 
 Share premium account                                15             946,211            828,526 
 Other distributable reserves                                         32,386            104,711 
 Retained earnings                                                   402,899            200,518 
--------------------------------------------------  -----  -----------------  ----------------- 
 Total shareholders' funds                                         1,392,810          1,144,040 
--------------------------------------------------  -----  -----------------  ----------------- 
 Net assets per share (pence)                         16               123.1              111.2 
--------------------------------------------------  -----  -----------------  ----------------- 
 

The Company has taken advantage of the exemption under section 408 of the Companies Act 2006 and accordingly has not presented a Statement of Comprehensive Income for the Company alone. The profit after tax of the Company alone for the year was GBP202,381,000 (2017: GBP59,868,000).

Authorised for issue by the Board on 27 February 2019 and signed on its behalf by:

   Tim Ingram                                                      Shonaid Jemmett-Page 
   Chairman                                                       Director 

The accompanying notes form an integral part of the financial statements.

Consolidated and Company Statement of Changes in Equity

For the year ended 31 December 2018

 
 For the year ended                                               Other distributable 
  31 December 2018        Note   Share capital   Share premium         reserves          Retained earnings     Total 
                                    GBP'000         GBP'000             GBP'000               GBP'000         GBP'000 
-----------------------  -----  --------------  --------------  ----------------------  ------------------  ---------- 
 Opening net assets 
  attributable to 
  shareholders (1 
  January 2018)                     10,285          828,526             104,711               200,518        1,144,040 
 Issue of share capital    15        1,029          119,366                -                     -            120,395 
 Share issue costs         15          -            (1,681)                -                     -            (1,681) 
 Profit and total 
  comprehensive income 
  for the year                         -               -                   -                  202,381         202,381 
 Interim dividends paid 
  in the year              8           -               -               (72,325)                  -           (72,325) 
 
 Closing net assets 
  attributable to 
  shareholders                      11,314          946,211             32,386                402,899        1,392,810 
-----------------------  -----  --------------  --------------  ----------------------  ------------------  ---------- 
 

Other distributable reserves were created through the cancellation of the share premium account on 5 June 2013. This amount is capable of being applied in any manner in which the Company's profits available for distribution, as determined in accordance with the Companies Act 2006, are able to be applied.

After taking account of cumulative unrealised gains of GBP163,704,725, the total reserves distributable by way of a dividend as at 31 December 2018 were GBP271,580,244.

 
 For the year ended                                                Other distributable 
  31 December 2017        Note   Share capital   Share premium                reserves   Retained earnings       Total 
                                       GBP'000         GBP'000                 GBP'000             GBP'000     GBP'000 
-----------------------  -----  --------------  --------------  ----------------------  ------------------  ---------- 
 Opening net assets 
  attributable to 
  shareholders (1 
  January 2017)                          7,367         495,110                 157,011             140,650     800,138 
 Issue of share capital    15            2,918         338,422                       -                   -     341,340 
 Share issue costs         15                -         (5,006)                       -                   -     (5,006) 
 Profit and total 
  comprehensive income 
  for the year                               -               -                       -              59,868      59,868 
 Interim dividends paid 
  in the year              8                 -               -                (52,300)                   -    (52,300) 
 
 Closing net assets 
  attributable to 
  shareholders                          10,285         828,526                 104,711             200,518   1,144,040 
-----------------------  -----  --------------  --------------  ----------------------  ------------------  ---------- 
 

After taking account of cumulative unrealised gains of GBP47,010,325, the total reserves distributable by way of a dividend as at 31 December 2017 were GBP258,218,229.

The accompanying notes form an integral part of the financial statements.

Consolidated Statement of Cash Flows

For the year ended 31 December 2018

 
                                                                               For the year ended   For the year ended 
                                                                        Note     31 December 2018     31 December 2017 
                                                                                          GBP'000              GBP'000 
---------------------------------------------------------------------  -----  -------------------  ------------------- 
 
 Net cash flows from operating activities                                17               101,829               60,083 
 
 Cash flows from investing activities 
 Acquisition of investments                                              9              (364,633)            (511,995) 
 Investment acquisition costs                                                             (1,647)              (2,672) 
 Cash received for adjustment to purchase price of investments           9                      -                2,600 
 Repayment of shareholder loan investments                               9                 15,845               12,877 
---------------------------------------------------------------------  -----  -------------------  ------------------- 
 Net cash flows from investing activities                                               (350,435)            (499,190) 
 
 Cash flows from financing activities 
 Issue of share capital                                                  15               118,845              340,000 
 Payment of issue costs                                                                   (1,949)              (4,912) 
 Amounts drawn down on loan facilities                                   13               480,000              500,000 
 Amounts repaid on loan facilities                                       13             (265,000)            (335,000) 
 Finance costs                                                                           (13,460)              (8,619) 
 Dividends paid                                                          8               (72,325)             (52,300) 
---------------------------------------------------------------------  -----  -------------------  ------------------- 
 Net cash flows from financing activities                                                 246,111              439,169 
 
 Net (decrease)/increase in cash and cash equivalents during the year                     (2,495)                   62 
 
 Cash and cash equivalents at the beginning of the year                                     5,922                5,860 
 
 Cash and cash equivalents at the end of the year                                           3,427                5,922 
---------------------------------------------------------------------  -----  -------------------  ------------------- 
 

The accompanying notes form an integral part of the financial statements.

Statement of Cash Flows - Company

For the year ended 31 December 2018

 
                                                                     For the year ended   For the year ended 
                                                              Note     31 December 2018     31 December 2017 
                                                                                GBP'000              GBP'000 
-----------------------------------------------------------  -----  -------------------  ------------------- 
 
 Net cash flows from operating activities                      17              (12,138)             (13,680) 
 
 Cash flows from investing activities 
 Loans advanced to Group companies                             9              (331,735)            (493,738) 
 Repayment of loans to Group companies                         9                 97,719               67,755 
-----------------------------------------------------------  -----  -------------------  ------------------- 
 Net cash flows from investing activities                                     (234,016)            (425,983) 
 
 Cash flows from financing activities 
 Issue of share capital                                        15               118,845              340,000 
 Payment of issue costs                                                         (1,949)              (4,912) 
 Amounts drawn down on loan facilities                         13               480,000              500,000 
 Amounts repaid on loan facilities                             13             (265,000)            (335,000) 
 Finance costs                                                                 (13,460)              (8,619) 
 Dividends paid                                                8               (72,325)             (52,300) 
-----------------------------------------------------------  -----  -------------------  ------------------- 
 Net cash flows from financing activities                                       246,111              439,169 
 
 Net decrease in cash and cash equivalents during the year                         (43)                (494) 
 
 Cash and cash equivalents at the beginning of the year                              79                  573 
 
 Cash and cash equivalents at the end of the year                                    36                   79 
-----------------------------------------------------------  -----  -------------------  ------------------- 
 

The accompanying notes form an integral part of the financial statements.

Notes to the Consolidated Financial Statements

For the year ended 31 December 2018

   1.    Significant accounting policies 

Basis of accounting

The consolidated annual financial statements have been prepared in accordance with IFRS to the extent that they have been adopted by the EU and with those parts of the Companies Act 2006 applicable to companies under IFRS.

The annual financial statements have been prepared on the historical cost basis, as modified for the measurement of certain financial instruments at fair value through profit or loss. The principal accounting policies are set out below.

These consolidated financial statements are presented in pounds sterling, which is the currency of the primary economic environment in which the Group operates and are rounded to the nearest thousand, unless otherwise stated.

Accounting for subsidiaries

The Directors have concluded that the Group has all the elements of control as prescribed by IFRS 10 "Consolidated Financial Statements" in relation to all its subsidiaries and that the Company continues to satisfy the three essential criteria to be regarded as an investment entity as defined in IFRS 10, IFRS 12 "Disclosure of Interests in Other Entities" and IAS 27 "Consolidated and Separate Financial Statements". The three essential criteria are such that the entity must:

1. Obtain funds from one or more investors for the purpose of providing these investors with professional investment management services;

2. Commit to its investors that its business purpose is to invest its funds solely for returns from capital appreciation, investment income or both; and

3. Measure and evaluate the performance of substantially all of its investments on a fair value basis.

In satisfying the second essential criteria, the notion of an investment time frame is critical. An investment entity should not hold its investments indefinitely but should have an exit strategy for their realisation. Although the Company has invested in equity interests in wind farms that have an indefinite life, the underlying wind farm assets that it invests in have an expected life of 30 years. The Company intends to hold these wind farms for the remainder of their useful life to preserve the capital value of the portfolio. However, as the wind farms are expected to have no residual value after their 30 year life, the Directors consider that this demonstrates a clear exit strategy from these investments.

Subsidiaries are therefore measured at fair value through profit or loss, in accordance with IFRS 13 "Fair Value Measurement" and IFRS 9 "Financial Instruments". The financial support provided by the Company to its unconsolidated subsidiaries is disclosed in note 10.

Notwithstanding this, IFRS 10 requires subsidiaries that provide services that relate to the investment entity's investment activities to be consolidated. Accordingly, the annual financial statements include the consolidated financial statements of Greencoat UK Wind PLC and Greencoat UK Wind Holdco Limited (a 100 per cent. owned UK subsidiary). In respect of these entities, intra-Group balances and any unrealised gains arising from intra-Group transactions are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated unless the costs cannot be recovered. The financial statements of subsidiaries that are included in the consolidated financial statements are included from the date that control commences until the dates that control ceases.

In the parent company financial statements, investments in subsidiaries are measured at fair value through profit or loss in accordance with IFRS 9, as permitted by IAS 27.

Accounting for associates and joint ventures

The Group has taken the exemption permitted by IAS 28 "Investments in Associates and Joint Ventures" and IFRS 11 "Joint Arrangements" for entities similar to investment entities and measures its investments in associates and joint ventures at fair value. The Directors consider an associate to be an entity over which the Group has significant influence, through an ownership of between 20 per cent. and 50 per cent.. The Group's associates and joint ventures are disclosed in note 10.

New and amended standards and interpretations applied

There were no new standards or interpretations effective for the first time for periods beginning on or after 1 January 2018 that had a significant effect on the Group or Company's financial statements. Furthermore, none of the amendments to standards that are effective from that date had a significant effect on the financial statements.

IFRS 9 was issued to replace IAS 39 "Financial Instruments: Recognition and Measurement" and became effective for accounting periods beginning on or after 1 January 2018 and has been first adopted in these financial statements. The Group has chosen not to restate comparatives. The Group's financial instruments predominantly comprise equity investments held at fair value. The accounting treatment for these financial instruments is consistent under both IAS 39 and IFRS 9, therefore the introduction of IFRS 9 has had no impact on the reported results and financial position of the Group.

IFRS 15 "Revenue from contracts with customers" was issued and became effective for accounting periods beginning on or after 1 January 2018. As the Group's investments are held at fair value through profit or loss and the revenue contracts are held at SPV level, the introduction of IFRS 15 has had no impact on the reported results and financial position of the Group.

New and amended standards and interpretations not applied

At the date of authorisation of these financial statements, IFRS 16 "Leases" was issued but will not become effective until accounting periods beginning on or after 1 January 2019. As the Group's investments are held at fair value through profit or loss and the leases are held at SPV level, the introduction of IFRS 16 is not expected to have a material impact on the reported results and financial position of the Group.

Other accounting standards and interpretations have been published and will be mandatory for the Company's accounting periods beginning on or after 1 January 2019 or later periods. The impact of these standards is not expected to be material to the reported results and financial position of the Group.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

At 31 December 2018 and 2017 the carrying amounts of cash and cash equivalents, receivables, payables, accrued expenses and short term borrowings reflected in the financial statements are reasonable estimates of fair value in view of the nature of these instruments or the relatively short period of time between the original instruments and their expected realisation. The fair value of advances and other balances with related parties which are short-term or repayable on demand is equivalent to their carrying amount.

Financial assets

The classification of financial assets at initial recognition depends on the purpose for which the financial asset was acquired and its characteristics.

All financial assets are initially recognised at fair value. All purchases of financial assets are recorded at the date on which the Group became party to the contractual requirements of the financial asset.

The Group's and Company's financial assets comprise of only investments held at fair value through profit or loss and loans and receivables.

Loans and receivables (2017)

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They principally comprise cash and trade and other receivables and they are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method, less provisions for impairment. Transaction costs are recognised in the Consolidated Statement of Comprehensive Income as incurred.

The Group and the Company assess whether there is any objective evidence that financial assets are impaired at the end of each reporting period. If any such evidence exists, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the loss is recognised in profit or loss.

Loans and receivables at amortised cost (2018)

Impairment provisions for loans and receivables are recognised based on a forward looking expected credit loss model. All financial assets assessed under this model are immaterial to the financial statements.

Investments held at fair value through profit or loss

Investments are designated upon initial recognition as held at fair value through profit or loss. Gains or losses resulting from the movement in fair value are recognised in the Consolidated Statement of Comprehensive Income at each valuation point. As shareholder loan investments form part of a managed portfolio of assets whose performance is evaluated on a fair value basis, loan investments are designated at fair value in line with equity investments.

The Company's loan and equity investments in Holdco are held at fair value through profit or loss. Gains or losses resulting from the movement in fair value are recognised in the Company's Statement of Comprehensive Income at each valuation point.

Financial assets are recognised / derecognised at the date of the purchase / disposal. Investments are initially recognised at cost, being the fair value of consideration given. Transaction costs are recognised in the Consolidated Statement of Comprehensive Income as incurred.

Fair value is defined as the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. Fair value is calculated on an unlevered, discounted cashflow basis in accordance with IFRS 13 and IFRS 9.

Derecognition of financial assets

A financial asset (in whole or in part) is derecognised either:

   --     when the Group has transferred substantially all the risks and rewards of ownership; or 

-- when it has neither transferred or retained substantially all the risks and rewards and when it no longer has control over the assets or a portion of the asset; or

   --     when the contractual right to receive cashflow has expired. 

Financial liabilities

Financial liabilities are classified according to the substance of the contractual agreements entered into and are recorded on the date on which the Group becomes party to the contractual requirements of the financial liability.

All loans and borrowings are initially recognised at cost, being fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Loan balances as at the year end have not been discounted to reflect amortised cost, as the amounts are not materially different from the outstanding balances.

The Group's other financial liabilities measured at amortised cost include trade and other payables and other short term monetary liabilities which are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method.

A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the Consolidated Statement of Comprehensive Income.

Embedded derivatives

Embedded derivatives are treated as separate derivatives when their economic characteristics and risks are not closely related to those of the host contract, which is a financial liability, the terms of the embedded derivative would meet the definition of a stand-alone derivative if they were contained in a separate contract and the combined contract is not held for trading or designated at fair value. Embedded derivatives are measured at fair value with changes in fair value recognised in the Consolidated Statement of Comprehensive Income. Embedded derivatives which are closely related to the host contract are not separated from the host instrument.

Finance expenses

Borrowing costs are recognised in the Consolidated Statement of Comprehensive Income in the period to which they relate on an accruals basis.

Share capital

Financial instruments issued by the Company are treated as equity if the holder has only a residual interest in the assets of the Company after the deduction of all liabilities. The Company's ordinary shares are classified as equity instruments.

Incremental costs directly attributable to the issue of new shares are shown in share premium as a deduction from proceeds. Incremental costs include those incurred in connection with the placing and admission which include fees payable under a placing agreement, legal costs and any other applicable expenses.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, deposits held on call with banks and other short-term highly liquid deposits with original maturities of 3 months or less, that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Foreign currencies

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income.

Dividends

Dividends payable are recognised as distributions in the financial statements when the Company's obligation to make payment has been established.

Income recognition

Dividend income and interest income on shareholder loan investments are recognised when the Group's entitlement to receive payment is established.

Other income is accounted for on an accruals basis using the effective interest rate method.

Gains or losses resulting from the movement in fair value of the Group's and Company's investments held at fair value through profit and loss are recognised in the Consolidated or Company Statement of Comprehensive Income at each valuation point.

Expenses

Expenses are accounted for on an accruals basis. Share issue expenses of the Company directly attributable to the issue and listing of shares are charged to the share premium account.

The Company issues shares to the Investment Manager in exchange for receiving investment management services. The fair value of the investment management services received in exchange for shares is recognised as an expense at the time at which the investment management fees are earned, with a corresponding increase in equity. The fair value of the investment management services is calculated by reference to the definition of investment management fees in the Investment Management Agreement.

Taxation

Under the current system of taxation in the UK, the Group is liable to taxation on its operations in the UK.

Payment received or receivable from the Group or Group owned SPVs for losses surrendered are recognised in the financial statements and form part of the tax credit. In some situations, it might not be appropriate to recognise the tax credit until the Group's and Group owned SPVs' tax affairs have been finalised and the losses elections have been made.

Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or substantively enacted at the date of the Consolidated Statement of Financial Position.

Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred tax assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit or the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments, except where the Group is able to control the timing of the reversal of the difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to the Consolidated Statement of Comprehensive Income except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off tax assets against tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Deferred tax assets and liabilities are not discounted.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors, as a whole. The key measure of performance used by the Board to assess the Group's performance and to allocate resources is the total return on the Group's net assets, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements.

For management purposes, the Group is organised into one main operating segment, which invests in wind farm assets.

All of the Group's income is generated within the UK.

All of the Group's non-current assets are located in the UK.

   2.    Critical accounting judgements, estimates and assumptions 

The preparation of the financial statements requires the application of estimates and assumptions which may affect the results reported in the financial statements. Estimates, by their nature, are based on judgement and available information.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying value of assets and liabilities are those used to determine the fair value of the investments as disclosed in note 9 to the financial statements.

As disclosed in note 1, the Directors have concluded that the Company meets the definition of an investment entity as defined in IFRS 10, IFRS 12 and IAS 27. This conclusion involved a degree of judgement and assessment as to whether the Company met the criteria outlined in the accounting standards.

The key assumptions that have a significant impact on the carrying value of investments that are valued by reference to the discounted value of future cashflows are the useful life of the assets, the discount factors, the level of wind resource, the rate of inflation, the price at which the power and associated benefits can be sold and the amount of electricity the assets are expected to produce.

Useful lives are based on the Investment Manager's estimates of the period over which the assets will generate revenue which are periodically reviewed for continued appropriateness. The assumption used for the useful life of the wind farms is 30 years. The actual useful life may be a shorter or longer period depending on the actual operating conditions experienced by the asset.

The discount factors are subjective and therefore it is feasible that a reasonable alternative assumption may be used resulting in a different value. The discount factors applied to the cashflows are reviewed annually by the Investment Manager to ensure they are at the appropriate level. The Investment Manager will take into consideration market transactions, where of similar nature, when considering changes to the discount factors used.

The revenues and expenditure of the investee companies are frequently partly or wholly subject to indexation and an assumption is made that inflation will increase at a long term rate.

The price at which the output from the generating assets is sold is a factor of both wholesale electricity prices and the revenue received from the Government support regime. Future power prices are estimated using external third party forecasts which take the form of specialist consultancy reports. The future power price assumptions are reviewed as and when these forecasts are updated. There is an inherent uncertainty in future wholesale electricity price projection.

Specifically commissioned external reports are used to estimate the expected electrical output from the wind farm assets taking into account the expected average wind speed at each location and generation data from historical operation. The actual electrical output may differ considerably from that estimated in such a report mainly due to the variability of actual wind to that modelled in any one period. Assumptions around electrical output will be reviewed only if there is good reason to suggest there has been a material change in this expectation.

   3.    Investment management fees 

Under the terms of the Investment Management Agreement, the Investment Manager is entitled to a combination of a Cash Fee and an Equity Element from the Company.

The Cash Fee is based upon the NAV as at the start of the quarter in question on the following basis:

-- on that part of the then most recently announced NAV up to and including GBP500 million, an amount equal to 0.25 per cent. of such part of the NAV;

-- on that part of the then most recently announced NAV over GBP500 million and up to and including GBP1,000 million, an amount equal to 0.225 per cent. of such part of the NAV; and

-- on that part of the then most recently announced NAV over GBP1,000 million, an amount equal to 0.2 per cent. of such part of the NAV.

The Equity Element is calculated quarterly in advance and has a value as set out below:

-- on that part of the then most recently announced NAV up to and including GBP500 million, 0.05 per cent.; and

-- on that part of the then most recently announced NAV over GBP500 million up to and including GBP1,000 million, 0.025 per cent.

The ordinary shares issued to the Investment Manager under the equity element are subject to a 3 year lock up starting from the quarter in which they are due to be paid.

As at 31 December each year, the Cash Fee and Equity Element shall be subject to a true-up to the value that would have been deliverable had they been calculated quarterly in arrears.

Investment management fees paid or accrued in the year were as follows:

 
                   For the year ended   For the year ended 
                     31 December 2018     31 December 2017 
                              GBP'000              GBP'000 
----------------  -------------------  ------------------- 
 
 Cash Fee                      11,689                8,312 
 Equity Element                 1,500                1,356 
----------------                       ------------------- 
                               13,189                9,668 
----------------  -------------------  ------------------- 
 

The value of the Equity Element and the Cash Fee detailed in the table above include the true-up amount for the year calculated in accordance with the Investment Management Agreement.

   4.    Return on investments 
 
                                                                 For the year ended   For the year ended 
                                                                   31 December 2018     31 December 2017 
                                                                            GBP'000              GBP'000 
--------------------------------------------------------------  -------------------  ------------------- 
 
 Dividends received (note 19)                                               108,613               63,254 
 Interest on shareholder loan investment received (note 19)                   6,153                3,468 
 Gain on adjustment to purchase price of investments (note 9)                     -                2,600 
 Unrealised movement in fair value of investments (note 9)                  116,695               11,815 
--------------------------------------------------------------  -------------------  ------------------- 
                                                                            231,461               81,137 
--------------------------------------------------------------  -------------------  ------------------- 
 
   5.    Operating expenses 
 
                                                      For the year ended   For the year ended 
                                                        31 December 2018     31 December 2017 
                                                                 GBP'000              GBP'000 
---------------------------------------------------  -------------------  ------------------- 
 
 Management fees (note 3)                                         13,189                9,668 
 Group and SPV administration fees                                   621                  522 
 Non-executive Directors' fees                                       233                  225 
 Other expenses                                                    1,038                  895 
 Fees to the Company's Auditor: 
   for audit of the statutory financial statements                    77                   76 
   for other audit related services                                    4                    4 
---------------------------------------------------  -------------------  ------------------- 
                                                                  15,162               11,390 
---------------------------------------------------  -------------------  ------------------- 
 

The fees to the Company's Auditor include GBP3,700 (2017: GBP3,700) payable in relation to a limited review of the half year report. During the year, BDO was paid GBPnil (2017: GBP22,000) in relation to capital raises of the Company. Total fees payable to BDO for non-audit services during the year were GBP3,700 (2017: GBP25,700).

   6.    Taxation 
 
                              For the year ended   For the year ended 
                                31 December 2018     31 December 2017 
                                         GBP'000              GBP'000 
---------------------------  -------------------  ------------------- 
 
 UK Corporation Tax credit               (1,703)              (1,382) 
---------------------------  -------------------  ------------------- 
                                         (1,703)              (1,382) 
---------------------------  -------------------  ------------------- 
 

The tax credit for the year shown in the Statement of Comprehensive Income is lower than the standard rate of corporation tax of 19 per cent. (2017: 19.25 per cent.). The differences are explained below.

 
                                                                               For the year ended   For the year ended 
                                                                                 31 December 2018     31 December 2017 
                                                                                          GBP'000              GBP'000 
----------------------------------------------------------------------------  -------------------  ------------------- 
 
 Profit for the year before taxation                                                      200,678               58,486 
----------------------------------------------------------------------------  -------------------  ------------------- 
 
 Profit for the year multiplied by the standard rate of corporation tax of 
  19 per cent. (2017: 
  19.25 per cent.)                                                                         38,129               11,256 
 
 Fair value movements (not subject to taxation)                                          (22,172)              (2,774) 
 Dividends received (not subject to taxation)                                            (20,637)             (12,174) 
 Expenditure not deductible for tax purposes                                                1,997                  518 
 Surrendering of tax losses to unconsolidated subsidiaries                                  2,683                3,174 
 Payments for current year losses surrendered                                               (219)                (195) 
 Payments for prior year losses surrendered                                               (1,484)              (1,187) 
----------------------------------------------------------------------------  -------------------  ------------------- 
 Total tax credit                                                                         (1,703)              (1,382) 
----------------------------------------------------------------------------  -------------------  ------------------- 
 
   7.    Earnings per share 
 
                                                                              For the year ended   For the year ended 
                                                                                31 December 2018     31 December 2017 
---------------------------------------------------------------------------  -------------------  ------------------- 
 
 Profit attributable to equity holders of the Company - GBP'000                          202,381               59,868 
 Weighted average number of ordinary shares in issue                               1,091,314,663          789,115,278 
---------------------------------------------------------------------------  -------------------  ------------------- 
 Basic and diluted earnings from continuing operations in the year (pence)                 18.54                 7.59 
---------------------------------------------------------------------------  -------------------  ------------------- 
 

Dilution of the earnings per share as a result of the Equity Element of the investment management fee as disclosed in note 3 does not have a significant impact on the basic earnings per share.

   8.    Dividends declared with respect to the year 
 
 Interim dividends paid in the year ended 31 December 2018                         Dividend per share   Total dividend 
                                                                                                pence          GBP'000 
--------------------------------------------------------------------------------  -------------------  --------------- 
 
 With respect to the quarter ended 31 December 2017                                            1.6225           16,694 
 With respect to the quarter ended 31 March 2018                                               1.6900           17,394 
 With respect to the quarter ended 30 June 2018                                                1.6900           19,116 
 With respect to the quarter ended 30 September 2018                                           1.6900           19,121 
                                                                                               6.6925           72,325 
--------------------------------------------------------------------------------  -------------------  --------------- 
 
   Interim dividends declared after 31 December 2018 and not accrued in the year   Dividend per share   Total dividend 
                                                                                                pence          GBP'000 
--------------------------------------------------------------------------------  -------------------  --------------- 
 
 With respect to the quarter ended 31 December 2018                                            1.6900           19,126 
                                                                                  -------------------  --------------- 
                                                                                               1.6900           19,126 
--------------------------------------------------------------------------------  -------------------  --------------- 
 

On 18 January 2019, the Company announced a dividend of 1.69 pence per share with respect to the quarter ended 31 December 2018, bringing the total dividend declared with respect to the year to 31 December 2018 to 6.76 pence per share. The record date for the dividend was 1 February 2019 and the payment date is 28 February 2019.

The following table shows dividends paid in the prior year.

 
                                                                                        Total 
 Interim dividends paid in the year ended 31 December 2017     Dividend per share    dividend 
                                                                            pence     GBP'000 
-----------------------------------------------------------   -------------------  ---------- 
 
 With respect to the quarter ended 31 December 2016                        1.5850      11,682 
 With respect to the quarter ended 31 March 2017                           1.6225      11,963 
 With respect to the quarter ended 30 June 2017                            1.6225      11,968 
 With respect to the quarter ended 30 September 2017                       1.6225      16,687 
------------------------------------------------------------                       ---------- 
                                                                           6.4525      52,300 
 -----------------------------------------------------------  -------------------  ---------- 
 
    9.   Investments at fair value through profit or loss 
 
 Group - for the year ended 31 December 2018                        Loans   Equity interest       Total 
                                                                  GBP'000           GBP'000     GBP'000 
--------------------------------------------------------------  ---------  ----------------  ---------- 
 
 Opening balance                                                  114,559         1,291,165   1,405,724 
 Additions                                                         45,945           318,688     364,633 
 Repayment of shareholder loan investments (note 19)             (15,845)                 -    (15,845) 
 Unrealised movement in fair value of investments (note 4)            446           116,249     116,695 
--------------------------------------------------------------  ---------  ----------------  ---------- 
                                                                  145,105         1,726,102   1,871,207 
--------------------------------------------------------------  ---------  ----------------  ---------- 
 
   Group - For the year ended 31 December 2017                      Loans   Equity interest       Total 
                                                                  GBP'000           GBP'000     GBP'000 
--------------------------------------------------------------  ---------  ----------------  ---------- 
 
 Opening balance                                                  107,673           787,118     894,791 
 Additions                                                         16,181           495,814     511,995 
 Repayment of shareholder loan investments (note 19)             (12,877)                 -    (12,877) 
 Adjustment to purchase price of investments                            -           (2,600)     (2,600) 
 Gain on adjustment to purchase price of investments (note 4)           -             2,600       2,600 
 Dilution                                                           1,945           (1,945)           - 
 Unrealised movement in fair value of investments (note 4)          1,637            10,178      11,815 
--------------------------------------------------------------  ---------  ----------------  ---------- 
                                                                  114,559         1,291,165   1,405,724 
--------------------------------------------------------------  ---------  ----------------  ---------- 
 
 

The unrealised movement in fair value of investments of the Group during the year and the prior year was made up as follows:

 
                                                          For the year ended   For the year ended 
                                                            31 December 2018     31 December 2017 
                                                                     GBP'000              GBP'000 
-------------------------------------------------------  -------------------  ------------------- 
 
 Increase / (decrease) in DCF valuation of investments                89,119             (17,413) 
 Repayment of shareholder loan investments (note 19)                  15,845               12,877 
 Movement in cash balances of SPVs                                     9,912               13,679 
 Acquisition costs (1)                                                 1,819                2,672 
-------------------------------------------------------  -------------------  ------------------- 
                                                                     116,695               11,815 
-------------------------------------------------------  -------------------  ------------------- 
 

(1) Excludes GBP91,000 in relation to Tom nan Clach wind farm.

The unrealised movement in fair value of investments of the Company during the year and the prior year was made up as follows:

 
 Company - for the year ended 31 December 2018          Loans   Equity interest       Total 
                                                      GBP'000           GBP'000     GBP'000 
--------------------------------------------------  ---------  ----------------  ---------- 
 
 Opening balance                                      672,517           738,861   1,411,378 
 Loan advanced to Holdco (note 19)                    331,735                 -     331,735 
 Repayment of loan to Holdco (note 19)               (97,719)                 -    (97,719) 
 Unrealised movement in fair value of investments           -           230,315     230,315 
--------------------------------------------------  ---------  ----------------  ---------- 
                                                      906,533           969,176   1,875,709 
--------------------------------------------------  ---------  ----------------  ---------- 
 
 
 Company - for the year ended 31 December 2017          Loans   Equity interest       Total 
                                                      GBP'000           GBP'000     GBP'000 
--------------------------------------------------  ---------  ----------------  ---------- 
 
 Opening balance                                      246,534           659,998     906,532 
 Loan advanced to Holdco (note 19)                    493,738                 -     493,738 
 Repayment of loan to Holdco (note 19)               (67,755)                 -    (67,755) 
 Unrealised movement in fair value of investments           -            78,863      78,863 
--------------------------------------------------  ---------  ----------------  ---------- 
                                                      672,517           738,861   1,411,378 
--------------------------------------------------  ---------  ----------------  ---------- 
 

Fair value measurements

IFRS 13 requires disclosure of fair value measurement by level. The level of fair value hierarchy within the financial assets or financial liabilities is determined on the basis of the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety into only one of the following 3 levels:

   --     Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; 

-- Level 2 - inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

-- Level 3 - inputs for assets or liabilities that are not based on observable market data (unobservable inputs).

The determination of what constitutes 'observable' requires significant judgement by the Group. The Group considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The only financial instruments held at fair value are the instruments held by the Group in the SPVs, which are fair valued at each reporting date. The Group's investments have been classified within level 3 as the investments are not traded and contain unobservable inputs. The Company's investments are all considered to be level 3 assets. As the fair value of the Company's equity and loan investments in Holdco is ultimately determined by the underlying fair values of the SPV investments, the Company's sensitivity analysis of reasonably possible alternative input assumptions is the same as for the Group.

Due to the nature of the investments, they are always expected to be classified as level 3. There have been no transfers between levels during the year ended 31 December 2018.

Any transfers between the levels would be accounted for on the last day of each financial period.

Valuations are derived using a discounted cashflow methodology in line with IPEV Valuation Guidelines and take into account, inter alia, the following:

   --     due diligence findings where relevant; 
   --     the terms of any material contracts including PPAs; 
   --     asset performance; 
   --     power price forecast from a leading market consultant; and 
   --     the economic, taxation or regulatory environment. 

The DCF valuation of the Group's investments represents the largest component of GAV and the key sensitivities are considered to be the discount rate used in the DCF valuation and assumptions in relation to inflation, energy yield, power price and asset life.

As there is no debt at wind farm level, the DCF valuation is produced by discounting the individual wind farm cashflows on an unlevered basis. The equivalent levered discount rate would be approximately 2 per cent. higher than the blended portfolio discount rate.

For the year end DCF valuation, an upgraded discounting methodology has been applied. Previously, each wind farm's cashflows were discounted at a single discount rate, irrespective of their nature. Different discount rates are now applied, tailored to the nature of the underlying cashflows; for example, one discount rate for fixed ROC cashflows and a higher discount rate for merchant power cashflows. The blended portfolio discount rate, assuming a 25 year asset life (see below), remains unchanged from 31 December 2017 at 7.7 per cent..

In addition to (but separate from) the upgraded discounting methodology, the asset life assumption used in the year end DCF valuation has been increased from 25 to 30 years, following a third party technical assessment of the portfolio. The technical asset life for many wind farms significantly exceeds 30 years and appropriate assumptions have been made in relation to the continued good management of the assets, lease extensions and other factors. A 30 year asset life assumption is a more appropriate assumption to be used to determine the fair value of the portfolio.

Amending the asset life and associated assumptions increased NAV per share by 6.7 pence. It also means that the blended portfolio discount rate has increased from 7.7 per cent. to 8.1 per cent. as a result of including a higher proportion of higher discount rate merchant power cashflows in years 26-30.

A variance of +/- 0.5 per cent. is considered to be a reasonable range of alternative assumptions for discount rate.

The base case long term RPI assumption is 3.0 per cent. (1.0 per cent. above the long term 2.0 per cent. CPI target). The assumption was increased from 2.75 per cent. during the year.

Base case energy yield assumptions are P50 (50 per cent. probability of exceedance) forecasts produced by expert consultants based on long term wind data and operational history. The P90 (90 per cent. probability of exceedance over a 10 year period) and P10 (10 per cent. probability of exceedance over a 10 year period) sensitivities reflect the future variability of wind and the uncertainty associated with the long term data source being representative of the long term mean. Given their basis on long term operating data, it is not anticipated that base case energy yield assumptions will be adjusted (other than any wind energy true-ups with compensating purchase price adjustments).

Long term power price forecasts are provided by a leading market consultant, updated quarterly and may be adjusted by the Investment Manager where more conservative assumptions are considered appropriate. Base case real power prices increase from approximately GBP48/MWh (2020) to approximately GBP58/MWh (2040). The sensitivity below assumes a 10 per cent. increase or decrease in power prices relative to the base case for every year of the asset life, which is relatively extreme (a 10 per cent. variation in short term power prices, as reflected by the forward curve, would have a much lesser effect).

Sensitivity analysis

The fair value of the Group's investments is GBP1,871,207,321 (2017: GBP1,405,724,491). The analysis below is provided to illustrate the sensitivity of the fair value of investments to an individual input, while all other variables remain constant. The Board considers these changes in inputs to be within reasonable expected ranges. This is not intended to imply the likelihood of change or that possible changes in value would be restricted to this range.

 
                                                                     Change in fair value of 
 Input             Base case               Change in input                       investments   Change in NAV per share 
----------------  ---------------------  -----------------  --------------------------------  ------------------------ 
                                                                                     GBP'000                     pence 
 
 Discount rate     8.1 per cent.           + 0.5 per cent.                          (64,598)                     (5.7) 
                                           - 0.5 per cent.                            68,595                       6.1 
 
 Energy yield      P50                         10 year P90                         (114,646)                    (10.1) 
                                               10 year P10                           114,566                      10.1 
 
 Power price                                - 10 per cent.                         (119,528)                    (10.6) 
  Forecast by 
   leading consultant                       + 10 per cent.                           118,901                      10.5 
 
 Long term                                 - 0.5 per cent.                          (67,438)                     (6.0) 
 inflation rate    3.0 per cent.           + 0.5 per cent.                            71,294                       6.3 
 
 Asset life        30 years                      - 5 years                          (76,216)                     (6.7) 
                                                 + 5 years                            61,166                       5.4 
 
 

The sensitivities above are assumed to be independent of each other. Combined sensitivities are not presented.

10. Unconsolidated subsidiaries, associates and joint ventures

The following table shows subsidiaries of the Group. As the Company is regarded as an Investment Entity as referred to in note 1, these subsidiaries have not been consolidated in the preparation of the financial statements:

 
 
                                                             Ownership interest as at   Ownership interest as at 
 Investment                             Place of business            31 December 2018           31 December 2017 
-------------------------------------  -------------------  -------------------------  ------------------------- 
 Bin Mountain                           Northern Ireland                         100%                       100% 
 Bishopthorpe                           England                                  100%                       100% 
 Brockaghboy                            Northern Ireland                         100%                          - 
 Carcant                                Scotland                                 100%                       100% 
 Church Hill                            Northern Ireland                         100%                          - 
 Corriegarth                            Scotland                                 100%                       100% 
 Corriegarth Holdings(1)                Scotland                                 100%                       100% 
 Cotton Farm                            England                                  100%                       100% 
 Crighshane                             Northern Ireland                         100%                          - 
 Crighshane & Church Hill Holdco(2)     Northern Ireland                         100%                          - 
 Crighshane & Church Hill Funding(2)    Northern Ireland                         100%                          - 
 Earl's Hall Farm                       England                                  100%                       100% 
 Kildrummy                              Scotland                                 100%                       100% 
 Langhope Rig                           Scotland                                 100%                       100% 
 Maerdy                                 Wales                                    100%                       100% 
 North Hoyle                            Wales                                    100%                       100% 
 Screggagh                              Northern Ireland                         100%                       100% 
 Slieve Divena                          Northern Ireland                         100%                       100% 
 Stroupster                             Scotland                                 100%                       100% 
 Tappaghan                              Northern Ireland                         100%                       100% 
 Bicker Fen                             England                                   80%                        80% 
 Deeping St. Nicholas                   England                                   80%                        80% 
 Glass Moor                             England                                   80%                        80% 
 Red House                              England                                   80%                        80% 
 Red Tile                               England                                   80%                        80% 
 Fenlands(3)                            England                                   80%                        80% 
 Drone Hill                             Scotland                                51.6%                      51.6% 
 North Rhins                            Scotland                                51.6%                      51.6% 
 Sixpenny Wood                          England                                 51.6%                      51.6% 
 Yelvertoft                             England                                 51.6%                      51.6% 
 SYND Holdco(4)                         UK                                      51.6%                      51.6% 
-------------------------------------  -------------------  -------------------------  ------------------------- 
 

(1) The Group's investment in Corriegarth is held through Corriegarth Holdings.

(2) The Group's investments in Crighshane and Church Hill are held through Crighshane & Church Hill Funding, which is held through Crighshane & Church Hill Holdco.

(3) The Group's investments in Deeping St. Nicholas, Glass Moor, Red House and Red Tile are held through Fenlands.

(4) The Group's investments in Drone Hill, North Rhins, Sixpenny Wood and Yelvertoft are held through SYND Holdco.

There are no restrictions on the ability of the Group's unconsolidated subsidiaries to transfer funds in the form of cash dividends.

The following table shows associates and joint ventures of the Group which have been recognised at fair value as permitted by IAS 28 "Investments in Associates and Joint Ventures":

 
 
                                             Ownership interest as at   Ownership interest as at 
 Investment             Place of business            31 December 2018           31 December 2017 
---------------------  -------------------  -------------------------  ------------------------- 
 Braes of Doune         Scotland                                  50%                        50% 
 ML Wind(1)             England                                   49%                        49% 
 Little Cheyne Court    England                                   41%                        41% 
 Clyde                  Scotland                                28.2%                    19.775% 
 Rhyl Flats             Wales                                  24.95%                     24.95% 
---------------------  -------------------  -------------------------  ------------------------- 
 

(1) The Group's investments in Middlemoor and Lindhurst are 49 per cent. (2017: 49 per cent.). These are held through ML Wind.

As disclosed in note 19, during the year, Holdco advanced a loan to Clyde of GBP45,945,307 (2017: GBP16,181,374). The loan accrues interest at a rate of 5.8 per cent. per annum.

Security deposits and guarantees provided by the Group on behalf of its investments are as follows:

 
 
 Provider 
  of security    Investment       Beneficiary           Nature                 Purpose                        Amount 
                                                                                                             GBP'000 
--------------  ---------------  --------------------  ---------------------  ----------------------------  -------- 
                                                                               Grid, radar, 
 Holdco           Clyde            SSE                  Counter-indemnity       decommissioning               21,771 
                                   The Crown 
 The Company      Rhyl Flats        Estate              Guarantee              Decommissioning                 4,291 
                  Braes 
 The Company       of Doune        Land owner           Guarantee              Decommissioning                 2,000 
 The Company      Bishopthorpe     MOD                  Guarantee              Radar                           1,206 
 The Company      Stroupster       RBS                  Counter-indemnity      Decommissioning                   366 
                  Cotton 
 The Company       Farm            Land owner           Guarantee              Decommissioning                   165 
                  Sixpenny 
 The Company       Wood            Land owner           Payment undertaking    Community fund                    150 
                                   Daventry 
 The Company      Yelvertoft        District Council    Guarantee              Decommissioning                    82 
                  Langhope 
 The Company       Rig             Barclays             Counter-indemnity      Decommissioning                    81 
 The Company      Maerdy           Natural Resource     Guarantee              Access rights to                  n/a 
                                    Wales                                      neighbouring land 
 The Company      North            The Crown            Guarantee              Decommissioning                   n/a 
                   Hoyle            Estate 
                                                                                                              30,112 
    ------------------------------------------------------------------------------------------------------  -------- 
 

The fair value of these guarantees, payment undertakings and counter-indemnities provided by the Group are considered to be GBPnil.

11. Receivables

 
 Group                                                                     31 December 2018   31 December 2017 
                                                                                    GBP'000            GBP'000 
------------------------------------------------------------------------  -----------------  ----------------- 
 
 Amounts due as consideration for investee company tax losses (note 19)               1,326              1,011 
 VAT receivable                                                                         125                369 
 Other receivables                                                                       83                 29 
 Prepayments                                                                             81                 73 
------------------------------------------------------------------------  -----------------  ----------------- 
                                                                                      1,615              1,482 
------------------------------------------------------------------------  -----------------  ----------------- 
 
 
 Company           31 December 2018   31 December 2017 
                            GBP'000            GBP'000 
----------------  -----------------  ----------------- 
 
 Prepayments                     81                 73 
 VAT receivable                  19                 12 
                                100                 85 
----------------  -----------------  ----------------- 
 

12. Payables

 
 Group                                31 December 2018   31 December 2017 
                                               GBP'000            GBP'000 
-----------------------------------  -----------------  ----------------- 
 
 Loan interest payable                           2,070              1,193 
 Commitment fee payable                            279                147 
 Other finance costs payable                        18                  - 
 Investment management fee payable                 366                606 
 Acquisition costs payable                         263                  - 
 Other payables                                    443                679 
 Amounts due to SPVs (note 19)                       -                994 
 Share issue costs payable                           -                268 
 VAT payable                                         -                201 
                                                 3,439              4,088 
-----------------------------------  -----------------  ----------------- 
 
 
 Company                              31 December 2018   31 December 2017 
                                               GBP'000            GBP'000 
-----------------------------------  -----------------  ----------------- 
 
 Loan interest payable                           2,070              1,193 
 Commitment fee payable                            279                147 
 Other finance costs payable                        18                  - 
 Investment management fee payable                 366                606 
 Other payables                                    302                288 
 Share issue costs payable                           -                268 
                                                 3,035              2,502 
-----------------------------------  -----------------  ----------------- 
 

13. Loans and borrowings

 
 Group and Company            31 December 2018   31 December 2017 
                                       GBP'000            GBP'000 
---------------------------  -----------------  ----------------- 
 
 Opening balance                       265,000            100,000 
 Revolving credit facility 
                Drawdowns              180,000            500,000 
                Repayments           (265,000)          (335,000) 
 Term debt facilities 
                Drawdowns              300,000                  - 
 Closing balance                       480,000            265,000 
---------------------------  -----------------  ----------------- 
 
 
                              For the year ended   For the year ended 
 Group and Company              31 December 2018     31 December 2017 
                                         GBP'000              GBP'000 
---------------------------  -------------------  ------------------- 
 
 Loan interest                            10,554                5,990 
 Facility arrangement fees                 3,050                2,000 
 Commitment fees                             633                1,018 
 Other facility fees                         140                  140 
 Professional fees                           109                   48 
---------------------------  -------------------  ------------------- 
 Finance expense                          14,486                9,196 
---------------------------  -------------------  ------------------- 
 

The loan balance as at 31 December 2018 has not been adjusted to reflect amortised cost, as the amounts are not materially different from the outstanding balances.

In relation to non-current loans and borrowings, the Board is of the view that the current market interest rate is not significantly different to the respective instrument's contractual interest rates, therefore the fair value of the non-current loans and borrowings at the end of the reporting periods is not significantly different from their carrying amounts.

As at 31 December 2018, the Company had a revolving credit facility with RBS, RBC and Santander of up to GBP300,000,000 with a margin of 1.75 per cent. per annum. The final maturity date of the revolving credit facility was 18 August 2020 which was the third anniversary of the amended and restated facility agreement. The Company was obliged to pay a quarterly commitment fee of 0.65 per cent. per annum on the undrawn commitment available under the revolving credit facility.

As at 31 December 2018, the balance of this facility was GBP80,000,000 (2017: GBP165,000,000), accrued interest was GBP103,277 (2017: GBP613,688) and the outstanding commitment fee was GBP278,521 (2017: GBP146,651).

During the year, the Company entered into new term debt arrangements with NAB and CIBC. The Company's term debt facilities and associated interest rate swaps now have various maturity dates, as set out in the below table:

 
 Provider      Maturity date   Loan margin   Swap fixed rate   Loan principal   Accrued interest at 31 December 2018 
                                         %                 %          GBP'000                                GBP'000 
----------  ----------------  ------------  ----------------  ---------------  ------------------------------------- 
 
 CBA              29/07/2022          1.65            1.9410           75,000                                    465 
 CBA              29/07/2022          1.65            1.2260           25,000                                    124 
 NAB              01/11/2023          1.25            1.4280           75,000                                    303 
 CBA              06/03/2025          1.55            1.5265           50,000                                    265 
 CIBC             03/11/2025          1.50            1.5103          100,000                                    454 
 NAB              01/11/2026          1.55            1.5980           75,000                                    356 
----------  ----------------  ------------  ----------------  ---------------  ------------------------------------- 
                                                                      400,000                                  1,967 
 ----------------             ------------  ----------------  ---------------  ------------------------------------- 
 
 

The swaps are embedded derivatives closely related to their host contracts. Accordingly they have been treated as single fixed rate loan agreements which effectively set interest payable at fixed rates.

All borrowing ranks pari passu and is secured by a debenture over the assets of the Company, including its shares in Holdco, and a floating charge over Holdco's bank accounts.

14. Contingencies and commitments

At the time of acquisition, wind farms which had less than 12 months' operational data may have had a wind energy true-up applied, whereby the purchase price for these wind farms may be adjusted so that it is based on a 2 year operational record, once the operational data has become available.

The following 2 wind energy true-ups remain outstanding and the maximum adjustment under each are as follows: Clyde Extension GBP4,747,094; and Corriegarth GBP9,069,293.

The Board and the Investment Manager are of the opinion that the estimate of the energy yield utilised at acquisition for the remaining assets is the most appropriate unbiased estimate of the yield following 2 years' operational data. Any variances of actual energy production from the date of acquisition to the date of signing this report are attributable to weather fluctuations and other short term operational factors rather than more fundamental factors that might influence the long term assessment. Therefore it is not appropriate to recognise an asset or liability in respect of these acquisitions.

On 4 October 2018, the Group entered into an agreement to acquire Belltown Power's 75 per cent. stake in Tom nan Clach wind farm for a headline consideration of GBP126 million, with the investment scheduled to complete in July 2019 once the wind farm is operational.

On 19 December 2018, the Group entered into an agreement to acquire Blue Energy's Douglas West project, with the investment scheduled to complete in March 2019. The Group will then construct the wind farm, with operations scheduled to commence in July 2021 and a total investment in the region of GBP45 million.

   15.    Share capital - ordinary shares of GBP0.01 
 
 Date                Issued and fully paid           Number of shares issued   Share capital   Share premium     Total 
                                                                                     GBP'000         GBP'000   GBP'000 
------------------  ------------------------------  ------------------------  --------------  --------------  -------- 
 
 1 January 2018                                                1,028,514,652          10,285         828,526   838,811 
 Shares issued to the Investment Manager 
                     True-up of 2017 Equity 
 1 February 2018      Element                                         38,526               1              49        50 
 1 February 2018     Q1 2018 Equity Element                          337,133               3             372       375 
 8 May 2018          Q2 2018 Equity Element                          327,980               3             372       375 
 1 August 2018       Q3 2018 Equity Element                          328,741               3             372       375 
 7 November 2018     Q4 2018 Equity Element                          326,053               3             372       375 
                                                                   1,358,433              13           1,537     1,550 
 
 Other 
 22 May 2018         Capital raise                               101,576,695           1,016         117,829   118,845 
 22 May 2018         Less share issue costs                                -               -         (1,681)   (1,681) 
                    ------------------------------  ------------------------  --------------                  -------- 
 31 December 2018                                              1,131,449,780          11,314         946,211   957,525 
--------------------------------------------------  ------------------------  --------------  --------------  -------- 
 
 
 Date                Issued and fully paid           Number of shares issued   Share capital   Share premium     Total 
                                                                                     GBP'000         GBP'000   GBP'000 
------------------  ------------------------------  ------------------------  --------------  --------------  -------- 
 
 1 January 2017                                                  736,700,850           7,367         495,110   502,477 
 Shares issued to the Investment Manager 
                     True-up of 2016 Equity 
 2 February 2017      Element                                         21,163               -              34        34 
 2 February 2017     Q1 2017 Equity Element                          299,268               3             322       325 
 5 May 2017          Q2 2017 Equity Element                          298,127               3             324       327 
 3 August 2017       Q3 2017 Equity Element                          298,151               3             324       327 
 26 October 2017     Q4 2017 Equity Element                          298,798               3             324       327 
------------------  ------------------------------  ------------------------  --------------  --------------  -------- 
                                                                   1,215,507              12           1,328     1,340 
 
 Other 
 1 January 2017      Less share issue costs(1)                             -               -            (24)      (24) 
 27 October 2017     Capital raise                               290,598,295           2,906         337,094   340,000 
 27 October 2017     Less share issue costs                                -               -         (4,982)   (4,982) 
------------------  ------------------------------  ------------------------  --------------                  -------- 
 31 December 2017                                              1,028,514,652          10,285         828,526   838,811 
--------------------------------------------------  ------------------------  --------------  --------------  -------- 
 

(1) Share issue costs recognised in the year in relation to the capital raise on 22 November 2016.

Shareholders are entitled to all dividends paid by the Company and, on a winding up, provided the Company has satisfied all of its liabilities, the shareholders are entitled to all of the residual assets of the Company.

Pursuant to the terms of the Investment Management Agreement, the Investment Manager receives an Equity Element as part payment of its investment management fee as disclosed in note 3 to the financial statements. The figures given in the table in note 3 include the true-up amount of the investment management fee for the periods calculated in accordance with the Investment Management Agreement and issued subsequent to 31 December 2018.

16. Net assets per share

 
 Group and Company                   31 December 2018   31 December 2017 
----------------------------------  -----------------  ----------------- 
 
 Net assets - GBP'000                       1,392,810          1,144,040 
 Number of ordinary shares issued       1,131,449,780      1,028,514,652 
----------------------------------  -----------------  ----------------- 
 Total net assets - pence                       123.1              111.2 
----------------------------------  -----------------  ----------------- 
 

17. Notes supporting the Statement of Cash Flows

Reconciliation of operating profit for the year to net cash from operating activities

 
                                                         For the year ended   For the year ended 
 Group                                                     31 December 2018     31 December 2017 
                                                                    GBP'000              GBP'000 
------------------------------------------------------  -------------------  ------------------- 
 
 Operating profit for the year                                      215,164               67,682 
 Adjustments for: 
 Movement in fair value of investments (notes 4 & 9)              (116,695)             (11,815) 
 Adjustment to purchase price of investments (note 9)                     -              (2,600) 
 Investment acquisition costs                                         1,910                2,672 
 Decrease in receivables                                                182                2,464 
 Decrease in payables                                               (1,620)                (944) 
 Equity Element of Investment Manager's fee (note 3)                  1,500                1,356 
 Consideration for investee company tax losses                        1,388                1,268 
 Net cash flows from operating activities                           101,829               60,083 
------------------------------------------------------  -------------------  ------------------- 
 
 
                                                        For the year ended   For the year ended 
 Company                                                  31 December 2018     31 December 2017 
                                                                   GBP'000              GBP'000 
-----------------------------------------------------  -------------------  ------------------- 
 
 Operating profit for the year                                     216,867               69,064 
 Adjustments for: 
 Movement in fair value of investments (note 9)                  (230,315)             (78,863) 
 (Increase)/decrease in receivables                                   (15)                2,702 
 Decrease in payables                                                (175)              (7,939) 
 Equity Element of Investment Manager's fee (note 3)                 1,500                1,356 
----------------------------------------------------- 
 Net cash flows from operating activities                         (12,138)             (13,680) 
-----------------------------------------------------  -------------------  ------------------- 
 

Reconciliation of cash flows and non-cash flow changes in liabilities arising from financing activities

 
 Group and Company                                           Loans and borrowings   Other liabilities 
                                                                          GBP'000             GBP'000 
----------------------------------------------------------  ---------------------  ------------------ 
 
 As at 1 January 2018                                                     265,000               1,295 
 
 Cash flows (net)                                                         215,000            (13,460) 
 Movements in Statement of Comprehensive Income (note 13)                       -              14,486 
 
 As at 31 December 2018                                                   480,000               2,321 
----------------------------------------------------------  ---------------------  ------------------ 
 
 
 Group and Company                                           Loans and borrowings   Other liabilities 
                                                                          GBP'000             GBP'000 
----------------------------------------------------------  ---------------------  ------------------ 
 
 As at 1 January 2017                                                     100,000                 718 
 
 Cash flows (net)                                                         165,000             (8,619) 
 Movements in Statement of Comprehensive Income (note 13)                       -               9,196 
 
 As at 31 December 2017                                                   265,000               1,295 
----------------------------------------------------------  ---------------------  ------------------ 
 

18. Financial risk management

The Investment Manager and the Administrator report to the Board on a quarterly basis and provide information to the Board which allows it to monitor and manage financial risks relating to its operations. The Group's activities expose it to a variety of financial risks: market risk (including price risk, interest rate risk and foreign currency risk), credit risk and liquidity risk.

The Group's market risk is managed by the Investment Manager in accordance with the policies and procedures in place. The Group's overall market positions are monitored on a quarterly basis by the Board.

Price risk

Price risk is defined as the risk that the fair value of a financial instrument held by the Group will fluctuate. Investments are measured at fair value through profit or loss and are valued on an unlevered, discounted cashflow basis. Therefore, the value of these investments will be (amongst other risk factors) a function of the discounted value of their expected cashflows and, as such, will vary with movements in interest rates and competition for such assets. As disclosed in note 9, the discount factors are subjective and therefore it is feasible that a reasonable alternative assumption may be used resulting in a different valuation for these investments.

Interest rate risk

The Group's interest rate risk on interest bearing financial assets is limited to interest earned on cash. The Group's only other exposure to interest rate risk is due to floating interest rates required to service external borrowings through the revolving credit facility. An increase of 1 per cent. represents the Investment Manager's assessment of a reasonably possible change in interest rates. Should the LIBOR rate increase from 0.7 per cent. to 1.7 per cent. (2017: increase from 0.5 per cent. to 1.5 per cent.), the annual interest due on the facility would increase by GBP800,000 (2017: GBP1,650,000). The Investment Manager regularly monitors interest rates to ensure the Group has adequate provisions in place in the event of significant fluctuations.

The associated interest rate swaps on amounts drawn under the CBA, CIBC and NAB term debt facilities effectively sets interest payable at a fixed rate for the full term of the loans, thereby mitigating the risks associated with the variability of cashflows arising from interest rate fluctuations.

The Board considers that, as shareholder loan investments bear interest at a fixed rate, they do not carry any interest rate risk.

The Group's interest and non-interest bearing assets and liabilities as at 31 December 2018 are summarised below:

 
                                        Interest bearing        Non-interest 
 Group                             Fixed rate   Floating rate        bearing       Total 
                                      GBP'000         GBP'000        GBP'000     GBP'000 
--------------------------------  -----------  --------------  -------------  ---------- 
 Assets 
 Cash at bank                               -               -          3,427       3,427 
 Other receivables (note 11)                -               -          1,534       1,534 
 Investments (note 9)                 145,105               -      1,726,102   1,871,207 
--------------------------------  -----------  --------------  -------------  ---------- 
                                      145,105               -      1,731,063   1,876,168 
--------------------------------  -----------  --------------  -------------  ---------- 
 Liabilities 
 Other payables (note 12)                   -               -        (3,439)     (3,439) 
 Loans and borrowings (note 13)     (400,000)        (80,000)              -   (480,000) 
--------------------------------  -----------  --------------  -------------  ---------- 
                                    (400,000)        (80,000)        (3,439)   (483,439) 
--------------------------------  -----------  --------------  -------------  ---------- 
 

The Group's interest and non-interest bearing assets and liabilities as at 31 December 2017 are summarised below:

 
                                        Interest bearing        Non-interest 
 Group                             Fixed rate   Floating rate        bearing       Total 
                                      GBP'000         GBP'000        GBP'000     GBP'000 
--------------------------------  -----------  --------------  -------------  ---------- 
 Assets 
 Cash at bank                               -           5,802            120       5,922 
 Other receivables (note 11)                -               -          1,409       1,409 
 Investments (note 9)                 114,559               -      1,291,165   1,405,724 
--------------------------------  -----------  --------------  -------------  ---------- 
                                      114,559           5,802      1,292,694   1,413,055 
--------------------------------  -----------  --------------  -------------  ---------- 
 Liabilities 
 Other payables (note 12)                   -               -        (4,088)     (4,088) 
 Loans and borrowings (note 13)     (100,000)       (165,000)              -   (265,000) 
--------------------------------  -----------  --------------  -------------  ---------- 
                                    (100,000)       (165,000)        (4,088)   (269,088) 
--------------------------------  -----------  --------------  -------------  ---------- 
 

The Company's interest and non-interest bearing assets and liabilities as at 31 December 2018 are summarised below:

 
                                        Interest bearing        Non-interest 
 Company                           Fixed rate   Floating rate        bearing       Total 
                                      GBP'000         GBP'000        GBP'000     GBP'000 
--------------------------------  -----------  --------------  -------------  ---------- 
 Assets 
 Cash at bank                               -               -             36          36 
 Other receivables (note 11)                -               -             19          19 
 Investments (note 9)                       -               -      1,875,709   1,875,709 
--------------------------------  -----------  --------------  -------------  ---------- 
                                            -               -      1,875,764   1,875,764 
--------------------------------  -----------  --------------  -------------  ---------- 
 Liabilities 
 Other payables (note 12)                   -               -        (3,035)     (3,035) 
 Loans and borrowings (note 13)     (400,000)        (80,000)              -   (480,000) 
--------------------------------  -----------  --------------  -------------  ---------- 
                                    (400,000)        (80,000)        (3,035)   (483,035) 
--------------------------------  -----------  --------------  -------------  ---------- 
 

The Company's interest and non-interest bearing assets and liabilities as at 31 December 2017 are summarised below:

 
                                        Interest bearing        Non-interest 
 Company                           Fixed rate   Floating rate        bearing       Total 
                                      GBP'000         GBP'000        GBP'000     GBP'000 
--------------------------------  -----------  --------------  -------------  ---------- 
 Assets 
 Cash at bank                               -              78              1          79 
 Other receivables (note 11)                -               -             12          12 
 Investments (note 9)                       -               -      1,411,378   1,411,378 
--------------------------------  -----------  --------------  -------------  ---------- 
                                            -              78      1,411,391   1,411,469 
--------------------------------  -----------  --------------  -------------  ---------- 
 Liabilities 
 Other payables (note 12)                   -               -        (2,502)     (2,502) 
 Loans and borrowings (note 13)     (100,000)       (165,000)              -   (265,000) 
--------------------------------  -----------  --------------  -------------  ---------- 
                                    (100,000)       (165,000)        (2,502)   (267,502) 
--------------------------------  -----------  --------------  -------------  ---------- 
 

Foreign currency risk

Foreign currency risk is defined as the risk that the fair values of future cashflows will fluctuate because of changes in foreign exchange rates. The Group's financial assets and liabilities are denominated in GBP and substantially all of its revenues and expenses are in GBP. The Group is not considered to be materially exposed to foreign currency risk.

Credit risk

Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfil its contractual obligations. The Group is exposed to credit risk in respect of other receivables, cash at bank and loan investments. The Group's credit risk exposure is minimised by dealing with financial institutions with investment grade credit ratings and making loan investments which are equity in nature. The Company has advanced loans to Holdco, however does not consider these loans a risk as they are intra-Group. No balances are past due or impaired.

The table below details the Group's maximum exposure to credit risk:

 
 Group                          31 December 2018   31 December 2017 
                                         GBP'000            GBP'000 
-----------------------------  -----------------  ----------------- 
 
 Other receivables (note 11)               1,534              1,409 
 Cash at bank                              3,427              5,922 
 Loan investments (note 9)               145,105            114,559 
                                         150,066            121,890 
-----------------------------  -----------------  ----------------- 
 

The table below details the Company's maximum exposure to credit risk:

 
 Company                        31 December   31 December 
                                       2018          2017 
                                    GBP'000       GBP'000 
-----------------------------  ------------  ------------ 
 
 Other receivables (note 11)             19            12 
 Cash at bank                            36            79 
 Loan investments (note 9)          906,533       672,517 
-----------------------------  ------------  ------------ 
                                    906,588       672,608 
-----------------------------  ------------  ------------ 
 

The table below shows the cash balances of the Group and the Standard & Poor's credit rating for each counterparty:

 
 Group                Rating    31 December 2018   31 December 2017 
                                         GBP'000            GBP'000 
-------------------  --------  -----------------  ----------------- 
 
 RBS International     BBB-                3,427              5,922 
                                           3,427              5,922 
 ----------------------------  -----------------  ----------------- 
 

The table below shows the cash balances of the Company and the Standard & Poor's credit rating for each counterparty:

 
 Company              Rating    31 December 2018   31 December 2017 
                                         GBP'000            GBP'000 
-------------------  --------  -----------------  ----------------- 
 
 RBS International     BBB-                   36                 79 
-------------------                               ----------------- 
                                              36                 79 
 ----------------------------  -----------------  ----------------- 
 

Liquidity risk

Liquidity risk is the risk that the Group and the Company may not be able to meet a demand for cash or fund an obligation when due. The Investment Manager and the Board continuously monitor forecast and actual cashflows from operating, financing and investing activities to consider payment of dividends, repayment of the Company's outstanding debt or further investing activities.

As disclosed in note 14, the purchase price of wind farms acquired which have less than 12 months' operational data, may be adjusted once 2 years of operational data becomes available.

The following tables detail the Group's expected maturity for its financial assets (excluding equity) and liabilities together with the contractual undiscounted cashflow amounts:

 
 Group - 31 December 2018       Less than 1 year   1 - 5 years    5+ years       Total 
                                         GBP'000       GBP'000     GBP'000     GBP'000 
-----------------------------  -----------------  ------------  ----------  ---------- 
 Assets 
 Other receivables (note 11)               1,534             -           -       1,534 
 Cash at bank                              3,427             -           -       3,427 
 Loan investments (note 9)                     -             -     145,105     145,105 
 
 Liabilities 
 Other payables (note 12)                (3,439)             -           -     (3,439) 
 Loans and borrowings                   (15,720)     (301,296)   (239,068)   (556,084) 
                                        (14,198)     (301,296)    (93,963)   (409,457) 
-----------------------------  -----------------  ------------  ----------  ---------- 
 
 
 Group - 31 December 2017       Less than 1 year   1 - 5 years   5+ years       Total 
                                         GBP'000       GBP'000    GBP'000     GBP'000 
-----------------------------  -----------------  ------------  ---------  ---------- 
 Assets 
 Other receivables (note 11)               1,409             -          -       1,409 
 Cash at bank                              5,922             -          -       5,922 
 Loan investments (note 9)                     -             -    114,559     114,559 
 
 Liabilities 
 Other payables (note 12)                (4,088)             -          -     (4,088) 
 Loans and borrowings                    (8,416)     (285,346)          -   (293,762) 
-----------------------------  -----------------  ------------  ---------  ---------- 
                                         (5,173)     (285,346)    114,559   (175,960) 
-----------------------------  -----------------  ------------  ---------  ---------- 
 

The following tables detail the Company's expected maturity for its financial assets (excluding equity) and liabilities together with the contractual undiscounted cashflow amounts:

 
 Company - 31 December 2018     Less than 1 year   1 - 5 years    5+ years       Total 
                                         GBP'000       GBP'000     GBP'000     GBP'000 
-----------------------------  -----------------  ------------  ----------  ---------- 
 Assets 
 Other receivables (note 11)                  19             -           -          19 
 Cash at bank                                 36             -           -          36 
 Loan investments (note 9)                     -             -     906,533     906,533 
 
 Liabilities 
 Other payables (note 12)                (3,035)             -           -     (3,035) 
 Loans and borrowings                   (15,720)     (301,296)   (239,068)   (556,084) 
-----------------------------  -----------------  ------------  ----------  ---------- 
                                        (18,700)     (301,296)     667,465     347,469 
-----------------------------  -----------------  ------------  ----------  ---------- 
 
 
 Company - 31 December 2017     Less than 1 year   1 - 5 years   5+ years       Total 
                                         GBP'000       GBP'000    GBP'000     GBP'000 
-----------------------------  -----------------  ------------  ---------  ---------- 
 Assets 
 Other receivables (note 11)                  12             -          -          12 
 Cash at bank                                 79             -          -          79 
 Loan investments (note 9)                     -             -    672,517     672,517 
 
 Liabilities 
 Other payables (note 12)                (2,502)             -          -     (2,502) 
 Loans and borrowings                    (8,416)     (285,346)          -   (293,762) 
-----------------------------  -----------------  ------------  ---------  ---------- 
                                        (10,827)     (285,346)    672,517     376,344 
-----------------------------  -----------------  ------------  ---------  ---------- 
 

The Group and Company will use cashflow generation, equity placings, debt refinancing or disposal of assets to manage liabilities as they fall due in the longer term.

Capital risk management

The Company considers its capital to comprise ordinary share capital, distributable reserves and retained earnings. The Company is not subject to any externally imposed capital requirements.

The Group's and the Company's primary capital management objectives are to ensure the sustainability of its capital to support continuing operations, meet its financial obligations and allow for growth opportunities. Generally, acquisitions are anticipated to be funded with a combination of current cash, debt and equity.

19. Related party transactions

During the year, the Company increased its loan to Holdco by GBP331,735,406 (2017: GBP493,738,402) and Holdco made repayments of GBP97,719,585 (2017: GBP67,755,512). The amount outstanding at the year end was GBP906,533,086 (31 December 2017: GBP672,517,265).

During the year, Holdco increased its shareholder loan to Clyde by GBP45,945,307 (2017: GBP16,181,374). The loan accrues interest at a rate of 5.8 per cent. per annum. The Group received loan capital repayments of GBP15,845,320 (2017: GBP12,876,474) and loan interest repayments of GBP6,153,489 (2017: GBP3,468,221) during the year from Clyde and the balance at 31 December 2018 was GBP143,006,034 (2017: GBP112,906,047).

During the year, GBP417,000 (2017: GBP371,000) was received from Little Cheyne Court, GBP873,835 (2017: GBP897,321) was received from Braes of Doune and GBP97,374 (2017: GBPnil) was received from SYND Holdco, as compensation for corporation tax losses surrendered via consortium relief through the Group.

As at 31 December 2018, GBP742,228 (2017: GBP873,835) was due from Braes of Doune, GBP232,480 (2017: GBP97,374) was due from SYND Holdco, GBP351,026 (2017: GBPnil) was due from North Rhins and GBPnil (2017: GBP39,484) was due from Little Cheyne Court as disclosed in note 11, in relation to corporation tax losses surrendered through the Group.

During the year, Holdco received GBP2,655,957 (2017: GBP994,430) in relation to renewables obligation proceeds on behalf of Bin Mountain, Carcant and Tappaghan. Amounts due to these investee companies as at 31 December 2018 were GBPnil (2017: GBP994,430).

Under the terms of a Management Services Agreement with Holdco, the Company receives GBP800,000 per annum in relation to management and administration services. During the year, GBP800,000 (2017: GBP800,000) was paid from Holdco to the Company under this agreement and amounts due to the Company at the year end were GBPnil (2017: GBPnil).

Holdco has Management Service Agreements with Braes of Doune, Tappaghan, Bin Mountain, Carcant, Cotton Farm, Earl's Hall Farm, Kildrummy, Maerdy, North Rhins, Drone Hill, Sixpenny Wood and Yelvertoft for which Holdco receives GBP33,937 (2017: GBP32,595) per wind farm per annum, of which GBP11,312 (2017: GBP10,865) is payable to the Investment Manager in relation to administration and management services. Holdco also has Management Service Agreements with Stroupster, Screggagh, Bishopthorpe, Corriegarth Holdings, Slieve Divena, North Hoyle, Langhope Rig and Brockaghboy for which Holdco receives GBP45,250 (2017: GBP43,460) per wind farm per annum, of which GBP22,625 (2017: GBP21,730) is payable to the Investment Manager. Amounts due to Holdco in respect of these fees as at 31 December 2018 were GBPnil (2017: GBPnil).

The table below shows dividends receivable in the year from the Group's investments.

 
                             For the year ended   For the year ended 
                               31 December 2018     31 December 2017 
                                        GBP'000              GBP'000 
--------------------------  -------------------  ------------------- 
 
 Fenlands (1)                             9,600                    - 
 Corriegarth Holdings (2)                 9,495                3,166 
 ML Wind (3)                              7,105                5,067 
 SYND Holdco (4)                          6,966                6,564 
 Rhyl Flats                               6,686                5,065 
 Stroupster                               6,181                6,787 
 Maerdy                                   4,879                3,244 
 Brockaghboy                              4,825                    - 
 Braes of Doune                           4,774                5,187 
 Tappaghan                                4,633                3,414 
 Kildrummy                                4,585                4,476 
 Little Cheyne Court                      4,428                3,169 
 North Hoyle                              4,300                    - 
 Cotton Farm                              4,147                3,411 
 Bicker Fen                               3,936                    - 
 Bishopthorpe                             3,635                1,238 
 Clyde                                    3,502                2,855 
 Langhope Rig                             3,431                1,694 
 Slieve Divena                            3,043                1,130 
 Earl's Hall Farm                         2,837                1,935 
 Screggagh                                2,488                2,375 
 Bin Mountain                             1,711                1,539 
 Carcant                                  1,426                  938 
                                        108,613               63,254 
--------------------------  -------------------  ------------------- 
 

(1) The Group's investments in Deeping St. Nicholas, Glass Moor, Red House and Red Tile are held through Fenlands.

(2) The Group's investment in Corriegarth is held through Corriegarth Holdings.

(3) The Group's investments in Middlemoor and Lindhurst are held through ML Wind.

(4) The Group's investments in Drone Hill, North Rhins, Sixpenny Wood and Yelvertoft are held through SYND Holdco.

   20.    Ultimate controlling party 

In the opinion of the Board, on the basis of the shareholdings advised to them, the Company has no ultimate controlling party.

   21.    Subsequent events 

On 18 January 2019, the Company announced a dividend of GBP19.1 million, equivalent to 1.69 pence per share with respect to the quarter ended 31 December 2018, bringing the total dividend declared with respect to the year to 31 December 2018 to 6.76 pence per share. The record date for the dividend was 1 February 2019 and the payment date was 28 February 2019.

On 1 February 2019, the Company amended and restated its revolving credit facility with RBS, RBC and Santander comprising a GBP300 million tranche A facility with a refreshed 3 year tenor and a GBP225 million tranche B facility with a 1 year tenor.

On 1 February 2019, the Company entered into an agreement to acquire 35.5 per cent. of Stronelairg and Dunmaglass wind farms from SSE for a total consideration of GBP452 million, with completion occurring at the end of March 2019.

On 27 February 2019, the Company issued 102,946,483 further shares at a price of 127 pence per share, raising gross proceeds of GBP131 million.

Company Information

 
 Directors (all non-executive)          Registered Company Number 
 Tim Ingram (Chairman)                  08318092 
 Shonaid Jemmett-Page 
 William Rickett C.B.                   Registered Office 
 Dan Badger                             27-28 Eastcastle Street 
 Martin McAdam                          London 
                                        W1W 8DH 
 
 Investment Manager                     Registered Auditor 
 Greencoat Capital LLP                  BDO LLP 
 3(rd) Floor, Burdett House             55 Baker Street 
 15-16 Buckingham Street                London 
 London                                 W1U 7EU 
 WC2N 6DU 
                                        Legal Adviser 
 Administrator and Company Secretary    Norton Rose Fulbright 
                                         LLP 
 Estera Administration (UK) Limited     3 More London Riverside 
 The Innovation Centre                  London 
 Northern Ireland Science Park          SE1 2AQ 
 Queen's Road 
 Belfast                                Broker 
 BT3 9DT                                RBC Capital Markets 
                                        Riverbank House 
 Depositary                             2 Swan Lane 
 Estera Depositary (UK) Limited         London 
 The Innovation Centre                  EC4R 3BF 
 Northern Ireland Science Park 
 Queen's Road                           Account Bank 
 Belfast                                RBS International 
 BT3 9DT                                280 Bishopsgate 
                                        London 
 Registrar                              EC2M 4RB 
 Link Market Services Limited 
 The Registry 
 34 Beckenham Road 
 Beckenham 
 Kent 
 BR3 4TU 
 
 

Supplementary Information (unaudited)

Under the Alternative Investment Fund Manager Regulations 2013 (as amended) the Company is a UK AIF and the Investment Manager is a full scope UK AIFM.

Estera Depositary (UK) Limited provides depositary services under the AIFMD.

The AIFMD outlines the required information which has to be made available to investors prior to investing in an AIF and directs that material changes to this information be disclosed in the Annual Report of the AIF. There were no material changes in the year.

All information required to be disclosed under the AIFMD is either disclosed in this Annual Report or is detailed within a schedule of disclosures on the Company's website at www.greencoat-ukwind.com.

The Investment Manager covers the potential professional liability risks resulting from its activities by holding professional indemnity insurance in accordance with Article 9(7)(b) of AIFMD.

The information in this paragraph relates to the Investment Manager, the AIFM, and its subsidiary company providing services to the AIFM and it does not relate to the Company. The total amount of remuneration paid by the Investment Manager, in its capacity as AIFM, to its 39 staff for the financial year ending 31 December 2018 was GBP6.3 million, consisting of GBP5.2 million fixed and GBP1.1 million variable remuneration. The aggregate amount of remuneration for the 5 staff members of the Investment Manager constituting senior management and those staff whose actions have a material impact on the risk profile of the Company was GBP1.0 million.

Defined Terms

Adjusted Portfolio Value means Gross Asset Value

Aggregate Group Debt means the Group's proportionate share of outstanding third party borrowings

AGM means Annual General Meeting of the Company

AIC means the Association of Investment Companies

AIC Code means the AIC's Code of Corporate Governance by way of reference to the AIC Guide

AIC Guide means the AIC's Corporate Governance Guide for Investment Companies

AIF means an Alternative Investment Fund as defined under the AIFMD

AIFM means an Alternative Investment Fund Manager as defined under the AIFMD

AIFMD means the Alternative Investment Fund Managers Directive

Balancing Mechanism means the system by which electricity demand and supply is balanced by National Grid in close to real time

BDO LLP means the Company's Auditor as at the reporting date

Bicker Fen means Bicker Fen Windfarm Limited

Bin Mountain means Bin Mountain Wind Farm (NI) Limited

Bishopthorpe means Bishopthorpe Wind Farm Limited

Board means the Directors of the Company

Braes of Doune means Braes of Doune Wind Farm (Scotland) Limited

Brockaghboy means Brockaghboy Windfarm Limited

Carcant means Carcant Wind Farm (Scotland) Limited

Cash Fee means the cash fee that the Investment Manager is entitled to under the Investment Management Agreement

CBA means Commonwealth Bank of Australia

CFD means Contract For Difference

Church Hill means Church Hill Wind Farm Limited

CIBC means Canadian Imperial Bank of Commerce

Clyde means Clyde Wind Farm (Scotland) Limited

Clyde Extension means the Clyde extension wind farm developed by SSE adjacent to the original Clyde wind farm

Company means Greencoat UK Wind PLC

Corriegarth means Corriegarth Wind Energy Limited

Corriegarth Holdings means Corriegarth Wind Energy Holdings Limited

Cotton Farm means Cotton Farm Wind Farm Limited

CPI means the Consumer Price Index

Crighshane means Crighshane Wind Farm Limited

Crighshane & Church Hill Funding means Crighshane and Church Hill Funding Limited

Crighshane & Church Hill Holdco means Crighshane and Church Hill Holdco Limited

DCF means Discounted Cash Flow

Deeping St. Nicholas means Deeping St. Nicholas wind farm

Drone Hill means Drone Hill Wind Farm Limited

DTR means the Disclosure Guidance and Transparency Rules sourcebook issued by the Financial Conduct Authority

Earl's Hall Farm means Earl's Hall Farm Wind Farm Limited

Equity Element means the ordinary shares issued to the Investment Manager under the Investment Management Agreement

EU means the European Union

Fenlands means Fenland Windfarms Limited

FRC means the Financial Reporting Council

GAV means Gross Asset Value

Glass Moor means Glass Moor wind farm

GLIL means GLIL Corporate Holdings Limited, the infrastructure investment vehicle of certain local authority pension funds, originally founded by the Greater Manchester Pension Fund and the London Pensions Fund Authority

Group means Greencoat UK Wind PLC and Greencoat UK Wind Holdco Limited

Holdco means Greencoat UK Wind Holdco Limited

IAS means International Accounting Standard

IFRS means International Financial Reporting Standards

Investment Management Agreement means the agreement between the Company and the Investment Manager

Investment Manager means Greencoat Capital LLP

IPEV Valuation Guidelines means the International Private Equity and Venture Capital Valuation Guidelines

IRR means Internal Rate of Return

Kildrummy means Kildrummy Wind Farm Limited

KPI means Key Performance Indicator

Langhope Rig means Langhope Rig Wind Farm Limited

Lindhurst means Lindhurst Wind Farm

Listing Rules means the listing rules made by the UK Listing Authority under Section 73A of the Financial Services and Markets Act 2000

Little Cheyne Court means Little Cheyne Court Wind Farm Limited

Maerdy means Maerdy Wind Farm Limited

Middlemoor means Middlemoor Wind Farm

ML Wind means ML Wind LLP

NAB means National Australia Bank

NAV means Net Asset Value

NAV per Share means the Net Asset Value per Ordinary Share

North Hoyle means North Hoyle Wind Farm Limited

North Rhins means North Rhins Wind Farm Limited

PFI means Private Finance Initiative

PPA means Power Purchase Agreement entered into by the Group's wind farms

RBC means the Royal Bank of Canada

RBS means the Royal Bank of Scotland PLC

RBS International means the Royal Bank of Scotland International Limited

Red House means Red House wind farm

Red Tile means Red Tile wind farm

Review Section means the front end review section of this report (including but not limited to the Chairman's Statement, Strategic Report, Investment Manager's Report and Report of the Directors)

Rhyl Flats means Rhyl Flats Wind Farm Limited

RPI means the Retail Price Index

Santander means Santander Global Banking and Markets

Screggagh means Screggagh Wind Farm Limited

Sixpenny Wood means Sixpenny Wood Wind Farm Limited

Slieve Divena means Slieve Divena Wind Farm Limited

SPVs means the Special Purpose Vehicles which hold the Group's investment portfolio of underlying wind farms

Stroupster means Stroupster Caithness Wind Farm (Scotland) Limited

SYND Holdco means SYND Holdco Limited

Tappaghan means Tappaghan Wind Farm (NI) Limited

TSR means Total Shareholder Return

UK means the United Kingdom of Great Britain and Northern Ireland

UK Code means the UK Corporate Governance Code issued by the FRC

Yelvertoft means Yelvertoft Wind Farm Limited

Cautionary Statement

The Review Section of this report has been prepared solely to provide additional information to shareholders to assess the Company's strategies and the potential for those strategies to succeed. These should not be relied on by any other party or for any other purpose.

The Review Section may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology.

These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs or current expectations of the Directors and the Investment Manager concerning, amongst other things, the investment objectives and Investment Policy, financing strategies, investment performance, results of operations, financial condition, liquidity, prospects, and distribution policy of the Company and the markets in which it invests.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Company's actual investment performance, results of operations, financial condition, liquidity, distribution policy and the development of its financing strategies may differ materially from the impression created by the forward-looking statements contained in this document.

Subject to their legal and regulatory obligations, the Directors and the Investment Manager expressly disclaim any obligations to update or revise any forward-looking statement contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.

In addition, the Review Section may include target figures for future financial periods. Any such figures are targets only and are not forecasts.

This Annual Report has been prepared for the Company as a whole and therefore gives greater emphasis to those matters which are significant in respect of Greencoat UK Wind PLC and its subsidiary undertakings when viewed as a whole.

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

FR SEFFWWFUSEIE

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February 28, 2019 02:00 ET (07:00 GMT)

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